DEPARTMENT OF HEALTH AND HUMAN SERVICES 

Centers for Medicare & Medicaid Services 

42 CFR Part 600 

Office of the Secretary 

45 CFR Part 144 

[CMS-2380-F] 

RIN 0938-AR93 

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 

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule establishes the Basic Health Program (BHP), as required by 

section 1331 of the Affordable Care Act. The BHP provides states the flexibility to establish a 

health benefits coverage program for low-income individuals who would otherwise be eligible to 

purchase coverage through the Affordable Insurance Exchange (Exchange, also called Health 

Insurance Marketplace). The BHP complements and coordinates with enrollment in a QHP 

through the Exchange, as well as with enrollment in Medicaid and the Children’s Health 

Insurance Program (CHIP). This final rule also sets forth a framework for BHP eligibility and 

enrollment, benefits, delivery of health care services, transfer of funds to participating states, and 

federal oversight. Additionally, this final rule amends another rule issued by the Secretary of the 

Department of Health and Human Services (Secretary) in order to clarify the applicability of that 

rule to the BHP. 
CMS-2380-F 2 

EFFECTIVE DATE: These regulations are effective on January 1, 2015.

FOR FURTHER INFORMATION CONTACT: 

Jessica Schubel (410) 786-3032; or Carey Appold (410) 786-2117.

SUPPLEMENTARY INFORMATION: 

Table of Contents 

To assist readers in referencing sections contained in this document, we are providing the 

following table of contents. 

I. Executive Summary 

II. Background 

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

A. General Provisions and Definitions 

B. Establishment of the Basic Health Program 

C. Federal Program Administration 

D. Eligibility and Enrollment 

E. Standard Health Plan 

F. Enrollee Financial Responsibilities 

G. Payment to States 

H. BHP Trust Fund 

IV. Provisions of the Final Regulations 

A. General Provisions and Definitions 

B. Establishment and Certification of State Basic Health Programs 

C. Federal Program Administration 

D. Eligibility and Enrollment 
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E. Standard Health Plan 

F. Enrollee Financial Responsibilities 

G. Payments to States 

H. BHP Trust Fund

V. Collection of Information Requirements 

VI. Regulatory Impact Statement 

A. Overall Impact 

B. Unfunded Mandates Reform Act 

C. Regulatory Flexibility Act 

D. Federalism 

Regulation Text 

Acronyms 

Because of the many organizations and terms to which we refer by acronym in this final rule, we 

are listing these acronyms and their corresponding terms in alphabetical order below: 

[the] Act Social Security Act 

Affordable Care Act The collective term for the Patient Protection and Affordable Care Act 

(Pub. L. 111-148) and the Health Care and Education Reconciliation Act of 

2010(Pub. L. 111-152)) 

APTC Advance Payments of the Premium Tax Credit 

BHP Basic Health Program 

CHIP Children’s Health Insurance Program 

CMS Centers for Medicare & Medicaid Services 

[the] Code Internal Revenue Code of 1986 

EHBs Essential Health Benefits 
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FEHBP Federal Employees Health Benefits Program (5 U.S.C 8901, et seq.) 

FPL Federal poverty line 

HCERA Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152, enacted 

March 30, 2010) 

HHS [U.S. Department of] Health and Human Services 

IHS Indian Health Service 

MEC Minimum Essential Coverage 

MAGI Modified adjusted gross income 

PHS Act Public Health Service Act 

PRA Paperwork Reduction Act of 1995 

QHP Qualified Health Plan 

SHOP Small Business Health Options Program 

I. Executive Summary 

This final rule implements section 1331 of the Patient Protection and Affordable Care 

Act (Pub. L. 111-148, enacted on March 23, 2010) and the Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111.152, enacted on March 30, 2010), which are collectively 

referred to as the Affordable Care Act. Section 1331 of the Affordable Care Act directs the 

Secretary to establish the Basic Health Program (BHP). In addition, this final rule amends 

certain other federal regulations, clarifying their applicability to the new program. 

 For coverage effective beginning on January 1, 2014, qualified individuals and small 

businesses will be able to purchase private health insurance coverage through competitive 

marketplaces, also termed “Exchanges” (or the Health Insurance Exchange). The premium tax 

credit and cost-sharing reductions are available to help lower income qualified individuals 

purchase and secure coverage and services through the plans operating on the Exchange. At the 
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same time, states provide coverage under Medicaid for low-income individuals and other 

individuals, including certain individuals with significant medical needs. New administrative 

procedures discussed in prior rulemaking establish a system for coordinating coverage across all 

insurance affordability programs (IAP) which includes coverage obtained through an Exchange 

with the associated premium tax credit and cost-sharing reductions, Medicaid, and the Children’s 

Health Insurance Program. Beginning January 1, 2015, under this final rule, states will have an 

additional option to establish a BHP to provide coverage for certain individuals who are not 

eligible for Medicaid and would otherwise be eligible to obtain coverage through the Exchange. 

This final rule establishes: (1) the requirements for certification of state submitted BHP 

Blueprints, and state administration of the BHP consistent with that Blueprint; (2) eligibility and 

enrollment requirements for standard health plan coverage offered through the BHP; (3) the 

minimum requirements for the benefits covered by such standard health plans; (4) the 

availability of federal funding of certified state BHPs; (5) the purposes for which states can use 

such federal funding; (6) the parameters for enrollee financial participation; and (7) the 

requirements for state and federal administration and oversight of BHP funds. The specific 

methods for calculating and providing payment to states, consistent with this rule, will be issued 

separately in a final payment notice. 

II. Background

Section 1331 of the Affordable Care Act provides states with a new coverage option, the 

Basic Health Program (BHP), for specified individuals who do not qualify for Medicaid but 

whose income does not exceed 200 percent of the federal poverty level (FPL). This final rule 

also implements statutory provisions of the BHP and other provisions necessary to ensure 

coordination with the other coverage options that, along with BHP, are collectively referred to as 

insurance affordability programs. Coordination is necessary to ensure that consumers are 
CMS-2380-F 6 

determined eligible for the appropriate program through a streamlined and seamless process and 

are enrolled in appropriate coverage without unnecessary paperwork or delay. This final rule 

describes standards for state administration and federal oversight of the BHP. 

In the September 25, 2013 Federal Register (78 FR 59122), we published a proposed 

rule to provide states the opportunity to establish a BHP in coordination with other insurance 

affordability programs. Rather than establish new and different rules for the BHP, when 

possible, we align BHP rules with existing rules governing coverage through the Exchange, 

Medicaid, or CHIP. This approach is supported by the statutory linkage between the minimum 

benefit coverage, maximum cost sharing, and overall funding for the BHP with the Exchange. 

Where necessary to accommodate unique features of the BHP, we adapted existing regulations 

or established specific rules for the new program. Recognizing that states may choose different 

ways to structure their BHP, when possible, we offer states flexibility in choosing to administer 

the program in accordance with Exchange rules or those governing Medicaid or CHIP. In those 

sections in which we offer states the choice, states must adopt all of the standards in the 

referenced Medicaid or Exchange regulations. 

For a detailed description of the background of this rule, please refer to “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” proposed rule published in the September 25, 2013 

Federal Register (78 FR 59122). 
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III. Summary of Proposed Provisions and Analysis of the Responses to Public 

Comments 

For a complete and full description of the BHP proposed provisions as required by the 

statute, see the September 25, 2013 proposed rule (78 FR 59122). 

 We received a total of 132 timely comments from state agencies, groups advocating on 

behalf of consumers, health care providers, employers, health insurers, health care associations, 

Tribes, tribal organizations, and the general public. In addition, we held an all-state/advocate 

consultation session on November 6, 2013 as well as a tribal consultation session on November 

7, 2013 to provide an overview of the BHP proposed rule where interested parties were afforded 

an opportunity to ask questions and make comments. We continued to meet during this time 

with interested states through the “learning collaborative” that was established prior to the 

publication of the proposed rule to solicit input related to program operations and coordination 

between all insurance affordability programs. At the consultation and learning collaborative 

sessions, participating parties were reminded to submit written comments before the close of the 

public comment period that was specified in the BHP proposed rule. 

 The following sections, arranged by subject area, include a summary of the public 

comments that we received, and our responses. 

A. General Provisions and Definitions

 In the September 25, 2013 proposed rule, we proposed in §600.1 the general authority for 

the BHP regulation as specified in section 1331 of the Affordable Care Act. The statute 

specifies that a state electing to implement a BHP must enter into contracts for the provision of 

standard health plan coverage, which must, at a minimum include the essential health benefits 

(EHB). A state implementing BHP will receive federal funding based on the amount of premium 

tax credit and cost-sharing reductions that would have otherwise been available to enrollees had 
CMS-2380-F 8 

they obtained coverage in the Exchange. We did not receive specific comments on this section 

and are finalizing the provision as proposed. 

 In §600.5, we proposed the definitions and use of terms that apply to BHP. For specific 

definitions, please see the September 25, 2013 proposed rule (78 FR 59142). 

 We received several public comments for this section, which we discuss below. In 

addition to changes resulting from comments on this section, we have added a definition of 

“interim certification” in conformance with a change made to §600.110. Interim certification is 

an approval status for the initial design of a state’s BHP. It does not confer any permission to 

begin enrollment or authority to seek funding from the federal government for BHP 

expenditures. 

 Comment: Several commenters requested that the BHP use the Medicaid definition of 

Indian that is set forth in 42 CFR 447.51 for purposes of Medicaid premium and cost sharing 

reductions. The Affordable Care Act defines Indians for purposes of premium and cost sharing 

reductions in Exchange plans using the definition set out in section 4(d) of the Indian SelfDetermination Act and Education Assistance Act, (25 U.S.C. 450b(d)). The referenced 

Medicaid regulatory definition of Indian is broader. 

 Response: We appreciate the commenters’ recommendation; however, because a BHP is 

required by statute only to provide that premium and cost sharing liability will not exceed such 

liability under Exchange coverage, the regulation adopts the Exchange definition. 

 Comment: One commenter recommended that HHS define the term “network of 

providers.” 

 Response: We have revised the list of definitions to include a definition of “network of 

healthcare providers.” 

B. Establishment of the Basic Health Program
CMS-2380-F 9 

In §600.100 to §600.170, we proposed the administrative structure for BHP. Within this 

structure, we proposed that the BHP Blueprint would be the vehicle for BHP certification and 

specified the operational principles required to implement a BHP. 

 In §600.110(a), we proposed that the BHP Blueprint would be the comprehensive 

document submitted by states to the Secretary to receive certification of proposed BHP 

programs. For specific discussions on the proposed content of the Blueprint, refer to the 

September 25, 2013 proposed rule (78 FR 59142). 

 In §600.110(b), we proposed that the BHP Blueprint be accompanied by a funding plan 

that provides enrollment and cost projections for the first 12 months of operation as well as 

additional funding sources if the state expects to use any non-federal funding. The funding plan 

must demonstrate that the federal funds will only be used to reduce premiums or cost-sharing or 

to provide additional benefits. In §600.110(c), we proposed that HHS post the state’s BHP 

Blueprint on-line. 

 The following sections, arranged by subject area, include a summary of the public 

comments that we received, and our responses. 

1. General 

Comment: We received a variety of supportive comments. One commenter supported 

the adoption of the Exchange approach of a Blueprint as opposed to utilizing a vehicle similar to 

a Medicaid state plan. A couple of commenters expressed support for the provision requiring 

Secretarial certification prior to implementation. We received several comments supporting the 

requirement that HHS post the Blueprint submitted by the state on-line. 

Response: We are finalizing the proposed provisions with some modifications. 
CMS-2380-F 10 

 We are clarifying that HHS will post on line the Blueprint submitted by the state, and 

will update it to reflect subsequent amendments by the state (including amendments made to 

ensure certification by HHS). 

Comment: Several commenters shared concerns related to the timing of the Blueprint 

requirements, and provided several suggestions in how to address this issue. One suggestion was 

to permit an abridged Blueprint in the first year of implementation, to permit greater flexibility in 

establishing contracts for standard health plans and making administrative arrangements. The 

abridged Blueprint would be required to include a few key areas in the Blueprint, such as its 

eligibility and enrollment processes as well as the standard health plan benefit package. Another 

suggestion included the use of an “interim certification” to outline basic program parameters 

until the contracting process concluded. One final suggestion was to permit a state to include 

contingencies in its Blueprint. 

Response: We have carefully considered the commenters’ concern that we were 

requiring too much detail and certainty in the initial Blueprint submission, because that level of 

detail would not be operationally feasible. In response to these comments, we are modifying the 

certification process to include an interim certification level, which we have defined in the 

definitions section. We expect that states will be able to provide their basic program design 

choices and we will be able to approve the structure of the program through the interim 

certification process, which will involve the submission of a limited set of Blueprint elements. 

We anticipate that interim certification will give states more certainty as they seek legislative 

and budget authority for their programs, with the understanding that full certification would be 

granted only when the Blueprint was fleshed out with additional detail. Full certification would 

still be required before states enroll individuals in a BHP. 
CMS-2380-F 11 

Comment: We received several comments expressing concern regarding the required 

content of the Blueprint. Several commenters, for example, requested that we make clear that 

we would not require exact premium amounts in the Blueprint (information that would not be 

available until later in implementation), but would only require a description of the process the 

state would use to establish premiums (information that would be available earlier.) 

Response: In our proposed rule we created some inconsistency which has now been 

corrected, at §§600.110(a)(6) and 600.505. Now both are consistent, requiring that the Blueprint 

contain only assurances that the premiums would be calculated in such a way that BHP 

enrollees would not pay more than they would have been required to pay if they had been 

enrolled in the applicable benchmark plan, taking into account any premium tax credit that 

would have been available . 

 Comment: On later sections of the regulation, we received many comments suggesting 

that we need to allow greater flexibility for states around the start-up and establishment of the 

program. As with other aspects of program operations, this flexibility would need to be 

addressed in the Blueprint. 

Response: We appreciate the commenters’ interest in ensuring smooth and efficient BHP 

implementation, and as such, we have included a 15th content area for the Blueprint in 

§600.110(a). We will require a transition plan if a state requests to phase in enrollment, which 

would include information about coordination of such a transition with the Exchange operating 

in the state. This additional Blueprint requirement corresponds to modifications made to 

§600.145. 

2. Development and Submission of the BHP Blueprint (§600.115) 

 In §600.115(a), we proposed that the Blueprint must be submitted by the Governor or the 

Governor’s designee, and in §600.115(b) we proposed that the state must identify the agency and 
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officials, by position or title, responsible for program administration, operations, and financial 

oversight. 

 In §600.115(c), we proposed that the state must seek public comment on the BHP 

Blueprint content before submission to the Secretary for certification, and ensure the comment 

process included federally recognized tribes located in the state. Additionally, we proposed that 

the state must seek comment on significant revisions which are those that alter core program 

operations required by §600.145(e). 

 In §600.115(d), we proposed that states may not implement BHP prior to receiving full 

certification. The date of implementation for this purpose is proposed as the first day that 

enrollees would receive coverage under BHP. 

 Comment: We received many comments on the public comment process. One 

commenter supported the flexibility that is afforded to states by not having a federally prescribed 

list of required public notice participants in the public notice standard. Another commenter 

expressed the opposite view and would like HHS to require a specific list of stakeholders that 

must be included in the public comment process, including consumer, health care and safety net 

advocacy groups. Another commenter suggested that the prescribed list of stakeholders should 

be the same as the Exchange. 

 Response: We recognize that BHP will have a significant impact on consumers, 

providers, plans and other stakeholders, and we appreciate the commenters’ interest in ensuring 

the public is afforded the opportunity to provide meaningful comment. While ensuring 

appropriate public participation in the comment process is important, we are not mandating the 

participation of certain stakeholders because the circumstances in different states in serving low 

income populations are not the same. Moreover, such a requirement could be viewed as giving 

particular weight to those stakeholders over others. But we do not preclude any state from 
CMS-2380-F 13 

adopting such a procedure based on the circumstances in that state. Nor do we specify a 

calendar a state must use when soliciting public comment; the opportunity to comment, however, 

must be meaningful. We believe states will build on existing programs and approaches currently 

in place, and we want to provide the flexibility for them to do so. 

 Comment: Some commenters specifically recommended that we should borrow the 

section 1115 Medicaid demonstration transparency requirements under title XIX of the Act and 

apply those standards to BHP. The commenters expressed the sentiment that the level of rigor in 

the 1115 standards would be appropriate for BHP. 

 Response: Section 1115 transparency requirements are specified in statute in detail. 

Moreover, section 1115 demonstration authority is used when states are requesting permission to 

depart from otherwise applicable federal law but nevertheless achieving the objectives of federal 

law, and public input is essential to informing the federal decision whether to approve the 

demonstration request. In that circumstance, it is particularly important to have a full 

opportunity for public comment to determine if there would be any unforeseen or adverse 

impact. In contrast, there is no statutory public input requirement for the development of a BHP. 

Moreover, when developing a BHP Blueprint, the need and purpose for public comment is 

different. A state is not departing from federal law but rather engaging the public in the state’s 

political process to assist in choices the state is making in establishing or modifying a program 

within a set of options. The opportunity for public input will help to ensure that the state has 

fully considered whether its BHP approach will meet all statutory requirements and has given 

due consideration to the required factors in its processes to contract with standard health plans. 

Interested parties typically are already involved in those processes, and do not need formal 

notice and comment periods to provide input to states on these choices. It may be appropriate 

for states to adjust public input processes to reflect these circumstances. For these reasons, we 
CMS-2380-F 14 

are not accepting the commenters’ recommendation to provide a rigid structure for the public 

input process for a BHP Blueprint and Blueprint amendments. 

 Comment: We received several comments recommending that HHS strengthen the 

definition of “significant revisions” in §600.115(c)(1) beyond the proposed reference to those 

that alter “core program operations required by §600.145(e).” 

 Response: We thank the commenters for their recommendation and we are modifying 

the regulatory text to reflect this definition change and clarify when an amendment to a BHP 

Blueprint is necessary. 

 Comment: Several commenters expressed concern that the timeline for BHP Blueprint 

submission and certification should be constructed to give sufficient notice to Qualified Health 

Plans (QHP) prior to the submission of Exchange premiums, QHP applications and the annual 

contract review process. 

 Response: We appreciate that there are many timing decisions to make with regard to 

the submission and certification of a BHP Blueprint that will impact, and be impacted, by many 

variables in any given state. States must synchronize legislative and funding authority with 

contracting timelines and federal approval. Given the legislative and contracting calendar 

differences between states, we do not believe it would be appropriate to mandate a specific 

timetable, or calendar for the public notice process. However, we expect states to take the QHP 

issuer bidding timeframe into account and to work with issuers to avoid unnecessary disruption 

and uncertainty in the individual market, particularly as issuers look to set rates for the next year. 

 With these considerations in mind, we are finalizing the provisions in this section as 

proposed except that in §600.115(c)(1). We are adding to the definition of “significant 

revisions” which will therefore, require an opportunity for public comment to “those that alter 
CMS-2380-F 15 

core program operations required by §600.145(f), as well as changes that alter the BHP benefit 

package, enrollment, disenrollment and verification policies.” 

3. Certification of a BHP Blueprint (§600.120) 

 In, §600.120(a), we proposed to establish the effective date of certification of the BHP 

Blueprint as the date of signature by the Secretary. 

 In §600.120(b), we proposed that the certification date is established as the first date for 

which any payments may be transmitted to the state for BHP operations. 

 Under §600.120(c), we proposed the period in which a certified Blueprint remains in 

effect. For specific discussions on this time period, refer to the September 25, 2013 proposed 

rule (78 FR 59143). 

 Under §600.120(d), we proposed Blueprint standards for certification. For specific 

discussions on the standards, refer to the September 25, 2013 proposed rule (78 FR 59143). 

 Comment: One commenter was concerned with our proposed Blueprint standard in 

§600.120(d)(3) specifying that the Blueprint be free of contingencies or reserved decisions on 

operational features. The commenter noted that, at times, contingencies are appropriate and 

contribute to operational success. 

 Response: We agree with the commenter regarding the need for contingencies and we 

will strive to develop a Blueprint template permissive of appropriate contingencies. We are 

deleting the word “contingencies” from paragraph (d). However, as the Blueprint will only 

collect information necessary for approval and oversight, we do not foresee being able to allow 

reserved decisions. 

 Comment: We received one comment requesting state flexibility in program 

development through 2016, particularly with respect to transitioning of populations. 
CMS-2380-F 16 

 Response: We have responded in other sections (§§600.110 and 600.145) regarding the 

need for flexibility around transitioning populations giving states with the shortest planning 

window, those that start in 2015, greater flexibility in planning for enrollment and service 

delivery needs. 

4. Revisions to a certified BHP Blueprint (§600.125) 

 In §600.125(a), we proposed that a state seeking to make changes to its BHP Blueprint 

must submit those changes, if altering core program operations, to the Secretary for review and 

certification. 

 In §600.125(b), we proposed that the state must continue to operate under the existing 

certification unless and until a revised Blueprint is certified. 

5. Withdrawal of a BHP Blueprint prior to implementation (§ 600.130) 

 In §600.130, we proposed a process for a state deciding to terminate a BHP before 

enrolling participants. For specific discussions, refer to the September 25, 2013 proposed rule 

(78 FR 59143). 

 Comment: We received several comments expressing concern regarding the broad state 

authority to terminate its BHP at any time. 

 Response: We appreciate the commenters’ concerns regarding this state authority; 

however, because BHP is an alternative health coverage program available at the state’s option, 

we do not believe we can prohibit a state from electing to terminate its program. 

 Comment: Several commenters suggested that states be required to provide advance 

notification to standard health plan offerors and QHPs when they voluntarily withdraw 

Blueprints, to enable these entities the opportunity to adjust their offerings. Other commenters 

recommended Blueprint submission timelines to be specifically aligned with Exchange 

timeframes to enable the most accurate pricing of products. 
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 Response: We agree that states should make decisions about BHP operations in a timely 

manner, to allow orderly transitions for beneficiaries and ensure proper coordination with the 

Exchange, including the ability of QHPs to price their products properly. However, the standard 

that the commenter is suggesting is very significant in that it would have to be lengthy notice in 

advance of the annual QHP pricing process. Given that BHP is a voluntary program, we do not 

believe we can force continued participation on the part of the state beyond that required for 

orderly shutdown. 

6. Notice and timing of HHS action on BHP Blueprint (§ 600.135) 

 In §600.135, we proposed that HHS respond to submissions in a timely manner and 

identify in writing impediments to certification if they exist. 

 Comment: We received comments recommending that Blueprints should be deemed 

certified and states should be able to proceed if they have not been acted upon within 60 days of 

state submission. Other commenters requested an expedited review process in the first year. A 

further request was that we institute a conditional approval and make retrospective payment 

available to states. We also received comments that we should have an administrative review 

process to resolve disputes over certification or potential decertification. 

 Response: We have carefully considered these comments and we are finalizing this 

section with the addition of a state option to request a reconsideration of an adverse certification 

decision. We believe this change, coupled with the addition of interim certification status 

discussed earlier and the requirement for HHS to respond timely to state submissions, will be 

sufficient to ensure responsiveness and opportunity for states to work effectively with HHS to 

secure necessary approvals to proceed with their programs. We have not included the request for 

a 60 day “clock” because we wish to allow for maximum flexibility in working with states to 

achieve certification of Blueprints for this new program. 
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7. State termination of a BHP (§600.140) 

 In §600.140, we proposed a process for states to terminate a BHP program with active 

enrollees. The state must submit written notice to the Secretary 120 days in advance along with 

a transition plan to assist enrollees switching to other coverage, submit written notice to 

participating standard health plan offerors and enrollees 90 days in advance, and transmit all 

information provided as part of an application to other state agencies administering insurance 

affordability programs. Additionally, the state must fulfill contractual obligations to standard 

health plans, fulfill data reporting to HHS, complete the annual financial reconciliation process, 

and refund the remaining balance in the BHP trust fund. 

 Comment: We received several comments requesting that the notification requirement 

for standard health plans be the same as it is for the Secretary (120 days). We also received a 

comment recommending that we require notification be sent to providers contracting with 

standard health plans. 

 Response: We are finalizing this section as proposed, because we believe there is value 

in a Secretarial review of the state’s transition plan before others are notified. We also anticipate 

that the state’s transition plan will include specifications about plan and provider notification. 

8. HHS withdrawal of certification and termination of a BHP (§600.142) 

 In §600.142, we proposed the process by which HHS would withdraw certification of a 

BHP Blueprint based on findings of non-compliance or significant beneficiary harm, financial 

malfeasance or fraud. This process is only invoked after notice to the state and a reasonable 

period (at least 120 days) for the state to address findings. 

 Comment: We received one comment requesting an appeal process for disagreement 

over findings of non-compliance or significant beneficiary harm, financial malfeasance or fraud. 
CMS-2380-F 19 

 Response: Similar to §600.135, we have decided to finalize this section as proposed 

with the addition of the right of the state to a reconsideration of the decision to withdraw 

certification if there is disagreement over findings that form the basis for that decision. 

9. State program administration and operation (§600.145) 

 In §600.145, we proposed that a state must operate a BHP according to the certified 

Blueprint and all applicable law and regulations. This section also contains our proposed core 

operational features of a BHP beginning in paragraph (b) through (d). For additional discussions 

on the core operational features of a BHP, refer to the September 25, 2013 proposed rule 

(78 FR 59144). 

 Comment: We received many comments on this section in support of the establishment 

of BHP without the limitations characteristic of more limited programs such as waivers or 

demonstrations. Similarly, we received a comment commending the Department for including 

nondiscrimination provisions assuring equal access to services through BHP. 

 Response: We appreciate the support for the content of this section. 

 Comment: Several commenters questioned the operational reality of being able to 

implement a program for every eligible individual on day-one of operations. 

 Response: We understand the concern raised by the commenters regarding day-one 

operations, particularly in 2015, the first operational year, for which states have a limited amount 

of time to coordinate with their Exchange and Medicaid programs. To address this comment, we 

are adding paragraph (e) providing states implementing in 2015 the option to identify a transition 

period during initial implementation. These states will be required to submit a transition plan as 

part of their Blueprint describing their proposed alternative enrollment strategies. 

10. Enrollment assistance and information requirements (§600.150) 
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In §600.150, we proposed that states make information available to potential applicants 

and enrollees about the BHP coverage option, including benefits and coverage, in a manner that 

is consistent with the requirements of the Exchange. Additionally, states must require standard 

health plans to provide information on premiums and covered services, including any limitations, 

cost-sharing, as well as other information conforming to the requirements of the Exchange. 

Finally, states must require participating standard health plans to provide current and complete 

information on the names and locations of participating providers. 

 Comment: One commenter suggested a requirement that we have application materials 

designed with individuals who have limited English proficiency in mind and that we should 

encourage marketing to younger individuals. Other commenters want states to be required to 

conduct outreach highlighting BHP availability to non-citizens or for individuals with limited 

English proficiency. Several of these commenters request applying Medicaid managed care 

requirements (42 CFR 438.10(c)) around enrollees with limited English proficiency to BHP. 

 Response: We agree with the commenters’ request for application materials that serve 

individuals with limited English proficiency. We further clarify that states must satisfy rules 

concerning accessibility requirements for persons with disabilities. We also agree that Medicaid 

standards are appropriate to address these populations and have applied them in §600.310. 

 Comment: Other commenters supported the requirement to make provider lists available 

to enrollees. One commenter specifically requested the inclusion of facility providers such as 

clinics and health centers, another commenter wants the requirement to be strengthened by 

including a quarterly update standard because of churn between QHPs and Standard Health 

Plans. 

 Response: We also agree that information requirements are only valuable if kept current 

so we have added “at least quarterly” to the requirement in paragraph (a)(5) that states must 
CMS-2380-F 21 

require participating plans to publicize and keep current their participating providers. Because 

this requirement is not limited to any classes or types of providers, we believe it is inclusive as 

written for all providers. 

11. Tribal consultation (§600.155) 

 In §600.155, we proposed that states are required to consult with Indian tribes located in 

the state on the development and execution of the BHP Blueprint using the state or federal tribal 

consultation policy approved by the state or federal Exchange as applicable. 

 Comment: We received a comment recommending the removal of the word “federal” 

from the requirement to follow the approved state or federal tribal consultation policy. Also the 

commenter urges CMS to use the Washington State Exchange tribal consultation policy as the 

model. 

 Response: We agree that it is not necessary to identify in this rule whether the state 

exchange was established by the state or federal government, or whether the tribal consultation 

policy was based on a state or federal policy. It is only necessary to make clear that the BHP 

should comply with the state Exchange’s tribal consultation policy. Therefore we will remove 

“State or Federal” as descriptors of the tribal consultation policy. We appreciate the reference to 

Washington State’s Exchange tribal consultation policy but because each state has a different 

tribal makeup and relationship, it is important to maintain state flexibility in determining an 

appropriate consultation policy. Thus, we are not specifying adoption of any specific state’s 

policy. 

12. Protections for American Indians and Alaska Natives (§600.160) 

 In §600.160, we proposed specific protections for American Indians and Alaska Natives. 

Specifically, we required the extension of the special enrollment status applicable in the 

Exchange, we require states to permit Indian tribes and tribal organizations to pay premiums on 
CMS-2380-F 22 

behalf of BHP enrolled individuals, cost-sharing is prohibited, and we require standard health 

plans to pay primary to health programs operated by the Indian Health Service or tribal 

organizations for services covered under the standard health plan. Because we realized that the 

proposed policy with respect to premium payment should not be limited to tribes, tribal 

organizations and urban Indian organizations, we are broadening that requirement and moving it 

into §600.520 as discussed below. 

 Comment: We received a comment requesting that we further protect Indian health 

providers operating within standard health plans by prohibiting the offerors from reducing the 

payments to providers by the amount of any cost-sharing that would be due from Indians but for 

the prohibition on cost-sharing. This prohibition is equivalent to that extended to Indian health 

providers providing services to Indians enrolled in a QHP in the individual market through an 

Exchange at 45 CFR 156.430(g). 

 Response: We agree with the commenter that, if the cost of protecting Indians from cost 

sharing was placed on providers, it would have the result of reducing access to care and would 

frustrate the purpose of the cost sharing protection. Therefore, we have added this protection as 

paragraph (c). 

13. Nondiscrimination standards (§600.165) 

 We proposed, in §600.165 that the state and standard health plans must comply with all 

applicable civil rights statutes which are delineated in the proposed rule (78 FR 59145) as well 

as the non-discrimination provision applicable to the Exchange. 

 Comment: One commenter specifically appreciated that the standards in this section 

clarify that BHP falls under protections of both Affordable Care Act and the Civil Rights Act 

bolstering the ability of the HHS Office for Civil Rights and individuals to hold states and 

contractors accountable. 
CMS-2380-F 23 

 Response: We are finalizing the language as proposed without change. 

14. Annual report content and timing (§600.170) 

 In §600.170, we proposed specific requirements for the content and timing of the BHP 

annual report. The report must include content establishing compliance with statutory 

requirements including eligibility verification, limitations on the use of federal funds, and quality 

and performance measures from participating standard health plans. Additionally, states are 

required to submit any evidence of fraud, waste, or abuse known to the state and any follow up 

that had been specified in findings from a federal review or audit. 

 Comment: Several commenters made specific reference to the requirement to report 

quality and performance measures and requested the ability to align with reporting for other 

insurance affordability programs. A commenter further recommended the use of NCQA, HEDIS 

and CAHPs standards. Two commenters made specific suggestions for measures or offered 

assistance in the development of measures that would be appropriate for this purpose. Several 

commenters offered that 2 full years of data should be available before quality measures are 

collected. A commenter requested that we limit the use of measures based on patient surveys. 

 Response: We agree that this standard warrants attention and that the Department 

should take into account the desirability of aligning measures across insurance affordability 

programs. As indicated in the preamble of the proposed rule, we intend to issue future 

subregulatory guidance on the quality and performance standards taking into account these 

comments. 

 Comment: Several commenters questioned the timing of the annual report, pointing out 

that the data available to the state 60 days before the end of the operational year would be limited 

and perhaps of poor quality. 
CMS-2380-F 24 

 Response: We agree that the timing of the annual report as proposed will prove 

problematic for states in that it will not enable the submission of complete data. In response to 

this concern, we are changing the timing to 60 days following the end of the operational year. 

With this change, we are reserving the right to request information in advance specifically 

needed to substantiate the release of funds. Otherwise, the section is being finalized as proposed. 

C. Federal Program Administration 

1. Federal program reviews and audits (§600.200) 

In §600.200(a), we proposed that HHS review each state BHP as needed, but no less 

frequently than annually, to determine state compliance with federal requirements and provisions 

of its BHP Blueprint. For additional discussions on specific reports and other documentation, 

refer to the September 25, 2013 proposed rule (78 FR 59126). We did not receive specific 

comments on this section and are finalizing the provision as proposed. 

In §600.200(b), we proposed the types of action items that may result from such review. 

For specific discussions on the action items, see the September 25, 2013 proposed rule (78 FR 

59126). We received specific comments on this section which are discussed below. 

In §600.200(c), we proposed the HHS Office of Inspector General (OIG) may 

periodically audit state operations and standard health plan practices. For specific discussions on 

the periodically conducted OIG audit, see the September 25, 2013 proposed rule (78 FR 59126). 

We did not receive specific comments on this section and are finalizing the provision as 

proposed. 

We received the following comments as they relate to federal program reviews and 

audits: 
CMS-2380-F 25 

Comment: One commenter recommended that the section title be renamed to “Federal 

program compliance reviews and audits." In addition, the commenter noted that §600.200(b)(3) 

may be missing an "and." 

Response: We appreciate the commenter’s recommended changes, which reflect the 

underlying intent of the provision. The final rule has been revised to include these changes. 

 Comment: One commenter expressed concern regarding the provision that permits HHS 

to withhold approval of Blueprint revisions in the event that the state has not resolved action 

items in which the state appears to be out of compliance. Specifically, the commenter expressed 

that withholding approval of Blueprint revisions that otherwise comply with federal 

requirements is inappropriate and potentially arbitrary given that the action to deny or 

disapprove a Blueprint revision should be directly related to the subject matter of that revision; 

therefore, the commenter recommended that we should delete paragraph (b)(3) under this 

section. 

Response: We believe that maintaining this provision in the final rule is appropriate as it 

provides a compliance remedy that permits the state the opportunity and necessary time to 

resolve compliance issues while maintaining its BHP certification. Removing this provision 

would result in having only one compliance remedy – the withdrawal of a state’s BHP 

certification – in the event that identified action items were not immediately resolved. We 

believe that this alternative is not in the best interest of the state, or in the best interest of the 

BHP enrollees, as it would result in program termination as well as coverage disruptions for 

BHP enrollees. 

Comment: We received a request to define the standard of review, especially as it relates 

to the use of BHP trust funds. 
CMS-2380-F 26 

Response: The standard of review for federal program reviews and audits is defined in 

§600.200(a). Specifically, this standard of review includes all applicable laws, regulation, and 

interpretive guidance as it relates to federal BHP requirements as well as the provisions of the 

state’s certified BHP Blueprint. The standard of review with respect to the use of BHP trust 

funds includes all applicable laws, regulation, and interpretive guidance as it relates to BHP 

trust funds, with a focus on the requirements specified in §600.705. We have modified the 

language in §600.200(b)(4) to clarify this standard. 

D. Eligibility and Enrollment

The proposed content of Subpart D includes all eligibility and application, screening and 

enrollment standards and procedures.

1. Basis, scope and applicability (§600.300) 

In proposed §600.300 we provided the citation for the statutory basis for subpart D of this 

rule as section 1331(e) of the Affordable Care Act, which sets forth eligibility standards for the 

BHP and prohibits eligible individuals from being treated as qualified individuals for purposes of 

enrolling in QHPs through the Exchange. We did not receive specific comments on proposed 

§600.300 and are finalizing the provision as proposed. 

2. Eligible individuals (§600.305) 

In §600.305(a), we proposed that an individual is eligible for BHP if the individual: 

● Resides in the state offering the BHP, and is not eligible for coverage under the state’s 

Medicaid program that includes at least the essential health benefits (EHB) described in 45 CFR 

Part 156; 

● Has household income that exceeds 133 percent of the federal poverty level (FPL) and 

does not exceed 200 percent of the FPL for the applicable family size, or for a lawfully present 
CMS-2380-F 27 

non-citizen ineligible for Medicaid due to citizenship status, with household income not 

exceeding 200 percent of the FPL; and 

● Is not eligible to enroll in minimum essential coverage (MEC), including Medicaid 

coverage that covers the EHBs described above (individuals enrolled in Medicaid or CHIP that 

does not constitute MEC, or individuals eligible only for unaffordable employer sponsored 

insurance as determined under section 5000A(e)(1) of the Internal Revenue Code would meet 

this criterion); 

● Is under age 65; 

● Is a citizen, or lawfully present non-citizen; and 

● Is not incarcerated (other than during a period pending disposition of charges). 

In §600.305(b), we proposed that a state may not impose limitations on eligibility 

through the imposition of waiting lists, caps on enrollment, restrictions based on geographic area 

or any other conditions. 

We are finalizing the provisions of this section as proposed but have made some changes 

in response to the comments described below. In addition, we have made several revisions for 

clarity. 

In §600.305(a)(1) we have modified the standard to read “are residents of the state.” In 

§600.305(a)(2), we changed the term “non-citizen” to “immigration” status clarifying that it is 

immigration status that is a determinant for eligibility. Additionally we clarified that this same 

immigration status may apply to CHIP as well as Medicaid. In the proposed §600.305(a)(1), the 

standard also referenced not being eligible for Medicaid consisting of at least the EHBs. 

Because this requirement is entirely subsumed under §600.305(a)(3) requiring ineligibility for 

MEC, we have deleted it from this section; this does not change the meaning of the regulations 

but rather makes the regulation more clear. Additionally, in §600.305(a)(3) we have removed 
CMS-2380-F 28 

the word “affordable” to more closely reflect the underlying statutory language that connects 

affordability to employer sponsored insurance. In addition, we have also deleted the reference to 

CHIP in §600.305(a)(3)(i), and have limited the reference to “such other programs” only to 

Medicaid, because the Department of Treasury’s final rule on MEC (78 FR 53646) now clarifies 

that all CHIP coverage is MEC (in contrast to Medicaid, which for some individuals may be 

limited and therefore not MEC). 

Comment: We received many comments supporting the proposed eligibility standards 

for BHP, including the provision permitting individuals in limited-benefit Medicaid programs to 

remain in such programs while also being determined eligible for BHP. Commenters expressed 

the importance of this provision as it relates to family planning, pregnancy related services, and 

HIV treatments. 

Response: We are finalizing the proposed provisions. 

Comment: We received one comment requesting that HHS provide an exception to the 

eligibility standards in states that do not expand Medicaid coverage citing the gap in coverage in 

those states that do not cover low income adults under 133 percent of the FPL. 

Response: We share the commenter’s concern regarding the gap in coverage in states 

that have not elected to expand Medicaid to cover low income adults under 133 percent FPL; 

however, we have no authority to provide an exception as requested by the commenter given that 

the statute specifies the household income standard in BHP (that is, individuals with household 

income that exceeds 133 percent of the FPL and does not exceed 200 percent of the FPL). 

Comment: Several commenters requested clarification that legally married same-sex 

couples will be recognized as married for purposes of BHP eligibility, in line with the 

Department’s policy in the Exchanges. 

Response: Marriage recognition is not a policy subject to federal regulation under either 
CMS-2380-F 29 

the Exchange or Medicaid, but it is necessary for the determination of household composition, 

which is a key element of calculating household income using the modified adjusted gross 

income (MAGI) methodology. Under section 1331(h) of the Affordable Care Act, BHP terms 

such as income, including the element of household composition, are required to have the same 

meaning as such terms have under section 36B of the Internal Revenue Code. Pursuant to 

September 2013 guidance on this issue from the IRS in Revenue Ruling 2013-17, a marriage of 

same-sex individuals validly entered into is recognized for purposes of the Internal Revenue 

Code even if the state in which the individuals are domiciled does not recognize the validity of 

same sex marriages. Because BHP is required to use the same definitions as are applicable under 

the Internal Revenue Code and because it would promote consistency across federal programs, 

we agree that this same policy is applicable to BHP. We intend to address this issue in 

subregulatory interpretive guidance similar to the guidance issued under the Exchange and 

Medicaid on BHP implications of United States v. Windsor, 570 U. S. ____ (2013). Using 

interpretive guidance will allow a more specific and nuanced consideration of the issues raised. 

Comment: Several commenters requested flexibility in BHP to provide coverage for 

spouses affected by the affordability test for employer based insurance. Some spouses are not 

eligible for a premium tax credit because they would be considered eligible for affordable 

employer based insurance. Some commenters suggested that CMS provide a state option to 

cover such spouses but not to require such coverage, so as not to force states to cover individuals 

for whom there would be no federal reimbursement. The commenters urged CMS to revise the 

regulation to permit states the option for such spouses to enroll in BHP and for states to have as 

much flexibility in funding as possible. 

Response: To explain the changes made to the regulation in response to these 

comments, it is necessary to point out that there is a statutory error in section 1331 of the 
CMS-2380-F 30 

Affordable Care Act, which as part of the eligibility standards, sets the BHP standard of 

affordability of employer sponsored insurance by referencing section 5000A(e)(2) of the Internal 

Revenue Code. Section 5000A(e)(2) is not an affordability test. Compounding the error, we 

cited the affordability test in the proposed rule as section 5000A(e)(1) which is not the statutory 

reference, but is an affordability test. Resolving this double error, we are clarifying that the 

affordability test that should have been cited in BHP is to the premium tax credit standard at 

section 36B(c)(2)(C) of the Code. As the commenters correctly point out, including the 

affordability test at 5000A(e)(1) creates a difference in eligibility between BHP and the PTC 

which does not seem to be supported by other sections of the statute and amounts to an unfunded 

mandate. 

These comments refer to statutory provisions concerning eligibility for the premium tax 

credit. Under current IRS rules, spouses are not eligible for the premium tax credit if the 

worker’s offer of individual coverage requires a contribution less than a certain percentage of 

household income, because they would be considered eligible for affordable coverage. Since we 

are applying the same affordability test for BHP eligibility that applies for the premium tax 

credit, the same policies concerning spousal eligibility would apply. The statutory definition of 

an eligible individual for purposes of BHP expressly excludes individuals who are eligible for 

affordable coverage. 

Comment: We received a comment recommending that HHS revise language regarding 

standards for non-citizens’ BHP eligibility to be more clear about the applicable income 

standard. 

Response: We have clarified the BHP eligibility standards for lawfully-present noncitizens ineligible for Medicaid by specifying the full income range (that is, lawfully present 

non-citizens who have household incomes from 0 to 200 percent of the FPL). 
CMS-2380-F 31 

Comment: A few commenters supported, but wanted further clarity, regarding the 

provision in the proposed rule that a state must determine an individual eligible for BHP when 

they are enrolled in Medicaid or CHIP coverage that does not provide MEC. In particular, one 

commenter would like verification that pregnancy-related services provided through Medicaid, 

whether comprehensive or not, continue to be excluded under Department of Treasury rules 

regarding MEC and would not preclude eligibility for BHP. 

Response: The definition of MEC is outside the scope of this rule. Section 1331(e) of 

the Affordable Care Act sets out two standards that are relevant to determining if individuals 

with household incomes from 133 up through 200 percent of the FPL, who are eligible for 

Medicaid, can enroll in BHP. First, such an individual may not be eligible for Medicaid benefits 

that consist of EHBs (as described in section 1302(b) of the Affordable Care Act). In addition, 

to be eligible for BHP, individuals may not be eligible for MEC. MEC is defined in the Internal 

Revenue Code and implementing regulations. In general, Medicaid coverage is considered to be 

MEC and Medicaid coverage consisting of the EHBs would be MEC. A recent rule issued by 

the Department of Treasury (78 FR 53646), however, now provides that some limited-benefits 

categories of coverage under title XIX are not MEC. Additionally, HHS has miscellaneous 

MEC authority to determine Medicaid programs to be MEC on an individual basis. 

Comment: Another commenter wanted clarity that an individual may be eligible to enroll 

in a standard health plan through BHP if the individual has access to employer sponsored 

coverage that fails to meet the minimum value standards. 

Response: As noted above, the standard for eligibility for BHP is based on statutory 

language in section 1331(e)(1) of the Affordable Care Act, which specifies that only individuals 

ineligible for MEC or individuals eligible for an employer-sponsored plan that is not affordable 

coverage are eligible for BHP. Minimum value is not a standard authorized by the statute. 
CMS-2380-F 32 

Comment: We received two comments requesting greater flexibility in states that 

implement a BHP for individuals who wish to remain in QHPs. The commenters expressed 

interest in providing such individuals with the choice to enroll in BHP, or remain enrolled in the 

Exchange with their premium tax credit and cost-sharing reductions. 

Response: We appreciate the commenters’ interest in providing flexibility to individuals 

eligible for BHP who wish to continue to receive coverage through QHPs. Such individuals may 

continue to receive coverage through QHPs; however, the statute specifies that individuals 

eligible for BHP are not eligible to receive the premium tax credit or cost-sharing reductions. If 

an individual elects to remain enrolled in QHP coverage, and is determined to be eligible for the 

state’s BHP, no federal subsidies will be available to purchase the QHP coverage. 

Comment: One commenter expressed concern about Medicaid serving as a secondary 

payer to BHP, because the commenter believed Medicaid will likely be the better payer. The 

commenter recommended that HHS ensure that individuals have easy access to comparison 

information between Medicaid and BHP to help facilitate choice. 

Response: If a person has eligibility for both Medicaid that is not MEC and for BHP, the 

Medicaid statute at section 1902(a)(25) of the Social Security Act and implementing Medicaid 

regulations require that Medicaid pay secondary to BHP. The provider is required to bill BHP 

primary to Medicaid; the individual is not given choice about who is the primary payer. 

Comment: A commenter requested clarification on whether a state implementing a BHP 

between open enrollment periods in the Exchange can allow any QHP enrollees with the 

premium tax credit to be transitioned to the BHP at the next open enrollment with no impact on 

the enrollees’ advance payments of the premium tax credits (APTCs). 

Response: We are finalizing §600.305(b) as proposed except that we have added 

language to conform with a change made in subpart B of this rule permitting states implementing 
CMS-2380-F 33 

BHP in 2015 to seek approval for a transition plan enabling the state to propose alternative initial 

enrollment strategies for eligible individuals. This would address the commenters concern if the 

state implements BHP in 2015. After 2015, we are requiring alignment of BHP with open 

enrollment in the Exchange at §600.115(d). Following the 2015 initial implementation year, a 

state implementing a BHP must coordinate implementation with open enrollment of the state’s 

Exchange. 

3. Application (§600.310) 

In §600.310, we proposed that any state operating a BHP must use the single streamlined 

application or the state’s approved alternative. Additionally, we proposed that application 

assistance be made available to individuals applying for BHP equal to that which is available in 

Medicaid. We also proposed that if a state uses authorized representatives, it would follow the 

standards of either Medicaid or the Exchange. We noted in the preamble that call centers 

required by the Exchange at 45 CFR 155.205(a) are encouraged under those regulations to 

provide information on all insurance affordability programs including BHP. 

Comment: Several commenters requested that we require that application assistance be 

conducted in a manner accessible to those with limited English proficiency or individuals with 

disabilities. A commenter suggested requiring call center staff to refer consumers in real time to 

community resources if they are unable to answer questions about BHP. Another commenter 

wanted call centers to be required to provide information on BHP rather than encouraged to do 

so. 

Response: After consideration of the comments received, we are finalizing this section 

as proposed. We have required application assistance for BHP equal to that provided in the 

Medicaid program, which requires accommodation for individuals with limited English 

proficiency and for persons with disabilities. Additionally, the call center requirements set forth 
CMS-2380-F 34 

at 45 CFR 155.205(a) are outside of the scope of this rule-making; therefore, we cannot make the 

suggestions proposed by the commenters. While we are unable to include specific call center 

requirements in this final rule, we expect that, in accordance with §600.330, the state will enter 

into an agreement with the state Exchange to ensure coordination of BHP and Exchange 

application and enrollment mechanisms. Since call centers are part of those mechanisms, we 

expect that the agreement will require that coordination will include call center activities. We 

expect that call centers will support all insurance affordability programs, including BHP. 

4. Certified Application Counselors (§600.315) 

In §600.315, we proposed that if, a state chooses to use certified application counselors 

(CACs), the state must apply either the certification standards and processes of Medicaid or the 

Exchange. 

Comment: One commenter requested clarification on whether a state must use certified 

application counselors. 

Response: We are not mandating the use of certified application counselors. 

Comment: We received several comments requesting clarification on who can serve as 

certified application counselor. Specifically, commenters recommended that HHS permit health 

plans to serve as certified application counselors. The commenters noted that it would be 

desirable to have plans assist as “issuer customer service representatives.” 

Response: Certified application counselors are individuals who meet certain 

qualifications, not entities. To the extent that employees of health plans or any other entities 

meet the applicable qualifications, they would not be precluded from serving as CACs. These 

qualifications would be based on the certification standards of either Medicaid at 42 CFR 

435.908 or the Exchange at 45 CFR 155.225 (at state option). We note that employees of health 

plans acting as CACs would need to be able to maintain confidential records, and would need to 
CMS-2380-F 35 

ensure that they will not operate with a conflict of interest (for example, they could not receive 

bonuses based on how many new enrollees sign up for the employing health plan). 

Comment: We also received a comment that the certification process should include 

specific training components on how to provide accessible services to individuals with 

disabilities and culturally and linguistically appropriate services. Commenters suggested that 

training should include components on how to access and work with interpreters as well as how 

to access and use augmentative and assistive communication devices. The commenter 

recommended that application counselors have access to population level data to assist in 

determining the needs of the population being served. A commenter recommended the inclusion 

of language directing assistance in the form of pre-enrollment outreach and education. 

Response: We share the commenter’s interest in ensuring that certified application 

counselors have sufficient training to assist individuals seeking health insurance coverage; 

however, we believe that the content of such training is best determined at the state-level given 

the state-specific needs and unique market features within the state. We anticipate that states 

will use a variety of application assistance techniques relying heavily on the strength of current 

operations in each state. Such state training still must be in accordance with 45 CFR 155.225 

(accessibility requirements for persons with disabilities), or 42 CFR 435.908 (accessibility 

requirements for persons with disabilities and for individuals with limited English proficiency.) 

5. Determination of eligibility for and enrollment in a BHP (§600.320) 

In §600.320, we proposed that determining eligibility for BHP is a governmental function 

that must be done by a state or local governmental entity, including at state choice, an Exchange 

that is a government entity. Further, we proposed that the timeliness standards for making 

modified adjusted gross income (MAGI) based eligibility determinations under Medicaid apply 

equally to BHP. Regarding establishment of the effective date of eligibility, we proposed that 
CMS-2380-F 36 

states must establish a uniform method of determining the effective date for purposes of 

enrollment in standard health plans using either the Exchange standards or Medicaid rules. 

Likewise, we proposed that the state must offer either the enrollment and special enrollment 

periods of the Exchange or the state may choose to follow the continuous open enrollment 

standard of Medicaid. 

We received several comments on this section, which we have carefully considered and 

we offer a variety of modifications, as described below. 

Comment: One commenter offered endorsement of the policy of having eligibility 

determinations made by governmental agencies. With regard to enrollment, we also received 

general support for offering the choice between the enrollment policies of the Exchange or 

Medicaid; however, some commenters suggested we narrow the Medicaid option to be exclusive 

of §435.915(a), which establishes retroactive coverage. 

Response: In §600.320(c) we have removed applicability of §435.915(a) to eliminate 

retroactive coverage from the Medicaid enrollment policies that would be required if the state 

elects the Medicaid model; states can still provide retroactive eligibility in BHP following the 

Medicaid rules if they so choose but it is not required. 

Comment: A few commenters requested clarification on whether tax filing is required 

for enrollment. 

Response: Tax filing is not an eligibility standard for BHP; the eligibility standards for 

BHP eligible individuals are set forth in §600.305. This section’s focus is on the processes, not 

the standards, for determining eligibility and enrollment. These processes should be used to 

determine eligibility against the standards given in §600.305(a). In §600.305(b) we have made it 

clear that states may not add to the list of eligibility standards. Therefore, we have not altered 

the regulation text. 
CMS-2380-F 37 

Comment: A commenter suggested that we permit presumptive eligibility in BHP and 

that we permit hospitals to delegate authority to another entity, such as an eligibility service 

vendor. 

Response: There is no statutory provision that authorizes presumptive eligibility under 

BHP. As discussed above, states may elect to provide for retroactive effective dates for 

eligibility. This option may ensure that coverage is not delayed because of the eligibility and 

enrollment process. 

Comment: We received a comment advising us to state the goal of real-time eligibility 

determinations. 

Response: We agree with the commenters’ position that insurance affordability 

programs, including BHP, should be moving towards real-time eligibility determinations. 

Achieving this goal is dependent on the development and maintenance of effective systems and 

procedures, which may take a substantial investment and time. 

Comment: One commenter suggested that we not use the term “continuous eligibility”, 

which the commenter noted could be confused with other eligibility policies. The commenter 

encouraged us to describe enrollment as continuing on a rolling basis throughout the year. 

Response: In response to the comment we have added the phrase “continuous open 

enrollment throughout the year” to §600.320(d) to clarify the Medicaid choice of enrollment. 

Comment: Several commenters raised concern that the Exchange standard does not 

include a special enrollment period for pregnancy and asked that we specifically address that in 

BHP. 

Response: We have modified the text to clarify that states choosing the Exchange 

enrollment policy must establish enrollment periods no more restrictive than those permitted by 
CMS-2380-F 38 

the Exchange, enabling states to add special enrollment periods based on pregnancy as 

suggested. 

6. Coordination with other Insurance Affordability Programs (§600.330) 

In §600.330, we proposed carrying over several of the coordination provisions from the 

Exchange and Medicaid regulations to BHP, including having agreements delineating lines of 

authority for making coordinated eligibility determinations. We have proposed that individuals 

applying to any insurance affordability program not be required to duplicate information already 

provided for purposes of applying for BHP, and that the state accomplish this through 

electronically transferring accounts between the BHP and other agencies as well as accepting 

determinations and assessments made by other insurance affordability programs and enrolling 

eligible individuals into coverage without delay. When accounts are transferred to the BHP from 

other agencies, we proposed a requirement that the BHP agency must notify the referring agency 

of any final determination. Also, we proposed that every application for BHP will result in a 

final determination of eligibility or ineligibility and that notices to applicants be coordinated with 

other insurance affordability programs. 

Comment: We received many comments supporting coordination between IAPs, some of 

the comments particularly pointed out the importance of having agreements between IAPs. No 

comments requesting change were received on this section. 

Response: We are finalizing this section as proposed. 

7. Appeals (§600.335) 

Section 1331 of the Affordable Care Act does not confer a federal level appeal for the 

BHP program. Therefore, we proposed in §600.335 that states follow the Medicaid appeals rules 

and processes. Under these processes, there would be no direct appeal to the Department of 

Health and Human Services. Further, we proposed that eligibility determinations must include 
CMS-2380-F 39 

notice of the right to appeal and instructions for how to engage the appeals process. We 

proposed that this process must be conducted in a manner accessible to individuals with limited 

English proficiency and persons with disabilities. 

Comment: While we received a few comments commending the decision to use the 

Medicaid appeals process, we received several comments expressing concern about this section. 

Commenters favored the ability to choose the Marketplace (Exchange) appeals process to 

decrease variability within a given state. One commenter acknowledged that notices would have 

to specify that there is no federal level appeal for BHP. 

Response: We understand the commenters’ desire to have the Exchange appeals rules 

and processes available to BHP, decreasing variability in states with state-based Exchanges. 

(We note the Federally Facilitated Exchange will only have a federal process, and we do not 

anticipate that this federal process will be available for BHP.) Therefore, as in many other areas 

of the regulation, we are changing this provision to give states the choice of using the appeals 

rules of Medicaid or the Exchange. 

8. Periodic renewal of BHP eligibility (§600.340) 

In §600.340(a), we proposed a 12-month period of eligibility unless redetermination is 

warranted based on new information. Additionally, we proposed that states require individuals 

to report changes in circumstances at least equivalent to that which is required by the Exchange. 

In §600.340(b), we proposed that enrollees who remain eligible be given notice of a reasonable 

opportunity to change plans. Further, we proposed that enrollees will remain in the plans 

selected for the previous year if they choose not to take action on such notices and such plans 

remain available. In paragraphs (c) and (d), we proposed that states apply the redetermination 

procedures of either the Exchange or Medicaid and that states are required to verify information 

in accordance with §600.345. Finally, in §600.340(e) we require states to provide an enrollee 
CMS-2380-F 40 

with an annual notice of redetermination of eligibility which includes all current information 

used as the basis of the individual’s eligibility. The enrollee is required to report changes within 

30 days and the state must verify the information. 

Comment: Many comments were received on this section, with the vast majority urging 

us to allow 12 month continuous eligibility. Commenters frequently cited that half the 

individuals in the eligible income bracket for BHP are expected to experience changes in income 

within a 12 month period that would cause them to shift from BHP to Medicaid or the Exchange. 

Many commenters were concerned with the administrative burden this would place on a state. 

Response: We have carefully considered the comments received and we are sympathetic 

to the request for 12 month continuous eligibility because we share the concern of the 

commenters both with regard to the shifts between different insurance affordability programs 

that could be experienced by the BHP enrollees and the administrative burden on states. 

Therefore, we are extending to states the option of only redetermining eligibility every 12 

months, regardless of any changes in income or other circumstances, as long as the enrollee is 

under age 65, is not otherwise enrolled in MEC, and remains a resident of the state. We have 

singled out those exceptions because they are situations in which BHP coverage would either be 

duplicative or outside its overall scope. However, enrollees must report changes impacting 

eligibility within 30 days regardless. Additionally, to clarify the relationship between this new 

provision and the 12 month periodic review of eligibility (provision (a)) we have replaced the 

language that an individual is “determined eligible for a period of” with “subject to periodic 

review of eligibility every” 12 months in provision (a). States will not receive additional funding 

to account for any higher BHP enrollment under this state option. 

Comment: One comment requested clarification that enrollees must report all changes 

within 30 days. 
CMS-2380-F 41 

Response: The 30 day standard specified in 45 CFR 155.330(b) is applied by reference. 

9. Eligibility verification (§600.345) and Privacy and Security of Information (§600.350) 

In §600.345, we proposed that states verify the eligibility of an applicant or enrollee in 

BHP using either the standards and procedures of Medicaid or the Exchange. In §600.350 we 

proposed that states are required to comply with standards and procedures protecting the privacy 

and security of eligibility information set forth by the Exchange. We did not receive specific 

comments on these sections and are finalizing the provisions as proposed. 

E. Standard Health Plan

1. Basis, scope and applicability (§600.400) 

Proposed §600.400 under subpart E specified the general statutory authority for, and the 

scope of, standards proposed in this subpart, which sets forth the minimum coverage standards 

under BHP and delivery of such coverage, including the competitive contracting process 

required for the provision of standard health plans. For specific discussions, see the September 

25, 2013 proposed BHP rule (78 FR 59128 and 59129). We did not receive specific comments 

on this section and are finalizing the provision as proposed. 

2. Standard health plan coverage (§600.405) 

In §600.405(a), we proposed that standard health plan coverage must include, at a 

minimum, the EHBs as determined and specified under 45 CFR 156.110, and 45 CFR 156.122 

regarding prescription drugs. We also proposed that states be able to select more than one base 

benchmark option from the reference plans specified at 45 CFR 156.100 when establishing 

EHBs for standard health plans. Additionally, we proposed that states comply with 45 CFR 

156.122(a)(2) by requiring participating standard health plans to submit a list of covered 

prescription drugs under the plan to the state. 

In proposed §600.405(b), the state is required to adopt the determination of the Exchange 
CMS-2380-F 42 

at 45 CFR 155.170(a)(3) in determining which benefits subject to state insurance mandates 

enacted after December 31, 2011 are in addition to the EHBs. 

In proposed §600.405(c) and (d), we required EHBs to include changes made through 

periodic review and prohibited discrimination in benefit design. 

Proposed §600.405(e) is the prohibition on federal funding for abortion prescribed in 

section 1303 of the Affordable Care Act that applies in the same manner to BHP and standard 

health plans as it does to QHPs. 

Comment: We received several comments in support of requiring coverage for 

preventive services without cost-sharing. 

Response: We are finalizing the proposed provisions. 

Comment: We received several commenters requesting that states have the ability to use 

the alternative benefit plan in Medicaid as the reference or base-benchmark plan for BHP in 

order to incorporate EPSDT and other child specific benefits in the event that CHIP does not 

continue beyond 2019. Another group of commenters request that we require the state to use the 

same base-benchmark or reference plan that the state uses for either the Exchange or the 

Medicaid benchmark. 

Response: Sections 1331(a)(2)(B) and 1331(b)(2) of the Affordable Care Act provide 

that the benefits offered through BHP must contain at least EHBs, which is determined by a 

comparison to a base benchmark plan set forth at 45 CFR 156.100 using the processes set forth 

in 45 CFR 156.110 and 45 CFR 156.122. The statute does not require benefits equivalent to a 

Medicaid alternative benefit plan. That said, states have the ability to negotiate for additional 

benefits through the competitive procurement process required by section 1331(c)(1) of the 

Affordable Care Act and can also provide additional benefits for BHP enrollees in addition to the 
CMS-2380-F 43 

standard health plan benefits, using BHP trust funds. 

Comment: Other commenters recommend additional benefits outside of the EHBs in the 

standard health plan. They also expressed concern that requiring the state to offer at least the 

EHBs “at a minimum” is insufficient to mean the state, at its option, may provide additional 

benefits to the standard health plan. 

Response: We have carefully considered the comments for this section and we are 

finalizing without change. We believe that this regulation is explicit in establishing that states 

must provide EHBs as a minimum level of benefits, can negotiate with standard health plans in 

the competitive procurement process for more benefits, and can supplement those benefits with 

additional benefits for BHP enrollees, using BHP trust fund dollars. 

Comment: We received one comment requesting that HHS provide examples of 

additional benefits a state could provide. Another commenter requested clarification that a state 

must provide coverage of plasma protein therapies. 

Response: We hesitate to provide examples in this area where states are extended 

complete latitude because examples are often viewed as recommendations. For benefits 

coverage policy, we are requiring the statutory floor of the EHBs, and each state is free to add to 

the benefits as the state decides is appropriate. We are leaving this provision unchanged. 

Comment: Several commenters expressed concern that the preamble language 

concerning the abortion services standard appeared to be misleading in that it may be read to 

mean that states out of compliance with this requirement would not receive any federal funding 

for BHP, rather than just federal funding for abortion. 

Response: The regulation text requires compliance with the rules on abortion coverage 

applicable to Exchanges at 45 CFR 156.280. The preamble explained that, consistent with that 

regulation, any abortion coverage for which public funding is prohibited could only be provided 
CMS-2380-F 44 

using segregated non-federal funding. If a state or standard health plan does not segregate 

funding for such abortion coverage, the state would be out of compliance with BHP 

requirements, and could lose program certification. Or the state could face disallowance of 

improperly spent funds. 

Comment: Another commenter requested the inclusion of additional guidance on 

substitution and supplementation of benefits. 

Response: Supplementation and substitution are policies that were developed for use by 

plans in the individual and group markets, and were adopted with some minor variations by 

Medicaid, for alternative benefit plans. In general, these policies are part of the determination of 

the scope of EHBs. Section 1302 of the Affordable Care Act sets forth 10 required EHBs, and 

then indicates that the full scope of EHBs should be based on the scope of benefits provided by a 

typical employer plan. To implement this requirement, under applicable regulations at 45 CFR 

156.100 et seq., states must select a base benchmark plan from among several options. While 

the state selects one base benchmark for individual and group plans, the state may select 

different and multiple base benchmarks for Medicaid. Supplementation allows a plan offeror to 

add to the base benchmark a required EHB that is missing, and substitution allows a plan offeror 

to substitute an actuarially equivalent essential health benefit into a reference plan. (In 

Medicaid, because the state acts as the plan offeror, it determines the supplementation and 

substitution procedures.) These flexibilities were created to make the definition of EHBs 

possible from existing commercial products. For BHP, we propose the same process to define 

EHBs, except that the state could select different and multiple base benchmarks for BHP. Any 

subregulatory guidance put forward by the Exchange will be made equally available under BHP. 

Comment: One commenter requested that HHS ensure payment for out-of-network 

providers for emergency services and the extension of protections in section 1932(b)(2) of the 
CMS-2380-F 45 

Act, the prudent laypersons standard for emergency care, to BHP. 

Response: With respect to the provider rates, we do not believe that statute provides the 

authority to establish rate-setting standards in BHP. States are free to contract with standard 

health plan offerors to provide coverage which may take many forms including networks, feefor-service or other models. States may impose additional requirements including mandatory 

benefits, rate structures, or delivery system limitations through law or contract. 

Regarding the prudent layperson standard for emergency services, EHBs are required by 

statute to be offered in BHP. Emergency services is an EHB, to which the prudent layperson 

standard is applied at 45 CFR 147.138(b)(4). Therefore, any base benchmark plan will 

necessarily include emergency services based on the prudent layperson standard. 

Comment: We received one comment expressing concern that the United States 

Phamacopeia (USP) classification system as specified in 45 CFR 156.122 is not designed to be 

used with plans requiring EHBs, and are inadequate in providing for women’s health care needs. 

Response: This issue is not within the scope of this regulation. 

3. Competitive contracting process (§600.410) 

Under §600.410(a), we propose that a state must assure in its BHP Blueprint that it meets 

the requirements of this section. 

We propose in §600.410(b) elements required in the competitive contracting process for 

the provision of standard health plans. For the specific elements, see the September 25, 2013 

proposed rule (78 FR 59147). 

In §600.410(c), we proposed an exception to the competitive contracting process for 

program year 2015. For specific requirements associated with this exception, see the September 

25, 2013 proposed rule (78 FR 59130). 
CMS-2380-F 46 

We proposed in §600.410(d) the specific negotiation criteria that the state must assure is 

included in its competitive contracting process. For the specific criteria, see the September 25, 

2013 proposed rule (78 FR 59147). 

In §600.410(e), we proposed additional considerations specified in statute that a state 

must include in its competitive contracting process for the provision of standard health plans. For 

specific discussions, see the September 25, 2013 proposed rule (78 FR 59147). We received the 

following comments on the competitive contracting process: 

Comment: We received several comments supporting the proposed competitive 

contracting process. 

Response: We are finalizing the competitive contracting process provisions with some 

modifications as discussed further below. 

 Comment: We received several comments requesting clarification on whether a state 

could use its Medicaid, or QHP, contracting process for BHP if that process was competitive in 

nature. Two commenters specifically asked whether Medicaid managed care organizations 

currently under contract could provide standard health plans to allow the alignment of BHP with 

existing benefits offered to Medicaid beneficiaries, or would the state need to begin a new 

procurement process for BHP. Another commenter requested that CMS waive the competitive 

contracting process if the state’s Medicaid or Exchange-based contracting process aligns with 

the BHP requirements. 

Response: With respect to how the state executes its procurements (that is, the manner in 

which the state solicits for bids and effectuates a contract award), a state may use an already 

established competitive contracting process, such as the Medicaid or QHP process, to enter into 

contracts with standard health plan offerors as long as the process provides for negotiation and 

consideration of each of the statutorily required factors for BHP procurement. This may require 
CMS-2380-F 47 

some adjustment to those established processes, since, for example, a Medicaid managed care 

procurement would not necessarily include negotiation or consideration of those required 

elements. Although the procurement process might have many standard elements, the state 

would have to adjust its solicitation of bids to reflect the differing requirements of each separate 

program, and contractors would likely need to adjust their offerings to meet the requirements of 

each separate program. In addition, the procurement process would have to ensure that there 

was no cross-subsidization between programs. Except for program year 2015, in which a state 

may request an exception to the competitive contracting process, the procurement process used 

to contract for the provision of standard health plans, whether it is a joint or standalone 

procurement, must include and comply with all of the statutorily required elements of 

competitive bidding for BHP standard health plans codified in §600.410. 

We understand the commenters’ interest in ensuring rapid and efficient implementation 

of BHP and, as a result, we have provided a state implementing BHP in program year 2015 with 

the option to request an exception to the competitive process. As specified in §600.410(c), the 

state must include a justification as to why it cannot meet this requirement and describe the 

process it will use to enter into contracts for the provision of standard health plans in 2015. This 

process can include, but is not limited to, amending existing Medicaid or Exchange-based 

contracts for the purpose of promoting coordination and efficiency in procurements. After the 

exception period has expired (that is, beginning for coverage effective in program year 2016), 

simply amending an existing contract to include BHP, after the competition process is complete, 

is not permissible. The statute requires the use of a competitive contracting process, and we do 

not believe we have the authority to exempt states from the process beyond the startup year for 

the program. 
CMS-2380-F 48 

Comment: Several commenters requested clarification regarding the procurement bidding 

process. Specifically, commenters asked if a state is required to open the bidding to all 

interested parties, or whether the state has the ability to impose criteria that limits the number of 

eligible bidders. Another commenter suggested that the bidding process ensure the participation 

of local health plans. 

Response: The statute specifies that a state must establish a competitive contracting 

process for the provision of standard health plans. In order to meet this statutory requirement, 

we proposed that a state may establish such a process under state procedures that are consistent 

with the standards set out in section 45 CFR 92.36(b) through (i). These standards provide states 

considerable flexibility in the solicitation and evaluation of bids as well as in the awarding of 

contracts; therefore, to the extent that the state’s solicitation complies with such standards as 

well as ensures that the qualified bidders can provide standard health plan coverage in all 

contexts, the state has the flexibility to determine the criteria for eligible standard health plan 

bidders, including the participation of local health plans. 

Comment: We received many comments encouraging HHS to ensure the participation of 

Administrative Service Organizations (ASOs) in the competitive contracting process. They felt 

that permitting ASO participation would enable more states to implement BHP as it would allow 

interested states to build off of their existing Medicaid programs thereby reducing the 

administrative burden associated with implementing a new program. 

Response: The statute requires states to contract for the provision of standard health 

plans under BHP. Neither the statute, nor our regulations, specifically prescribe or restrict the 

participation of certain kinds of entities as standard health plan offerors. Rather, standard health 

plan offerors must meet the requirements delineated out in §600.415(a). ASOs may participate 

in the competitive contracting process to the extent that they can meet the criteria of a standard 
CMS-2380-F 49 

health plan offeror in §600.415(a). ASOs (who traditionally only offer administrative support) 

may expand their capabilities and practices to meet those requirements, or partner with other 

entities who do so. 

Comment: While we received several comments supporting the competitive contracting 

process exception for program year 2015, many commenters recommended that HHS extend this 

exception through 2016, or alternatively, provide this exception to states during their first year of 

implementation even if that occurs after 2015. 

Response: We are finalizing the proposed provisions providing an exception only for 

2015. Given the short time period in which states have to establish a BHP in time for the 

January 1, 2015 effective date, we believe that the one year exception will not only help states 

quickly and efficiently implement BHP by leveraging existing contracts that may not have been 

procured consistent with the finalized regulation, but also promote coordination and continuity 

of care during the initial implementation of BHP in 2015. For states that elect to implement 

BHP after 2015, we believe that these states will have sufficient time between the issuance of 

these final rules and a post-2015 implementation to establish a competitive contracting process 

for the procurement of standard health plans. The statute requires such a process and we do not 

believe we have the authority to exempt states from the process beyond the startup year for the 

program. 

Comment: We received many comments recommending that we allow states to utilize a 

primary care case management (PCCM) delivery of care model under BHP. Many commenters 

expressed that the PCCM model not only meets the statutory requirement to use a process with 

as many attributes of managed care as possible, but that it would also encourage BHP 

implementation as it would allow interested states to build off of their existing Medicaid 

programs. 
CMS-2380-F 50 

Response: The statute requires states to contract for the provision of standard health 

plans under BHP. Neither the statute, nor our regulations, specifically prescribe or restrict the 

participation of certain kinds of entities as standard health offerors. Rather, standard health 

offerors must meet the requirements delineated in 600.415(a). Standard health plan offerors 

have the discretion to determine and utilize a delivery of care model, such as the PCCM model, 

of their choice. As such, standard health plan offerors electing to operate a PCCM delivery of 

care model may participate in the competitive contracting process to the extent that they can 

meet the criteria of a standard health plan offeror in §600.415(a). Entities that traditionally only 

provide some of the services delineated in section 600.410(c) and (d) may expand their 

capabilities and practices to meet those requirements, or partner with other entities who do so. 

While we appreciate commenters’ suggested language changes throughout §600.410 to include 

the use of PCCM, we are not including those suggested language changes into the final 

regulation. 

Comment: One commenter requested that CMS consider broadening the definition of 

what constitutes competitive contracting to permit fewer than two standard health plans to serve 

a local health care market. The commenter believes this would encourage the development of 

innovative models of care delivery that coordinates care throughout a locality, without a division 

between standard health plan offerors. Specifically, the commenter recommended that providing 

additional flexibility in competitive contracting would encourage states interested in establishing 

local community-based coordinated care models to pursue such models. 

Response: We have considered the commenter’s request, but we believe that, as 

proposed, the regulation already affords a state with considerable flexibility and opportunity for 

state innovation as it establishes its competitive contracting process. The standards set forth 

simply require the state to be consistent with those found in 45 CFR 92.36(b) which provide a 
CMS-2380-F 51 

basic framework to the required procurement process. We believe that standard health plan 

offerors also have considerable flexibility in developing innovative models of care delivery, and 

encourage states to promote innovations in delivery system and payment reforms during the 

contracting process. Given that innovations in care coordination, utilization of preventive care 

services and patient-centered health decision making are specified in statute, we hope that states 

will make such innovations a high-ranking criterion in the solicitation process. A state interested 

in pursuing innovations that extend beyond the parameters of BHP and into other insurance 

affordability programs has the option, beginning in 2017, to request a waiver for state innovation 

as specified in section 1332 of the Affordable Care Act. Finally, as described below, we are 

clarifying the provision of the proposed regulation which requires availability of at least two 

standard health plan offerors; we do not believe that this provision will limit innovation. We 

view the choice of standard health plan offerors as an essential enrollee protection that is 

consistent with the requirement in section 1331(c) (3) to provide multiple plans to the maximum 

extent feasible. 

Comment: We received many comments recommending that the final regulation 

strengthen the network adequacy requirements in the competitive contracting process. 

Specifically, many commenters suggested that the standard health plan offerors be required to 

demonstrate that their provider networks not only have a sufficient number of providers, 

especially specialty providers, but also have a sufficient geographic distribution such that 

enrollees in rural areas, for example, have sufficient access to providers. In addition, to 

strengthen the overall network adequacy requirements, many commenters also recommended 

that states ensure the standard health plan offerors include essential community providers; 

federally qualified health centers (FQHCs), pediatric primary care providers and other specialists 

in their networks. 
CMS-2380-F 52 

Response: We appreciate and share the commenters’ interest in ensuring that BHP 

enrollees have sufficient access to providers; therefore, we have revised the language in 

§600.410(e) (2) regarding access to providers. States will have some flexibility to determine the 

specific nature of the standards; however, we believe that at a minimum, the state should ensure 

that the standard health plan offerors maintain a network of providers that is sufficient in 

number, mix, and geographic distribution to meet the needs of the anticipated number of 

enrollees in the service area to the same extent that would be required under the standards 

applicable either to managed care providers in Medicaid under 42 CFR Part 438, Subpart D or to 

coverage offered through the Exchange under 45 CFR 156.230 and 156.235. With respect to 

requiring states to ensure that standard health plan offerors contract with certain provider types, 

the strengthened language requiring that states ensure that standard health plans comply with 

either Medicaid or Exchange access standards should address this issue. While these access 

standards do not require that plans contract with any particular essential community providers, 

they address the inclusion of essential community providers in provider networks to ensure 

access to care. As a result of these stronger network adequacy standards, we anticipate that 

standard health plan offerors will need to include other providers, such as I/T/Us, FQHCs, 

OB/GYNs, pediatric primary care providers and other specialists in their networks to ensure that 

there is a sufficient number, mix and geographic distribution of providers for BHP enrollees to 

access. Finally, we would also like to note that the consideration of access concerns for states 

that have Indian populations should include consideration of access to providers that serve such 

populations. 

Comment: Several commenters recommended that the final regulation require that as a 

condition of participating in BHP, a standard health plan offeror participate in either the state’s 

Medicaid program or in the state’s Exchange. Commenters offering this recommendation 
CMS-2380-F 53 

believe that participating in BHP, Medicaid and/or the Exchange would help mitigate any 

disruptions in care in the event that a BHP enrollee transitions from BHP into Medicaid or the 

Exchange as the individual could potentially stay with the same health plan during the transition 

out of BHP. 

Response: We share the commenters’ interest in having strategies in place between 

states and standard health plan offerors to promote continuity of care for BHP enrollees 

transitioning into, or out of, the program. States have the discretion to include standards and 

criteria in their competitive procurement process to further the goals of continuity of care that the 

commenters are expressing. We do not believe, however, that limiting competition to plan 

offerors who participate in other IAPs is the only method to assure continuity of care, and in fact, 

could prevent BHP enrollees from having access to a range of qualified standard health plan 

offerors and their networks of providers. The commenters’ concerns are addressed in part by the 

requirement specified in §600.425 that states must coordinate the continuity of care for enrollees 

across the insurance affordability programs, and describe in their Blueprints how they will do so. 

We anticipate that these descriptions will address how the state will ensure minimal disruptions 

in care for those who transition between insurance affordability programs. 

Comment: Many commenters expressed concern that the provisions regarding the 

negotiation of benefits, premiums and cost sharing in the proposed rule precluded a state from 

developing a standard benefit package, premium amount, and/or cost-sharing amount and 

including such a standard in its solicitation. One commenter asked if it was permissible for a 

state to establish a standard benefit package as well as standard premium and cost-sharing 

amounts and accept any willing providers that agree to meet such standards issued in the 

solicitation. Many commenters felt that the final regulation should clarify that such an approach 
CMS-2380-F 54 

(that is, establishing standard benefits, premiums and cost sharing) would satisfy the “negotiation 

of” requirement specified in statute. 

Response: While the statute specifies that there must be a negotiation of benefits, 

premiums and cost sharing during the competitive contracting process, nothing precludes a state 

from establishing standards that will serve as the starting point for negotiations with standard 

health plans offerors. Such negotiations around benefits, premiums, cost sharing and other 

required elements specified in statute may include, but are not limited to price, the provision of 

benefits in addition to those specified in the state’s solicitation, lower premium and cost-sharing 

amounts than those specified in the state’s solicitation, or any other aspects of the state’s 

program that were included in its solicitation. While the state may propose a “standard” set of 

benefits, premiums and cost sharing, the state, at a minimum, must permit some level of 

negotiation, such as on price, or on additional benefits for enrollees, with the standard health 

plan offeror. 

Comment: Many commenters requested that HHS include additional negotiation criteria 

in §600.410(d) and (e) that a state must include in its competitive contracting process. 

Recommendations included: (1) requiring states to consider similarities between BHP enrollees, 

Medicaid beneficiaries, and Exchange consumers; (2) requiring the inclusion of specific quality 

and performance measures; (3) specifying that standard health plan offerors provide 

documentation that they can bear risk and meet the state’s financial solvency requirements; (4) 

including the negotiation of provider reimbursement rates; and (5) require standard health plan 

offerors to provide proof that they meet all of the negotiation criteria and other considerations 

specified in §600.410(d) and (e) as well as all of the contract requirements specified in 

§600.415(b). 
CMS-2380-F 55 

Response: We appreciate the commenters’ recommendations; however, we believe that 

the statute specifies the minimum requirements that a state must assure are included in its 

competitive contracting and leaves considerable flexibility for states to include additional 

negotiation criteria. Therefore, the requirements specified in §600.410(d) and (e) are the 

minimum federal requirements that the state must assure are included in its competitive 

contracting process. A state can, at its option, include additional criteria, such as those 

recommended by the commenters, to establish sound negotiating standards and criteria to ensure 

the ability of offerors to provide standard health plans in such a manner that promotes affordable, 

high quality health care coverage to BHP enrollees. 

4. Contracting qualifications and requirements (§600.415)

We proposed in §600.415(a) the entities that a state may contract with for the 

administration and provision of standard health plans. For specific discussions, see the 

September 25, 2013 proposed rule (78 FR 59130). 

In §600.415(b), we proposed the general contract requirements that must be included in 

the state’s standard health plan contracts. For specific discussions on these requirements as well 

as the proposed “safe harbor” approach, see the September 25, 2013 proposed rule (78 FR 59130 

and 59131). 

We proposed in §600.415(c) that a state must include in its BHP Blueprint the standard 

set of contract requirements it will include in its standard health plan contracts. 

We received the following comments on contract qualifications requirements: 

Comment: We received several comments in support of the proposed “safe harbor” 

approach enabling states to select either Medicaid or Exchange contracting provisions for their 

standard health plan contracts. 

Response: We thank the commenters for their support and we are finalizing the 
CMS-2380-F 56 

provisions as proposed. 

Comment: We received several comments in support of our proposed rule permitting 

states to contract with non-licensed health maintenance organizations participating in Medicaid 

and/or CHIP. 

Response: We thank the commenters for their support and we are finalizing the 

provisions as proposed. 

Comment: Several commenters recommended that HHS apply a standard set of 

qualification standards, specifically the QHP certification and licensure standards, to standard 

health plan offerors. 

Response: We appreciate the commenters’ recommendations; however, we are not 

requiring such an approach, in part because it may undermine the state’s efforts to encourage 

Medicaid managed care organizations and other health insurance issuers to participate in BHP. 

This, in turn, could undermine state efforts to promote coordination between all the insurance 

affordability programs. As commenters rightly pointed out, there are different standards applied 

to Medicaid managed care organizations relative to the standards applied to QHPs (for example, 

licensure and accreditation standards). In order to ensure that a state has the ability to contract 

with health maintenance organizations that operate in Medicaid and the Exchange, we believe 

that it is appropriate to impose a minimum standard at the federal level and permit state 

flexibility in determining whether the application of additional qualification standards are 

appropriate and in the best interest of the state’s goals and objectives. 

Comment: We received several comments requesting that HHS consider including safety 

net health plans, as defined in section 9010(c)(2)(C) of the Affordable Care Act, in the list of 

eligible standard health plan offerors. 

Response: We appreciate the commenter’s concern, and have modified the language in 
CMS-2380-F 57 

§600.415(a) to clarify that states are not limited to contracting with the entities specified in this 

section for the provision of standard health plans. A state has the flexibility to establish the 

criteria included in its BHP solicitation, including specific qualifications of the standard health 

plan offeror. Assuming a safety net health plan, or another entity, meets both the federal 

requirements, as well as those specified in a state’s BHP solicitation, the state may enter into 

contracts with such entities for the provision of standard health plans. 

Comment: Several commenters requested that HHS require that a state include specific 

requirements in its standard health plan contracts. Specific recommendations include: (1) 

requiring that payment rates to standard health plan offerors are actuarially sound; (2) inclusion 

of specific providers; (3) specific provider reimbursements, such as the prospective payment 

system rate used for payment to FQHCs; (4) specific provider performance and quality 

measures; and (5) prohibition on the inclusion of “all-products” clauses in physician contracts. 

Response: We appreciate the commenters’ recommendations; however, we believe that 

federal standard health plan contract requirements should reflect the competitive contracting 

requirements specified in statute rather than specific requirements that are not specified in the 

statute. We believe this approach promotes maximum flexibility for states that may wish to 

pursue different contracting approaches in BHP, or to blend elements from Medicaid and the 

Exchange. We are finalizing the proposed provision at §600.415(b), which sets forth the 

minimum contract requirements that must be included in a state’s standard health plan contract. 

Because these are the minimum requirements and a state has the flexibility to include additional 

requirements based on its negotiation criteria, a state must assure and include in its BHP 

Blueprint the standard set of contract provisions that it intends to incorporate into its contracts. 

A state can, at its option, include additional contract requirements, such as those recommended 

by the commenters, to promote affordable, high quality health care coverage to BHP enrollees. 
CMS-2380-F 58 

Comment: We received several comments recommending that HHS apply the 85 percent 

medical loss ratio requirement to all standard health plan offerors, and not just those that qualify 

as health insurance issuers. 

Response: We appreciate the commenters’ recommendation; however, we are finalizing 

the proposed provisions. The statute specifies the application of the medical loss ratio (MLR) 

requirement only to standard health plan offerors that are also health insurance issuers. As 

discussed above, this standard is the minimum standard that a state must adhere to. A state has 

the discretion to apply this MLR requirement to all standard health plan offerors if it determines 

that such a requirement furthers the objectives and goals of its program. However, we do not 

believe we have the authority to require the application of this standard to entities beyond those 

described by statute. 

Comment: One commenter requested clarification about ongoing eligibility to offer a 

standard health plan in the event that a standard health plan offeror does not comply with the 

MLR requirement. The commenter also asked what standard, or calculation methodology, 

would be used in determining whether the standard health plan offeror met the MLR 

requirement. 

Response: A standard health plan offeror that is also a health insurance issuer would not 

qualify for a contract award if that offeror was not able to comply with the MLR requirement. 

The statute as specified in section 1331(b)(3) of the Affordable Care requires that standard health 

plan offerors that are also health insurance issuers comply with the 85 percent MLR requirement. 

As described above, to the extent that the standard health plan offeror is, for example, a 

Medicaid managed care organization or a network of providers, the offeror would not need to 

meet the 85 percent MLR requirement as a condition for contract award unless a state chose to 
CMS-2380-F 59 

impose that requirement. With respect to the MLR calculation, the same calculation used in the 

individual and small group market will be used in BHP. 

5. Enhanced availability of standard health plans (§600.420)

We proposed in §600.420(a) that a state must assure that at least two standard health 

plans are offered under BHP. 

In §600.420(b), we proposed standards for a state entering into a joint procurement, or 

regional compact, with another state for the provision of standard health plans. For specific 

discussions on the regional compact, see the September 25, 2013 proposed rule (78 FR 59131). 

We received the following comments on enhancing the availability of standard health 

plans: 

Comment: While we received several comments in support of ensuring choice of 

standard health plans, the majority of the comments we received on this provision requested that 

HHS clarify whether states must ensure the availability of at least two standard health plans, or 

the availability of at least two standard health plan offerors. 

 Response: After carefully considering this issue, we are adding clarifying language to 

require that states assure the availability of at least two standard health plan offerors. This 

standard is consistent with the Medicaid requirement set forth in 42 CFR 438.52(a), which 

requires states to give Medicaid managed care beneficiaries a choice of at least two “entities.” 

We believe that requiring a state to contract with at least two standard health plan offerors will 

afford BHP applicants and enrollees the opportunity to compare and select their health coverage 

in a manner comparable to selecting health coverage from different health insurance issuers in 

the Exchange. In addition, we believe that requiring at least two standard health plan offerors to 

participate in BHP will lead to more robust competition, which could lead to better offered 

standard health plans and lower costs. BHP enrollees will also have the assurance that standard 
CMS-2380-F 60 

health plan coverage will always be available in the event that the participation of one of the two 

standard health plan offerors in the program is affected (that is, if one of the two offerors stopped 

participating in BHP). 

 We believe that, in certain circumstances, the availability of two standard health plan 

offerors may not be feasible. For example, after completing its competitive contracting process, 

a state may only have one eligible standard health plan offeror qualified to award a standard 

health plan contract, or there may be an area within a state that only one standard health plan 

offeror provides coverage. As such, we have added an exception to the choice of standard health 

plan offerors in §600.420(a)(2). In its exception request, the state must include a justification as 

to why it cannot assure choice of standard health plan offeror as well as demonstrate that it has 

reviewed all its contract requirements and qualifications to determine whether they are required 

under the federal framework for BHP, determined whether additional negotiating flexibility 

would be consistent with the minimum statutory requirements and available BHP funding, and 

reviewed the information provided to bidders was sufficient to encourage participation in the 

BHP competitive contracting process. 

Comment: One commenter requested that states entering a regional compact ensure that 

certified registered nurse anesthetists (CRNAs) are used to their full scope of practice. 

Response: We appreciate the commenter’s interest in ensuring the issue of full scope of 

practice is addressed in regional compacts; however, we believe states entering into the regional 

compact have discretion in addressing this issue through the competitive contracting process. 

States entering into a regional compact must ensure that the standard health plans offered 

through the compact meet all of the required negotiation criteria set forth in §600.415(d) and (e), 

including ensuring the sufficient number, mix and geographic distribution of providers that is 

sufficient to ensure the proper provision of standard health plan coverage. 
CMS-2380-F 61 

6. Coordination with other insurance affordability programs (§600.425)

In §600.425, we proposed that a state must ensure the coordination of health care services 

to promote continuity of care between Medicaid, CHIP, Exchange and other state-administered 

health insurance programs. The state must include in its BHP Blueprint a description of how it 

will assure such coordination. We received the following comments on insurance affordability 

program coordination: 

Comment: We received several comments expressing support for the requirement that a 

state in its Blueprint describe how it will coordinate the provision of services to ensure 

continuity of care between insurance affordability programs. 

Response: We thank the commenters for their support and are finalizing the provisions 

as proposed. 

Comment: Several commenters recommended that states submit detailed coordination 

plans to ensure continuity of care as well as require states to specifically include “churn” 

mitigation strategies for pregnant women and children. 

Response: We appreciate the commenters’ concerns regarding the scope and level of 

detail of the coordination descriptions; however, we believe that the language as proposed 

sufficiently addresses and incorporates the commenters concern. These descriptions will be 

reviewed and considered during the certification approval process thereby permitting HHS to ask 

additional questions as needed to ensure the state has addressed this requirement and reflected it 

in its Blueprint. 

Comment: One commenter recommended that HHS include stronger continuity of care 

requirements under this section. 

Response: We share the commenter’s interest in ensuring continuity of care between the 

insurance affordability programs. We are not, however, revising the regulation because we 
CMS-2380-F 62 

believe that states have several strategies available to them to promote continuity of care and 

reduce disruptions in care. As such, we believe that the state should have the discretion to select 

the strategies that best fit within the confines of its program. Examples of how states can ensure 

coordination across the insurance affordability programs were included in the September 25, 

2013 proposed rule (78 FR 59131). 

F. Enrollee Financial Responsibilities

1. Basis, scope and applicability (§600.500)

Proposed §600.500 under subpart F specified the general statutory authority for and 

scope of standards proposed in this subpart, which sets forth the calculation and imposition of 

monthly premiums and cost sharing for BHP enrollees. For specific discussions, see the 

September 25, 2013 proposed rule (78 FR 59131 and 59132). We did not receive specific 

comments on this section and are finalizing the provision as proposed. 

2. Premiums (§600.505) 

In §600.505(a), we proposed that a state must assure that the monthly premiums imposed 

on BHP enrollees do not exceed what they would have been required to pay had he or she 

enrolled in the Exchange. The state must include this assurance along with several other 

premium requirements in its BHP Blueprint. For specific discussions on monthly BHP 

premiums, see the September 25, 2013 proposed rule (78 FR 59132). 

We received the following comment on BHP monthly premiums: 

Comment: Several commenters recommended that HHS ensure that the American Indian 

and Alaska Native (AI/AN) population is not at a disadvantage with respect to premiums. In the 

Exchange, this population receives 100 percent of the cost-sharing reduction subsidy regardless 

of the metal level of the QHP that the individual enrolls in. Consequently, many commenters 

believe that premiums, and not cost sharing, will be the primary factor when selecting QHP 
CMS-2380-F 63 

coverage, which may result in many individuals in this population selecting bronze-level QHP 

coverage as these QHPs will have the lowest premiums. As such, commenters recommended 

that HHS require that states set premium levels for this population in BHP such that they do not 

exceed the lowest cost bronze plan premium in the state. If HHS is not able to afford this 

protection to the American Indian and Alaska Native population, many of the commenters 

requested that this population have the ability to opt out of BHP. 

Response: We appreciate and understand the commenters’ point regarding the premium 

levels for the American Indian and Alaska Native population. However, the statute does not 

support requiring the bronze plan premiums as a minimum standard nor does such a premium 

protection exist in the Exchange. We have, however, applied the Exchange’s cost-sharing 

protections afforded to this population to BHP. We would also note that states have the 

flexibility to use BHP trust funds (or state funds) to lower premiums for individuals eligible for 

BHP, and we encourage the commenters to work with their respective states on this issue. 

With respect to the commenter’s second recommendation that HHS permit this 

population to opt out of BHP, if individuals opt out of BHP, they would not be eligible to receive 

federal subsidies to purchase coverage in the Exchange. The statute specifies that individuals 

eligible for BHP are ineligible to receive the premium tax credit and cost-sharing reductions. As 

noted, states may lower premiums for BHP enrollees or decide not to charge premiums. 

3. Cost Sharing (§600.510) 

In §600.510(a), we proposed that a state must assure compliance with the cost-sharing 

standards specified in §600.520(c). The state must include this assurance, along with a 

description of several elements as they relate to cost sharing in BHP, in the state’s BHP 

Blueprint. For specific discussions on BHP cost sharing, see the September 25, 2013 proposed 

rule (78 FR 59132). 
CMS-2380-F 64 

We proposed in §600.510(b) that a state may not impose cost sharing on preventive 

health services or items as defined in 45 CFR 147.130. We received the following comments on 

cost sharing in BHP: 

Comment: We received comments in support of the identification of BHP enrollees 

subject to cost sharing. 

Response: We thank the commenters for their support, and are finalizing the provisions 

as proposed. 

Comment: We received several comments recommending that HHS establish BHP costsharing amounts for specific services. In particular, one commenter suggested that cost sharing 

for dental services should not exceed levels imposed in CHIP for children and pregnant women. 

Another commenter opposed higher cost-sharing amounts for non-emergency use of the 

emergency department. 

Response: We appreciate the commenters’ interest in BHP cost-sharing amounts; 

however, we do not believe it is advisable to mandate the cost-sharing amounts for specific 

services in BHP. But we note that these regulations apply to BHP the Exchange’s cost-sharing 

protections, including the prohibition of cost sharing for preventive health services, as specified 

in §§ 600.510(b) and 600.520. Furthermore, providing states with discretion subject to these 

protections when establishing the cost-sharing levels for particular services; may encourage 

competition and could ultimately lower costs for BHP enrollees. 

Comment: One commenter expressed concern that permitting standard health plans to 

include varying cost-sharing amounts for prescription drugs (that is, through the use of drug 

tiers) would negatively affect access to such drugs. 

Response: We appreciate the commenter’s concern regarding the variation in costsharing amounts for prescription drugs and the potential effect this may have on their 
CMS-2380-F 65 

availability; however, we believe that such variation in benefit design and cost sharing is 

consistent with the practices of QHPs offering coverage in the Exchange. Specifically, we 

believe that the Exchange’s benefit and cost-sharing standards, which we apply to BHP as 

specified in §600.405(a) and §600.520(c), afford BHP enrollees the same protections that they 

would have otherwise received in the Exchange. These protections serve as the minimum 

benefit and cost-sharing standards for states when establishing their program. In addition, states 

have the option to set additional limits on cost sharing not included in the final regulation. 

4. Public Schedule of Enrollee Premium and Cost Sharing (§600.515) 

We proposed in §600.515(a) that the state must ensure that applicants and BHP enrollees 

have access to information related to premiums and cost sharing under BHP. For specific 

discussions, see the September 25, 2013 proposed rule (78 FR 59132). We did not receive 

specific comments on this section and are finalizing the provision as proposed. 

5. General Cost-sharing Protections (§600.520) 

 In §600.520(a), we proposed that a state may vary premiums and cost sharing based on 

income only in a manner that does not favor enrollees with higher income over enrollees with 

lower income. We did not receive specific comments on this section and are finalizing the 

provision as proposed. 

We proposed in §600.520(b) that the state must ensure standard health plans meet the 

cost-sharing standards applicable to Indians in accordance with 45 CFR 156.420(b)(1) and (d). 

We did not receive specific comments on this section and are finalizing the provision as 

proposed. 

In §600.520(c), we proposed to apply the Exchange cost-sharing standards in BHP. For 

specific discussions, see the September 25, 2013 proposed rule (78 FR 59132 and 59133). 
CMS-2380-F 66 

We also proposed in 600.160(b) that states must permit payment of premiums for Indians 

by Indian tribes, tribal organizations and urban Indian organizations. In our further 

consideration of that provision, we determined that this protection should be more broadly 

extended to all premiums and cost-sharing for all beneficiaries of state and federal programs. 

This will ensure coordination of benefits between these programs and BHP. As such, this 

protection is more logically located in the regulatory section governing general cost-sharing 

protections. Thus, in this final rule, we are including in 600.520(d) that states must permit 

payment of premiums and cost sharing by such programs for individuals by Indian tribes, tribal 

organizations, urban Indian organizations, Ryan White HIV/AIDS programs under title XXVI of 

the Public Health Service Act and other federal and state programs. 

We received the following comments related to cost-sharing protections: 

Comment: While we received many comments supporting our proposed provision to 

apply the Exchange’s cost-sharing standards (which establish the maximum annual limitation on 

cost sharing, among other provisions) to BHP, we also received several comments expressing 

concern that the Exchange standards would result in high BHP cost-sharing amounts making 

BHP unaffordable to its enrollees. 

Response: We thank the commenters that submitted comments in support of the 

proposed cost-sharing standards, and are finalizing the proposed provisions. With respect to the 

other commenters’ concern that BHP cost-sharing amounts will be high, we believe that the 

application of the Exchange’s cost-sharing standards, as specified in §600.520(c), to BHP will 

help prevent such an occurrence. These standards afford BHP enrollees the same cost-sharing 

protections that they would have otherwise received had they enrolled in QHP coverage in the 

Exchange. Furthermore, while these protections set the minimum standards for permissible costsharing amounts, states have the discretion to include additional standards when contracting with 
CMS-2380-F 67 

standard health plan offerors and the negotiation process with standard health plan offerors may 

further reduce cost-sharing amounts for BHP enrollees. 

Comment: We received one comment expressing opposition to the application of the 

Exchange’s cost-sharing standards as the commenter felt that this should be left to the discretion 

of the state. Approval of the state’s approach to its BHP design is already subject to Secretarial 

approval, and as such, the commenter believes that HHS does not need to impose minimum 

requirements 

Response: We appreciate the commenter’s concern; however, statute requires that, at a 

minimum, the same protections individuals would have otherwise received had they enrolled in a 

QHP in the Exchange apply to BHP. 

Comment: Several commenters recommended that BHP enrollees should not be required 

to pre-pay the full amount of cost sharing, including the value of the cost-sharing reduction 

subsidy, and seek reimbursement for the subsidy at a later date. Commenters suggested that this 

process be “invisible” to the enrollee. 

Response: The standard health plan offered to BHP enrollees will account for the value 

of the cost-sharing subsidy, which will be represented by the actuarial value of the standard 

health plan. Specifically, standard health plans offered to individuals with household income 

below 150 percent of the FPL must have an actuarial value of 94 percent, which, consistent with 

the Exchange’s standard, is subject to a de minimis standard of 1 percent. For BHP enrollees 

with income above 150 percent of the FPL, the actuarial value must be 87 percent which, 

consistent with the Exchange’s standard, is subject to a de minimis standard of 1 percent. In this 

manner, the application of the cost-sharing reduction subsidy will be “invisible” to the BHP 

enrollee as it will be accounted for in the design of the standard health plan that is offered to 

them. Any cost-sharing amounts that the enrollees would be required to pay would already 
CMS-2380-F 68 

include the consideration of the subsidy and any further negotiation between the state and the 

standard health plan offeror. 

6. Disenrollment Procedures and Consequences for Nonpayment of Premiums (§600.525) 

In §600.525(a), we proposed the disenrollment procedures for nonpayment of premiums. 

For specific discussions, see the September 25, 2013 proposed rule (78 FR 59133). 

In §600.525(b), we proposed the consequences of nonpayment of premiums and 

reenrollment into BHP. For specific discussions, see the September 25, 2013 proposed rule (78 

FR 59133). 

We received the following comments on the disenrollment procedures and consequences 

for nonpayment of premiums: 

Comment: Several commenters expressed concern that providers will incur 

uncompensated care costs during the second and third months of the 3-month grace period as 

standard health plan offerors are not required to pay claims for services rendered during the last 

two months of the grace period. 

Response: We understand that pended claims increase uncertainty for providers and can 

potentially increase the amount of uncompensated care, and we share the concerns of the 

commenters regarding claims incurred during the grace period that are not ultimately paid. In 

accordance with 45 CFR §156.270(d)(3), standard health plan offerors must notify providers of 

the possibility for denied claims for services incurred during months two and three of the grace 

period for enrollees who owe past due premiums. Similar to our expectation with issuers 

operating in the Exchange, we expect that standard health plan offerors will provide this notice 

within the first month of the grace period and throughout months two and three. 
CMS-2380-F 69 

Comment: We received several comments expressing concern that individuals would be 

disenrolled from BHP who failed to pay a de minimis amount of their premium, and suggested 

that the final regulation protect individuals from being disenrolled in such an instance. 

Response: We do not believe that the statute provides authority for CMS to require this 

type of protection in BHP. As with many other programmatic designs, states have the discretion 

to establish disenrollment policies that further the goals and objectives of their programs which 

may include not terminating individuals for failure to pay de minimis amounts. 

Comment: Several commenters also offered an alternative to the 30-day premium grace 

period. Specifically, they recommended that HHS consider permitting a reinstatement period in 

which an individual is able to reinstate BHP coverage without a break in such coverage by 

paying the premium arrears by the 20th business day. 

Response: We appreciate the commenters’ alternative to the 30-day premium grace 

period; however, in keeping with our policy to adopt policies existing in other insurance 

affordability programs to ensure program consistencies, we are finalizing the proposed 

provision. As noted elsewhere, states have the discretion to establish additional standards that 

best fit the designs of their programs. 

Comment: We received one comment recommending that HHS only permit a 90-day 

premium grace period rather than give states the option to select the grace period that most 

closely aligns with their enrollment policies. 

Response: We believe that providing states with the option to select the grace period that 

most closely aligns with their enrollment policies ensures program consistency and can help 

consumers understand program rules. 

G. Payment to States

1. Basis, scope and applicability (§600.600)
CMS-2380-F 70 

Proposed §600.600 under subpart G specified the general statutory authority for and 

scope of standards proposed in this subpart, which sets forth provisions relating to the 

methodology used to calculate the federal BHP payment to a state in a given fiscal year and the 

process and procedures by which the Secretary establishes such amount for each state operating 

a BHP. For specific discussions, see the September 25, 2013 proposed BHP rule (78 FR 59133). 

We did not receive specific comments on this section and are finalizing the provision as 

proposed. 

2. BHP Payment Methodology (§600.605) 

We proposed in §600.605(a) the two components that comprise the BHP payment 

methodology – the premium tax component and the cost-sharing reduction component. For 

specific discussions, see the September 25, 2013 proposed rule (78 FR 59133). 

In §600.605(b), we proposed the factors specified in statute that the Secretary must 

consider when determining the federal BHP payment methodology. For specific discussions, see 

the September 25, 2013 proposed rule (78 FR 59133 and 59134). 

We proposed in §600.605(c) that the Secretary will adjust the payment methodology on a 

prospective basis. 

We received the following comments regarding the BHP payment methodology: 

Comment: We received a comment supporting the relevant factors included in the BHP 

payment methodology as specified in §600.605(b). 

Response: We thank the commenter for their support, and are finalizing the proposed 

provisions. 

Comment: One commenter expressed concern that the information regarding the BHP 

payment methodology in the proposed rule did not address how a state’s BHP could be 
CMS-2380-F 71 

financially self-sustainable, such as the authority to asses an administrative charge on standard 

health plan offerors. 

Response: We appreciate the commenter’s concern; however, we believe that the state 

has considerable flexibility to ensure the sustainability of its program through program design 

and market competition. In addition to the federal BHP deposits, the state has the option to also 

supplement its program with non-federal funding sources. 

Comment: We received many comments requesting that HHS reconsider applying 100 

percent of the cost-sharing reduction that would have been available in the Exchange to the BHP 

payment methodology, as opposed to 95 percent. Many commenters argued that the statute 

provides for this interpretation given the placement of the comma in section 1331(d)(3)(i) of the 

Affordable Care Act. 

Response: We appreciate the commenters’ concern regarding this issue, and we have 

carefully considered and reviewed the commenters’ arguments. We have interpreted the 95 

percent specified in statute to refer to both the premium tax credit and the cost-sharing reduction 

component of the BHP payment methodology. We believe that applying the 95 percent to both 

components of the methodology represents the best reading of the statute and the intent of the 

drafters, and we are therefore finalizing the proposed provision. 

Comment: We received a comment recommending that the premium tax credit 

component of the methodology use an overall average for the state so that all geographic 

variations are accounted for in the calculation rather than over-weighting geographic areas with 

fewer individuals receiving the premium tax credit. 

Response: We appreciate the commenter’s suggestion; however, geographic variations 

are accounted for in the proposed payment methodology as we are proposing to use the second 

lowest cost silver plan premium, which may vary in amount by county, as the basis for the 
CMS-2380-F 72 

calculation of the premium tax credit component. Please refer to the final 2015 BHP Federal 

Funding Methodology for additional information on how we propose to calculate the premium 

tax credit component for program year 2015. 

Comment: One commenter expressed concern that the BHP payment methodology will 

result in narrower provider networks as states will only receive 95 percent of both the premium 

tax credit and cost-sharing reduction that an individual would have otherwise received had he or 

she enrolled in a QHP in the Exchange. 

Response: We appreciate the commenter’s concern, although we do not agree that this is 

necessarily the result. States, for example, that combine their contracting for BHP with 

Medicaid and/or CHIP will have significant market power to drive efficiencies. In any event, 

network adequacy is essential, and we have required, as specified in §600.410(e)(2), that 

network adequacy must be considered during the state’s competitive contracting process. States 

must ensure that standard health plan offerors have a network of providers sufficient in number, 

mix, and geographic distribution to meet the needs of the anticipated number of enrollees in the 

service area of the standard health plan, at least consistent with the access standards under 

Medicaid or the Exchange. 

Comment: We received comments asserting that, to the extent that BHP eligibility 

exceeds the scope of eligibility for a PTC because the affordability test applied under BHP is less 

stringent than the affordability test for PTCs, there could be an unfunded mandate. These 

commenters explained that because federal BHP payment is limited to 95 percent of the amount 

of the PTCs and cost sharing reductions that would be paid if the individual was enrolled in 

coverage through the Exchange, there would be no federal BHP payment with respect to 

individuals eligible for BHP but not eligible for a PTC. One commenter suggested that, in light 

of the absence of funding, states should be given the option to restrict eligibility. 
CMS-2380-F 73 

Response: We understand the possibility raised by the commenters; however, as 

discussed in the eligibility section above, we believe this possibility was created through a 

statutory error which we are correcting in this rule. We believe congressional intent was to align 

BHP eligibility seamlessly with premium tax credit eligibility, which eliminates the possibility 

of an unfunded mandate. The payment methodology has been aligned with this interpretation. 

Comment: We received several comments requesting that HHS ensure that BHP 

payment methodology adequately address the issue of risk adjustment. 

Response: Please refer to the final 2015 BHP Federal Funding Methodology for 

additional discussions related to the population health factor in the BHP payment methodology 

for program year 2015, as well as the optional risk adjustment reconciliation process as both 

sections in the Funding Methodology address the issue of risk adjustment. 

Comment: One commenter requested that we include the relevant factors, their weight 

and applicability in the proposed payment notice. 

Response: We have included additional detail on the relevant factors, including their 

values and data sources, in the final 2015 BHP Federal Funding Methodology. 

Comment: Several commenters recommended that the BHP payment methodology 

include state-specific market factors to account for issues such as low premiums offered in the 

Exchange. 

Response: Please refer to the final 2015 BHP Federal Funding Methodology for 

additional details on the option we are providing to states to use either 2014 premium data 

(trended forward) or actual 2015 premium data as the basis for calculating their 2015 federal 

BHP payment rates. 
CMS-2380-F 74 

Comment: One commenter noted that the methodology specifies the use of factors much 

like those for adjusted community rating, but requested clarification whether that standard health 

plan offeror must also use adjusted community rating, or any other particular form of rating. 

Response: We believe that this is an issue to be determined, and resolved, through the 

competitive contracting process between the state and the standard health plan offeror. There are 

minimum negotiation criteria and other considerations specified in statute that the state must 

include in its process; however, the state has the discretion to add additional qualifications and 

standards to its solicitation that would further the objectives of its program. 

Comment: While we received several comments in support of the proposed provision to 

exclude BHP from the individual market’s risk pool, other commenters requested that HHS 

consider providing states with the option to include BHP in its individual market’s risk pool. 

Commenters also requested the HHS permit states to have the ability to apply aspects of the 

individual market’s reinsurance and risk adjustment programs to BHP. 

Response: We have carefully considered this issue and have determined that BHP should 

be excluded from the individual market because the market reform rules under the Public Health 

Service Act that were added by Title I, Subtitles A and B of the Affordable Care Act, such as the 

requirements for guaranteed issue, and premium rating do not apply to standard health plans 

participating in BHP. Moreover, in accordance with 45 CFR 153.234 and 45 CFR 153.20, 

standard health plans operating under a BHP are not eligible to participate in the reinsurance 

program and the federally-operated risk adjustment program. With respect to the risk corridor 

program, the statute, under section 1342 of the Affordable Care Act, precludes standard health 

plans from participation. To the extent that a state operating a BHP determines that, because of 

the risk-profile of its BHP population, standard health plans should be included in mechanisms 

that share risk, the state would need to use other methods for achieving this goal. But we are 
CMS-2380-F 75 

providing an opportunity in 2015 for states to elect to include in the BHP federal payment 

methodology a retroactive adjustment to reflect the effect of the different health status of the 

BHP population on PTC and CSRs if the BHP population had been enrolled in coverage through 

the Exchange, and we will consider in future years whether data supports a prospective 

adjustment. 

Comment: Several commenters requested clarification regarding a state’s ability to 

implement a risk corridor-like mechanism in BHP. 

Response: We appreciate the commenters’ interest in the implementation of risk 

corridors in BHP; to the extent that a state operating a BHP determines that, because of the riskprofile of its BHP population, standard health plans should be included in mechanisms that share 

risk, the state would need to establish state-specific methods for achieving this goal. Because 

section 1342 of the Affordable Care Act specifically limits the risk corridor program to QHPs, 

standard health plans operating under BHP are not eligible to participate. 

3. Secretarial Determination of BHP Payment Amount (§600.610) 

We proposed in §600.610(a) that each year in October the Secretary will publish the BHP 

payment methodology for the upcoming program year in a proposed payment notice in the 

Federal Register. We did not receive specific comments on this section and are finalizing the 

provision as proposed. 

In §600.610(b), we proposed that the Secretary will publish the final BHP payment 

methodology and BHP payment amounts annually in February in a Federal Register notice. We 

did not receive specific comments on this section and are finalizing the provision as proposed. 

We proposed in §600.610(c) that states will receive a prospective aggregate BHP 

payment amount on a quarterly basis. For specific discussion, see the September 25, 2013 

proposed rule (78 FR 59135). 
CMS-2380-F 76 

We received the following questions related to the quarterly prospective BHP payment 

deposits: 

Comment: We received several comments expressing support for the proposed provision 

to make quarterly prospective deposits into a state’s BHP trust fund and for not making any 

retrospective adjustments that could cause a state to have to return federal BHP funding. 

Response: We thank commenters for their support. We generally do not anticipate 

making any retrospective adjustments in the certified per enrollee payment methodology that 

would cause a state to return federal BHP funding. But we would provide for retrospective 

adjustments to ensure that this methodology is applied based on actual enrollment. To the extent 

that actual enrollment is lower than the state’s projected enrollment, CMS will reduce the state’s 

next quarterly BHP deposit by the difference amount. Another instance in which a retrospective 

adjustment may occur is if a mathematical “error” was made during the calculation process. For 

specific discussions on what constitutes a mathematical “error,” please refer to the September 

25, 2013 proposed notice (78 FR 59134). Finally, to the extent that the prevailing BHP funding 

methodology for a given program year permits adjustments to a state’s BHP payment amount 

due to insufficient data that is necessary for the Secretary to prospectively determine the relevant 

factors specified in the payment notice, retrospective adjustments to the state’s BHP payment 

amount may occur. For example, in light of the absence of any data in 2015 to prospectively 

take into account variance of the BHP population health status from the Exchange population, in 

the accompanying final payment methodology for 2015, we permit a state to elect to develop a 

protocol to support a retrospective adjustment for this factor. 

Comment: We received several comments requesting clarification on the timing of the 

deposits, as well as when any necessary adjustments in payment are to be made based on 

differences between actual and projected enrollment numbers. Some commenters also expressed 
CMS-2380-F 77 

concern that data used to determine some of the factors included in the payment methodology 

would negatively affect payment to states. 

Response: We anticipate providing future guidance on the specific timeframes for 

deposits made to state BHP trust funds; however, we anticipate that deposits will be made at the 

beginning of each fiscal year quarter assuming the state has submitted its projected enrollment 

data at least 60 days prior to the beginning of each fiscal year quarter. For example, the deposit 

for fiscal year quarter one would occur on October 1st using enrollment data submitted by the 

state by July 31st. As stated in §600.620(c)(2)(i), a retrospective adjustment will be made 60 

days after the end of each fiscal year quarter to account for any differences between projected 

and actual enrollment. 

With respect to the commenters’ concerns regarding the potential effect on the timing of 

payment and the release of data needed to calculate the factors included in the BHP payment 

methodology, we are generally not making any retrospective adjustment to the BHP payment 

methodology in a given year unless the payment notice specifies the availability of a 

retrospective adjustment due to the lack of sufficient data necessary for the Secretary to 

prospectively determine one or more relevant factors in the BHP funding methodology. We 

anticipate using new data, or adjustments to previously released data, to refine future prospective 

BHP funding methodologies, which will be published annually through a proposed notice 

process. 

Comment: We received several comments recommending that after the first or second 

year of BHP implementation, HHS adjust the aggregate federal BHP payment amounts upward 

should actual experience support such an adjustment. Commenters felt that such an adjustment 

would be similar to a risk corridor approach. 
CMS-2380-F 78 

Response: We appreciate the commenter’s concern, and have addressed the issue raised 

by the commenters in further detail in the Final BHP Federal Funding Methodology for Program 

Year 2015. As described in greater depth in the final methodology, we are providing states with 

the option to propose, and implement, a retrospective adjustment protocol to the extent that such 

a protocol is approved as part of the certified payment methodology by the CMS Chief Actuary 

Comment: We received several comments requesting clarification on the proposed 

retrospective adjustments. One commenter recommended that HHS revise language in the 

regulation text to clarify that HHS will not make retrospective adjustments to a state’s quarterly 

deposit based on enrollee income changes. 

Response: As explained elsewhere, HHS will not make any retrospective adjustments to 

a state’s quarterly deposit except for in three instances. The first instance in which HHS will 

adjust the payment is in the event that a mathematical error occurred during the calculation of the 

payment amount. For example, if HHS multiplied the payment rate to the incorrect number of 

enrollees associated with that payment rate, HHS would then make a retrospective adjustment to 

correct the mathematical error. The second instance occurs when there is a difference in 

projected and actual enrollment for a given fiscal year quarter. For example, if the state 

projected that there would be 10,000 enrollees in payment rate cell A, but enrollment in payment 

rate cell A was actually 12,000, HHS would add the additional federal funds to the state’s 

upcoming quarterly deposit to account for the difference between the projected and actual 

enrollment. Finally, the third instance occurs only when the prevailing payment notice in a 

given program year permits retrospective adjustment to a state’s BHP federal payment amount to 

the extent that data necessary for the Secretary to prospectively determine the relevant factors 

included in the BHP funding methodology was not available. We believe that the regulation text 

at §600.605(c) and revised §600.610(c)(2) sufficiently describes this policy. 
CMS-2380-F 79 

4. Deposit of Federal BHP Payment (§600.615) 

In §600.615, we proposed that HHS will make a quarterly deposit into a state’s trust fund 

based on the aggregate quarterly payment amount described in §600.610(c). We did not receive 

specific comments on this section and are finalizing the provision as proposed. 

H. BHP Trust Fund

1. Basis, scope and applicability (§600.700)

Proposed §600.700 under subpart G specified the general statutory authority for and 

scope of standards proposed in this subpart, which sets forth a framework for BHP trust funds 

and accounting, establishing sound fiscal policies and accountability standard and procedures for 

the restitution of unallowable BHP trust fund expenditures. For specific discussions, see the 

September 25, 2013 proposed rule (78 FR 59135). We did not receive specific comments on this 

section and are finalizing the provision as proposed. 

2. BHP Trust Fund (§600.705) 

 In §600.705(a), we proposed requirements for the BHP trust fund, including where to 

establish the trust fund and the identification of trustees and their authorities. 

 We proposed in §600.705(b) that states may deposit non-federal funds into its BHP trust 

fund; however, once deposited, those funds must meet the standards described in paragraphs (c) 

and (d) of this section. 

 In §600.705(c), we proposed that trust funds may only be used to reduce premiums and 

cost sharing and/or provide additional benefits to individuals eligible for BHP. 

 We proposed in §600.705(d) the limitations in expending BHP trust funds. For the 

specific limitations, see the September 25, 2013 proposed rule (78 FR 59150). 

 In §600.705(e), we proposed that a state may maintain a surplus of funds in its trust 

through the carryover of unexpended funds from year-to-year. We received a comment 
CMS-2380-F 80 

supporting this provision, and are subsequently finalizing the provision as proposed. We 

received the following comments related to the BHP trust fund: 

Comment: We received several comments in general support of using BHP trust funds, as 

specified in §600.705(c), to further reduce premiums and cost sharing and to provide additional 

benefits to individuals eligible for BHP. 

Response: We thank the commenters for their support, and are finalizing the provision as 

proposed. 

Comment: One commenter requested clarification on the establishment of the state’s 

BHP trust fund. Specifically, the commenter requested that the BHP trust fund be established at 

either an independent entity or in a segregated account within a state’s fund structure rather than 

in a subset account to the state’s general fund. The commenter indicated that there are sufficient 

legal boundaries through various state laws with respect to the integrity of federal funding 

streams. 

Response: We appreciate the commenter’s suggestion, and have clarified the language in 

the final rule to reflect the suggested language change. 

Comment: We received a comment requesting that HHS further clarify the role of BHP 

trustees. 

Response: There are two fundamental activities required of the BHP trustees. One is to 

provide trust fund oversight to ensure that trust fund expenditures are made in an allowable 

manner, and the second is to specify individuals with the authority to make withdrawals from the 

fund to make allowable expenditures. The state, as specified in §600.110(a)(12), must describe 

any additional responsibilities, outside of these two activities, that the trustees may have. 

Specifically, §600.110(a)(12) requires the state to describe the process by which the trustees will 

be appointed, the qualifications used to determine trustee appointment, and any arrangements 
CMS-2380-F 81 

used to insure or indemnify such trustees against claims for breaches of their fiduciary 

responsibilities. 

Comment: One commenter requested clarification that BHP trust funds are available to 

reduce premiums for American Indians and Alaska Natives. 

Response: Yes. The state has the option to further reduce premiums for eligible BHP 

enrollees that are American Indian and Alaska Natives with its trust funds. This is a permissible 

expenditure. 

Comment: Several commenters expressed support for the limitations on BHP trust fund 

expenditures; however, some emphasized that it was important to ensure that the limitations are 

applied consistently across functions and organizations. 

Response: We appreciate the commenters’ support, and are finalizing the proposed 

provisions. 

Comment: We received many comments expressing concern regarding the limitations on 

the use of BHP trust funds. Specifically, commenters requested that HHS permit trust funds to 

pay for program implementation and start-up costs as well as for administrative costs. 

Commenters argued that without the authority to use trust funds to pay for implementation and 

administrative costs, states would not be able to implement BHP. We received one comment 

requesting that HHS provide states with options for paying administrative costs, including some 

of the user-fee assessments built into the Exchange carrier rates. Another commenter suggested 

that HHS develop a funding formula similar to Medicaid, or set a “flat fee” to pay for 

administrative costs. 

In addition, several other commenters also expressed concern that these limitations do 

not permit states to finance consumer assistance programs with BHP trust funds, or promote 
CMS-2380-F 82 

payment innovations, quality improvement activities or pay-for-performance incentives under 

BHP. 

Response: We understand the concerns that the commenters have raised with respect to 

the use of trust funds to cover administrative costs; however, the statute prohibits the expenditure 

of BHP trust funds for any activities except for lowering premiums and cost sharing and 

providing additional benefits to individuals eligible for BHP. Through its competitive 

contracting process, a state can establish parameters for quality improvement projects and 

delivery system and payment reform innovations that it believes will further the objectives of its 

BHP. The state can then evaluate the innovation proposals submitted by standard health plan 

offerors in their BHP bids thereby including the negotiated projects into the contract awards. 

While the statute has limited the use of federal trust funds to lowering premiums and cost 

sharing as well as for the provision of additional benefits, states have the option to establish 

sources of non-federal funding to help offset administrative costs associated with BHP. Nonfederal resources can include assessments imposed on BHP participating plans. A state with a 

state-based Exchange has the ability to apply a portion of the fee assessed to QHPs in its 

Exchange to BHP; however, this ability does not extend to states in which the FederallyFacilitated Exchange is operating. In accordance with OMB Circular No. A-25 Revised (Circular 

No. A-25R), which establishes federal policy regarding user fees, the Federally-Facilitated 

Exchange user fee is collected from issuers to recover the cost to the federal government of 

providing special benefits to QHP issuers participating in a Federally-Facilitated Exchange; 

those funds are not available to fund BHP as it is not a special benefit provided to issuers by the 

federal government. Non-federal resources can either remain outside of the BHP trust fund, such 

as in a state’s General Fund, or be deposited into the BHP trust fund. Should the state deposit 

these non-federal funds into the state’s BHP trust fund, all standards applied to federal sources of 
CMS-2380-F 83 

funding will also apply to the non-federal funds. While we are finalizing our proposed 

provision, we will continue to review this issue and publish additional guidance upon concluding 

our review. 

Comment: One commenter requested that we clarify whether enrollee premiums 

collected outside of the trust fund are subject to the limitations in §600.705(d). 

Response: If enrollee premiums are not deposited into the state’s trust fund, then they are 

not considered to be BHP trust funds and are therefore not subject to the limitations specified in 

§600.705(d). 

3. Fiscal Policies and Accountability (§600.710) 

 We proposed in §600.710(a) that the state maintain an accounting system and supporting 

fiscal records to assure the proper use of BHP trust funds. We did not receive specific comments 

on this section and are finalizing the provision as proposed. 

 In §600.710(b), we proposed that the state obtain an annual certification certifying the 

proper expenditure and maintenance of BHP trust funds. For the specific certification elements, 

see the September 25, 2013 proposed rule (78 FR 59150). 

 We proposed in §600.710(c) that the state conduct an independent audit of BHP trust 

funds over a 3-year period to determine whether the expenditures during this period were 

allowable. For specific standards of this audit, see the September 25, 2013 proposed rule (78 FR 

59150). We did not receive specific comments on this section and are finalizing the provision as 

proposed. 

 In §600.710(d), we proposed that the state publish an annual report on the use of funds. 

We did not receive specific comments on this section and are finalizing the provision as 

proposed. 
CMS-2380-F 84 

 We proposed in §600.710(e) that the state establish and maintain BHP trust fund 

restitution procedures. We did not receive specific comments on this section and are finalizing 

the provision as proposed. 

 In §600.710(f) we proposed that the state maintain records for 3 years from the date of 

submitting its final expenditure report. We did not receive specific comments on this section and 

are finalizing the provision as proposed. 

 We proposed in §600.710(g) that the state retain all records beyond the 3-year retention 

period in the event litigation begins prior to the expiration of the retention period. We did not 

receive specific comments on this section and are finalizing the provision as proposed. 

We received the following comment regarding the annual certification process in 

§600.710(b): 

Comment: We received several comments requesting that HHS require that the annual 

certification include a certification that the payment rates made to the standard health plan 

offerors are actuarially sound. 

Response: As noted in the contract requirements section, the statutory actuarial 

soundness requirement found in Medicaid does not apply in BHP; therefore, we are not requiring 

that a state certify that its standard health plan offeror rates are actuarially sound. We anticipate 

that the competitive contracting process will help to ensure that the rates paid to the standard 

health plan offerors are reflective of the costs associated in the provision of standard health 

plans. 

4. Corrective Action, Restitution, and Disallowance of Questioned BHP Transactions 

(§600.715) 

In §600.715(a), we proposed that a state review and develop written responses to 

questions identified concerning the authority for BHP trust fund expenditures. To the extent 
CMS-2380-F 85 

necessary, the state shall implement changes to fiscal procedures to ensure proper use of BHP 

trust funds. We did not receive specific comments on this section and are finalizing the 

provision as proposed. 

We proposed in §600.715(b) that state must ensure restitution to its BHP trust fund such 

funds that have not been properly spent. We did not receive specific comments on this section 

and are finalizing the provision as proposed. 

In §600.715(c), we proposed that the restitution period may not exceed a 2-year period, 

and that restitution may occur in a lump sum amount, or in equal installment amounts. We did 

not receive specific comments on this section and are finalizing the provision as proposed. 

We proposed in §600.715(d) that HHS may disallow the improper BHP trust fund 

expenditures in the event that no restitution has been made back to the state’s trust fund. For 

specific discussions on the disallowance procedures, see the September 25, 2013 proposed rule 

(78 FR 59151). We did not receive specific comments on this section and are finalizing the 

provision as proposed. 

In §600.715(e), we proposed the administrative reconsideration procedures in the event 

of a disallowance. For specific discussions on such procedures, see the September 25, 2013 

proposed rule (78 FR 59151). 

We proposed in §600.715(f) that disallowed federal BHP funding must be returned to 

HHS within 60 days after the disallowance notice, or the final administrative reconsideration 

upholding the disallowance. Such repayment cannot be made from BHP trust funds. We did not 

receive specific comments on this section and are finalizing the provision as proposed. 

We received the following comments on the administrative procedures in the event of a 

disallowance of questioned BHP transactions: 
CMS-2380-F 86 

Comment: We received a comment requesting clarification on the administrative process 

for reconsideration. The commenter suggested that HHS consider using either the Medicaid 

procedures found in 42 CFR 430.42(f) for disallowances, or the procedures at 42 CFR 430.38 

which provides for judicial review without further administrative process. 

 Response: We appreciate the commenter’s suggestions; however, given the numerous 

processes available to the state prior to the corrective action stage, we believe that requiring the 

additional administrative reconsideration procedures found in 42 CFR 430.42(f) or in 42 CFR 

430.38 is unnecessary. Therefore, we are finalizing the proposed provisions. 

Comment: We received several comments in general support of the proposed provisions 

as they relate to benefits, premiums, cost sharing and expanding coverage to low-income 

individuals. 

Response: We thank the commenters for their support, and are finalizing the proposed 

provisions. 

Comment: Several commenters expressed support for the various market reforms 

authorized under the Affordable Care Act, such as the ability to remain on a parent’s health 

insurance policy and the expansion of health insurance coverage to all those that are uninsured. 

Response: While we appreciate the support for these important reforms, this comment is 

beyond the scope of this rulemaking. 

Comment: We received one comment requesting more information on BHP in order for 

states to decide whether to implement the program. 

Response: We hope that the clarifications provided in this rulemaking as well as the 

BHP Final Federal Funding Methodology for program year 2015 have provided sufficient 

information for states during their decision making process. We also anticipate continuing to 
CMS-2380-F 87 

work closely with states as they contemplate their options and responding in writing to questions 

posed about implementation. 

Comment: We received several comments on how, and when, individuals can enroll in 

BHP. 

Response: States that elect to implement a BHP will determine the effective date for 

their programs, which will be no earlier than January 1, 2015. As indicated in §600.145, initial 

implementation in 2015 may involve an alternate enrollment strategy as a transition to BHP 

operation. In order to enroll, individuals must complete the single streamlined application and 

be determined eligible for a state BHP. As discussed elsewhere in these regulations, states have 

the option to use a limited open enrollment period approach or to allow applications to be 

submitted throughout the year. 

Comment: One commenter requested that HHS delay the implementation of BHP until 

January 1, 2017 in order to provide the Exchange sufficient time to ensure efficient and effective 

operability before additional coverage programs are launched. 

Response: We appreciate the commenter’s interest in ensuring the operability of the 

Exchange. We are committed to ensuring the availability of this insurance affordability 

coverage option to states effective January 1, 2015. To comply with BHP requirements, 

however, states will need to coordinate the BHP with Exchange, Medicaid and CHIP. As the 

commenter noted, in determining an implementation date, states need to consider the time and 

resources needed to achieve such coordination by January 1, 2015. 

Comment: Several commenters expressed interest in how BHP will affect costs 

associated with emergency department care. Specifically, commenters hoped that BHP would 

reduce such costs. 
CMS-2380-F 88 

Response: We share the commenters’ interest in lowering the costs associated with 

emergency department care. Although this comment is beyond the scope of this rulemaking, we 

will be interested to observe the impact of BHP over time. 

Comment: One commenter recommended that HHS design BHP in such a fashion as to 

ensure appropriate coverage for children who may lose CHIP coverage in the event that CHIP is 

not authorized in 2019. 

Response: We appreciate the commenter’s recommendation. We believe that the BHP 

statute provides states with a vehicle to provide such coverage without any change in design or 

administrative requirements. 

Comment: We received several comments expressing concern that the implementation of 

BHP will increase the temporary shifting of low-income individuals from one insurance 

affordability program to another (“churn”). 

Response: While BHP does introduce an additional insurance affordability program, the 

amount of churn is not clear at this time. It is our understanding that many states and other 

observers believe that BHP will reduce churn between BHP and Medicaid. Regardless of how 

a state might establish its BHP, as specified in §600.425, states are required describe how they 

will ensure coordination for the provision of health care services to promote enrollee continuity 

of care among the insurance affordability programs. In addition, and as described further above, 

another feature in BHP that can promote continuity of coverage and care is the provision 

specified in §600.340 permitting states to adopt a policy of limited redeterminations during a 12 

month period, reducing churn based on fluctuations in income.. 

Comment: Several commenters expressed concern regarding the effect of BHP on 

Exchange enrollment as well as the risk profile of those enrolled in Exchange coverage. 
CMS-2380-F 89 

Response: Because the BHP population is the lower income range of the population that 

would otherwise be enrolled in coverage through the Exchange, states that elect to implement 

BHP will experience somewhat lower enrollment in coverage through the Exchange. We do not 

believe the reduction will impair the Exchange’s ability to operate effectively. With respect to 

the commenters’ concerns on the Exchange’s risk profile, it is unclear at this time the effect BHP 

will have (that is, whether healthier, or sicker, individuals will enroll in BHP relative to those 

enrolled in the Exchange). We anticipate that this will be the subject of research once all of the 

programs are operational. 

Comment: We received one comment requesting that standard health plan offerors be 

subject to the annual insurer fee. 

 Response: The annual insurer fee is administered by the Department of the Treasury and 

its applicability is beyond the scope of this rulemaking. 

IV. Provisions of the Final Regulations

For the most part, this final rule incorporates the provisions of the proposed rule. Those 

provisions of this final rule that differ from the proposed rule are as follows: 

A. General Provisions and Definitions

We have amended §600.5 to add two new definitions: interim certification and network 

of providers to reflect clarifications made in subsequent sections of this final rule. 

We have clarified, in this section, the definition of Essential Health Benefits to include 

the citation to the implementing regulations. 

We have clarified in the reference plan definition that “reference” is synonymous to 

“base” benchmark by adding the word “base.” 

B. Establishment and Certification of State Basic Health Programs
CMS-2380-F 90 

 We are amending §600.110(a)(6) to clarify the BHP Blueprint content to align with the 

premium standards specified in §600.505. 

 We are adding §600.110(a)(15) to conform with a later change to §600.145. The change 

adds a requirement for the inclusion of a transition plan as a required element of the Blueprint if 

a state participating in 2015 plans to propose an alternative enrollment strategy. Additionally, 

the transition plan must include a plan for the coordination of any proposed implementation 

strategies with the Exchange operating in the state. 

 We amended § 600.110(c) to include the requirement that HHS post revisions to Blueprints 

on line. 

 We amended §§600.115(c)(1) and 600.125(a) clarifying that significant change includes 

changes that alter the BHP benefit package, enrollment, disenrollment and verification policies. 

 To conform the addition of an interim certification level, we amended §600.115(a) and 

(d) as well as §600.120(a) and (b). To §600.115(a) we added the sentence, “A State may choose 

to submit its BHP Blueprint in two parts: the first limited submission to secure interim 

certification and the second full submission to secure full certification.” To §600.115(d) we 

added the word “full” to indicate that states must receive full certification to implement a 

program. To §600.120(a) we clarified that the effective date of interim certification is also the 

date of signature of the Secretary, and to §600.120(b) we clarified that full certification is needed 

before payments may be made. 

 We further amended §600.115(d) to require states implementing after 2015 to coordinate 

with open enrollment of the state’s Exchange. 

 We amended §600.120(d) by deleting the word “contingencies”. 

 We added §600.135(c) to require HHS to accept a state request for reconsideration and to 

provide an impartial review against the certification standards if requested. We also extended 
CMS-2380-F 91 

the state’s ability to request reconsideration for termination decisions made by the Secretary in 

§600.142. 

 We added §600.145(e) providing states implementing BHP in 2015 the opportunity to 

create a transition plan for approval delineating any proposed alternative enrollment strategies. 

 We amended §600.150(a)(5) to include a minimum timeliness standard of at least 

quarterly regarding standard health plans provision of updated provider lists. 

 We amended §600.155 to remove the qualifying language “State or Federal” describing 

the tribal consultation policy. 

 We amended §600.160 to include a new paragraph (c) prohibiting BHP offerors from 

reducing the payments to providers by the amount of cost-sharing that would be due from 

Indians if it was not prohibited. Additionally, we are amending §600.520 to add paragraph (d) 

incorporating and broadening the protection set forth in the proposed rule at §600.160(b), to 

require that states permit payment of premiums and cost-sharing for individuals in Indian tribes, 

tribal organizations, urban Indian organizations, Ryan White HIV/AIDS programs, and other 

federal and states programs. We have renamed the proposed paragraphs to reflect these changes. 

 We have amended the timeliness standard in §600.170(b) to be 60 days after the end of each 

operational year for the submission of the state’s required annual report. 

C. Federal Program Administration

We amended the section title to “Federal program compliance review and audits” to 

better represent the nature of this section. 

In §600.200(b)(3) we made an editorial revision to add the word “add” to the paragraph. 

We amended §600.200(b)(4) by clarifying that the standards of review during federal 

program reviews and audits for the improper use of BHP trust funds are the provisions specified 

in §600.705. 
CMS-2380-F 92 

We amended §600.200(c) to clarify that all paragraphs, and not only paragraph (a), under 

§430.33 apply. We have also clarified the language in this paragraph to clarify the timing of the 

final report and state opportunity for correction. 

D. Eligibility and Enrollment 

 We amended §600.305(a)(1) to limit it to requiring residency. 

 We amended §600.305(a)(2) to clarify that lawfully present non-citizens, ineligible for 

Medicaid, must have household income between zero and 200 percent of the FPL. We further 

clarified this standard by changing “non-citizen” status to “immigration” status to increase 

technical accuracy and we clarified that a person may also be ineligible for CHIP due to 

immigration status. 

 We amended §600.305(a)(3) by removing the word “affordable” to more closely reflect 

the underlying statutory language connecting affordability to employer sponsored insurance. We 

also added a parenthetical to conform to our definition of MEC, clarifying that an individual may 

not have access to MEC other than a standard health plan. 

 We deleted the reference to CHIP in §600.305(a)(3)(i) and have limited the proposed 

reference to “such other programs” only to Medicaid to conform with Department of Treasury 

rules on MEC. 

 We changed the parenthetical in §600.305(a)(3)(ii) to tie the definition of affordable 

employer sponsored insurance to section 36B(c)(2)(C) of the Internal Revenue Code. 

 We amended §600.305(b) to provide a conforming exception for a change made in 

§600.145 permitting states to submit a transition plan in certain circumstances. 

 We amended §600.310(b) to include the requirements of §435.907(g) of this chapter 

regarding accessibility of written applications in addition to the other standards of accessibility 

for individuals with limited English proficiency and individuals with disabilities. 
CMS-2380-F 93 

 We amended §600.320(a) to clarify that states permitting local government entities to 

make eligibility determinations do so through delegation. 

 We amended §600.320(c) to be exclusive of §435.915(a). 

 We amended §600.320(d) to clarify the Medicaid choice of enrollment as being 

“continuous open enrollment throughout a year” and the Exchange choice of enrollment policy 

as being no “more” restrictive than that used by the Exchange. 

 We have amended §600.335(b) to give the states the choice of following the appeals 

process or either Medicaid or the Exchange. 

 We amended §600.340(a) to remove the reporting requirement exception clause 

“Except as provided in paragraph (d)” because paragraph (d) did not include reporting 

requirements. 

 We added language to §600.340(b) to clarify that the opportunity to change plans 

must be offered “at least annually,” and that enrollees in plans that are no longer available will 

be given a reasonable opportunity to select a new plan. 

 Finally, we have added §600.340(f) to offer states the option of not redetermining 

eligibility for a 12-month period as long as enrollees are under age 65, are not otherwise enrolled 

in MEC and remain residents of the state. Additionally, we have further amended §600.340(a) to 

draw the distinction between it and the new paragraph (f). We have replaced the proposed 

language that an individual is “determined eligible for a period of” with “subject to periodic 

review of eligibility every” 12 months. 

E. Standard Health Plan

We are amending §600.415(a) to clarify that a state can contract with an entity for one 

standard health plan rather than contracting with at least two or more standard health plans. This 

clarification is needed to conform to the changes made in §600.420 regarding choice of standard 
CMS-2380-F 94 

health plan offeror. Ensuring choice of standard health plan offeror is a beneficiary protection 

not a contracting issue, and not related to the eligibility of the offeror; therefore, we have 

removed the reference to choice in this paragraph. 

We are amending §600.415(e)(2) to clarify that a state must consider the local 

availability and access to providers to ensure a sufficient number, mix and geographic 

distribution to meet the needs of enrollees in a service area, including but not limited to services 

provided by essential community providers as defined in 45 CFR 156.235 so that access to 

services is least be sufficient to meet the access standards applicable under 42 CFR Part 438, 

Subpart D, or 45 CFR 156.230 and 156.235. 

We are amending §600.420(a)(1) to clarify that a state must ensure choice of at least two 

standard health plan offerors. We are also amending this section to clarify that the state must 

assure to choice of standard health plan offeror and that this assurance be reflected in the state’s 

BHP Blueprint along with a description of how it will further enrollee choice of standard health 

plans. 

We are also adding a new paragraph to §600.420(a) to provide an exception to the choice 

of standard health plan offeror requirement set forth in paragraph (a)(1). This new paragraph 

provides the procedural steps for a state to submit a request for such an exception. 

We are adding a new paragraph to §600.420(b) to clarify that a state entering into a 

regional compact with another state for the provision of a geographically specific standard health 

plan must assure that enrollees, regardless of residency within the state, continue to have choice 

of at least two standard health plans. This new requirement is specified in §600.420(b)(2). 

We are amending §600.420(b)(3)(ii)(A) to clarify that a state entering into a regional 

compact for the provision of a geographically specific standard health plan, must continue to 
CMS-2380-F 95 

assure that enrollees, regardless of location, continue to have choice of at least two standard 

health plan offerors. 

In §600.425, we have revised the regulatory text to clarify that the state must ensure 

coordination between all other insurance affordability programs. We are also clarifying that the 

state’s BHP Blueprint must describe how it will ensure such coordination. 

F. Enrollee Financial Responsibilities 

 We are amending §600.505(a) to clarify the premium requirements that the state must 

assure to and that such an assurance must be included in the state’s BHP Blueprint along with 

the other requirements specified in §600.505(a)(2). 

 In §600.510(a), we are clarifying the cost-sharing requirements that the state must assure 

to and that such an assurance must be included in the state’s BHP Blueprint along with the other 

requirements specified in §600.510(a)(2). 

 We have added §600.520(d) to broaden the protection in the proposed rule under 

§600.160(b) as described above and we have modified §600.510(a)(ii) to reflect the inclusion of 

the new paragraph (d). 

 We are amending §600.525(a) to clarify that the state must assure that it is in compliance 

with the disenrollment procedures described in 45 CFR 155.430. We are also clarifying that this 

assurance is reflected in the state’s BHP Blueprint. 

G. Payments to States

 We are amending §600.605(c) to clarify the Secretary will adjust the payment 

methodology on a prospective basis to adjust for any changes in the calculation of the premium 

tax credit and cost-sharing reduction components that to the extent that necessary data is 

available for the Secretary to prospectively determine all relevant factors, as specified in 

paragraph (b) of this section. 
CMS-2380-F 96 

 We are adding new paragraph §600.610(c)(2)(iii) to reflect that to the extent that the final 

payment notice permits retrospective adjustments to the state’s BHP payment amount (due to the 

lack of necessary data for the Secretary to prospectively determine the relevant factors 

comprising the premium tax credit and cost-sharing reductions components of the BHP funding 

methodology), the Secretary will recalculate the state’s BHP payment amount and make any 

necessary adjustments in accordance with paragraph (c)(2)(iv) of this section, which was 

previously (c)(2)(iii). 

H. BHP Trust Fund

In §600.705(a), we have amended this provision by deleting the option for the state to 

establish its BHP trust fund in a subset account within its General Fund and replaced it with the 

option to establish it in a segregated account within the state’s fund structure to provide states 

with the opportunity to utilize state financial management services while maintaining 

accountability. The option to establish the trust fund at an independent entity remains. We 

believe this change will provide states with more flexibility given the unique features each state 

may have in its accounting and fiscal structures. 

We are amending §600.710 to clarify that the state must assure to the fiscal policies and 

accountability standards set forth in that section. We are also clarifying that this assurance must 

be reflected in the state’s BHP Blueprint.

V. Collection of Information Requirements

The information collection requirements/burden that were set out in the September 25, 

2013, proposed rule estimated one respondent per year. Based on comments received, we 

continue to estimate one respondent in this final rule. Since we estimate fewer than the 

Paperwork Reduction Act’s 10 respondent per year threshold, the information collection 
CMS-2380-F 97 

requirements/burden that are associated with this final rule are not subject to the requirements of 

the Paperwork Reduction Act (5 CFR 1320.3(c)). 

VI. Regulatory Impact Statement 

A. Overall Impact

We have examined the impacts of this rule as required by Executive Order 12866 on 

Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving 

Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) 

(September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, section 202 of 

the Unfunded Mandates Reform Act of 1995 (March 22, 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 Orders 12866 and 13563 direct 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). Section 3(f) of Executive Order 12866 defines a 

“significant regulatory action” as an action that is likely to result in a rule: (1) having an annual 

effect on the economy of $100 million or more in any 1 year, or adversely and materially 

affecting a sector of the economy, productivity, competition, jobs, the environment, public health 

or safety, or state, local or tribal governments or communities (also referred to as “economically 

significant”); (2) creating a serious inconsistency or otherwise interfering with an action taken or 

planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, 

user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel 

legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set 

forth in the Executive Order. 

A regulatory impact analysis (RIA) must be prepared for major rules with economically 
CMS-2380-F 98 

significant effects ($100 million or more in any 1 year). The Basic Health Program provides 

states the flexibility to establish an alternative coverage program for low-income individuals who 

would otherwise be eligible to purchase coverage through Exchange. The effects of this 

rulemaking will be “economically significant” as measured by the $100 million threshold, and 

hence a major rule under the Congressional Review Act. We did not receive any public 

comments on the impact analysis section of the proposed rule. We received a variety of 

comments from six states on other sections of the rule. These comments did not provide further 

information that would contribute to the assessment of economic impact. We have received a 

solid commitment of participation from one state and we expect that a mid-range participation 

estimate over the first 5 years would be 3 states. In accordance with the provisions of Executive 

Order 12866, this regulation was reviewed by the Office of Management and Budget. 

The aggregate economic impact of this rule of this final rule is estimated to be -$900 

million from CY 2015 to 2019 (measured in real 2015 dollars). The federal government is 

expected to reduce its overall expenditures, as the payments to the states for BHP are anticipated 

to be less than the payments that would have been made to qualified health plans (QHPs) for 

PTCs and CSR, if persons had been enrolled in those plans instead of in BHP. In general, we 

expect that federal payments to states for BHP would be 5 percent less than the federal payments 

for PTCs and CSR to QHPs if persons had been enrolled in those plans through the exchange. 

CMS’ Office of the Actuary (OACT) developed estimates for the impact of this section 

of the Affordable Care Act, which were initially published in April 2010, 

(https://www.cms.gov/ActuarialStudies/downloads/PPACA_2010-04-22.pdf). These estimates 

are consistent with the assumptions and projections in the President’s FY 2014 Budget. In 

particular, these estimates rely on many of the same data and assumptions used to project the 

federal costs related to the health insurance Exchanges. (The original estimates that appeared in 
CMS-2380-F 99 

the April 2010 estimates were based off of the President’s Fiscal Year 2010 Budget Mid-Session 

Review.) 

To determine the impact of BHP on federal expenditures, OACT developed estimates of 

the number of persons who would enroll in BHP if the program were implemented in all states. 

In general, this estimate was based on projections of the number of people who would be eligible 

for BHP based on their household income and other eligibility criteria, and the number of people 

who would enroll in BHP. The percentage of people who would enroll in BHP among those 

eligible is affected by estimates of the likelihood of persons having other forms of health 

insurance (in particular, for persons who have employer sponsored insurance) and the estimated 

participation rate of those without other forms of coverage. The participation rate may be 

affected by a number of factors, which include the health status and expected health care costs of 

eligible persons (in general, persons with higher expected health care costs are assumed to be 

more likely to enroll), the cost to the enrollee for participating (in general, lower premiums and 

fewer cost sharing requirements are assumed to lead to greater participation), and the 

effectiveness of enrollment systems and outreach efforts. These assumptions are consistent with 

those used to estimate the number of people that would enroll in QHPs through the Exchanges. 

OACT also developed estimates of health care costs and the amounts of PTCs and CSR 

that the federal government would pay for persons who would enroll in BHP. These estimates 

relied on historical health care cost expenditure data for eligible persons, adjusted for the effect 

that having health insurance would have on health care costs. (For persons who were previously 

uninsured, their costs were adjusted to reflect that having health insurance is expected to lead to 

greater utilization of health care services than compared to not having insurance. In addition, for 

persons who were previously uninsured or had different forms of health insurance, their costs 
CMS-2380-F 100 

were adjusted to reflect differences in cost sharing requirements on health care expenditures, and 

differences in provider payment rates between types of insurance. 

To determine the impact of BHP, OACT has developed estimates compared to those of 

the impacts of the Exchanges (CMS-9989-F). As the implementation of BHP would result in a 

decrease in the number of persons enrolled through the Exchange, and thus the amount of PTCs 

and CSR that would be paid by the federal government, we believe it is appropriate to develop 

the impact analysis using the net effects of BHP relative to the previously estimated impacts of 

the Exchanges. 

 For the purpose of this analysis, OACT has assumed that 3 states would implement BHP 

between 2015 and 2019. This assumption is based off of information on states’ preliminary 

interest in BHP; however, in actuality more or fewer states may decide to implement BHP, and 

may decide to implement BHP after 2015. Accordingly, more or fewer states implementing 

BHP would increase or decrease the impact of the program, and the particular number of 

enrollees and the costs of the BHP may vary state to state. These estimates are not specific to 

any 3 particular states. 

OACT has also assumed that persons would be enrolled in BHP plans at the same 

participation rate as they would have been expected to enroll in QHPs through the Exchanges. 

The participation rate may depend on a number of factors (including the amount of premium and 

cost sharing a person would be required to pay in BHP, the choice of BHP plans, and the benefits 

offered in BHP), and in actuality could vary from the participation rate of persons eligible for 

QHPs. OACT has assumed that BHP plans would have similar premium and cost-sharing 

requirements as QHPs on the Exchange (net of the effects of PTCs and CSR) and would offer 

similar benefits to QHPs. Thus, the effects of implementing BHP on enrollees would be no 

different than the effects of the Exchanges; however, to the extent that BHP plans offer 
CMS-2380-F 101 

additional benefits or further reduce the amount of costs enrollees would pay for their health 

care, enrollees may experience some additional benefit. Lastly, OACT has assumed that states 

would not contribute any other state funds to BHP and that federal BHP payments and enrollees’ 

premiums and cost sharing would be sufficient to pay for the required benefits under BHP. To 

the extent that a state contributes additional funds (possibly to provide additional benefits or 

reduce enrollees’ premiums or cost sharing), the state would experience an increase in 

expenditures. 

 The estimated effects of BHP on federal government are shown in Table 1. 

TABLE 1: Estimated Federal Impacts for the Basic Health Program 

(Millions of 2015 dollars) 

2015 2016 2017 2018 2019 Total

BHP Expenditures $2,610 $3,000 $3,410 $4,000 $4,170 $17,190

PTC and CSR Expenditures –$2,750 –$3,160 –$3,590–$4,210–$4,390–$18,100

Net Federal Impact –$140 –$160 –$180 –$210 –$220 –$900

The estimated number of BHP enrollees is shown in Table 2. 

TABLE 2: Estimated Number of Basic Health Program Enrollees 

2015 2016 2017 2018 2019

BHP 

Enrollment 

460,000 550,000 710,000970,0001,020,000

 

B. Accounting Statement and Table

As required by OMB’s Circular A-4 (available at 

http://www.whitehouse.gov/omb//circulars_a004_a-4/), in Table 3 we have prepared an 

accounting statement illustrating the classification of the federal and state expenditures 

associated with this final rule. 
CMS-2380-F 102 

TABLE 3: Accounting Statement: Classification of Estimated Expenditures for Basic 

Health Program during Calendar Years 2015 through 2019 

(Millions of 2015 Dollars) 

Category Transfers 

Annualized 

Monetized 

Transfers 

Discount Rate Period 

Covered 

 7% 3% 

Primary 

Estimate $3,561 $3,594 

CYs 2015-

2019 

From/To Qualified Health Plans to Federal Government 

Category Transfers 

Annualized 

Monetized 

Transfers 

Discount Rate Period 

Covered 

7% 3% 

Primary 

Estimate $3,382 $3,414 

CYs 2015-

2019 

From/To Federal Government to State Governments 

1. Need for the Rule 

Section 1331 of the Affordable Care Act (codified at 42 USC § 18051) requires the 

Secretary to establish a Basic Health Program. This final rule implements that section. 

2. Benefits 

We anticipate that the Basic Health Program will provide benefits to both consumers and 

states. 

a. Benefits to Consumers 

The Basic Health Program (BHP) targets low-income individuals who would be eligible 

for premium and cost-sharing reductions, if they purchased health insurance through an 

Exchange. These individuals may have variable income that causes them to move between 

insurance programs. For example, if their income drops, they may be eligible for Medicaid, and 

when their income rises, they would be eligible to purchase insurance (with premium and costsharing reductions) on an Exchange. This phenomenon is known as “churning.” Because 
CMS-2380-F 103 

Medicaid health plans and health plans offered on Exchanges vary in terms of benefits, provider 

networks, cost-sharing, and administration, churn can be disruptive. Researchers have estimated 

that the Basic Health Program will significantly reduce the number of individuals that churn 

between Medicaid and Exchanges1

. We have modified the rule to include the option of 12 month 

continuous eligibility. This option will further reduce churn in states that adopt it, by enabling 

those enrolled to remain eligible for a full 12 months regardless of income fluctuation. However, 

we are not adjusting the payment methodology and have clarified in the response to comment 

that states will bear the associated financial burden to the extent there is one. 

b. Benefits to States 

Several states currently operate health insurance programs for low-income adults with 

income above Medicaid eligibility levels. These states believe that the programs confer benefit 

to their residents beyond what those individuals could obtain by purchasing health insurance on 

an Exchange. The Basic Health Program established by this rule will give states the option to 

maintain these programs rather than having those individuals purchase insurance through the 

Exchange. 

3. Costs 

The provisions of this rule were designed to minimize regulatory costs. It minimizes new 

administrative structures, because the Basic Health Program does not include administrative 

funding and because of the need for states to coordinate with other insurance affordability 

programs. To the extent possible, we borrowed structures from existing programs. In finalizing 

 

1

Hwang, A., S. Rosenbaum, and B. D. Sommers. “Creation Of State Basic Health Programs Would Lead To 

4 Percent Fewer People Churning Between Medicaid And Exchanges.” Health Affairs 31.6 (2012): 1314-1320. 

Buettgens, M., A. Nichols, and S. Dorn. “Churning Under the ACA and State Policy Options for Mitigation: Timely 

Analysis of Immediate Health Policy Issues.” Urban Institute (2012). Available at 

http://www.urban.org/UploadedPDF/412587-Churning-Under-the-ACA-and-State-Policy-Options-forMitigation.pdf.
CMS-2380-F 104 

the rule, we further extended the use of existing administrative infrastructure by permitting the 

use of the Exchange appeals process for BHP. Additionally, we created an interim certification 

level to mitigate the risk associated with state expenditure of start- up funding prior to receiving 

any conceptual approval for the program. 

4. Transfers 

The provisions of this rule are designed to transfer funds that will be available to 

individuals for premium and cost-sharing reductions for coverage purchased on an Exchange to 

states to offer coverage through a Basic Health Program. In states that choose to implement a 

Basic Health Program, eligible individuals will not be able to purchase health insurance through 

the Exchange. As a result, fewer individuals will use the Exchange to purchase health insurance. 

Depending on the profile of the people in BHP, this may result in adjustments to the risk profile 

of the Exchange. 

5. Regulatory Alternatives 

Many of the structures of the Basic Health Program are set out in statute, and therefore 

we were limited in the alternatives we could consider. When we had options, we attempted to 

limit the number of new regulatory structures we created. To make the program easier for states 

to implement, we adopt or adapt regulations from existing programs—Medicaid, the Children’s 

Health Insurance Program, and the Exchanges—whenever possible, rather than create new 

structures. Two areas in which we had choices are reporting compliance with federal rules and 

contracting with standard health plans. 

a. Reporting compliance with federal rules to HHS 

We followed the paradigm of adopting or adapting existing structures when creating a 

process for reporting state compliance with federal rules. Two existing structures we considered 

were the Exchange model of Blueprints and the Medicaid model of state plans. We chose to use 
CMS-2380-F 105 

the Blueprint model, which we believe will be less burdensome to states than the state plan 

model. Additionally, we indicated in the final rule that we would be accepting a limited set of 

data elements from the Blueprint to establish and interim level of certification giving states 

design approval before further investment. 

b. Contracting requirements 

Similarly when choosing how to regulate state contracts with standard health plans, we 

looked to models in the Exchange and Medicaid rather than creating new regulatory schemes. 

We have adopted, where possible, existing procurement requirements in order to minimize the 

burden on states. In addition, we have allowed states the option to seek an exemption from 

competitive contracting requirements for program year 2015 if they are unable to meet the 

requirements in the first year of the program. 

C. Unfunded Mandates Reform Act

 Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires that 

agencies assess anticipated costs and benefits before issuing any rule whose mandates require 

spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation, by state, 

local, or tribal governments, in the aggregate, or by the private sector. In 2014, that threshold is 

approximately $141 million. States have the option, but are not required, to establish a BHP. 

Thus, this final rules does not mandate expenditures by state governments, local governments, or 

tribal governments 

D. Regulatory Flexibility Act 

 The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) requires agencies to prepare 

an initial regulatory flexibility analysis to describe the impact of the final rule on small entities, 

unless the head of the agency can certify that the rule will not have a significant economic 

impact on a substantial number of small entities. The Act generally defines a “small entity” as 
CMS-2380-F 106 

(1) a proprietary firm meeting the size standards of the Small Business Administration (SBA); 

(2) a not-for-profit organization that is not dominant in its field; or (3) a small government 

jurisdiction with a population of less than 50,000. Individuals and states are not included in the 

definition of a small entity. 

We have clarified in the final rule that we do not have statutory authority to mandate the 

inclusion or exclusion of particular providers. This final rule is focused on eligibility and 

enrollment in public programs, and it sets out broad contracting standards but it does not contain 

provisions that would have a significant direct impact on hospitals, and other health care 

providers that are designated as small entities under the RFA. However, the provisions in this 

final rule may have a substantial, positive indirect effect on hospitals and other health care 

providers due to the substantial increase in the prevalence of health coverage among populations 

who are currently unable to pay for needed health care, leading to lower rates of uncompensated 

care at hospitals. The Department determines that this final rule will not have a significant 

economic impact on a substantial number of small entities. 

 Section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a 

proposed rule may have a significant economic impact on the operations of a substantial number 

of small rural hospitals. For purposes of section 1102(b) of the Act, we define a small rural 

hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 

100 beds. As indicated in the preceding discussion, there may be indirect positive effects from 

reductions in uncompensated care, but we have concluded that there is not a direct economic 

impact of these facilities. 

E. Federalism

Executive Order 13132 establishes certain requirements that an agency must meet when 

it promulgates a final rule that imposes substantial direct effects on States, preempts State law, or 
CMS-2380-F 107 

otherwise has Federalism implications. The BHP is entirely optional for states, and if 

implemented in a state, provides access to a pool of funding that would not otherwise be 

available to the state. 

We conclude that there is not an impact on Federalism by this voluntary state program. 
CMS-2380-F 108 

List of Subjects 

42 CFR Part 600 

Administrative practice and procedure, Health care, Health insurance, Penalties, and 

Reporting and recordkeeping requirements, State and local governments. 

45 CFR Part 144 

Health care, Health insurance, Reporting and recordkeeping requirements.
CMS-2380-F 109 

 For the reasons set forth in the preamble, under the authority at section 1331(a)(1) of the 

Affordable Care Act, the Centers for Medicare & Medicaid Services and the Office of the 

Secretary amends 42 CFR chapter IV and 45 CFR subtitle A, respectively, as set forth below: 

Title 42 – Public Health 

1. Subchapter I, consisting of part 600, is added to chapter IV to read as follows: 

Subchapter I— Basic Health Program 

PART 600—ADMINISTRATION, ELIGIBILITY, ESSENTIAL HEALTH BENEFITS, 

PERFORMANCE STANDARDS, SERVICE DELIVERY REQUIREMENTS, PREMIUM 

AND COST SHARING, ALLOTMENTS, AND RECONCILATION 

Subpart A--General Provisions and Definitions 

Sec. 

600.1 Scope. 

600.5 Definitions and use of terms. 

Subpart B— Establishment and Certification of State Basic Health Programs 

600.100 Program description. 

600.105 Basis, scope, and applicability of subpart B. 

600.110 BHP Blueprint. 

600.115 Development and submission of the BHP Blueprint. 

600.120 Certification of a BHP Blueprint. 

600.125 Revisions to a certified BHP Blueprint. 

600.130 Withdrawal of a BHP Blueprint prior to implementation. 

600.135 Notice and timing of HHS action on a BHP Blueprint. 

600.140 State termination of a BHP. 

600.142 HHS withdrawal of certification and termination of a BHP. 

600.145 State program administration and operation. 

600.150 Enrollment assistance and information requirements. 

600.155 Tribal consultation. 

600.160 Protections for American Indian and Alaska Natives. 

600.165 Nondiscrimination standards. 

600.170 Annual report content and timing. 

Subpart C--Federal Program Administration 

600.200 Federal program compliance reviews and audits. 
CMS-2380-F 110 

Subpart D--Eligibility and Enrollment 

600.300 Basis, scope, and applicability. 

600.305 Eligible individuals. 

600.310 Application. 

600.315 Certified application counselors. 

600.320 Determination of eligibility for and enrollment in a standard health plan. 

600.330 Coordination with other insurance affordability programs. 

600.335 Appeals. 

600.340 Periodic determination and renewal of BHP eligibility. 

600.345 Eligibility verification. 

600.350 Privacy and security of information. 

Subpart E--Standard Health Plan 

600.400 Basis, scope, and applicability. 

600.405 Standard health plan coverage. 

600.410 Competitive contracting process. 

600.415 Contracting qualifications and requirements. 

600.420 Enhanced availability of standard health plans. 

600.425 Coordination with other insurance affordability programs. 

Subpart F--Enrollee Financial Responsibilities 

600.500 Basis, scope, and applicability. 

600.505 Premiums. 

600.510 Cost-sharing. 

600.515 Public schedule of enrollee premium and cost sharing. 

600.520 General cost-sharing protections. 

600.525 Disenrollment procedures and consequences for nonpayment of premiums. 

Subpart G--Payment to States 

600.600 Basis, scope, and applicability. 

600.605 BHP payment methodology. 

600.610 Secretarial determination of BHP payment amount. 

600.615 Deposit of Federal BHP payment. 

Subpart H - BHP Trust Fund 

600.700 Basis, scope, and applicability. 

600.705 BHP trust fund. 

600.710 Fiscal policies and accountability. 

600.715 Corrective action, restitution, and disallowance of questioned BHP transactions. 

Authority: Section 1331 of the Patient Protection and Affordable Care Act of 2010 (Pub. 

L. 111-148, 124 Stat. 119), as amended by the Health Care and Education Reconciliation Act of 
CMS-2380-F 111 

2010 (Pub. L. 111-152, 124 Stat 1029).

Subpart A--General Provisions and Definitions 

§600.1 Scope. 

Section 1331 of the Affordable Care Act, provides for the establishment of the Basic 

Health Program (BHP) under which a State may enter into contracts for standard health plans 

providing at least essential health benefits to eligible individuals in lieu of offering such 

individuals the opportunity to enroll in coverage through an Affordable Insurance Exchange. 

States that elect to operate a BHP will receive federal funding based on the amount of the 

premium tax credit and cost-sharing reductions that would have been available if enrollees had 

obtained coverage through the Exchange. 

§600.5 Definitions and use of terms. 

For purposes of this part, the following definitions apply: 

Advance payments of the premium tax credit means payment of the tax credit authorized 

by 26 U.S.C. 36B and its implementing regulations, which are provided on an advance basis to 

an eligible individual enrolled in a QHP through an Exchange in accordance with sections 1402 

and 1412 of the Affordable Care Act. 

Affordable Care Act is the Patient Protection and Affordable Care Act of 2010 (Pub. L. 

111-148) as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 

111-152). 

Basic Health Program (BHP) Blueprint is the operational plan that a State must submit to 

the Secretary of Health and Human Services (HHS) for certification to operate a BHP. 

Certification means authority to operate the program which is required for program 

operations but it does not create an obligation on the part of the State to implement a BHP. 

Code means the Internal Revenue Code of 1986. 
CMS-2380-F 112 

Cost sharing means any expenditure required by or on behalf of an enrollee with respect 

to covered health benefits; such term includes deductibles, coinsurance, copayments, or similar 

charges, but excludes premiums, balance billing amounts for non-network providers and 

spending for non-covered services. 

Enrollee means an eligible individual who is enrolled in a standard health plan contracted 

to operate as part of a BHP. 

Essential health benefits means the benefits described under section 1302(b) of the 

Affordable Care Act, as determined in accordance with implementing regulations at 45 CFR 

156.100 through 156.110 and 156.122 regarding prescription drugs. 

Family and family size is as defined at 26 CFR 1.36B-1(d). 

Federal fiscal year means the time period beginning October 1st and ending September 

30th. 

Federal poverty level or FPL means the most recently published Federal poverty level, 

updated periodically in the Federal Register by the secretary of Health and Human Services 

under the authority of 42 U.S.C. 9902(2). 

Household income is as defined in 26 CFR 1.36B-1(e)(1) and is determined in the same 

way as it is for purposes of eligibility for coverage through the Exchange. 

Indian means any individual as defined in section 4 (d) of the Indian 

Self-Determination and Education Assistance Act (Pub. L 93–638). 

Interim certification is an approval status for the initial design of a state’s Basic Health 

Program. It does not confer any permission to begin enrollment or seek federal funding. 

Lawfully present has the meaning given in 45 CFR 152.2. 

Minimum essential coverage has the meaning set forth at 26 CFR 1.5000A–2, including 

coverage recognized by the Secretary as minimum essential coverage pursuant to 26 CFR 
CMS-2380-F 113 

1.5000A–2(f). Under that authority, the Secretary recognizes coverage through a BHP standard 

health plan as minimum essential coverage. 

Modified adjusted gross income is as defined in 26 CFR 1–36B–1(e)(2). 

Network of health care providers means an entity capable of meeting the provision and 

administration of standard health plan coverage, including but not limited to, the provision of 

benefits, administration of premiums and applicable cost sharing and execution of innovative 

features, such as care coordination and care management, and other requirements as specified 

under the Basic Health Program. Such entities may include but are not limited to: Accountable 

Care Organizations, Independent Physician Associations, or a large health system. 

Premium means any enrollment fee, premium, or other similar charge paid to the 

standard health plan offeror. 

Preventive health services and items includes those services and items specified in 45 

CFR 147.130(a). 

Program year means a calendar year for which a standard health plan provides coverage 

for eligible BHP enrollees. 

Qualified health plan or QHP means a health plan that has in effect a certification that it 

meets the standards described in subpart C of 45 CFR part 156 issued or recognized by each 

Exchange through which such plan is offered in accordance with the process described in subpart 

K of 45 CFR part 156, except that such term must not include a qualified health plan which is a 

catastrophic plan described in 45 CFR 155.20 

Reference plan is a synonym for the EHB base benchmark plan and is defined at 45 CFR 

156.100. 
CMS-2380-F 114 

Regional compact means an agreement between two or more States to jointly procure and 

enter into contracts with standard health plan offeror(s) for the administration and provision of a 

standard health plan under the BHP to eligible individuals in such States. 

Residency is determined in accordance with 45 CFR 155.305(a)(3). 

Single streamlined application has the same meaning as application defined at 42 CFR 

431.907(b)(1) of this chapter and 45 CFR 155.405(a) and (b). 

Standard health plan means a health benefits package, or product, that is provided by the 

standard health plan offeror. 

Standard health plan offeror means an entity that is eligible to enter into contracts with 

the State for the administration and provision of a standard health plan under the BHP. 

State means each of the 50 states and the District of Columbia as defined by section 1304 

of the Act. 

Subpart B—Establishment and Certification of State Basic Health Programs 

§ 600.100 Program description. 

A State Basic Health Program (BHP) is operated consistent with a BHP Blueprint that 

has been certified by the Secretary to meet the requirements of this part. The BHP Blueprint is 

developed by the State for certification by the Secretary in accordance with the processes 

described in this subpart. 

§600.105 Basis, scope, and applicability of subpart B. 

(a) Statutory basis. This subpart implements the following sections of the Act: 

(1) Section 1331(a)(1) which defines a Basic Health Program. 

(2) Section 1331(a)(2) which requires the Secretary to certify a Basic Health Program 

before it may become operational. 

(3) Section 1331(f) which requires Secretarial oversight through annual reviews. 
CMS-2380-F 115 

(b) Scope and applicability. (1) This subpart sets forth provisions governing the 

administration of the BHP, the general requirements for development of a BHP Blueprint 

required for certification, for program operations and for voluntary program termination. 

(2) This subpart applies to all States that submit a BHP Blueprint and request certification 

to operate a BHP. 

§600.110 BHP Blueprint. 

The BHP Blueprint is a comprehensive written document submitted by the State to the 

Secretary for certification of a BHP in the form and manner specified by HHS which will include 

an opportunity for states to submit a limited set of elements necessary for interim certification at 

the state option. The program must be administered in accordance with all aspects of section 

1331 of the Affordable Care Act and other applicable law, this chapter, and the certified BHP 

Blueprint. 

(a) Content of a Blueprint. The Blueprint will establish compliance with applicable 

requirements by including a description, or if applicable, an assurance of the following: 

(1) The minimum benefits offered under a standard health plan that assures inclusion of 

essential health benefits as described in section 1302(b) of the Affordable Care Act, in 

accordance with §600.405. 

(2) The competitive process, consistent with § 600.410, that the State will undertake to 

contract for the provision of standard health plans.

(3) The standard contract requirements, consistent with §600.415, that the State will 

incorporate in its standard health plan contracts. 

(4) The methods by which the State will enhance the availability of standard health plan 

coverage as described in §600.420. 
CMS-2380-F 116 

(5) The methods by which the State will ensure and promote coordination with other 

insurance affordability programs as described in §600.425. 

(6) The premium standards set forth in §600.505. 

(7) The cost sharing imposed under the BHP, consistent with the standards described in 

§600.510. 

(8) The disenrollment procedures and consequences for nonpayment of premiums 

consistent with §600.525, respectively. 

(9) The standards, consistent with §600.305 used to determine eligibility for the program. 

(10) The State’s policies regarding enrollment, disenrollment and verification consistent 

with §§600.320 and 600.345, along with a plan to ensure coordination with and eliminate gaps in 

coverage for individuals transitioning to other insurance affordability programs. 

(11) The fiscal policies and accountability procedures, consistent with §600.710. 

(12) The process by which BHP trust fund trustees shall be appointed, the qualifications 

and responsibilities of such trustees, and any arrangements to insure or indemnify such trustees 

against claims for breaches of their fiduciary responsibilities. 

(13) A description of how the State will ensure program integrity, including how it will 

address potential fraud, waste, and abuse and ensure consumer protections. 

(14) An operational assessment establishing operating agency readiness. 

(15) A transition plan if a state participating in 2015 plans to propose an alternative 

enrollment strategy for initial implementation consistent with §600.145. Such a transition plan 

must include a plan for coordination of this initial implementation strategy with the Exchange 

operating in the state, and if beneficiaries will be transitioning from Medicaid, with the Medicaid 

agency. 
CMS-2380-F 117 

(b) Funding plan. (1) The BHP Blueprint must be accompanied by a funding plan that 

describes the enrollment and cost projections for the first 12 months of operation and the funding 

sources, if any, beyond the BHP trust fund. 

(2) The funding plan must demonstrate that Federal funds will only be used to reduce 

premiums and cost-sharing or to provide additional benefits. 

(c) Transparency. HHS shall make a State’s BHP Blueprint available on line after it is 

submitted for certification, and will update the posted Blueprint to the extent that it is later 

revised by the state. 

§600.115 Development and submission of the BHP Blueprint. 

(a) State authority to submit the State Blueprint. A State BHP Blueprint must be signed 

by the State’s Governor or by the official with delegated authority from the Governor to sign it. 

A State may choose to submit its BHP Blueprint in two parts: the first limited submission to 

secure interim certification and the second full submission to secure full certification. 

(b) State Basic Health Program officials. The State must identify in the BHP Blueprint 

the agency and officials within that agency, by position or title, who are responsible for program 

administration, operations, and financial oversight. 

(c) Opportunity for public comment. The State must provide an opportunity for public 

comment on the BHP Blueprint content described in § 600.110 before submission to the 

Secretary for certification. 

(1) The State must seek public comment on any significant subsequent revisions prior to 

submission of those revisions to the Secretary for certification. Significant revisions are those 

that alter core program operations required by §600.145(f), as well as changes that alter the BHP 

standard health plan benefit package, or enrollment, disenrollment and verification policies. 
CMS-2380-F 118 

(2) The process of seeking public comment must include Federally recognized tribes as 

defined in the Federally Recognized Indian Tribe List Act of 1994, 25 U.S.C. 479a, located in 

the State. 

(d) Submission and timing. The BHP Blueprint must be submitted in a manner and 

format specified by HHS. States may not implement the BHP prior to receiving full certification. 

The date of implementation for this purpose is the first day enrollees would receive coverage 

under the BHP. Following the 2015 initial implementation year, a state implementing a BHP 

must coordinate implementation with open enrollment of the state’s exchange. 

§600.120 Certification of a BHP Blueprint. 

(a) Effective date of certification. The effective date of either interim or full certification 

is the date of signature by the Secretary. 

(b) Payments for periods prior to certification. No payment may be made under this part 

for periods of BHP operation prior to the date of full certification. 

(c) Period in which a certified Blueprint remains in effect. The certified Blueprint 

remains in effect until: 

(1) The Blueprint is replaced by Secretarial certification of updated Blueprint containing 

revisions submitted by the State. 

(2) The State terminates the program consistent with §600.140. 

(3) The Secretary makes a finding that the BHP Blueprint no longer meets the standards 

for certification based on findings in the annual review, or reports significant evidence of 

beneficiary harm, financial malfeasance, fraud, waste or abuse by the BHP agency or the State 

consistent with §600.142. 

(d) Blueprint approval standards for certification. The Secretary will certify a BHP 

Blueprint provided it meets all of the following standards: 
CMS-2380-F 119 

(1) The Blueprint contains sufficient information for the Secretary to determine that the 

BHP will comply with the requirements of section 1331 of the Affordable Care Act and this Part. 

(2) The BHP Blueprint demonstrates adequate planning for the integration of BHP with 

other insurance affordability programs in a manner that will permit a seamless, coordinated 

experience for a potentially eligible individual. 

(3) The Blueprint is a complete and comprehensive description of the BHP and its 

operations, demonstrating thorough planning and a concrete program design, without reserved 

decisions on operational features. 

§ 600.125 Revisions to a certified BHP Blueprint. 

(a) Submission of revisions. In the event that a State seeks to make significant change(s) 

that alter program operations the BHP benefit package, enrollment, disenrollment and 

verification policies described in the certified BHP Blueprint, the State must submit a revised 

Blueprint to the Secretary for review and certification. 

(b) Continued operation. The State is responsible for continuing to operate under the 

terms of the existing certified Blueprint until and unless a revised Blueprint is certified. 

§600.130 Withdrawal of a BHP Blueprint prior to implementation. 

To the extent that a State has not enrolled eligible individuals into the BHP: 

(a) The State may submit a written request to stop any further consideration of a 

previously submitted BHP Blueprint, whether certified or not. 

(b) The written request must be signed by the governor, or the State official delegated to 

sign the BHP Blueprint by the governor. 

(c) HHS will respond with a written confirmation that the State has withdrawn the 

Blueprint. 

§600.135 Notice and timing of HHS action on a BHP Blueprint. 
CMS-2380-F 120 

(a) Timely response. HHS will act on all certification and revision requests in a timely 

manner. 

(b) Issues preventing certification. HHS will notify the State in writing of any 

impediments to certification that arise in reviewing a proposed BHP Blueprint. 

(c) Reconsideration of decision. HHS will accept a State request for reconsideration of a 

certification decision and provide an impartial review against the standards for certification if 

requested. 

§600.140 State termination of a BHP. 

(a) If a State decides to terminate its BHP, the State must complete all of the following 

prior to the effective date of the termination or the indicated dates: 

(1) Submit written notice to the Secretary no later than 120 days prior to the proposed 

termination date accompanied by a proposed transition plan that describes procedures to assist 

consumers with transitioning to other insurance affordability programs. 

(2) Resolve concerns expressed by the Secretary and obtain approval by the Secretary of 

the transition plan. 

(3) Submit written notice to all participating standard health plan offerors, and enrollees 

that it intends to terminate the program at least 90 days prior to the termination date. The notices 

to enrollees must include information regarding the State’s assessment of their eligibility for all 

other insurance affordability programs in the State. Notices must meet the accessibility and 

readability standards at 45 CFR 155.230(b). 

(4) Transmit all information provided as part of an application, and any information 

obtained or verified by the State or other agencies administering insurance affordability 

programs via secure electronic interface, promptly and without undue delay to the agency 

administering the Exchange and the Medicaid agency as appropriate. 
CMS-2380-F 121 

(5) Fulfill its contractual obligations to participating standard health plan offerors 

including the payment of all negotiated rates for participants, as well as plan oversight ensuring 

that participating standard health plan offerors fulfill their obligation to cover benefits for each 

enrollee. 

(6) Fulfill data reporting requirements to HHS. 

(7) Complete the annual financial reconciliation process with HHS to ensure full 

compliance with Federal financial obligations. 

(8) Refund any remaining balance in the BHP trust fund. 

(b) [Reserved] 

§600.142 HHS withdrawal of certification and termination of a BHP. 

(a) The Secretary may withdraw certification for a BHP Blueprint based on a finding that 

the BHP Blueprint no longer meets the standards for certification based on findings in the annual 

review, findings from a program review conducted in accordance with §600.200 or from 

significant evidence of beneficiary harm, financial malfeasance, fraud, waste or abuse. 

(b) Withdrawal of certification for a BHP Blueprint shall occur only after the Secretary 

provides the State with notice of the proposed finding that the standards for certification are not 

met or evidence of harm or misconduct in program operations, a reasonable period for the State 

to address the finding (either by substantiating compliance with the standards for certification or 

submitting revisions to the Blueprint, or securing HHS approval of a corrective action plan), and 

an opportunity for a hearing before issuing a final finding. 

(c) The Secretary shall make every reasonable effort to resolve proposed findings without 

requiring withdrawal of BHP certification and in the event of a decision to withdraw 

certification, will accept a request from the State for reconsideration. 
CMS-2380-F 122 

(d) The effective date of an HHS determination withdrawing BHP certification shall not 

be earlier than 120 days following a final finding of noncompliance with the standards for 

certification. 

(e) Within 30 days following a final finding of noncompliance with the standards for 

certification, the State shall submit a transition plan that describes procedures to assist 

consumers with transitioning to other insurance affordability programs, and shall comply with 

the procedures described in § 600.140(a)(2) through (8). 

§600.145 State program administration and operation. 

(a) Program operation. The State must implement its BHP in accordance with 

the approved and fully certified State BHP Blueprint, any approved modifications to the State 

BHP Blueprint and the requirements of this chapter and applicable law. 

(b) Eligibility. All persons have a right to apply for a determination of eligibility and, if 

eligible, to be enrolled into coverage that conforms to the regulations in this part. 

(c) Statewide program operation. A state choosing to operate a BHP must operate it 

statewide. 

(d) No caps on program enrollment. A State implementing a BHP must not be permitted 

to limit enrollment by setting an income level below the income standard prescribed in section 

1331 of the Affordable Care Act, having a fixed enrollment cap or imposing waiting lists. 

(e) Transition plan. States implementing in 2015 may identify a transition period 

following initial implementation during which the state may propose alternative enrollment 

strategies for approval. The transition plan is required to be submitted as part of the state’s BHP 

Blueprint consistent with § 600.110. 

(f) Core operations. A State operating a BHP must perform all of the following core 

operating functions: 
CMS-2380-F 123 

(1) Eligibility determinations as specified in § 600.320. 

(2) Eligibility appeals as specified in § 600.335. 

(3) Contracting with standard health plan offerors as specified in § 600.410. 

(4) Oversight and financial integrity including, but not limited to, operation of the Trust 

Fund specified at §§600.705 and 600.710, compliance with annual reporting at §600.170, and 

providing data required by § 600.610 for Federal funding and reconciliation processes. 

(5) Consumer assistance as required in §600.150. 

(6) Extending protections to American Indian/Alaska Natives specified at 

§600.160, as well as comply with the Civil Rights and nondiscrimination provisions specified at 

§600.165. 

(7) Data collection and reporting as necessary for efficient and effective operation of the 

program and as specified by HHS to support program oversight. 

(8) If necessary, program termination procedures at §600.145. 

§600.150 Enrollment assistance and information requirements. 

(a) Information disclosure. (1) The State must make accurate, easily understood 

information available to potential applicants and enrollees about the BHP coverage option along 

with information about other insurance affordability programs. 

(2) The State must provide accessible information on coverage, including additional 

benefits that may be provided outside of the standard health plan coverage, any tiers of coverage 

it has built into the BHP, including who is eligible for each tier. 

(3) The State must require participating standard health plans to provide clear 

information on premiums; covered services including any limits on amount, duration and scope 

of those services; applicable cost-sharing using a standard format supplied by the State, and 

other data specified in, and in accordance with, 45 CFR 156.220. 
CMS-2380-F 124 

(4) The State must provide information in a manner consistent with 45 CFR 155.205(c). 

(5) The State must require participating standard health plans to make publicly available, 

and keep up to date (at least quarterly), the names and locations of currently participating 

providers. 

(b) [Reserved] 

§ 600.155 Tribal consultation. 

The State must consult with Indian tribes located in the State on the development and 

execution of the BHP Blueprint using the tribal consultation policy approved by the State 

Exchange. 

§600.160 Protections for American Indian and Alaska Natives. 

(a) Enrollment. Indians must be extended the same special enrollment status in BHP 

standard health plans as applicable to enrollment in a QHP through the Exchange under 45 CFR 

155.420(d)(8). Indians will be allowed to enroll in, or change enrollment in, standard health 

plans one time per month. 

 (b) Cost sharing. No cost sharing may be imposed on Indians under the standard health 

plan. 

(c) Payments to providers. Equal to the protection extended to Indian health providers 

providing services to Indians enrolled in a QHP in the individual market through an Exchange at 

45 CFR 156.430(g), BHP offerors may not reduce the payment for services to Indian health 

providers by the amount of any cost-sharing that would be due from the Indian but for the 

prohibition in paragraph (b) of this section. 

(d) Requirement. Standard health plans must pay primary to health programs operated by 

the Indian Health Service, Indian tribes, tribal organizations, and urban Indian organizations for 

services that are covered by a standard health plan. 
CMS-2380-F 125 

§600.165 Nondiscrimination standards. 

(a) The State and standard health plans, must comply with all applicable civil rights 

statutes and requirements, including Title VI of the Civil Rights Act of 1964, Title II of the 

Americans with Disabilities Act of 1990, Section 504 of the Rehabilitation Act of 1973, the Age 

Discrimination Act of 1975, Section 1557 of the Affordable Care Act, and 45 CFR part 80, part 

84, and part 91 and 28 CFR part 35. 

(b) The State must comply with the nondiscrimination provision at 45 CFR 

155.120(c)(2). 

§600.170 Annual report content and timing. 

(a) Content. The State must submit an annual report that includes any evidence of fraud, 

waste, or abuse on the part of participating providers, plans, or the State BHP agency known to 

the State, and a detailed data-driven review of compliance with the following: 

(1) Eligibility verification requirements for program participation as specified in § 

600.345. 

(2) Limitations on the use of Federal funds received by the BHP as specified in § 

600.705. 

(3) Requirements to collect quality and performance measures from all participating 

standard health plans focusing on quality of care and improved health outcomes as specified in 

sections 1311(c)(3) and (4) of the Affordable Care Act and as further described in §600.415. 

(4) Requirements specified by the Secretary at least 120 days prior to the date of the 

annual report as requiring further study to assess continued State compliance with Federal law, 

regulations and the terms of the State’s certified Blueprint, based on a Federal review of the BHP 

pursuant to §600.200, and/or a list of any outstanding recommendations from any audit or 

evaluation conducted by the HHS Office of Inspector General that have not been fully 
CMS-2380-F 126 

implemented, including a statement describing the status of implementation and why 

implementation is not complete. 

(b) Timing. The annual reports, in the format specified by the Secretary, are due 60 days 

after the end of each operational year. Information that may be required to secure the release of 

funding for the subsequent year may be requested in advance. 

Subpart C--Federal Program Administration 

§600.200 Federal program compliance reviews and audits.

(a) Federal compliance review of the State BHP. To determine whether the State is 

complying with the Federal requirements and the provisions of its BHP Blueprint, HHS may 

review, as needed, but no less frequently than annually, the compliance of the State BHP with 

applicable laws, regulations and interpretive guidance. This review may be based on the State’s 

annual report submitted under §600.170, or may be based on direct Federal review of State 

administration of the BHP Blueprint through analysis of the State’s policies and procedures, 

reviews of agency operation, examination of samples of individual case records, and additional 

reports and/or data as determined by the Secretary. 

(b) Action on compliance review findings. The compliance review will identify the 

following action items: 

(1) Requirements that need further study or data to assess continued State compliance 

with Federal law, regulations and the terms of the State’s certified Blueprint. Such findings must 

be addressed in the next State annual report due no more than 120 days after the date of the 

issuance of the Federal compliance review. 

(2) Requirements with which the State BHP does not appear to be in compliance that 

could be the basis for withdrawal of BHP certification. Such findings must be resolved by the 

State (either by substantiating compliance with the standards for certification or submitting 
CMS-2380-F 127 

revisions to the Blueprint) If not resolved, such action items can be the basis for a proposed 

finding for withdrawal of BHP certification. 

(3) Requirements with which the State BHP does not appear to be in compliance and are 

not a basis for withdrawal of BHP certification but require revision to the Blueprint must be 

resolved by the State. If not resolved, such action items can be the basis for denial of other 

Blueprint revisions. 

(4) Improper use of BHP trust fund resources. The State and the BHP trustees shall be 

given an opportunity to review and resolve concerns regarding improper use of BHP trust funds, 

including failure to use these funds as specified in §600.705. As indicated in § 600.715(a) 

through (c), the state may do this either by substantiating the proper use of trust fund resources 

as specified in §600.705(c) or by taking corrective action, which include changes to procedures 

to ensure proper use of trust fund resources, and restitution of improperly used resources to the 

trust fund. 

(c) The HHS Office of Inspector General (OIG) may periodically audit State operations 

and standard health plan practices as described in § 430.33 of this chapter. Final reports on those 

audits shall be transmitted to both the State and the Secretary for actions on findings. The State 

and the BHP trustees shall be given an opportunity to resolve concerns about improper use of 

BHP trust funds as indicated in § 600.715(a) through (c): either by substantiating the proper use 

of trust fund, or by taking corrective action that includes changes to procedures to ensure proper 

use of trust fund resources, and restitution of improperly used resources to the trust fund. 

Subpart D--Eligibility and Enrollment 

§ 600.300 Basis, scope, and applicability. 

 (a) Statutory basis. This subpart interprets and implements section 1331(e) of the 

Affordable Care Act, which sets forth eligibility standards for the BHP and prohibits eligible 
CMS-2380-F 128 

individuals from being treated as qualified individuals under section 1312 of the Affordable Care 

Act and enrolling in qualified health plans offered through the Exchange. 

(b) Scope and applicability. This subpart sets forth the requirements for all BHPs 

established under section 1331 of the Affordable Care Act regarding eligibility standards and 

application screening and enrollment procedures. 

§600.305 Eligible individuals. 

(a) Eligibility standards The State must determine individuals eligible to enroll in a 

standard health plan if they: 

(1) Are residents of the State. 

(2) Have household income which exceeds 133 percent but does not exceed 200 percent 

of the FPL for the applicable family size, or, in the case of an individual who is a lawfully 

present non-citizen, ineligible for Medicaid or CHIP due to such immigration status, whose 

household income is between zero and 200 percent of the FPL for the applicable family size. 

(3) Are not eligible to enroll in minimum essential coverage (other than a standard health 

plan). If an individual meets all other eligibility standards, and— 

(i) Is eligible for, or enrolled in, coverage that does not meet the definition of minimum 

essential coverage, including Medicaid that is not minimum essential coverage, the individual is 

eligible to enroll in a standard health plan without regard to eligibility or enrollment in Medicaid; 

or 

(ii) Is eligible for Employer Sponsored Insurance (ESI) that is unaffordable (as 

determined under section 36B(c)(2)(C) of the Internal Revenue Code), the individual is eligible 

to enroll in a standard health plan. 

(4) Are 64 years of age or younger. 

(5) Are either a citizen or lawfully present non-citizen. 
CMS-2380-F 129 

(6) Are not incarcerated, other than during a period pending disposition of charges. 

(b) Eligibility restrictions. With the exception of during an approved implementation 

period specified in a transition plan in accordance with §600.145, the State may not impose 

conditions of eligibility other than those identified in this section, including, but not limited to, 

restrictions on eligibility based on geographic location or imposition of an enrollment cap or a 

waiting period for individuals previously eligible for or enrolled in other coverage. 

§600.310 Application. 

(a) Single streamlined application. The State must use the single streamlined application 

used by the State in accordance with §435.907(b) of this chapter and 45 CFR 155.405(a) and (b). 

(b) Opportunity to apply and assistance with application. The terms of §§435.906, 

435.907(g) and 435.908 of this chapter, requiring the State to provide individuals the opportunity 

to apply and receive assistance with an application in the Medicaid program, apply in the same 

manner to States in the administration of the BHP. 

(c) Authorized representatives. The State may choose to permit the use of an authorized 

representative designated by an applicant or beneficiary to assist with the individual’s 

application, eligibility renewal and other ongoing communication with the BHP. If the State 

chooses this option, the State must follow the standards set forth at either 45 CFR 155.227 or 42 

CFR 435.923. 

§600.315 Certified application counselors. 

The State may have a program to certify application counselors to assist individuals to apply for 

enrollment in the BHP and other insurance affordability programs. If the State chooses this 

option, the State must follow the procedures and standards for such a program set forth in the 

regulations at either 45 CFR 155.225 or 42 CFR 435.908. 

§600.320 Determination of eligibility for and enrollment in a standard health plan. 
CMS-2380-F 130 

(a) Determining eligibility to enroll in a standard health plan may be performed by a 

State or through delegation to a local governmental entity, including a governmental entity that 

determines eligibility for Medicaid or CHIP, and may be delegated by the State to an Exchange 

that is a government agency. 

(b) Timely determinations. The terms of 42 CFR 435.912 (relating to timely 

determinations of eligibility under the Medicaid program) apply to eligibility determinations for 

enrollment in a standard health plan exclusive of § 435.912(c)(3)(i). The standards established 

by the State must be included in the BHP Blueprint. 

(c) Effective date of eligibility. The State must establish a uniform method of 

determining the effective date of eligibility for enrollment in a standard health plan following 

either the Exchange standards at 45 CFR 155.420(b)(1) or the Medicaid process at 42 CFR 

435.915 exclusive of § 435.915(a). 

(d) Enrollment periods. The State must either offer enrollment and special enrollment 

periods no more restrictive than those required for an Exchange at 45 CFR 155.410 and 155.420 

or follow the Medicaid process permitting continuous open enrollment throughout the year. 

§600.330 Coordination with other insurance affordability programs. 

(a) Coordination. The State must establish eligibility and enrollment mechanisms and 

procedures to maximize coordination with the Exchange, Medicaid and CHIP. The terms of 45 

CFR 155.345(a) regarding the agreements between insurance affordability programs apply to a 

BHP. The State BHP agency must fulfill the requirements of 42 CFR 435.1200(d) and (e) and, if 

applicable, paragraph (c) for BHP eligible individuals. 

(b) Coordinated determinations of eligibility. The agency administering BHP must 

establish and maintain processes to make income eligibility determinations using modified 

adjusted gross income, and to ensure that applications received by the agency, to the extent 
CMS-2380-F 131 

warranted and permitted under delegations from other agencies administering insurance 

affordability programs, also result in eligibility assessments or determinations for those other 

programs. The BHP must also accept applications transferred from other agencies administering 

insurance affordability programs, and ensure that individuals assessed or determined eligible for 

BHP by such other agencies are afforded the opportunity to enroll in a standard health plan 

without undue delay. Individuals submitting applications to any of the aforementioned agencies 

must not be required to duplicate the submission of information. 

(c) Account transfers. The agency administering the BHP must participate in the secure 

exchange of information with agencies administering other insurance affordability programs, 

using the standards set forth under 45 CFR 155.345(h) regarding electronic account transfers. 

(d) Notification to referring agency. The terms in § 435.1200(d)(5) regarding the 

notification to other programs of the final determination of eligibility apply equally to States 

administering a BHP. 

(e) Notice of decision concerning eligibility. Every application for BHP shall result in a 

determination of eligibility or ineligibility, unless the application has been withdrawn, the 

applicant has died, or the applicant cannot be located. Written notices of eligibility 

determinations shall be provided and shall be coordinated with other insurance affordability 

programs and Medicaid. Electronic notices shall be provided to the extent consistent with § 

435.918(b). 

§600.335 Appeals. 

(a) Notice of eligibility appeal rights. Eligibility determinations must include a notice of 

the right to appeal the determination, and instructions regarding how to file an appeal. 

(b) Appeals process. Individuals must be given the opportunity to appeal BHP eligibility 

determinations through the appeals rules of the state’s Medicaid program or the Exchange. 
CMS-2380-F 132 

However, this process may not include an appeal to the federal Department of Health and 

Human Services. 

(c) Accessibility. Notices must be provided and the appeals process must be conducted in 

a manner accessible to individuals with limited English proficiency and persons with disabilities. 

§600.340 Periodic redetermination and renewal of BHP eligibility. 

(a) Periodic review of eligibility. An individual is subject to periodic review of eligibility 

every 12 months unless the eligibility is redetermined sooner based on new information received 

and verified from enrollee reports or data sources. The State must require 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, consistent with 45 CFR 155.330(b). 

(b) Renewal of coverage. If an enrollee remains eligible for coverage in the BHP, the 

enrollee will be afforded notice of a reasonable opportunity at least annually to change plans to 

the extent the BHP offers a choice of plans, and shall remain in the plan selected for the previous 

year unless such enrollee terminates coverage from the plan by selecting a new plan or 

withdrawing from a plan, or the plan is no longer available as a standard health plan in BHP. 

Enrollees in plans that are no longer available will be given a reasonable opportunity to select a 

new plan, and if they do not select a new plan will be enrolled in another plan pursuant to a 

methodology set forth in the State’s Blueprint. 

(c) Procedures. The State shall choose to apply equally all the redetermination procedures 

described in either 45 CFR 155.335 or 42 CFR 435.916(a) in administering a BHP. 

(d) Verification. The State must verify information needed to redetermine and renew 

eligibility in accordance with § 600.345 and comply with the requirements set forth in § 600.330 

relating to screening individuals for other insurance affordability programs and transmitting such 
CMS-2380-F 133 

individuals’ electronic accounts and other relevant information to the other program, as 

appropriate. 

(e) Notice to enrollee. The State must provide an enrollee with an annual notice of 

redetermination of eligibility. The annual notice should include all current information used for 

the most recent eligibility determination. The enrollee is required to report any changes with 

respect to information listed within the notice within 30 days of the date of the notice. The State 

must verify information in accordance with § 600.345. 

(f) Continuous eligibility. The state is not required to redetermine eligibility of BHP 

enrollees more frequently than every 12 months, regardless of changes of circumstances, as long 

as the enrollees are under age 65, are not otherwise enrolled in minimum essential coverage and 

remain residents of the State. 

§600.345 Eligibility verification. 

(a) The State must verify the eligibility of an applicant or beneficiary for BHP consistent 

either with the standards and procedures set forth in— 

(1) Medicaid regulations at §§ 435.945 through 435.956 of this chapter; or 

(2) Exchange regulations at 45 CFR 155.315 and 155.320. 

(b) [Reserved] 

§600.350 Privacy and security of information. 

The State must comply with the standards and procedures set forth in 45 CFR 155.260(b) and (c) 

as are applicable to the operation of the BHP. 

Subpart E--Standard Health Plan 

§600.400 Basis, scope, and applicability. 

(a) Statutory basis. This subpart implements sections 1331(b), (c), and (g) of the 

Affordable Care Act, which set forth provisions regarding the minimum coverage standards 
CMS-2380-F 134 

under BHP, as well as the delivery of such coverage, including the contracting process for 

standard health plan offerors participating in the BHP. 

(b) Scope and applicability. This subpart consists of provisions relating to all BHPs for 

the delivery of, at a minimum, the ten essential health benefits as described in section 1302(b) of 

the Affordable Care Act, the contracting process by which States must contract for the provision 

of standard health plans, the minimum requirements States must include in their standard health 

plan contracts, the minimum coverage standards provided by the standard health plan offeror, 

and other applicable requirements to enhance the coordination of the provision of standard health 

plan coverage. 

§600.405 Standard health plan coverage. 

(a) Essential Health Benefits (EHB). Standard health plan coverage must include, at a 

minimum, the essential health benefits as determined and specified under 45 CFR 156.110, and 

45 CFR 156.122 regarding prescription drugs, except that States may select more than one base 

benchmark option from those codified at 45 CFR 156.100 for establishing essential health 

benefits for standard health plans. Additionally, States must comply with 45 CFR 156.122(a)(2) 

by requiring participating plans to submit their drug list to the State. 

(b) Additional required benefits. Where the standard health plan for BHP is subject to 

State insurance mandates, the State shall adopt the determination of the Exchange at 45 CFR 

155.170(a)(3) in determining which benefits enacted after December 31, 2011 are in addition to 

EHB. 

(c) Periodic review. Essential health benefits must include any changes resulting from 

periodic reviews required by section 1302(b)(4)(G) of the Affordable Care Act. The provision 

of such essential health benefits must meet all the requirements of 45 CFR 156.115. 

(d) Non-discrimination in benefit design. The terms of 45 CFR 156.125 applies to 
CMS-2380-F 135 

standard health plans offered under the BHP. 

 (e) Compliance. The State and standard health plans must comply with prohibitions on 

federal funding for abortion services at 45 CFR 156.280. 

§600.410 Competitive contracting process. 

(a) General requirement. In order to receive initial HHS certification as described in 

§600.120, the State must assure in its BHP Blueprint that it complies with the requirements set 

forth in this section. 

(b) Contracting process. The State must: 

(1) Conduct the contracting process in a manner providing full and open competition 

consistent with the standards of 45 CFR 92.36(b) through (i); 

(2) Include a negotiation of the elements described in paragraph (d) of this section on a 

fair and adequate basis; and 

(3) Consider the additional elements described in paragraph (e) of this section. 

(c) Initial implementation exceptions. (1) If a State is not able to implement a 

competitive contracting process described in paragraph (b) of this section for program year 2015, 

the State must include a justification as to why it cannot meet the conditions in paragraph (b), as 

well as a description of the process it will use to enter into contracts for the provision of standard 

health plans under BHP. 

(2) The State must include a proposed timeline that implements a competitive 

contracting process, as described in paragraph (b) of this section, for program year 2016. 

(3) Initial implementation exceptions are subject to HHS approval consistent with the 

BHP Blueprint review process established in §600.120, and may only be in effect for benefit 

year 2015. 

(d) Negotiation criteria. The State must assure that its competitive contracting process 
CMS-2380-F 136 

includes the negotiation of: 

(1) Premiums and cost sharing, consistent with the requirements at §§600.505 and 

600.510(e); 

(2) Benefits, consistent with the requirements at §600.405; 

(3) Inclusion of innovative features, such as: 

(i) Care coordination and care management for enrollees, with a particular focus on 

enrollees with chronic health conditions; 

(ii) Incentives for the use of preventive services; and 

(iii) Establishment of provider-patient relationships that maximize patient involvement 

in their health care decision-making, including the use of incentives for appropriate health care 

utilization and patient choice of provider. 

(e) Other considerations: The State shall also include in its competitive process criteria 

to ensure: 

(1) Consideration of health care needs of enrollees; 

(2) Local availability of, and access, to health care providers to ensure the appropriate 

number, mix and geographic distribution to meet the needs of the anticipated number of 

enrollees in the service area (including but not limited to services provided by essential 

community providers, as defined in 45 CFR 156.235) so that access to services is at least 

sufficient to meet the access standards applicable under 42 CFR Part 438, Subpart D, or 45 CFR 

156.230 and 156.235; 

(3) Use of a managed care process, or a similar process to improve the quality, 

accessibility, appropriate utilization, and efficiency of services provided to enrollees; 

(4) Performance measures and standards focused on quality of care and improved health 

outcomes as specified in §600.415; 
CMS-2380-F 137 

(5) Coordination between other health insurance affordability programs to ensure 

enrollee continuity of care as described in §600.425; and 

(6) Measures to prevent, identify, and address fraud, waste and abuse and ensure 

consumer protections. 

(f) Discrimination. Nothing in the competitive process shall permit or encourage 

discrimination in enrollment based on pre-existing conditions or other health status-related 

factors. 

§600.415 Contracting qualifications and requirements. 

(a) Eligible offerors for standard health plan contracts. A State may enter into contracts 

for the administration and provision of standard health plans under the BHP with, but not limited 

to, the following entities: 

(1) Licensed health maintenance organization. 

(2) Licensed health insurance insurer. 

(3) Network of health care providers demonstrating capacity to meet the criteria set forth 

in § 600.410(d). 

(4) Non-licensed health maintenance organizations participating in Medicaid and/or 

CHIP. 

(b) General contract requirements. (1) A State contracting with eligible standard health 

plan offerors described in paragraph (a) of this section must include contract provisions 

addressing network adequacy, service provision and authorization, quality and performance, 

enrollment procedures, disenrollment procedures, noticing and appeals, provisions protecting the 

privacy and security of personally identifiable information, and other applicable contract 

requirements as determined by the Secretary to the extent that the service delivery model furthers 

the objectives of the program. 
CMS-2380-F 138 

(2) All contracts under this part must include provisions that define a sound and 

complete procurement contract, as required by 45 CFR 92.36(i). 

(3) To the extent that the standard health plan is health insurance coverage offered by a 

health insurance issuer, the contract must provide that the medical loss ratio is at least 85 

percent. 

(c) Notification of State election. To receive HHS certification, the State must include in 

its BHP Blueprint the standard set of contract requirements described in paragraph (b) of this 

section that will be incorporated into its standard health plan contracts. 

§600.420 Enhanced availability of standard health plans. 

(a) Choice of standard health plans offerors. (1) The State must assure that standard 

health plans from at least two offerors are available to enrollees under BHP. This assurance 

shall be reflected in the BHP Blueprint, which if applicable, shall also include a description of 

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

(2) If a State is not able to assure choice of standard health plan offerors, the State may 

request an exception to the requirement set forth in paragraph (a)(1) of this section, which must 

include a justification as to why it cannot assure choice of standard health plan offeror as well as 

demonstrate that the State has reviewed its competitive contracting process to determine the 

following: 

(i) Whether all contract requirements and qualifications are required under the federal 

framework for BHP; 

(ii) Whether additional negotiating flexibility would be consistent with the minimum 

statutory requirements and available BHP funding: and 

(iii) Whether potential bidders have received sufficient information to encourage 

participation in the BHP competitive contracting process. 
CMS-2380-F 139 

(b) Use of regional compacts. (1) A State may enter into a joint procurement with other 

States to negotiate and contract with standard health plan offerors to administer and provide 

standard health plans statewide, or in geographically specific areas within the States, to BHP 

enrollees residing in the participating regional compact States. 

(2) A State electing the option described in paragraph (b)(1) of this section that also 

contracts for the provision of a geographically specific standard health plan must assure that 

enrollees, regardless of residency within the State, continue to have choice of at least two 

standard health plans. 

(3) A State electing the option described in paragraph (b)(1) of this section must include 

in its BHP Blueprint all of the following: 

(i) The other State(s) entering into the regional compact. 

(ii) The specific areas within the participating States that the standard health plans will 

operate, if applicable. 

(A) If the State contracts for the provision of a geographically specific standard health 

plan, the State must describe in its BHP Blueprint how it will assure that enrollees, regardless of 

location within the State, continue to have choice of at least two standard health plan offerors. 

(B) [Reserved] 

(iii) An assurance that the competitive contracting process used in the joint procurement 

of the standard health plans complies with the requirements set forth in §600.410. 

(iv) Any variations that may occur as a result of regional differences between the 

participating states with respect to benefit packages, premiums and cost sharing, contracting 

requirements and other applicable elements as determined by HHS. 

§600.425 Coordination with other insurance affordability programs. 

A State must ensure coordination for the provision of health care services to promote 
CMS-2380-F 140 

enrollee continuity of care between Medicaid, CHIP, Exchange and any other state-administered 

health insurance programs. The State’s BHP Blueprint must describe how it will ensure such 

coordination.

Subpart F--Enrollee Financial Responsibilities 

§600.500 Basis, scope, and applicability. 

(a) Statutory basis. This subpart implements section 1331(a) of the Affordable Care Act, 

which sets forth provisions regarding the establishment of the BHP and requirements regarding 

monthly premiums and cost sharing for enrollees. 

(b) Scope and applicability. This subpart consists of provisions relating to the 

imposition of monthly premiums and cost-sharing under all state BHPs. 

§600.505 Premiums. 

(a) Premium requirements. (1) For premiums imposed on enrollees, the State must assure 

that the monthly premium imposed on any enrollee does not exceed the monthly premium that 

the enrollee would have been required to pay had he or she enrolled in a plan with a premium 

equal to the premium of the applicable benchmark plan, as defined in 26 CFR 1.36B-3(f). The 

State must assure that when determining the amount of the enrollee’s monthly premium, the 

State took into account reductions in the premium resulting from the premium tax credit that 

would have been paid on the enrollee’s behalf. 

(2) This assurance must be reflected in the BHP Blueprint, which shall also include: 

(i) The group or groups of enrollees subject to premiums. 

(ii) The collection method and procedure for the payment of an enrollee’s premium. 

(iii) The consequences for an enrollee or applicant who does not pay a premium. 

(b) [Reserved] 

§600.510 Cost-sharing. 
CMS-2380-F 141 

(a) Cost-sharing requirements. (1) For cost sharing imposed on enrollees, the State must 

assure the following: 

(i) The cost sharing imposed on enrollees meet the standards detailed in §600.520(c). 

(ii) The establishment of an effective system to monitor and track the cost-sharing 

standards consistent with §600.520(b) through (d). 

(2) This assurance must be reflected in the BHP Blueprint, which shall also include the 

group or groups of enrollees subject to the cost sharing. 

(b) Cost sharing for preventive health services. A State may not impose cost sharing with 

respect to the preventive health services or items, as defined in, and in accordance with 45 CFR 

147.130. 

§600.515 Public schedule of enrollee premium and cost sharing. 

(a) The State must ensure that applicants and enrollees have access to information about 

all of the following, either upon request or through an Internet web site: 

(1) The amount of and types of enrollee premiums and cost sharing for each standard 

health plan that would apply for individuals at different income levels. 

(2) The consequences for an applicant or an enrollee who does not pay a premium. 

(b) The information described in paragraph (a) of this section must be made available to 

applicants for standard health plan coverage and enrollees in such coverage, at the time of 

enrollment and reenrollment, after a redetermination of eligibility, when premiums, cost sharing, 

and annual limitations on cost sharing are revised, and upon request by the individual. 

§600.520 General cost-sharing protections. 

(a) Cost-sharing protections for lower income enrollees. The State may vary premiums 

and cost sharing based on household income only in a manner that does not favor enrollees with 

higher income over enrollees with lower income. 
CMS-2380-F 142 

(b) Cost-sharing protections to ensure enrollment of Indians. A State must ensure that 

standard health plans meet the standards in accordance with 45 CFR 156.420(b)(1) and (d). 

(c) Cost-sharing standards. A State must ensure that standard health plans meet: 

(1) The standards in accordance with 45 CFR 156.420(c) and (e); and 

(2) The cost-sharing reduction standards in accordance with 45 CFR 156.420(a)(1) for 

an enrollee with household income at or below 150 percent of the FPL, and 45 CFR 

156.420(a)(2) for an enrollee with household income above 150 percent of the FPL. 

(3) The State must establish an effective system to monitor compliance with the costsharing reduction standards in paragraph (c) of this section, and the cost-sharing protections to 

ensure enrollment of Indians in paragraph (b) of this section to ensure that enrollees are not held 

responsible for such monitoring activity. 

(d) Acceptance of certain third party payments. States must ensure that standard health 

plans must accept premium and cost-sharing payments from the following third party entities on 

behalf of plan enrollees: 

(1) Ryan White HIV/AIDS Programs under title XXVI of the Public Health Service Act; 

(2) Indian tribes, tribal organizations or urban Indian organizations; and 

(3) State and federal government programs. 

§600.525 Disenrollment procedures and consequences for nonpayment of premiums. 

(a) Disenrollment procedures due to nonpayment of premium. (1) A State must assure 

that it is in compliance with the disenrollment procedures described in 45 CFR 155.430. This 

assurance must be reflected in the state’s BHP Blueprint. 

(2) A State electing to enroll eligible individuals in accordance with 45 CFR 155.410 and 

155.420 must comply with the premium grace period standards set forth in 45 CFR 156.270 for 

required premium payment prior to disenrollment. 
CMS-2380-F 143 

(3) A State electing to enroll eligible individuals throughout the year must provide an 

enrollee a 30-day grace period to pay any required premium prior to disenrollment. 

(b) Consequences of nonpayment of premium. (1) A State electing to enroll eligible 

individuals in accordance with 45 CFR 155.410 and 155.420 may not restrict reenrollment to 

BHP beyond the next open enrollment period. 

(2) A State electing to enroll eligible individuals throughout the year must comply with 

the reenrollment standards set forth in § 457.570(c) of this chapter. If applicable, the State must 

define the length of its premium lockout period in its BHP Blueprint. 

Subpart G--Payment to States 

§600.600 Basis, scope, and applicability. 

(a) Statutory basis. This subpart implements section 1331(d)(1) and (3) of the Affordable 

Care Act regarding the transfer of Federal funds to a State’s BHP trust fund and the Federal 

payment amount to s State for the provision of BHP. 

(b) Scope and applicability. This subpart consists of provisions relating to the 

methodology used to calculate the amount of payment to a state in a given Federal fiscal year for 

the provision of BHP and the process and procedures by which the Secretary establishes a 

State’s BHP payment amount. 

§600.605 BHP payment methodology. 

(a) General calculation. The Federal payment for an eligible individual in a given 

Federal fiscal year is the sum of the premium tax credit component, as described in paragraph 

(a)(1) of this section, and the cost-sharing reduction component, as described in paragraph (a)(2) 

of this section. 

(1) Premium tax credit component. The premium tax credit component equals 95 percent 

of the premium tax credit for which the eligible individual would have qualified had he or she 
CMS-2380-F 144 

been enrolled in a qualified health plan through an Exchange in a given calendar year, adjusted 

by the relevant factors described in paragraph (b) of this section. 

(2) Cost-sharing reduction component. The cost-sharing reduction component equals 95 

percent of the cost of the cost-sharing reductions for which the eligible individual would have 

qualified had he or she been enrolled in a qualified health plan through an Exchange in a given 

calendar year adjusted by the relevant factors described in paragraph (b) of this section. 

(b) Relevant factors in the payment methodology. In determining the premium tax credit 

and cost-sharing reduction components described in paragraph (a) of this section, the Secretary 

will consider the following factors to determine applicable adjustments: 

(1) Age of the enrollee; 

(2) Income of the enrollee; 

(3) Self-only or family coverage; 

(4) Geographic differences in average spending for health care across rating areas; 

(5) Health status of the enrollee for purposes of determining risk adjustment payments 

and reinsurance payments had the enrollee been enrolled in a qualified health plan through an 

Exchange; 

(6) Reconciliation of the premium tax credit or cost-sharing reductions had such 

reconciliation occurred if an enrollee had been enrolled in a qualified health plan through an 

Exchange; 

(7) Marketplace experience in other states with respect to Exchange participation and the 

effect of the premium tax credit and cost-sharing reductions provided to residents, particularly 

those residents with income below 200 percent of the FPL; and 

(8) Other factors affecting the development of the methodology as determined by the 

Secretary. 
CMS-2380-F 145 

(c) Annual adjustments to payment methodology. The Secretary will adjust the payment 

methodology on a prospective basis to adjust for any changes in the calculation of the premium 

tax credit and cost-sharing reduction components to the extent that necessary data is available for 

the Secretary to prospectively determine all relevant factors, as specified in paragraph (b) of this 

section .. 

§600.610 Secretarial determination of BHP payment amount. 

(a) Proposed payment notice. (1) Beginning in FY 2015 and each subsequent year 

thereafter, the Secretary will determine and publish in a Federal Register document the next 

fiscal year’s BHP payment methodology. The Secretary will publish this document annually in 

October upon receiving certification from the Chief Actuary of CMS. 

(2) A State may be required to submit data in accordance with the published proposed 

payment document in order for the Secretary to determine the State’s payment rate as described 

in paragraph (b) of this section. 

(b) Final payment notice. (1) The Secretary will determine and publish the final BHP 

payment methodology and BHP payment amounts annually in February in a Federal Register 

document. 

(2) Calculation of payment rates. State payment rates are determined by the Secretary 

using the final BHP payment methodology, data requested in the proposed payment notice 

described in paragraph (a) of this section, and, if needed, other applicable data as determined by 

the Secretary. 

 (c) State specific aggregate BHP payment amounts. (1) Prospective aggregate payment 

amount. The Secretary will determine, on a quarterly basis, the prospective aggregate BHP 

payment amount by multiplying the payment rates described in paragraph (b) of this section by 

the projected number of enrollees. This calculation would be made for each category of enrollees 
CMS-2380-F 146 

based on enrollee characteristics and the other relevant factors considered when determining the 

payment methodology. The prospective aggregate BHP payment amount would be the sum of 

the payments determined for each category of enrollees for a State. 

(2) Retrospective adjustment to state specific aggregate payment amount for enrollment 

and errors. (i) Sixty days after the end of each fiscal year quarter, the Secretary will calculate a 

retrospective adjustment to the previous quarter’s specific aggregate payment amount by 

multiplying the payment rates described in paragraph (b) of this section by actual enrollment for 

the respective quarter. This calculation would be made for each category of enrollees based on 

enrollee characteristics and the other relevant factors considered when determining the payment 

methodology. The adjusted BHP payment amount would be the sum of the payments determined 

for each category of enrollees for a State. 

(ii) Upon determination that a mathematical error occurred during the application of the 

BHP funding methodology, the Secretary will recalculate the state’s BHP payment amount and 

make any necessary adjustments in accordance with paragraph (c)(2)(iv) of this section. 

(iii) To the extent that the final payment notice described in paragraph (b) of this section 

permits retrospective adjustments to the state’s BHP payment amount (due to the lack of 

necessary data for the Secretary to prospectively determine the relevant factors comprising the 

premium tax credit and cost-sharing reductions components of the BHP funding methodology), 

the Secretary will recalculate the state’s BHP payment amount and make any necessary 

adjustments in accordance with paragraph (c)(2)(iv) of this section. 

(iv) Any difference in the adjusted payment and the prospective aggregate payment 

amount will result in either: 

(A) A deposit of the difference amount into the State’s BHP trust fund; or 

(B) A reduction in the upcoming quarter’s prospective aggregate payment as described 
CMS-2380-F 147 

in paragraph (c)(1) of this section by the difference amount. 

§600.615 Deposit of Federal BHP payment. 

HHS will make quarterly deposits into the state’s BHP trust fund based on the aggregate 

quarterly payment amounts described in § 600.610(c). 

Subpart H--BHP Trust Fund 

§600.700 Basis, scope, and applicability. 

(a) Statutory basis. This subpart implements section 1331(d)(2) of the Affordable Care 

Act, which set forth provisions regarding BHP trust fund expenditures, fiscal policies and 

accountability standards and restitution to the BHP trust fund for unallowable expenditures. 

(b) Scope and applicability. This subpart sets forth a framework for BHP trust funds and 

accounting, establishing sound fiscal policies and accountability standards and procedures for 

the restitution of unallowable BHP trust fund expenditures. 

§600.705 BHP trust fund. 

(a) Establishment of BHP trust fund. (1) The State must establish a BHP trust fund with 

an independent entity, or in a segregated account within the State’s fund structure. 

(2) The State must identify trustees responsible for oversight of the BHP trust fund. 

(3) Trustees must specify individuals with the power to authorize withdrawal of funds 

for allowable trust fund expenditures. 

(b) Non-Federal deposits. The State may deposit non-Federal funds, including such 

funds from enrollees, providers or other third parties for standard health plan coverage, into its 

BHP trust fund. Upon deposit, such funds will be considered BHP trust funds, must remain in 

the BHP trust fund and meet the standards described in paragraphs (c) and (d) of this section. 

(c) Allowable trust fund expenditures. BHP trust funds may only be used to: 

(1) Reduce premiums and cost sharing for eligible individuals enrolled in standard health 
CMS-2380-F 148 

plans under BHP; or 

(2) Provide additional benefits for eligible individuals enrolled in standard health plans 

as determined by the State. 

(d) Limitations. BHP trust funds may not be expended for any purpose other than those 

specified in paragraph (c) of this section. In addition, BHP trust funds may not be used for other 

purposes including but not limited to: 

(1) Determining the amount of non-Federal funds for the purposes of meeting matching 

or expenditure requirements for Federal funding; 

(2) Program administration of BHP or any other program; 

(3) Payment to providers not associated with BHP services or requirements; or 

(4) Coverage for individuals not eligible for BHP. 

(e) Year-to-year carryover of trust funds. A State may maintain a surplus, or reserve, of 

funds in its trust through the carryover of unexpended funds from year-to-year. Expenditures 

from this surplus must be made in accordance with paragraphs (b) and (c) of this section. 

§600.710 Fiscal policies and accountability. 

The BHP administering agency must assure the fiscal policies and accountability set forth 

in paragraphs (a) through (g) of this section. This assurance must be reflected in the BHP 

Blueprint. 

(a) Accounting records. Maintain an accounting system and supporting fiscal records to 

assure that the BHP trust funds are maintained and expended in accord with applicable Federal 

requirements, such as OMB Circulars A-87 and A-133. 

(b) Annual certification. Obtain an annual certification from the BHP trustees, the 

State’s chief financial officer, or designee, certifying all of the following: 

(1) The State’s BHP trust fund financial statements for the fiscal year. 
CMS-2380-F 149 

(2) The BHP trust funds are not being used as the non-Federal share for purposes of 

meeting any matching or expenditure requirement of any Federally-funded program. 

(3) The use of BHP trust funds is in accordance with Federal requirements consistent 

with those specified for the administration and provision of the program. 

(c) Independent audit. Conduct an independent audit of BHP trust fund expenditures, 

consistent with the standards set forth in chapter 3 of the Government Accountability Office’s 

Government Auditing Standards, over a 3-year period to determine that the expenditures made 

during the 3-year period were allowable as described in § 600.705(b) and in accord with other 

applicable Federal requirements. The independent audit may be conducted as a sub-audit of the 

single state audit conducted in accordance with OMB Circular A-133, and must follow the cost 

accounting principles in OMB Circular A-87. 

(d) Annual reports. Publish annual reports on the use of funds, including a separate line 

item that tracks the use of funds described in § 600.705(e) to further reduce premiums and cost 

sharing, or for the provision of additional benefits within 10 days of approval by the trustees. If 

applicable for the reporting year, the annual report must also contain the findings for the audit 

conducted in accordance with paragraph (c) of this section. 

(e) Restitution. Establish and maintain BHP trust fund restitution procedures. 

(f) Record retention. Retain records for 3 years from date of submission of a final 

expenditure report. 

(g) Record retention related to audit findings. If any litigation, claim, financial 

management review, or audit is started before the expiration of the 3-year period, the records 

shall be retained until all litigation, claims or audit findings involving the records have been 

resolved and final action taken. 

§600.715 Corrective action, restitution, and disallowance of questioned BHP transactions. 
CMS-2380-F 150 

(a) Corrective action. When a question has been raised concerning the authority for BHP 

trust fund expenditures in an OIG report, other HHS compliance review, State audit or 

otherwise, the BHP trustees and the State shall review the issues and develop a written response 

no later than 60 days upon receipt of such a report, unless otherwise specified in the report, 

review or audit. To the extent determined necessary in that review, the BHP trustees and State 

shall implement changes to fiscal procedures to ensure proper use of trust fund resources. 

(b) Restitution. To the extent that the State and BHP trustees determine that BHP trust 

funds may not have been properly spent, they must ensure restitution to the BHP trust fund of the 

funds in question. Restitution may be made directly by the BHP trustees, by the State, or by a 

liable third party. The State or the BHP trustees may enter into indemnification agreements 

assigning liability for restitution of funds to the BHP trust fund. 

 (c) Timing of restitution. Restitution to the BHP trust fund for any unallowable 

expenditure may occur in a lump sum amount, or in equal installment amounts. Restitution to the 

BHP trust fund cannot exceed a 2-year period from the date of the written response in 

accordance with paragraph (a) of this section. 

 (d) HHS disallowance of improper BHP trust fund expenditures. The State shall return 

to HHS the amount of federal BHP funding that HHS has determined was expended for 

unauthorized purposes, when no provision has been made to restore the funding to the BHP trust 

fund in accordance with paragraph (b) of this section (unless the restitution does not comply with 

the timing conditions described in paragraphs (c) of this section). When HHS determines that 

federal BHP funding is not allowable, HHS will provide written notice to the state and BHP 

Trustees containing: 

(1) The date or dates of the improper expenditures from the BHP trust fund; 

(2) A brief written explanation of the basis for the determination that the expenditures 
CMS-2380-F 151 

were improper; and 

(3) Procedures for administrative reconsideration of the disallowance based on a final 

determination. 

(e) Administrative reconsideration of BHP trust fund disallowances. (1) BHP Trustees 

or the State may request reconsideration of a disallowance within 60 days after receipt of the 

disallowance notice described in paragraph (d)(1) of this section by submitting a written request 

for review, along with any relevant evidence, documentation, or explanation, to HHS. 

(2) After receipt of a reconsideration request, if the Secretary (or a designated hearing 

officer) determines that further proceedings would be warranted, the Secretary may issue a 

request for further information by a specific date, or may schedule a hearing to obtain further 

evidence or argument. 

(3) The Secretary, or designee, shall issue a final decision within 90 days after the later of 

the date of receipt of the reconsideration request or date of the last scheduled proceeding or 

submission. 

(f) Return of disallowed BHP funding. Disallowed federal BHP funding must be 

returned to HHS within 60 days after the later of the date of the disallowance notice or the final 

administrative reconsideration upholding the disallowance. Such repayment cannot be made 

from BHP trust funds, but must be made with other, non-Federal funds. 

Title 45 – Public Welfare 

PART 144—REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE 

2. The authority citation for part 144 continues to read as follows: 

Authority: Secs. 2701 through 2763, 2791, and 2792 of the Public Health Service Act, 

42 U.S.C. 300gg through 300gg-63, 300gg-91, and 300gg-92. 

3. Section 144.103 is amended by revising the definition of “individual market” to read 
CMS-2380-F 152 

as follows: 

§ 144.103 Definitions. 

 * * * * * 

Individual market means the market for health insurance coverage offered to individuals 

other than in connection with a group health plan, or other than coverage offered pursuant to a 

contract between the health insurance issuer with the Medicaid, Children’s Health Insurance 

Program, or Basic Health programs. 

* * * * * 
CMS-2380-F 153 

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical Assistance 

Program) 

Dated: February 19, 2014.

 _____________________________ 

Marilyn Tavenner, 

Administrator, 

Centers for Medicare & Medicaid Services. 

Approved: February 21, 2014.

 ___________________________________ 

Kathleen Sebelius, 

Secretary, 

Department of Health and Human Services. 

BILLING CODE 4120-01-P 
CMS-2380-F 154 

[FR Doc. 2014-05299 Filed 03/07/2014 at 4:15 pm; Publication Date: 03/12/2014]