10750 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Parts 144, 147, 153, 154, 155, 

156 and 158 

[CMS–9944–F] 

RIN 0938–AS19 

Patient Protection and Affordable Care 

Act; HHS Notice of Benefit and 

Payment Parameters for 2016 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule sets forth 

payment parameters and provisions 

related to the risk adjustment, 

reinsurance, and risk corridors 

programs; cost sharing parameters and 

cost-sharing reductions; and user fees 

for Federally-facilitated Exchanges. It 

also finalizes additional standards for 

the individual market annual open 

enrollment period for the 2016 benefit 

year, essential health benefits, qualified 

health plans, network adequacy, quality 

improvement strategies, the Small 

Business Health Options Program, 

guaranteed availability, guaranteed 

renewability, minimum essential 

coverage, the rate review program, the 

medical loss ratio program, and other 

related topics. 

DATES: These regulations are effective 

on April 28, 2015 except the 

amendments to §§ 156.235, 

156.285(d)(1)(ii), and 158.162 are 

effective on January 1, 2016. 

FOR FURTHER INFORMATION CONTACT:

For general information: Jeff Wu, 

(301) 492–4305. 

For matters related to guaranteed 

availability, guaranteed renewability, 

rate review, or the applicability of Title 

I of the Affordable Care Act in the U.S. 

Territories: Jacob Ackerman, (301) 492– 

4179. 

For matters related to risk adjustment 

or the methodology for determining the 

reinsurance contribution rate and 

payment parameters: Kelly Horney, 

(410) 786–0558. 

For matters related to reinsurance 

generally, distributed data collection 

good faith compliance policy, or 

administrative appeals: Adrianne 

Glasgow, (410) 786–0686. 

For matters related to the definition of 

common ownership for purposes of 

reinsurance contributions: Adam Shaw, 

(410) 786–1019. 

For matters related to risk corridors: 

Jaya Ghildiyal, (301) 492–5149. 

For matters related to essential health 

benefits, network adequacy, essential 

community providers, or other 

standards for QHP issuers: Leigha 

Basini, (301) 492–4380. 

For matters related to the qualified 

health plan good faith compliance 

policy: Cindy Yen, (301) 492–5142. 

For matters related to the Small 

Business Health Options Program: 

Christelle Jang, (410) 786–8438. 

For matters related to the Federallyfacilitated Exchange user fee or 

minimum value: Krutika Amin, (301) 

492–5153. 

For matters related to cost-sharing 

reductions or the premium adjustment 

percentage: Pat Meisol, (410) 786–1917. 

For matters related to re-enrollment, 

open enrollment periods, or exemptions 

from the individual shared 

responsibility payment: Christine 

Hammer, (301) 492–4431. 

For matters related to special 

enrollment periods: Rachel Arguello, 

(301) 492–4263. 

For matters related to minimum 

essential coverage: Cam Moultrie 

Clemmons, (206) 615–2338. 

For matters related to quality 

improvement strategies: Marsha Smith, 

(410) 786–6614. 

For matters related to the medical loss 

ratio program: Julie McCune, (301) 492– 

4196. 

For matters related to meaningful 

access to QHP information, consumer 

assistance tools and programs of an 

Exchange, or cost-sharing reduction 

notices: Tricia Beckmann, (301) 492– 

4328. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Executive Summary 

II. Background 

A. Legislative and Regulatory Overview 

B. Stakeholder Consultation and Input 

III. Provisions of the Final Regulations and 

Analysis and Responses to Public 

Comments 

A. Part 144—Requirements Relating to 

Health Insurance Coverage 

1. Definitions (§ 144.103) 

a. Plan 

b. State 

B. Part 147—Health Insurance Reform 

Requirements for the Group and 

Individual Health Insurance Markets 

1. Guaranteed Availability of Coverage 

(§ 147.104) 

2. Guaranteed Renewability of Coverage 

(§ 147.106) 

C. Part 153—Standards Related to 

Reinsurance, Risk Corridors, and Risk 

Adjustment Under the Affordable Care 

Act 

1. Provisions for the State Notice of Benefit 

and Payment Parameters (§ 153.100) 

2. Provisions and Parameters for the 

Permanent Risk Adjustment Program 

a. Risk Adjustment User Fee (§ 153.610(f)) 

b. Overview of the HHS Risk Adjustment 

Model (§ 153.320) 

c. Proposed Updates to Risk Adjustment 

Model (§ 153.320) 

d. List of Factors To Be Employed in the 

Model (§ 153.320) 

e. Cost-Sharing Reductions Adjustments 

(§ 153.320) 

f. Model Performance Statistics (§ 153.320) 

g. Overview of the Payment Transfer 

Formula (§ 153.320) 

h. HHS Risk Adjustment Methodology 

Considerations (§ 153.320) 

i. State-Submitted Alternate Risk 

Adjustment Methodology (§ 153.330) 

3. Provisions and Parameters for the 

Transitional Reinsurance Program 

a. Common Ownership Clarification 

b. Reinsurance Contributing Entities and 

Minimum Value 

c. Self-Insured Expatriate Plans 

(§ 153.400(a)(1)(iii)) 

d. Determination of Debt (§ 153.400(c)) 

e. Reinsurance Contribution Submission 

Process 

f. Consistency in Counting Methods for 

Health Insurance Issuers (§ 153.405(d)) 

g. Snapshot Count and Snapshot Factor 

Counting Methods (§§ 153.405(d)(2) and 

(e)(2)) 

h. Uniform Reinsurance Contribution Rate 

for 2016 

i. Uniform Reinsurance Payment 

Parameters for 2016 

j. Uniform Reinsurance Payment 

Parameters for 2015 

k. Deducting Cost-Sharing Reduction 

Amounts From Reinsurance Payments 

4. Provisions for the Temporary Risk 

Corridors Program 

a. Application of the Transitional Policy 

Adjustment in Early Renewal States 

b. Risk Corridors Payments for 2016 

5. Distributed Data Collection for the HHSOperated Risk Adjustment and 

Reinsurance Programs 

a. Good Faith Safe Harbor (§ 153.740(a)) 

b. Default Risk Adjustment Charge 

(§ 153.740(b)) 

c. Information Sharing (§ 153.740(c)) 

D. Part 154—Health Insurance Issuer Rate 

Increases: Disclosure and Review 

Requirements 

1. General Provisions 

a. Definitions (§ 154.102) 

2. Disclosure and Review Provisions 

a. Rate Increases Subject to Review 

(§ 154.200) 

b. Submission of Rate Filing Justification 

(§ 154.215) 

c. Timing of Providing the Rate Filing 

Justification (§ 154.220) 

d. CMS’s Determinations of Effective Rate 

Review Programs (§ 154.301) 

E. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

1. General Provisions 

a. Definitions (§ 155.20) 

2. General Functions of an Exchange 

a. Consumer Assistance Tools and 

Programs of an Exchange (§ 155.205) 

b. Standards Applicable to Navigators and 

Non-Navigator Assistance Personnel 

Carrying Out Consumer Assistance 

Functions Under §§ 155.205(d) and (e) 

and 155.210 in a Federally-Facilitated 

Exchange and to Non-Navigator 


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Assistance Personnel Funded Through 

an Exchange Establishment Grant 

(§ 155.215) 

c. Ability of States To Permit Agents and 

Brokers To Assist Qualified Individuals, 

Qualified Employers, or Qualified 

Employees Enrolling in QHPs (§ 155.220) 

d. Standards for HHS-Approved Vendors of 

Federally-Facilitated Exchange Training 

for Agents and Brokers (§ 155.222) 

3. Exchange Functions in the Individual 

Market: Eligibility Determinations for 

Exchange Participation and Insurance 

Affordability Programs 

a. Annual Eligibility Redetermination 

(§ 155.335) 

4. Exchange Functions in the Individual 

Market: Enrollment in Qualified Health 

Plans 

a. Enrollment of Qualified Individuals Into 

QHPs (§ 155.400) 

b. Annual Open Enrollment Period 

(§ 155.410) 

c. Special Enrollment Periods (§ 155.420) 

d. Termination of Exchange Enrollment or 

Coverage (§ 155.430) 

5. Exchange Functions in the Individual 

Market: Eligibility Determinations for 

Exemptions 

a. Eligibility Standards for Exemptions 

(§ 155.605) 

b. Required Contribution Percentage 

(§ 155.605) 

6. Exchange Functions: Small Business 

Health Options Program (SHOP) 

a. Standards for the Establishment of a 

SHOP (§ 155.700) 

b. Functions of a SHOP (§ 155.705) 

c. Eligibility Standards for SHOP 

(§ 155.710) 

d. Enrollment of Employees Into QHPs 

Under SHOP (§ 155.720 and § 156.285) 

e. Enrollment Periods Under SHOP 

(§ 155.725 and § 156.285) 

f. Termination of SHOP Enrollment or 

Coverage (§ 155.735 and § 156.285) 

7. Exchange Functions: Certification of 

Qualified Health Plans 

a. Certification Standards for QHPs 

(§ 155.1000) 

b. Recertification of QHPs (§ 155.1075) 

F. Part 156—Health Insurance Issuer 

Standards Under the Affordable Care 

Act, Including Standards Related to 

Exchanges 

1. General Provisions 

a. Definitions (§ 156.20) 

b. FFE User Fee for the 2016 Benefit Year 

(§ 156.50(c)) 

2. Essential Health Benefits Package 

a. State Selection of Benchmark (§ 156.100) 

b. Provision of EHB (§ 156.115) 

c. Collection of Data To Define Essential 

Health Benefits (§ 156.120) 

d. Prescription Drug Benefits (§ 156.122) 

e. Prohibition on Discrimination 

(§ 156.125) 

f. Cost-Sharing Requirements (§ 156.130) 

g. Premium Adjustment Percentage 

(§ 156.130) 

h. Reduced Maximum Annual Limitation 

On Cost Sharing (§ 156.130) 

i. Minimum Value (§ 156.145) 

3. Qualified Health Plan Minimum 

Certification Standards 

a. QHP Issuer Participation Standards 

(§ 156.200) 

b. Transparency in Coverage (§ 156.220) 

c. Network Adequacy Standards 

(§ 156.230) 

d. Essential Community Providers 

(§ 156.235) 

e. Meaningful Access to Qualified Health 

Plan Information (§ 156.250) 

f. Enrollment Process for Qualified 

Individuals (§ 156.265) 

g. Termination of Coverage or Enrollment 

for Qualified Individuals (§ 156.270) 

h. Segregation of Funds for Abortion 

Services (§ 156.280) 

i. Non-Renewal and decertification of 

QHPs (§ 156.290) 

4. Health Insurance Issuer Responsibility 

for Advance Payments of the Premium 

Tax Credit and Cost-Sharing Reductions 

a. Plan Variations (§ 156.420) 

b. Changes in Eligibility for Cost-Sharing 

Reductions (§ 156.425) 

c. Cost-Sharing Reductions Reconciliation 

(§ 156.430) 

5. Minimum Essential Coverage 

a. Other Coverage That Qualifies as 

Minimum Essential Coverage (§ 156.602) 

6. Enforcement Remedies in FederallyFacilitated Exchanges 

a. Available Remedies; Scope (§ 156.800) 

b. Plan Suppression (§ 156.815) 

7. Quality Standards 

a. Quality Improvement Strategy 

(§ 156.1130) 

8. Qualified Health Plan Issuer 

Responsibilities 

a. Administrative Appeals (§ 156.1220(c)) 

G. Part 158—Issuer Use of Premium 

Revenue: Reporting and Rebate 

Requirements 

1. Treatment of Cost-Sharing Reductions in 

MLR Calculation (§ 158.140) 

2. Reporting of Federal and State Taxes 

(§ 158.162) 

3. Distribution of Rebates to Group 

Enrollees in Non-Federal Governmental 

Plans (§ 158.242) 

IV. Collection of Information Requirements 

V. Regulatory Impact Analysis 

A. Statement of Need 

B. Overall Impact 

C. Impact Estimates of the Payment Notice 

Provisions and Accounting Table 

D. Regulatory Alternatives Considered 

E. Regulatory Flexibility Act 

F. Unfunded Mandates 

G. Federalism 

H. Congressional Review Act Regulations 

Text 

Acronyms 

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), as amended 

AHFS American hospital formulary system 

AV Actuarial value 

CFR Code of Federal Regulations 

CMS Centers for Medicare & Medicaid 

Services 

COBRA Consolidated Omnibus Budget 

Reconciliation Act of 1985 (Pub. L. 99–272) 

(29 U.S.C. 1161, et seq.) 

ECP Essential community provider 

EHB Essential health benefits 

ERISA Employee Retirement Income 

Security Act of 1974 (Pub. L. 93–406) 

FFE Federally-facilitated Exchange 

FF–SHOP Federally-facilitated Small 

Business Health Options Program 

FPL Federal Poverty Level 

FQHC Federally qualified health center 

HCC Hierarchical condition category 

HHS United States Department of Health 

and Human Services 

HIPAA Health Insurance Portability and 

Accountability Act of 1996 (Pub. L. 104– 

191) 

IRS Internal Revenue Service 

LEP Limited English proficient/proficiency 

MLR Medical loss ratio 

MV Minimum value 

NAIC National Association of Insurance 

Commissioners 

OMB Office of Management and Budget 

OPM United States Office of Personnel 

Management 

PHS Act Public Health Service Act 

PRA Paperwork Reduction Act of 1995 

P&T committee Pharmacy and therapeutics 

committee 

QHP Qualified health plan 

QIS Quality improvement strategy 

SADP Stand-alone Dental Plan 

SEP Special enrollment period 

SHOP Small Business Health Options 

Program 

The Code Internal Revenue Code of 1986 

TPA Third-party administrator 

URL Uniform resource locator 

USP United States Pharmacopeia 

I. Executive Summary 

Qualified individuals and qualified 

employers are now able to purchase 

private health insurance coverage 

through competitive marketplaces 

called Affordable Insurance Exchanges, 

or ‘‘Exchanges’’ (also called Health 

Insurance Marketplaces, or 

‘‘Marketplaces’’). Individuals who enroll 

in qualified health plans (QHPs) 

through individual market Exchanges 

may be eligible to receive a premium tax 

credit to make health insurance more 

affordable and for cost-sharing 

reductions to reduce out-of-pocket 

expenses for health care services. 

Additionally, in 2014, HHS began 

operationalizing the premium 

stabilization programs established by 

the Affordable Care Act. These 

programs—the risk adjustment, 

reinsurance, and risk corridors 

programs—are intended to mitigate the 

potential impact of adverse selection 

and stabilize the price of health 

insurance in the individual and small 

group markets. These programs, together 

with other reforms of the Affordable 

Care Act, are making high-quality health 

insurance affordable and accessible to 

millions of Americans. 

We have previously outlined the 

major provisions and parameters related 

to the advance payments of the 

premium tax credit, cost-sharing 

reductions, and premium stabilization 

programs. This rule finalizes additional 


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10752 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 

1Available at: http://www.cms.gov/CCIIO/

Resources/Fact-Sheets-and-FAQs/Downloads/faqrisk-corridors-04-11-2014.pdf. 

provisions and modifications related to 

the implementation of the premium 

stabilization programs, as well as key 

payment parameters for the 2016 benefit 

year. 

The HHS Notice of Benefit and 

Payment Parameters for 2014 (78 FR 

15410) (2014 Payment Notice) finalized 

the risk adjustment methodology that 

HHS will use when it operates the risk 

adjustment program on behalf of a State. 

Risk adjustment factors reflect enrollee 

health risk and the costs of a given 

disease relative to average spending. 

This final rule recalibrates the HHS risk 

adjustment models for the 2016 benefit 

year by using 2011, 2012, and 2013 

claims data from the Truven Health 

Analytics 2010 MarketScan®

Commercial Claims and Encounters 

database (MarketScan) to develop 

updated risk factors. 

Using the same methodology as set 

forth in the 2014 Payment Notice and 

the HHS Notice of Benefit and Payment 

Parameters for 2015 (79 FR 13744) (2015 

Payment Notice), we finalize a 2016 

uniform reinsurance contribution rate of 

$27 annually per enrollee, and the 2016 

uniform reinsurance payment 

parameters—a $90,000 attachment 

point, a $250,000 reinsurance cap, and 

a 50 percent coinsurance rate. We are 

decreasing the attachment point for the 

2015 benefit year from $70,000 to 

$45,000, while retaining the $250,000 

reinsurance cap and a 50 percent 

coinsurance rate. In this rule, we also 

finalize the definition of ‘‘common 

ownership’’ for purposes of determining 

whether a contributing entity uses a 

third-party administrator for core 

administrative functions. In addition, 

this final rule discusses the reinsurance 

contribution payment schedule and 

accompanying notifications. We also 

extend the good faith safe harbor for 

non-compliance with the HHS-operated 

risk adjustment and reinsurance data 

requirements through the 2015 calendar 

year. 

We are finalizing a clarification and a 

modification to the risk corridors 

program. We clarify that the risk 

corridors transitional adjustment policy 

established in the 2015 Payment Notice, 

which makes an adjustment to a QHP 

issuer’s risk corridors calculation based 

on Statewide enrollment in transitional 

plans, does not include in that 

calculation enrollment in so-called 

‘‘early renewal plans’’ (plans that 

renewed before January 1, 2014 and 

before the end of their 12-month terms) 

unless and until the plans renew in 

2014 and become transitional plans. 

Additionally, for the 2016 benefit year, 

we are finalizing an approach for the 

treatment of risk corridors collections 

under the policy set forth in our April 

11, 2014, FAQ on Risk Corridors and 

Budget Neutrality,1 in the event that risk 

corridors collections available in 2016 

exceed risk corridors payment requests 

from QHP issuers. 

We also finalize several provisions 

related to cost sharing. First, we 

establish the premium adjustment 

percentage for 2016, which is used to set 

the rate of increase for several 

parameters detailed in the Affordable 

Care Act, including the maximum 

annual limitation on cost sharing for 

2016. We establish the maximum 

annual limitations on cost sharing for 

the 2016 benefit year for cost-sharing 

reduction plan variations. For 

reconciliation of 2014 cost-sharing 

reductions, we are finalizing and 

expanding our proposal to permit 

issuers whose plan variations meet 

certain criteria to estimate the portion of 

claims attributable to non-essential 

health benefits to calculate cost-sharing 

reductions provided. 

For 2016, we finalize a Federallyfacilitated Exchange (FFE) user fee rate 

of 3.5 percent of premium, the same rate 

as for 2015. This rule also finalizes 

provisions to enhance the transparency 

and effectiveness of the rate review 

program and standards related to 

minimum essential coverage, the 

individual market annual open 

enrollment period for the 2016 benefit 

year, and amendments to a number of 

Small Business Health Options Program 

(SHOP) provisions, including minimum 

participation rates. This final rule 

amends the medical loss ratio (MLR) 

provisions relating to the treatment of 

cost-sharing reductions and certain 

taxes in MLR and rebate calculations, as 

well as the distribution of rebates by 

group health plans not subject to the 

Employee Retirement Income Security 

Act of 1974 (Pub. L. 93–406) (ERISA). 

This final rule provides more specificity 

about the meaningful access 

requirements applicable to Exchanges, 

to QHP issuers, and to agents and 

brokers subject to § 155.220(c)(3)(i), 

related to access for individuals with 

limited English proficiency (LEP). This 

final rule requires issuers to provide a 

summary of benefits and coverage (SBC) 

for each plan variation of the standard 

QHP and to provide adequate notice to 

enrollees of changes in cost-sharing 

reduction eligibility. This final rule also 

includes additional quality 

improvement strategy reporting 

provisions for QHP issuers, specifies the 

circumstances that may lead an 

Exchange to suppress a QHP from being 

offered to new enrollees through an 

Exchange, and extends the good faith 

compliance policy for QHP issuers in 

the FFEs through the 2015 calendar 

year. 

In this final rule, we are finalizing a 

number of standards relating to essential 

health benefits (EHBs), including a 

definition of habilitative services, 

coverage of pediatric services, and 

coverage of prescription drugs. This 

final rule also provides examples of 

discriminatory plan designs and amends 

requirements for essential community 

providers (ECPs). 

II. Background 

A. Legislative and Regulatory Overview 

The Patient Protection and Affordable 

Care Act (Pub. L. 111–148) was enacted 

on March 23, 2010. The Health Care and 

Education Reconciliation Act of 2010 

(Pub. L. 111–152), which amended and 

revised several provisions of the Patient 

Protection and Affordable Care Act, was 

enacted on March 30, 2010. In this final 

rule, we refer to the two statutes 

collectively as the ‘‘Affordable Care 

Act.’’ 

Subtitles A and C of title I of the 

Affordable Care Act reorganized, 

amended, and added to the provisions 

of part A of title XXVII of the Public 

Health Service Act (PHS Act) relating to 

group health plans and health insurance 

issuers in the group and individual 

markets. 

Section 2701 of the PHS Act, as added 

by the Affordable Care Act, restricts the 

variation in premium rates that may be 

charged by a health insurance issuer for 

non-grandfathered health insurance 

coverage in the individual or small 

group market to certain specified 

factors. The factors are: Family size, 

rating area, age, and tobacco use (within 

specified limits). 

Section 2701 of the PHS Act operates 

in coordination with section 1312(c) of 

the Affordable Care Act. Section 1312(c) 

of the Affordable Care Act generally 

requires a health insurance issuer to 

consider all enrollees in all health plans 

(except for grandfathered health plans) 

offered by such issuer to be members of 

a single risk pool for each of its 

individual and small group markets. 

States have the option to merge the 

individual market and small group 

market risk pools under section 

1312(c)(3) of the Affordable Care Act. 

Section 2702 of the PHS Act, as added 

by the Affordable Care Act, requires 

health insurance issuers that offer 

health insurance coverage in the group 

or individual market in a State to offer 

coverage to and accept every employer 


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2The implementing regulations in part 154 limit 

the scope of the requirements under section 2794 

of the PHS Act to health insurance issuers offering 

health insurance coverage in the individual market 

or small group market. See Rate Increase Disclosure 

and Review; Final Rule, 76 FR 29964, 29966 (May 

23, 2011). 

3 If a State elects to offer QHPs in the large group 

market through the SHOP, the rating rules in 

section 2701 of the PHS Act and its implementing 

regulations will apply to all coverage offered in 

such State’s large group market (except for selfinsured group health plans) under section 

2701(a)(5) of the PHS Act. 

and individual in the State that applies 

for such coverage unless an exception 

applies. 

Section 2703 of the PHS Act, as added 

by the Affordable Care Act, requires 

health insurance issuers that offer 

health insurance coverage in the group 

or individual market to renew or 

continue in force such coverage at the 

option of the plan sponsor or individual 

unless an exception applies. 

Section 2718 of the PHS Act, as added 

by the Affordable Care Act, generally 

requires health insurance issuers to 

submit an annual MLR report to HHS 

and provide rebates to enrollees if they 

do not achieve specified MLR 

thresholds. 

Section 2794 of the PHS Act, as added 

by the Affordable Care Act, directs the 

Secretary of HHS (the Secretary), in 

conjunction with the States, to establish 

a process for the annual review of 

‘‘unreasonable increases in premiums 

for health insurance coverage.’’ 2 The 

law also requires health insurance 

issuers to submit justifications to the 

Secretary and the applicable State 

entities for unreasonable premium 

increases prior to the implementation of 

the increases. Section 2794(b)(2) of the 

PHS Act further specifies that, 

beginning in 2014, the Secretary, in 

conjunction with the States, will 

monitor premium increases of health 

insurance coverage offered through an 

Exchange and outside of an Exchange. 

Section 1302 of the Affordable Care 

Act provides for the establishment of an 

essential health benefits (EHB) package 

that includes coverage of EHB (as 

defined by the Secretary) and costsharing limits, and meets statutorily 

defined actuarial value (AV) 

requirements. The law directs that EHBs 

be equal in scope to the benefits covered 

by a typical employer plan and that they 

cover at least the following 10 general 

categories: Ambulatory patient services; 

emergency services; hospitalization; 

maternity and newborn care; mental 

health and substance use disorder 

services, including behavioral health 

treatment; prescription drugs; 

rehabilitative and habilitative services 

and devices; laboratory services; 

preventive and wellness services and 

chronic disease management; and 

pediatric services, including oral and 

vision care. 

Sections 1302(b)(4)(A) through (D) 

establish that the Secretary must define 

EHB in a manner that: (1) Reflects 

appropriate balance among the 10 

categories; (2) is not designed in such a 

way as to discriminate based on age, 

disability, or expected length of life; (3) 

takes into account the health care needs 

of diverse segments of the population; 

and (4) does not allow denials of EHBs 

based on age, life expectancy, disability, 

degree of medical dependency, or 

quality of life. 

Section 1302(d) of the Affordable Care 

Act describes the various levels of 

coverage based on AV. Consistent with 

section 1302(d)(2)(A) of the Affordable 

Care Act, AV is calculated based on the 

provision of EHB to a standard 

population. Section 1302(d)(3) of the 

Affordable Care Act directs the 

Secretary to develop guidelines that 

allow for de minimis variation in AV 

calculations. 

Section 1311(b)(1)(B) of the 

Affordable Care Act directs the SHOP to 

assist qualified small employers in 

facilitating the enrollment of their 

employees in QHPs offered in the small 

group market. Sections 1312(f)(1) and 

(2) of the Affordable Care Act define 

qualified individuals and qualified 

employers. Under section 1312(f)(2)(B) 

of the Affordable Care Act, beginning in 

2017, States will have the option to 

allow issuers to offer QHPs in the large 

group market through the SHOP.3

Section 1311(c)(1)(B) of the 

Affordable Care Act requires the 

Secretary to establish minimum criteria 

for provider network adequacy that a 

health plan must meet to be certified as 

a QHP. Section 1311(c)(1)(E) of the 

Affordable Care Act specifies that, to be 

certified as a QHP participating in 

Exchanges, each health plan must 

implement a quality improvement 

strategy (QIS), which is described in 

section 1311(g)(1) of the Affordable Care 

Act. 

Section 1311(c)(5) of the Affordable 

Care Act requires the Secretary to 

continue to operate, maintain, and 

update the Internet portal developed 

under section 1103 of the Affordable 

Care Act to provide information to 

consumers and small businesses on 

affordable health insurance coverage 

options. 

Section 1311(c)(6)(B) of the 

Affordable Care Act states that the 

Secretary is to set annual open 

enrollment periods for Exchanges for 

calendar years after the initial 

enrollment period. 

Section 1301(a)(1)(B) of the 

Affordable Care Act directs all issuers of 

QHPs to cover the EHB package 

described in section 1302(a) of the 

Affordable Care Act, including the 

services described in section 1302(b) of 

the Affordable Care Act, to adhere to the 

cost-sharing limits described in section 

1302(c) of the Affordable Care Act, and 

to meet the AV levels established in 

section 1302(d) of the Affordable Care 

Act. Section 2707(a) of the PHS Act, 

which is effective for plan or policy 

years beginning on or after January 1, 

2014, extends the coverage of the EHB 

package to non-grandfathered 

individual and small group coverage, 

irrespective of whether such coverage is 

offered through an Exchange. In 

addition, section 2707(b) of the PHS Act 

directs non-grandfathered group health 

plans to ensure that cost sharing under 

the plan does not exceed the limitations 

described in sections 1302(c)(1) and (2) 

of the Affordable Care Act. 

Sections 1313 and 1321 of the 

Affordable Care Act provide the 

Secretary with the authority to oversee 

the financial integrity of State 

Exchanges, their compliance with HHS 

standards, and the efficient and nondiscriminatory administration of State 

Exchange activities. Section 1321 of the 

Affordable Care Act provides for State 

flexibility in the operation and 

enforcement of Exchanges and related 

requirements. 

Section 1321(a) of the Affordable Care 

Act provides the Secretary with broad 

authority to establish standards and 

regulations to implement statutory 

requirements related to Exchanges, 

QHPs, and other components of title I of 

the Affordable Care Act. Under the 

authority established in section 

1321(a)(1) of the Affordable Care Act, 

the Secretary promulgated the 

regulations at § 155.205(d) and (e). 

Section 155.205 authorizes Exchanges to 

perform certain consumer service 

functions. Section 155.205(d) provides 

that each Exchange must conduct 

consumer assistance activities, 

including the Navigator program 

described in § 155.210, and § 155.205(e) 

provides that each Exchange must 

conduct outreach and education 

activities to inform consumers about the 

Exchange and insurance affordability 

programs to encourage participation. 

Sections 155.205(d) and (e) also allow 

for the establishment of a non-Navigator 

consumer assistance program. Section 

155.215 establishes standards for 

Navigators and non-Navigator assistance 

personnel in FFEs and for nonNavigator assistance personnel that are 


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funded with Exchange establishment 

grant funds under section 1311(a) of the 

Affordable Care Act. 

When operating an FFE under section 

1321(c)(1) of the Affordable Care Act, 

HHS has the authority under sections 

1321(c)(1) and 1311(d)(5)(A) of the 

Affordable Care Act to collect and spend 

user fees. In addition, 31 U.S.C. 9701 

permits a Federal agency to establish a 

charge for a service provided by the 

agency. Office of Management and 

Budget (OMB) Circular No. A–25 

Revised establishes Federal policy 

regarding user fees and specifies that a 

user charge will be assessed against 

each identifiable recipient for special 

benefits derived from Federal activities 

beyond those received by the general 

public. 

Section 1321(c)(2) of the Affordable 

Care Act authorizes the Secretary to 

enforce the Exchange standards using 

civil money penalties (CMPs) on the 

same basis as detailed in section 2723(b) 

of the PHS Act. Section 2723(b) of the 

PHS Act authorizes the Secretary to 

impose CMPs as a means of enforcing 

the individual and group market 

reforms contained in Part A of title 

XXVII of the PHS Act when a State fails 

to substantially enforce these 

provisions. 

Section 1321(d) of the Affordable Care 

Act provides that nothing in title I of the 

Affordable Care Act should be 

construed to preempt any State law that 

does not prevent the application of title 

I of the Affordable Care Act. Section 

1311(k) of the Affordable Care Act 

specifies that Exchanges may not 

establish rules that conflict with or 

prevent the application of regulations 

issued by the Secretary. 

Section 1341 of the Affordable Care 

Act provides for the establishment of a 

transitional reinsurance program in each 

State to help pay the cost of treating 

high-cost enrollees in the individual 

market in the 2014 through 2016 benefit 

years. Section 1342 of the Affordable 

Care Act directs the Secretary to 

establish a temporary risk corridors 

program that protects against inaccurate 

rate setting in the 2014 through 2016 

benefit years. Section 1343 of the 

Affordable Care Act establishes a 

permanent risk adjustment program that 

is intended to provide increased 

payments to health insurance issuers 

that attract higher-risk populations, 

such as those with chronic conditions, 

funded by payments from those that 

attract lower-risk populations, thereby 

reducing incentives for issuers to avoid 

higher-risk enrollees. 

Sections 1402 and 1412 of the 

Affordable Care Act provide for 

reductions in cost sharing for EHBs for 

qualified low- and moderate-income 

enrollees in silver level health plans 

offered through the individual market 

Exchanges. These sections also provide 

for reductions in cost sharing for 

Indians enrolled in Exchange plans at 

any metal level. 

Section 5000A of the Internal 

Revenue Code (the Code), as added by 

section 1501(b) of the Affordable Care 

Act, requires an individual to have 

minimum essential coverage for each 

month, qualify for an exemption, or 

make a shared responsibility payment 

with his or her Federal income tax 

return. Section 5000A(f) of the Code 

defines minimum essential coverage as 

any of the following: (1) Coverage under 

a specified government sponsored 

program; (2) coverage under an eligible 

employer-sponsored plan; (3) coverage 

under a health plan offered in the 

individual market within a State; or (4) 

coverage under a grandfathered health 

plan. Section 5000A(f)(1)(E) of the Code 

authorizes the Secretary, in 

coordination with the Secretary of the 

Treasury, to designate other health 

benefits coverage as minimum essential 

coverage. 

1. Premium Stabilization Programs 

In the July 15, 2011 Federal Register 

(76 FR 41930), we published a proposed 

rule outlining the framework for the 

premium stabilization programs. We 

implemented the premium stabilization 

programs in a final rule, published in 

the March 23, 2012 Federal Register (77 

FR 17220) (Premium Stabilization Rule). 

In the December 7, 2012 Federal 

Register (77 FR 73118), we published a 

proposed rule outlining the benefit and 

payment parameters for the 2014 benefit 

year to expand the provisions related to 

the premium stabilization programs, 

and establish payment parameters for 

those programs (proposed 2014 Payment 

Notice). We published the 2014 

Payment Notice final rule in the March 

11, 2013 Federal Register (78 FR 

15410). 

In the December 2, 2013 Federal 

Register (78 FR 72322), we published a 

proposed rule outlining the benefit and 

payment parameters for the 2015 benefit 

year to expand upon the provisions 

related to the premium stabilization 

programs, setting forth certain oversight 

provisions, and establishing the 2015 

payment parameters for those programs 

(proposed 2015 Payment Notice). We 

published the 2015 Payment Notice 

final rule in the March 11, 2014 Federal 

Register (79 FR 13744). 

2. Program Integrity 

In the June 19, 2013 Federal Register 

(78 FR 37032), we published a proposed 

rule that proposed certain program 

integrity standards related to Exchanges 

and the premium stabilization programs 

(proposed Program Integrity Rule). The 

provisions of that proposed rule were 

finalized in two rules, the ‘‘first Program 

Integrity Rule’’ published in the August 

30, 2013 Federal Register (78 FR 54070) 

and the ‘‘second Program Integrity 

Rule’’ published in the October 30, 2013 

Federal Register (78 FR 65046). 

3. Exchanges 

We published a request for comment 

relating to Exchanges in the August 3, 

2010 Federal Register (75 FR 45584). 

We issued initial guidance to States on 

Exchanges on November 18, 2010. We 

proposed a rule in the July 15, 2011 

Federal Register (76 FR 41866) to 

implement components of the 

Exchange, and a rule in the August 17, 

2011 Federal Register (76 FR 51202) 

regarding Exchange functions in the 

individual market, eligibility 

determinations, and Exchange standards 

for employers. A final rule 

implementing components of the 

Exchanges and setting forth standards 

for eligibility for Exchanges was 

published in the March 27, 2012 

Federal Register (77 FR 18310) 

(Exchange Establishment Rule). 

We established standards for the 

administration and payment of costsharing reductions and the SHOP in the 

2014 Payment Notice and in the 

Amendments to the HHS Notice of 

Benefit and Payment Parameters for 

2014 interim final rule, published in the 

March 11, 2013 Federal Register (78 FR 

15541). The provisions established in 

the interim final rule were finalized in 

the second Program Integrity Rule. We 

also set forth standards related to 

Exchange user fees in the 2014 Payment 

Notice. We also established an 

adjustment to the FFE user fee in the 

Coverage of Certain Preventive Services 

Under the Affordable Care Act final 

rule, published in the July 2, 2013 

Federal Register (78 FR 39870) 

(Preventive Services Rule). 

In a final rule published in the July 

17, 2013 Federal Register (78 FR 

42859), we established standards for 

Navigators and non-Navigator assistance 

personnel in FFEs and for nonNavigator assistance personnel funded 

through an Exchange establishment 

grant. 

4. Essential Health Benefits and 

Actuarial Value 

We initially established requirements 

relating to EHBs and AVs in the 

Standards Related to Essential Health 

Benefits, Actuarial Value, and 

Accreditation Final Rule, which was 


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published in the February 25, 2013 

Federal Register (78 FR 12834) (EHB 

Rule). We established standards for 

updating the AV Calculator for future 

plan years in the 2015 Payment Notice 

and established an expedited 

prescription drug exception process 

based on exigent circumstances for 

plans providing EHB in the Exchange 

and Insurance Market Standards for 

2015 and Beyond Final Rule (2015 

Market Standards Rule) that was 

published in the May 27, 2014 Federal 

Register (79 FR 30240). 

5. Market Rules 

A proposed rule relating to the Health 

Insurance Market Rules was published 

in the November 26, 2012 Federal 

Register (77 FR 70584). A final rule 

implementing the Health Insurance 

Market Rules was published in the 

February 27, 2013 Federal Register (78 

FR 13406) (2014 Market Rules). 

A proposed rule relating to Exchanges 

and Insurance Market Standards for 

2015 and Beyond was published in the 

March 21, 2014 Federal Register (79 FR 

15808) (2015 Market Standards 

Proposed Rule). The 2015 Market 

Standards Rule was published in the 

May 27, 2014 Federal Register (79 FR 

30240). 

6. Rate Review 

We published a proposed rule to 

establish the rate review program in the 

December 23, 2010 Federal Register (75 

FR 81004). We implemented the rate 

review program in a final rule published 

in the May 23, 2011 Federal Register 

(76 FR 26694). We subsequently 

amended the rate review provisions in 

a final rule published in the September 

6, 2011 Federal Register (76 FR 54969) 

and in the 2014 Market Rules. 

7. Medical Loss Ratio (MLR) 

We published a request for comment 

on section 2718 of the PHS Act in the 

April 14, 2010 Federal Register (75 FR 

19297), and published an interim final 

rule with a 60-day comment period 

relating to the MLR program on 

December 1, 2010 (75 FR 74864). A final 

rule with a 30-day comment period was 

published in the December 7, 2011 

Federal Register (76 FR 76574). An 

interim final rule with a 60-day 

comment period was published in the 

December 7, 2011 Federal Register (76 

FR 76596). A final rule was published 

in the Federal Register on May 16, 2012 

(77 FR 28790). 

B. Stakeholder Consultation and Input 

HHS has consulted with stakeholders 

on policies related to the operation of 

Exchanges, including the SHOP and the 

premium stabilization programs. HHS 

has held a number of listening sessions 

with consumers, providers, employers, 

health plans, the actuarial community, 

and State representatives to gather 

public input. HHS consulted with 

stakeholders through regular meetings 

with the National Association of 

Insurance Commissioners (NAIC), 

regular contact with States through the 

Exchange Establishment grant and 

Exchange Blueprint approval processes, 

and meetings with Tribal leaders and 

representatives, health insurance 

issuers, trade groups, consumer 

advocates, employers, and other 

interested parties. We considered all of 

the public input as we developed the 

policies in this final rule. 

III. Provisions of the Final Regulations 

and Analysis and Responses to Public 

Comments 

In the November 26, 2014 Federal 

Register (79 FR 70674), we published 

the ‘‘Patient Protection and Affordable 

Care Act; HHS Notice of Benefit and 

Payment Parameters for 2016’’ proposed 

rule. We received 313 comments from 

various stakeholders, including States, 

health insurance issuers, consumer 

groups, labor entities, industry groups, 

provider groups, patient safety groups, 

national interest groups, and other 

stakeholders. The comments ranged 

from general support of or opposition to 

the proposed provisions to very specific 

questions or comments regarding 

proposed changes. We received a 

number of comments and suggestions 

that were outside the scope of the 

proposed rule and therefore will not be 

addressed in this final rule. 

In this final rule, we provide a 

summary of each proposed provision, a 

summary of the public comments 

received and our responses to them, and 

the provisions we are finalizing. 

Comment: We received a number of 

comments requesting that the comment 

period be extended to 60 days. Several 

commenters asked that HHS develop a 

standard timeline for issuance of the 

proposed and final Payment Notices, 

one commenter asked that the final 

Payment Notice be published by midJanuary each year, and another asked 

that it be published by February 1st 

each year. 

Response: The timeline for 

publication of this final rule 

accommodates issuer filing deadlines 

for the 2016 benefit year. We appreciate 

the deadlines that States, Exchanges, 

issuers, and other entities face in 

implementing these rules. 

Comment: We received one comment 

disapproving of the wide array of topics 

covered in the rule. 

Response: Many of the programs 

covered by this final rule are closely 

linked. To simplify the regulatory 

process, facilitate public comment, and 

provide the information needed to meet 

statutory deadlines, we elected to 

propose and finalize these regulatory 

provisions in one rule. 

Comment: One commenter asked that 

HHS allow States to continue their 

oversight of their insurance markets and 

defer to the NAIC for the development 

of important industry-wide, State-based 

standards. 

Response: Title XXVII of the PHS Act 

contemplates that States will exercise 

primary enforcement authority over 

health insurance issuers in the group 

and individual markets to ensure 

compliance with the Federal market 

reforms. HHS has the responsibility to 

enforce these provisions in the event 

that a State notifies HHS that it does not 

have the statutory authority to enforce 

or that it is not otherwise enforcing, or 

if HHS determines that a State is not 

substantially enforcing, these 

requirements. This enforcement 

framework, in place since 1996, ensures 

that all consumers in all States have the 

protections of the Affordable Care Act 

and other parts of the PHS Act. We aim 

to establish Federal oversight standards 

that complement State standards while 

meeting Federal obligations, and intend 

to continue to coordinate with State 

authorities to address compliance issues 

and to reduce the burden on 

stakeholders. 

Comment: One commenter urged HHS 

to ensure that all regulatory information 

related to the premium stabilization 

programs be presented in a transparent 

and timely fashion. 

Response: We strive to publicize and 

present all information related to the 

premium stabilization programs in a 

transparent and timely fashion. 

A. Part 144—Requirements Relating to 

Health Insurance Coverage 

1. Definitions (§ 144.103) 

Section 144.103 sets forth definitions 

of terms that are used throughout parts 

146 through 150. In the proposed rule, 

we proposed to amend the definitions of 

‘‘plan’’ and ‘‘State.’’ 

a. Plan 

We proposed to make the definition of 

‘‘plan’’ more specific by clarifying that 

the term means the pairing of the health 

insurance coverage benefits under a 

‘‘product’’ with a particular cost-sharing 

structure, provider network, and service 


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4Under § 144.103, the term ‘‘product’’ means a 

discrete package of health insurance coverage 

benefits that a health insurance issuer offers using 

a particular product network type within a service 

area. Examples of product network types include 

health maintenance organization (HMO), preferred 

provider organization (PPO), exclusive provider 

organization (EPO), point of service (POS), and 

indemnity. 

area.4 The same definition would be 

used for purposes of part 154, rate 

review, and part 156, health insurance 

issuer standards. 

We noted that issuers can modify the 

health insurance coverage for a product 

upon coverage renewal and sought 

comment on standards for determining 

when a plan that has been modified 

should be considered to be the ‘‘same 

plan’’ for purposes of rate review, plan 

identification in the Health Insurance 

Oversight System (HIOS), and other 

programs. In particular, we sought 

comment on whether these standards 

should be similar to those applicable at 

the product level under the uniform 

modification provision at § 147.106(e). 

We are finalizing the amendments to 

the definition of ‘‘plan’’ as proposed. 

We are also specifying standards for 

determining when a plan that has been 

modified will be considered to be the 

‘‘same plan.’’ 

Comment: Many commenters were 

supportive of the proposed definition of 

‘‘plan’’ stating it more closely aligns 

with issuer operations and consumer 

expectations. However, some 

commenters believed that parts of the 

definition were too vague, such as the 

references to ‘‘cost-sharing structure’’ 

and ‘‘provider network.’’ For example, 

one commenter stated that the reference 

to a ‘‘particular’’ cost-sharing structure 

could mean that each cost-sharing 

reduction plan variation of the standard 

QHP would constitute a separate 

‘‘plan.’’ One commenter recommended 

adding the prescription drug formulary 

as a distinct plan characteristic. Other 

commenters cautioned HHS to be 

mindful of the operational impacts of 

changing the definition of ‘‘plan.’’ 

Response: We believe the proposed 

definition accurately reflects the key 

features of a plan: a package of benefits 

paired with a cost-sharing structure and 

provider network that operates within a 

service area. By ‘‘provider network,’’ we 

mean the defined set of providers under 

contract with the issuer for the delivery 

of medical care (including items and 

services paid for as medical care), if 

applicable. We recognize that the 

prescription drug formulary is an 

important element of plan coverage, but 

do not specifically include it in the 

definition, because each aspect of the 

formulary—the covered drugs and the 

tiering design—are represented by the 

plan’s benefits and cost-sharing 

structure. Further, we clarify that each 

plan variation of a standard QHP would 

not constitute a ‘‘particular cost-sharing 

structure’’ for purposes of the definition 

and thus would not constitute a separate 

plan. 

The final rule adopts the definition of 

‘‘plan’’ as proposed. We believe many 

issuers already distinguish their plans 

according to these characteristics, and 

we do not anticipate significant 

downstream issues as a result of these 

clarifications. Nevertheless, we will 

work with States and issuers to make 

any necessary adjustments to plan 

identifiers in Federal systems. 

Comment: We received some 

comments addressing when a plan 

should be considered to be the ‘‘same 

plan’’ following modifications at the 

plan level. Several commenters agreed 

with the option we presented in the 

preamble to the proposed rule of using 

standards similar to those for uniform 

modification of a product for identifying 

modifications to a plan that would 

result in the plan remaining the ‘‘same 

plan.’’ Commenters stated that we 

should permit changes to cost sharing 

designed to maintain the same metal 

level and modifications attributable to 

Federal or State legal requirements to 

constitute the same plan. Two 

commenters recommended standards 

regarding provider network and service 

area. 

Response: In this final rule, we 

specify when a plan that has been 

modified will be considered to be the 

‘‘same plan.’’ Based on the comments 

received, the final rule generally adopts 

the standards for uniform modification 

at the product level for changes made at 

the plan level. These standards reflect 

characteristics relevant to the definition 

of ‘‘plan,’’ including provider network, 

an additional characteristic not reflected 

in the uniform modification provision. 

We specifically omit those standards at 

§ 147.106(e)(3) related to issuer, product 

network type, and covered benefits, 

which are relevant only at the product 

level. We note that modifications to 

these characteristics in a manner that 

exceeds the standards for uniform 

modification would result in a new 

product and, consequently, new plans 

within the product. 

The final rule provides that a plan 

that has been modified at the time of 

coverage renewal in accordance with 

§ 147.106 will be considered to be the 

same plan if it meets the following 

conditions: 

• Has the same cost-sharing structure 

as before the modification, or any 

variation in cost sharing is solely related 

to changes in cost or utilization of 

medical care (that is, medical inflation 

or demand for services based on 

inflationary increases in the cost of 

medical care), or is to maintain the same 

metal tier level described in sections 

1302(d) and (e) of the Affordable Care 

Act (that is, bronze, silver, gold, 

platinum, or catastrophic). 

• Continues to cover a majority of the 

same service area. 

• Continues to cover a majority of the 

same provider network (as applicable). 

We recognize that a plan’s provider 

network may change throughout the 

plan year. Therefore, for purposes of 

determining whether a plan maintains a 

majority of the same provider network, 

the plan’s provider network on the first 

day of the plan year is compared with 

the plan’s provider network on the first 

day of the preceding plan year. If at least 

50 percent of the contracted providers at 

the beginning of the plan year are still 

contracted providers at the beginning of 

the next plan year, the plan will be 

considered to have maintained a 

majority of the same provider network. 

Furthermore, similar to the standard 

for uniform modification of a product, a 

plan also will not fail to be treated as 

the same plan to the extent the changes 

are made uniformly and solely pursuant 

to applicable Federal or State 

requirements, provided that the changes 

are made within a reasonable time 

period after the imposition or 

modification of the Federal or State 

requirement and are directly related to 

the imposition or modification of the 

Federal or State requirement. 

The cost-sharing provision under this 

final rule is identical to the cost-sharing 

provision under the uniform 

modification standard. In the 2015 

Market Standards Rule (79 FR 30251), 

which established criteria for uniform 

modification, we stated that the costsharing provision is intended to 

establish basic parameters around costsharing modifications to protect 

consumers from extreme changes in 

deductibles, copayments, and 

coinsurance, while preserving issuer 

flexibility to make reasonable and 

customary adjustments from year to 

year. 

Finally, as with the uniform 

modification provision, States have 

flexibility to broaden the definition of 

‘‘same plan.’’ States may, at their option, 

permit greater changes to cost-sharing 

structure, or designate a lower threshold 

than the ‘‘majority’’ standard in this 

final rule for changes in provider 

network and service area, to constitute 

the same plan. We intend to monitor 

issues around compliance with the 


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5See for example, Letter to Virgin Islands on the 

Definition of State (July 16, 2014). Available at: 

http://www.cms.gov/CCIIO/Resources/Letters/

Downloads/letter-to-Francis.pdf. 

6See Insurance Standards Bulletin, Form and 

Manner of Notices When Discontinuing or 

Renewing a Product in the Group or Individual 

Market, section IV (September 2, 2014). Available 

at: http://www.cms.gov/CCIIO/Resources/

Regulations-and-Guidance/Downloads/RenewalNotices-9-3-14-FINAL.PDF. See also Patient 

Protection and Affordable Care Act; Annual 

Eligibility Redeterminations for Exchange 

Participation and Insurance Affordability Programs; 

Health Insurance Issuer Standards Under the 

Affordable Care Act, Including Standards Related to 

Exchanges, 79 FR at 53000 (September 5, 2014). 

categorization of ‘‘plans’’ and may 

provide future guidance as necessary. 

b. State 

We proposed to amend the definition 

of ‘‘State’’ to exclude application of the 

Affordable Care Act market reforms 

under part 147 to issuers in the U.S. 

Territories of Puerto Rico, the Virgin 

Islands, Guam, American Samoa, and 

the Northern Mariana Islands. The 

change codifies HHS’s interpretation, 

outlined in letters to the Territories on 

July 16, 2014, that the new provisions 

of the PHS Act enacted in title I of the 

Affordable Care Act are appropriately 

governed by the definition of ‘‘State’’ set 

forth in that title, and therefore do not 

apply to group or individual health 

insurance issuers in the Territories.5

As explained in the July 16, 2014 

letters and reiterated in the preamble to 

the proposed rule (79 FR 70681), this 

interpretation applies only to health 

insurance that is governed by the PHS 

Act. It does not affect the PHS Act 

requirements that were enacted in the 

Affordable Care Act and incorporated 

into ERISA and the Code and apply to 

group health plans (whether insured or 

self-insured), because such applicability 

does not rely upon the term ‘‘State’’ as 

it is defined in either the PHS Act or 

Affordable Care Act. It also does not 

affect the PHS Act requirements that 

were enacted in the Affordable Care Act 

and apply to non-Federal governmental 

plans. As a practical matter, therefore, 

PHS Act, ERISA, and Code requirements 

applicable to group health plans 

continue to apply to such coverage, and 

issuers selling policies to both private 

sector and public sector employers in 

the Territories should ensure their 

products comply with the relevant 

Affordable Care Act amendments to the 

PHS Act applicable to group health 

plans since their customers—the group 

health plans—are subject to those 

provisions. These include the 

prohibition on lifetime and annual 

limits (section 2711 of the PHS Act), the 

prohibition on rescissions (section 2712 

of the PHS Act), coverage of preventive 

health services (section 2713 of the PHS 

Act), and the revised internal and 

external appeals process (section 2719 

of the PHS Act). 

We are finalizing these amendments 

as proposed. 

Comment: Several commenters 

supported the proposed amendments to 

the term ‘‘State’’ to avoid undermining 

the stability of the Territories’ health 

insurance markets. One commenter 

encouraged HHS to work with the 

Territories to improve access to 

coverage for their residents. 

Response: We are committed to 

partnering with the Territories to ensure 

their markets are robust and 

competitive, so that consumers have 

access to quality, affordable health 

insurance. 

B. Part 147—Health Insurance Reform 

Requirements for the Group and 

Individual Health Insurance Markets 

1. Guaranteed Availability of Coverage 

(§ 147.104) 

We proposed several modifications to 

the guaranteed availability requirements 

under § 147.104. First, we proposed to 

remove regulation text in § 147.104(b)(2) 

establishing a special enrollment period 

(also referred to as a ‘‘limited open 

enrollment period’’) for individuals 

enrolled in non-calendar year 

individual market plans, because the 

requirement is incorporated through 

cross-reference in the same paragraph to 

the Exchange rules at § 155.420(d)(1)(ii). 

Second, we proposed to add new 

paragraph § 147.104(f), which would 

move and recodify, with minor 

modifications for clarity, the 

requirement under existing 

§ 147.104(b)(2) for non-grandfathered 

individual and merged market plans to 

be offered on a calendar year basis. 

Third, we proposed to amend 

§ 147.104(b)(4) by adding a crossreference to the advance availability of 

special enrollment periods under 

§ 155.420(c)(2). This would align with 

the Exchange regulations and allow 

individuals to make a plan selection 60 

days before and after certain triggering 

events when enrolling inside or outside 

the individual market Exchanges. 

Finally, we proposed amending 

§ 147.104(b)(1)(i)(C) to update the 

citation to the SHOP regulations to 

conform with changes made in this 

rulemaking. The cross-reference is 

changed from § 155.725(a)(2) to 

§ 155.725. 

We are finalizing these amendments 

as proposed. 

Comment: Most commenters 

supported extending the 60-day advance 

availability provisions to ensure marketwide consistency in special enrollment 

periods. One commenter recommended 

a 30-day special enrollment period. 

Other commenters recommended 

maintaining the 60-day special 

enrollment period. 

Response: We agree with commenters 

who urged consistency in access to 

special enrollment periods inside and 

outside the individual market 

Exchanges. We believe these provisions 

will help consumers avoid gaps in 

coverage when they experience certain 

significant life changes without 

resulting in adverse selection. 

2. Guaranteed Renewability of Coverage 

(§ 147.106) 

Consistent with previous guidance, 

we proposed that an issuer will not 

satisfy the requirements for product 

discontinuation under the guaranteed 

renewability regulations at 

§ 146.152(c)(2), § 147.106(c)(2), or 

§ 148.122(d)(2) if the issuer 

automatically enrolls a plan sponsor or 

individual (as applicable) into a product 

of another licensed health insurance 

issuer.6 However, this would not 

prevent an issuer that decides to 

withdraw from the market in a State 

from mapping enrollees to a product of 

another licensed issuer, to the extent 

permitted by applicable State law, and 

provided the issuer otherwise satisfies 

the requirements for market withdrawal. 

We stated that allowing an issuer to 

transfer blocks of business to another 

issuer could create opportunities for risk 

segmentation, but also recognized that 

regulating these matters could have 

implications for certain corporate 

reorganization practices. We sought 

comment on how to interpret the 

guaranteed renewability provisions in 

the context of various corporate 

transactions involving a change of 

ownership, such as acquisitions, 

mergers, or other corporate transactions; 

how common such transactions are and 

how they are typically structured; 

whether auto-enrollment should be 

allowed into a product of the posttransaction issuer; how the market 

reforms such as the single risk pool 

provision should be applied; and what 

protections should be provided to 

consumers when their product is 

transferred. 

Because ownership transfers have 

implications for the operational 

processes of HHS-administered 

programs, such as advance payments of 

the premium tax credit, cost-sharing 

reduction payments, FFE user fees, and 

the premium stabilization programs, we 

proposed a notification requirement on 


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7 Id. 

issuers of a QHP, a plan otherwise 

subject to risk corridors, or a 

reinsurance-eligible plan or a risk 

adjustment covered plan, in cases of 

changes of ownership. We proposed that 

the post-transaction issuer notify HHS 

of the transaction by the date the 

transaction is entered into or the 30th 

day prior to the effective date of the 

transaction, whichever is later. We 

sought comments on all aspects of the 

notification, including what further 

notification requirements should apply 

to ownership transfers, and whether the 

notification requirement should apply 

to all plans subject to the guaranteed 

renewability requirements, including 

grandfathered health plans. 

We are finalizing the notification 

requirement in cases of changes of 

ownership as recognized by the State in 

which the issuer offers coverage. In light 

of the comments discussed below, we 

are not codifying the provision 

prohibiting an issuer from automatically 

enrolling plan sponsors or individuals 

(as applicable) into a product of another 

licensed health insurance issuer. We 

intend to consult with the NAIC and 

other stakeholders before releasing 

further guidance on this issue. 

Comment: Many commenters 

encouraged HHS to defer to State 

determinations on matters regarding 

change of ownership, including when it 

is appropriate for an issuer to renew 

coverage through another licensed 

issuer. One commenter requested that 

HHS expressly recognize an offer of 

coverage by an affiliated issuer as an 

exception to the prohibition on autoenrollment. Several commenters 

emphasized the need for continuity of 

care and recommended that, in cases of 

mid-year changes of ownership, the 

acquiring issuer retain some or all of the 

characteristics of the original plan, such 

as the same benefits, cost sharing, 

formulary, and network. Conversely, 

another commenter noted that the same 

coverage features rarely remain in place 

after an ownership transfer. Some 

commenters recommended HHS work 

with States and issuers before releasing 

guidance on how corporate transactions 

should be handled. 

Response: After careful review of the 

comments submitted on this issue and 

the relevant statutory language, we are 

not codifying the prohibition on autoenrollment into a product of another 

licensed issuer at this time. We intend 

to consult with the NAIC and other 

stakeholders to develop guidance on 

how to handle corporate transactions 

involving a change of ownership. We 

will generally look to the applicable 

State authority on matters regarding 

changes of ownership until further 

guidance is issued. In the interim, we 

will continue to apply our interpretation 

of the guaranteed renewability 

requirements, set forth in previous 

guidance,7 to prohibit auto-enrollment 

into a product of another issuer in cases 

where the auto-enrollment does not 

occur in connection with a change of 

ownership. 

Comment: Some commenters 

recommended that HHS provide 

flexibility to issuers to determine 

liability of each party in a transaction 

for advance payments of the premium 

tax credit, cost-sharing reductions 

payments, and the premium 

stabilization programs. 

Response: We intend to take these 

comments into consideration as we 

consider whether guidance on liability 

is necessary as it relates to the HHSadministered programs described above. 

Comment: In response to the 

proposed notification requirement for 

issuers experiencing a change of 

ownership, some commenters 

recommended that HHS defer to State 

definitions of change of ownership. One 

commenter suggested notice is 

unnecessary, as QHP issuers in the FFEs 

must already provide HHS with notice 

of change of ownership under § 156.330. 

One commenter recommended issuers 

be required to provide notice only after 

a transaction is completed, and sought 

clarification that HHS will collect only 

the minimum information necessary to 

facilitate operational processes and has 

no intention of collecting the 

information for purposes other than for 

continuity of operations. 

Response: We are finalizing the 

proposal to require notification when an 

issuer experiences a change of 

ownership, as recognized by the State in 

which the issuer offers coverage. The 

definition of change of ownership for 

the purpose of notification is intended 

simply to capture situations in which 

such a change may have operational 

implications for the above mentioned 

programs. We recognize that States have 

existing regulatory processes for 

reviewing changes of ownership. 

We also recognize that FFE issuers are 

subject to a notification requirement 

under § 156.330; however, changes of 

ownership may have operational 

implications for HHS-administered 

programs beyond the FFEs. The HHSadministered programs described above 

affect QHP issuers in both the FFEs and 

State-based Exchanges, as well as 

issuers offering plans outside of 

Exchanges. To work closely with issuers 

to anticipate and resolve potential 

issues arising from such transactions, 

we are finalizing the notice requirement 

for an issuer of a QHP, a plan otherwise 

subject to risk corridors, a risk 

adjustment covered plan, or a 

reinsurance-eligible plan, as proposed. 

We intend to limit the information 

collected to those elements necessary 

for HHS and issuers to determine how 

the change of ownership affects 

operations of HHS-administered 

programs. These elements include the 

legal name, HIOS plan identifier, tax 

identification number of the original 

and post-transaction issuers, the 

effective date of the change of 

ownership, and the summary 

description of transaction. Depending 

on the nature of the transaction, 

additional information may be 

necessary to ensure smooth operations 

of affected programs. We anticipate 

addressing the need for additional 

information on a case-by-case basis, 

through discussion with affected 

issuers, with the participation of 

affected issuers. 

Finally, we are sensitive to the fluid 

nature of change of ownership 

transactions, but believe that our 

proposed dates for notification 

accommodate most transactional 

timelines. In addition, the information 

we intend to require from issuers is 

limited in scope and should not 

substantially burden either issuers or 

HHS, even if the transaction is not 

ultimately consummated. To ensure 

continuity of operations, particularly for 

administration of monthly payments 

and charges for advance payments of the 

premium tax credit and cost-sharing 

reductions, it is in the interest of both 

issuers and HHS to coordinate prior to 

the effective date of the transaction. 

C. Part 153—Standards Related to 

Reinsurance, Risk Corridors, and Risk 

Adjustment Under the Affordable Care 

Act 

1. Provisions for the State Notice of 

Benefit and Payment Parameters 

(§ 153.100) 

In § 153.100(c), we established a 

deadline of March 1 of the calendar year 

prior to the applicable benefit year for 

a State to publish a State notice of 

benefit and payment parameters if the 

State is required to do so under 

§ 153.100(a) or (b)—that is, if the State 

is operating a risk adjustment program, 

or if the State is establishing a 

reinsurance program and wishes to 

modify the data requirements for issuers 

to receive reinsurance payments from 

those specified in the HHS notice of 

benefit and payment parameters for the 

benefit year, wishes to collect additional 

reinsurance contributions or use 


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additional funds for reinsurance 

payments, or elects to use more than 

one applicable reinsurance entity. As of 

the date of publication of this final rule, 

Connecticut is the only State that has 

elected to establish a transitional 

reinsurance program and Massachusetts 

is the only State that has elected to 

operate a risk adjustment program. We 

proposed to modify § 153.100(c) so that 

the publication deadline for the State 

notice of benefit and payment 

parameters would be the later of March 

1 of the calendar year prior to the 

applicable benefit year, or the 30th day 

following publication of the final HHS 

notice of benefit and payment 

parameters for that benefit year. 

We are finalizing this modification as 

proposed. 

Comment: One commenter disagreed 

with our proposal, stating that delaying 

the publication of the State notices 

would not give issuers enough time to 

develop product and rate filings. 

Response: Although HHS intends to 

issue the final HHS notice of benefit and 

payment parameters in a timely fashion, 

it is difficult for States to publish such 

a notice by the required deadline if the 

final HHS notice of benefit and payment 

parameters for the applicable benefit 

year has not yet been published. 

2. Provisions and Parameters for the 

Permanent Risk Adjustment Program 

The risk adjustment program is a 

permanent program created by section 

1343 of the Affordable Care Act that 

transfers funds from lower risk, nongrandfathered plans to higher risk, nongrandfathered plans in the individual 

and small group markets, inside and 

outside the Exchanges, to balance risk 

and maintain market stability. In 

subparts D and G of the Premium 

Stabilization Rule, we established 

standards for the administration of the 

risk adjustment program. A State that is 

approved or conditionally approved by 

the Secretary to operate an Exchange 

may establish a risk adjustment 

program, or have HHS do so on its 

behalf. 

a. Risk Adjustment User Fee 

If a State is not approved to operate 

or chooses to forgo operating its own 

risk adjustment program, HHS will 

operate risk adjustment on the State’s 

behalf. As described in the 2014 

Payment Notice, HHS’s operation of risk 

adjustment on behalf of States is funded 

through a risk adjustment user fee. 

Section 153.610(f)(2) provides that an 

issuer of a risk adjustment covered plan 

must remit a user fee to HHS equal to 

the product of its monthly enrollment in 

the plan and the per-enrollee-per-month 

risk adjustment user fee specified in the 

annual HHS notice of benefit and 

payment parameters for the applicable 

benefit year. 

OMB Circular No. A–25R establishes 

Federal policy regarding user fees, and 

specifies that a user charge will be 

assessed against each identifiable 

recipient for special benefits derived 

from Federal activities beyond those 

received by the general public. The risk 

adjustment program will provide special 

benefits as defined in section 6(a)(1)(b) 

of Circular No. A–25R to issuers of risk 

adjustment covered plans because it 

will mitigate the financial instability 

associated with potential adverse risk 

selection. The risk adjustment program 

also will contribute to consumer 

confidence in the health insurance 

industry by helping to stabilize 

premiums across the individual and 

small group health insurance markets. 

In the 2015 Payment Notice, we 

estimated Federal administrative 

expenses of operating the risk 

adjustment program to be $0.96 perenrollee-per-year, based on our 

estimated contract costs for risk 

adjustment operations. For the 2016 

benefit year, we proposed to use the 

same methodology to estimate our 

administrative expenses to operate the 

program. These contracts cover 

development of the risk adjustment 

model and methodology, collections, 

payments, account management, data 

collection, data validation, program 

integrity and audit functions, 

operational and fraud analytics, 

stakeholder training, and operational 

support. To calculate the user fee, we 

divided HHS’s projected total costs for 

administering the risk adjustment 

programs on behalf of States by the 

expected number of enrollees in risk 

adjustment covered plans in HHSoperated risk adjustment programs for 

the benefit year (other than plans not 

subject to market reforms and student 

health plans, which are not subject to 

payments and charges under the risk 

adjustment methodology HHS uses 

when it operates risk adjustment on 

behalf of a State). 

We estimated that the total cost for 

HHS to operate the risk adjustment 

program on behalf of States for 2016 

will be approximately $50 million, and 

that the risk adjustment user fee would 

be $1.75 per enrollee per year. The 

increased risk adjustment user fee for 

2016 is the result of the increased 

contract costs to support the risk 

adjustment data validation process 

when HHS operates risk adjustment, 

which HHS will administer for the first 

time in 2016. We are finalizing the 

proposed methodology for benefit year 

2016 and are finalizing a per capita risk 

adjustment user fee of $1.75 per enrollee 

per year, which we will apply as a perenrollee-per-month risk adjustment user 

fee of $0.15. 

Comment: One commenter did not 

support the higher risk adjustment user 

fee for 2016, noting that issuers are 

already bearing significant costs for risk 

adjustment data validation audits, and 

requested that CMS identify efficiencies 

that could be leveraged in risk 

adjustment data validation operations 

that will keep costs down. Another 

commenter supported the higher risk 

adjustment user fee for 2016 to support 

risk adjustment data validation audits, 

reiterating the importance of these 

audits to ensure that the risk adjustment 

program is as accurate and effective as 

possible over time. One commenter 

requested clarification that the risk 

adjustment user fee is assessed on 

issuers, not States. 

Response: As we stated in the 2014 

Payment Notice, we believe that a 

reliable funding source is necessary to 

ensure a robust Federal risk adjustment 

program. We also agree with the 

commenter that risk adjustment data 

validation audits are critical to ensure 

that risk adjustment is as accurate, fair, 

and effective as possible over time. The 

risk adjustment user fee was established 

for the sole purpose of funding HHS’s 

costs for operating the Federal risk 

adjustment program, and we intend to 

keep the user fee amount as low as 

possible. The risk adjustment user fee 

must be remitted by issuers of risk 

adjustment covered plans, rather than 

States. 

b. Overview of the HHS Risk 

Adjustment Model 

The HHS risk adjustment model 

predicts plan liability for an enrollee 

based on that person’s age, sex, and 

diagnoses (risk factors), producing a risk 

score. The HHS risk adjustment 

methodology utilizes separate models 

for adults, children, and infants to 

account for cost differences in each of 

these age groups. In each of the adult 

and child models, the relative costs 

assigned to an individual’s age, sex, and 

diagnoses are added together to produce 

a risk score. Infant risk scores are 

determined by inclusion in one of 25 

mutually exclusive groups based on the 

infant’s maturity and the severity of his 

or her diagnoses. If applicable, the risk 

score is multiplied by a cost-sharing 

reduction adjustment. 

The enrollment-weighted average risk 

score of all enrollees in a particular risk 

adjustment-covered plan, or the plan 

liability risk score, within a geographic 

rating area is one input into the 


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8The HHS-Developed Risk Adjustment Model 

Algorithm Software and Instructions are available 

at: http://www.cms.gov/CCIIO/Programs-andInitiatives/Premium-Stabilization-Programs/

index.html under ‘‘Regulations & Guidance’’ 

(posted under ‘‘Guidance’’ on June 2, 2014). 

payment transfer formula, which 

determines an issuer’s transfer (payment 

or charge) for that plan. Thus, the HHS 

risk adjustment model predicts 

individual-level risk scores, but is 

designed to predict average group costs 

to account for risk across plans, which, 

as we stated in the 2014 Payment 

Notice, accords with the Actuarial 

Standards Board’s Actuarial Standards 

of Practice for risk classification. We 

received several general comments 

about the HHS risk adjustment model. 

Comment: Several commenters 

requested additional guidance about the 

ICD–10 transition and how the risk 

adjustment model will implement these 

changes. 

Response: We will publish updated 

ICD–9 instructions and software and 

then a combined set of ICD–9 and ICD– 

10 instructions and software on our Web 

site, as we did for the original ICD–9 

software and instructions, which we 

have updated annually.8 Because ICD– 

10 codes will be accepted for risk 

adjustment beginning October 1, 2015, 

we intend to publish these documents 

shortly. 

Comment: One commenter requested 

an additional 60 days for review of the 

risk adjustment recalibration, stating 

that the 30-day comment period was 

insufficient to review the model and 

provide sufficient comments. Another 

commenter stressed that issuers need 60 

to 90 days prior to filing dates to 

account for final risk adjustment model 

changes. 

Response: We are sympathetic to 

these concerns; however, we received 

numerous detailed, substantive 

comments on the proposed risk 

adjustment recalibration. Additionally, 

the timeline for publication of this final 

rule accommodates many commenters’ 

requests that the final rule be published 

prior to filing deadlines for the 2016 

benefit year. 

Comment: One commenter requested 

that the § 153.420(b) data submission 

deadline of April 30 of the year 

following the benefit year be moved to 

July 31 for the initial year of risk 

adjustment. 

Response: We have been working 

with issuers to ensure that issuers’ data 

submissions for 2014 benefit year risk 

adjustment and reinsurance will be 

complete and accurate by April 30, 

2015. We do not intend to delay the 

final data submission deadline for 2014 

risk adjustment (and reinsurance). 

c. Proposed Updates to Risk Adjustment 

Models 

We proposed to continue to use the 

same risk adjustment methodology 

finalized in the 2014 Payment Notice, 

with changes to reflect more current 

data, as described below. As we stated 

above, in the adult and child models, 

enrollee health risks are estimated using 

the HHS risk adjustment methodology, 

which assigns a set of additive factors 

that reflect the relative costs of 

demographics and diagnoses. Risk 

adjustment factors are developed using 

claims data and reflect the costs of a 

given disease relative to average 

spending. The longer the lag in data 

used to develop the risk factors, the 

greater the potential that the costs of 

treating one disease versus another have 

changed in a manner not fully reflected 

in the risk factors. 

To provide risk adjustment factors 

that best reflect more recent treatment 

patterns and costs, we proposed to 

recalibrate the HHS risk adjustment 

models for 2016 by using more recent 

claims data to develop updated risk 

factors. The risk factors published in the 

2014 Payment Notice for use in 2014 

and 2015 were developed using the 

Truven Health Analytics 2010 

MarketScan® Commercial Claims and 

Encounters database (MarketScan); we 

proposed to update the risk factors in 

the HHS risk adjustment models using 

2010, 2011, and 2012 MarketScan data. 

We also proposed that if 2013 

MarketScan data becomes available after 

the publication of the proposed rule, we 

would update the risk factors in the 

HHS risk adjustment model using the 3 

most recent years of data available— 

MarketScan 2011, 2012, and 2013 data. 

These updated risk factors would be 

published and finalized in this final 

rule. 

We proposed to implement the 

recalibrated risk adjustment factors in 

2016 to provide sufficient time for 

issuers to account for risk adjustment 

model changes. However, we also 

sought comment on making the 

recalibrated HHS risk adjustment 

models effective beginning for the 2015 

benefit year instead of the 2016 benefit 

year. We sought comment on this 

approach, including whether we should 

update risk factors based on 2013 

MarketScan data when it becomes 

available after publication of the 

proposed rule, and whether the updated 

risk factors should be implemented for 

2015 or 2016. We are finalizing the HHS 

risk adjustment recalibration using 

2011, 2012, and 2013 MarketScan data 

to develop final risk adjustment factors 

to be implemented in the 2016 benefit 

year. We are making no changes for the 

2015 benefit year. 

Comment: Commenters supported 

recalibrating the risk adjustment model 

based on the most recent data available, 

noting that the underlying data is dated 

and that updating the factors will boost 

issuers’ confidence in the model’s 

predictive power, which could reduce 

risk selection behaviors and help 

stabilize premiums. One commenter 

suggested that we provide simulated 

results between the proposed 3-year 

recalibration approach and the 2014 risk 

adjustment factors for the 2015 benefit 

year. Another commenter requested that 

CMS provide a report that includes a 

detailed analysis of the impact that 

recalibration may have, including 

details sufficient for issuers to make 

adjustments to premium rates as 

appropriate. Most commenters 

supported recalibrating for the 2016 

benefit year, since 2015 rates have 

already been set, with some commenters 

supporting implementation of 

recalibration in the 2015 benefit year. 

Commenters supported using 2013 data 

as long as the data would be available 

prior to publication of the final 2016 

Payment Notice and would be available 

prior to 2016 rate filings. Other 

commenters did not support using 2013 

MarketScan data, instead suggesting that 

2010, 2011, and 2012 data are sufficient. 

Response: We agree on the 

importance of using recent data to 

calibrate our models. However, we also 

agree that timely notice of risk 

adjustment model changes is necessary 

for orderly rate development. Therefore, 

we will implement the recalibrated risk 

adjustment models in the 2016 benefit 

year. Additionally, because we received 

and were able to prepare the 2013 

MarketScan dataset prior to the 

publication of this final rule, we have 

developed the 2016 risk adjustment 

factors using 2011, 2012, and 2013 

MarketScan data. We believe this 

incorporation allows for the use of the 

most recent data available to HHS, 

while giving issuers the notice required 

for rate setting for the 2016 benefit year. 

We will continue to assess how we may 

ameliorate the data lag in future 

recalibrations. We believe that the 

transfer equation provided in the 2014 

Payment Notice and the updated risk 

adjustment factors provided in this final 

Payment Notice are sufficient for issuers 

to evaluate the impact of risk 

adjustment on their rate development 

for 2016. 

We believe that using multiple years 

of data will promote market stability 

and minimize volatility in coefficients 

for certain rare diagnoses. In using 

multiple years of data to recalibrate the 


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9HHS-Developed Risk Adjustment Model 

Algorithm Software Instructions. June 2, 2014. 

http://www.cms.gov/CCIIO/Resources/Regulationsand-Guidance/Downloads/DIY-instructions-5-20- 

14.pdf 

risk adjustment model, we considered 

either pooling data from 3 sample years 

or averaging coefficients from three 

separately estimated calibrations, based 

on the 2010, 2011, and 2012 data, and 

sought comment on the two approaches. 

We examined the effects of pooling data 

and averaging separate calibrations, and 

did not find a quantitatively important 

difference between the resulting 

coefficients. However, we believe that 

averaging coefficients offers the 

advantage of transparency and ease in 

future recalibrations. Averaging 

coefficients using the 3 most recent 

years of separately estimated 

calibrations allows for most recent data 

to be incorporated into the model, while 

ensuring that coefficients remain 

relatively stable, and are therefore 

finalizing our approach to average the 

coefficients from 3 separately estimated 

sample years. Below we publish the 

R-squared statistics of the 3 separately 

estimated sample years’ estimates, and 

the blended coefficient for each risk 

adjustment factor. 

Comment: Commenters supported the 

transparency and ease of averaging 

coefficients from three separately 

estimated calibrations, with one 

commenter recommending that we 

consider statistical best practices in the 

decision as to whether to average 

coefficients or pool data. Another 

commenter requested that we average 

coefficients, validate the results using 

pooled data, and publish a report 

detailing the results of the two methods. 

Response: We carefully considered 

the two approaches, noting the benefits 

of each approach—transparency with 

averaging, and a single R-squared 

statistic and larger sample sizes for each 

model with pooling. However, when we 

compared the coefficients from both 

approaches, we did not find 

quantitatively important differences 

across the coefficients. We will continue 

to evaluate the coefficient averaging 

approach and consider any refinements 

in future recalibrations. 

We made minor refinements to the 

underlying MarketScan recalibration 

samples from which the risk adjustment 

factors are derived. In particular, we 

changed our treatment of Age 0 infants 

without birth hierarchical condition 

categories (HCCs). There may be cases 

in which there is no separate infant 

birth claim from which to gather 

diagnoses. For example, mother and 

infant claims may be bundled such that 

infant diagnoses appear on the mother’s 

record. Where newborn diagnoses 

appear on the mother’s claims, HHS has 

issued operational guidance on how 

best to associate those codes with the 

appropriate infant.9

However, we proposed a change in 

how we categorize age 0 infants who do 

not have birth codes. We previously 

stated in the operational guidance 

referenced above that infants without 

birth codes would be assigned an ‘‘Age 

0, Term’’ factor in risk adjustment 

operations. We did so under the 

assumption that issuers paid the birth 

costs, yet the birth HCCs were missing 

(perhaps because claims were bundled 

with the mother’s, whose claims were 

excluded). Upon further analysis of age 

0 and age 1 claims, we found that age 

0 infants without birth HCCs had costs 

more similar to age 1 infants by severity 

level. We believe that these infants 

should be assigned to age 1 in situations 

where the issuer did not pay the birth 

costs during the plan year. For many age 

0 infants without birth HCCs, the birth 

could have occurred in the prior year or 

was paid for by a different issuer. We 

proposed that age 0 infants without 

birth HCCs be assigned to ‘‘Age 1’’ by 

severity level. We have made this 

change in the recalibration samples that 

we are using to calculate risk factors for 

proposed implementation in the 2016 

benefit year. We also proposed to make 

this change in the operation of the risk 

adjustment methodology for the year in 

which we would implement the 

recalibrated risk adjustment factors. We 

are finalizing our approach as proposed, 

for implementation in the 2016 benefit 

year with the recalibrated risk 

adjustment models. 

Comment: Some commenters 

supported our reassignment of age 0 

infants without birth codes from ‘‘Age 0, 

Term’’ to ‘‘Age 1, severity level,’’ noting 

the reduction in the factor that occurs 

from these infants’ reassignment. Other 

commenters disagreed with our 

reassignment of age 0 infants without 

birth codes to ‘‘Age 1, severity level.’’ 

Commenters suggested that bundling 

claims is standard industry practice and 

infants on bundled claims without birth 

codes should be assigned to ‘‘Age 0, 

Term,’’ while another commenter 

suggested that this reassignment would 

result in incorrect payments for infant 

claims with discharge dates that overlap 

benefit years. 

Response: In previous guidance, we 

have stated that issuers should 

unbundle claims to receive credit for all 

diagnoses. We believe that many age 0 

infants without birth codes more closely 

resemble the risk profiles of age 1 

infants. In many cases, the birth codes 

have been appropriately excluded due 

to a birth in the previous year or a 

change in insurance status. We will 

continue to treat infants with discharge 

dates that overlap benefit years as age 0, 

unless they do not have birth codes, in 

which case we would assign them to 

‘‘age 1, severity level,’’ as with age 0 

infants without birth codes whose 

discharge dates do not overlap benefit 

years. 

d. List of Factors To Be Employed in the 

Model 

The HHS risk adjustment models 

predict annualized plan liability 

expenditures using age and sex 

categories and the HHS HCCs included 

in the HHS risk adjustment model. 

Dollar coefficients were estimated for 

these factors using weighted least 

squares regression, where the weight 

was the fraction of the year enrolled. 

We are including the same HCCs that 

were included in the original risk 

adjustment calibration in the 2014 

Payment Notice. For each model, the 

factors are the statistical regression 

dollar values for each HCC in the model 

divided by a weighted average plan 

liability for the full modeling sample. 

The factors represent the predicted 

relative incremental expenditures for 

each HCC. The proposed factors 

resulting from the averaged factors from 

the 2011, 2012, and 2013 separately 

solved models are shown in the tables 

below. For a given enrollee, the sums of 

the factors for the enrollee’s HCCs are 

the total relative predicted expenditures 

for that enrollee. Table 1 contains the 

factors for each adult model, including 

the interactions. Table 3 contains the 

factors for each child model. Table 4 

contains the factors for each infant 

model. 

Comment: One commenter requested 

that HHS provide the rationale for the 

modification of the child model 

transplant factors. 

Response: We constrained the six 

transplant status HCC coefficients (other 

than kidney) in the child model. The 

sample sizes of transplants are smaller 

in the child than the adult model. The 

levels and changes in the child 

transplant relative coefficients appeared 

to be dominated by random instability 

and therefore, we believe the accuracy 

of the model will be improved by 

constraining these coefficients. We 

intend to monitor the child transplant 

relative coefficients, and adjust them if 

needed in future recalibrations. 

Comment: Several commenters 

suggested that the model is not 

equipped to accurately account for the 

introduction of new treatments, and 


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recommended that HHS add drug 

utilization or selected classes of 

prescription medicines to the list of risk 

adjustment model factors. Commenters 

suggested that plans placing 

medications to treat serious chronic 

diseases on formulary tiers with the 

highest cost sharing is evidence that 

current plan designs discourage 

enrollment by higher-risk enrollees, 

which suggests that the current risk 

adjustment model is not effectively 

reducing plans’ incentives to design 

benefits that discourage enrollment by 

higher risk and higher cost patients. One 

commenter recommended that HHS 

evaluate additional medical conditions 

or characteristics for new enrollees 

which may indicate future 

expenditures. Another commenter 

suggested that HHS analyze the 

difference between Truven and 

Medicaid claim variables for age 0–1 

and that HHS assess the impact of 

habilitative and Medicaid-like benefits 

on costs which are generally not present 

in commercial claims. Lastly, a 

commenter suggested that the risk 

adjustment factors may be more 

appropriately calculated and applied 

regionally. 

Response: As stated above, we wish to 

use the same risk adjustment models 

finalized in the 2014 Payment Notice, 

with changes to reflect more current 

data. We did not intend to change the 

models’ structure, for example by 

including pharmacy utilization. 

However, we will continue to consider 

including prescription drug data in 

future model recalibrations. Similarly, 

we intend to evaluate additional 

medical conditions and characteristics 

for new enrollees which may indicate 

future expenditures, including through 

Medicaid claims comparisons. The risk 

adjustment methodology takes into 

account Statewide average premium and 

geographic rating area in the transfer 

formula. 

TABLE 1—ADULT RISK ADJUSTMENT MODEL FACTORS

Factor Platinum Gold Silver Bronze Catastrophic 

Demographic Factors 

Age 21–24, Male .................................................................. 0.250 0.202 0.139 0.076 0.070 

Age 25–29, Male .................................................................. 0.260 0.208 0.141 0.074 0.067 

Age 30–34, Male .................................................................. 0.311 0.248 0.168 0.083 0.075 

Age 35–39, Male .................................................................. 0.375 0.302 0.209 0.109 0.099 

Age 40–44, Male .................................................................. 0.459 0.374 0.269 0.149 0.138 

Age 45–49, Male .................................................................. 0.548 0.451 0.334 0.198 0.184 

Age 50–54, Male .................................................................. 0.701 0.584 0.445 0.273 0.255 

Age 55–59, Male .................................................................. 0.814 0.681 0.529 0.339 0.319 

Age 60–64, Male .................................................................. 0.982 0.824 0.650 0.428 0.404 

Age 21–24, Female ............................................................. 0.408 0.326 0.208 0.089 0.078 

Age 25–29, Female ............................................................. 0.505 0.406 0.271 0.130 0.116 

Age 30–34, Female ............................................................. 0.634 0.520 0.376 0.222 0.207 

Age 35–39, Female ............................................................. 0.735 0.612 0.466 0.308 0.292 

Age 40–44, Female ............................................................. 0.824 0.689 0.532 0.358 0.340 

Age 45–49, Female ............................................................. 0.849 0.709 0.548 0.361 0.343 

Age 50–54, Female ............................................................. 0.962 0.809 0.636 0.420 0.397 

Age 55–59, Female ............................................................. 0.989 0.830 0.652 0.427 0.403 

Age 60–64, Female ............................................................. 1.088 0.911 0.720 0.473 0.447 

Diagnosis Factors 

HIV/AIDS .............................................................................. 6.157 5.598 5.302 5.310 5.315 

Septicemia, Sepsis, Systemic Inflammatory Response 

Syndrome/Shock .............................................................. 12.643 12.435 12.334 12.417 12.429 

Central Nervous System Infections, Except Viral Meningitis ................................................................................... 7.550 7.419 7.353 7.389 7.394 

Viral or Unspecified Meningitis ............................................ 5.290 5.002 4.868 4.805 4.803 

Opportunistic Infections ....................................................... 10.151 10.027 9.969 9.964 9.963 

Metastatic Cancer ................................................................ 26.334 25.786 25.486 25.597 25.610 

Lung, Brain, and Other Severe Cancers, Including Pediatric Acute Lymphoid Leukemia ....................................... 12.032 11.615 11.394 11.418 11.421 

Non-Hodgkin’s Lymphomas and Other Cancers and Tumors .................................................................................. 6.543 6.254 6.097 6.045 6.039 

Colorectal, Breast (Age <50), Kidney, and Other Cancers 5.929 5.641 5.482 5.426 5.420 

Breast (Age 50+) and Prostate Cancer, Benign/Uncertain 

Brain Tumors, and Other Cancers and Tumors .............. 3.447 3.235 3.117 3.051 3.043 

Thyroid Cancer, Melanoma, Neurofibromatosis, and Other 

Cancers and Tumors ........................................................ 1.651 1.476 1.368 1.239 1.224 

Pancreas Transplant Status/Complications ......................... 6.947 6.726 6.616 6.645 6.650 

Diabetes with Acute Complications ..................................... 1.344 1.193 1.100 0.959 0.942 

Diabetes with Chronic Complications .................................. 1.344 1.193 1.100 0.959 0.942 

Diabetes without Complication ............................................ 1.344 1.193 1.100 0.959 0.942 

Protein-Calorie Malnutrition ................................................. 15.443 15.449 15.444 15.532 15.541 

Mucopolysaccharidosis ........................................................ 2.379 2.239 2.160 2.088 2.080 

Lipidoses and Glycogenosis ................................................ 2.379 2.239 2.160 2.088 2.080 

Amyloidosis, Porphyria, and Other Metabolic Disorders ..... 2.379 2.239 2.160 2.088 2.080 

Adrenal, Pituitary, and Other Significant Endocrine Disorders ............................................................................... 2.379 2.239 2.160 2.088 2.080 

Liver Transplant Status/Complications ................................ 16.879 16.651 16.547 16.575 16.581 

End-Stage Liver Disease ..................................................... 6.272 5.972 5.825 5.852 5.857 

Cirrhosis of Liver .................................................................. 2.548 2.348 2.252 2.213 2.210 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 10763 

TABLE 1—ADULT RISK ADJUSTMENT MODEL FACTORS—Continued 

Factor Platinum Gold Silver Bronze Catastrophic 

Chronic Hepatitis .................................................................. 2.339 2.170 2.077 1.994 1.987 

Acute Liver Failure/Disease, Including Neonatal Hepatitis 4.521 4.324 4.225 4.215 4.216 

Intestine Transplant Status/Complications .......................... 41.078 41.016 40.976 41.009 41.010 

Peritonitis/Gastrointestinal Perforation/Necrotizing 

Enterocolitis ...................................................................... 13.554 13.224 13.049 13.108 13.115 

Intestinal Obstruction ........................................................... 7.453 7.114 6.952 6.996 7.004 

Chronic Pancreatitis ............................................................. 6.273 5.985 5.849 5.891 5.898 

Acute Pancreatitis/Other Pancreatic Disorders and Intestinal Malabsorption ........................................................... 3.183 2.950 2.834 2.778 2.772 

Inflammatory Bowel Disease ............................................... 3.283 2.988 2.831 2.693 2.677 

Necrotizing Fasciitis ............................................................. 7.506 7.254 7.120 7.153 7.157 

Bone/Joint/Muscle Infections/Necrosis ................................ 7.506 7.254 7.120 7.153 7.157 

Rheumatoid Arthritis and Specified Autoimmune Disorders 3.834 3.534 3.373 3.349 3.348 

Systemic Lupus Erythematosus and Other Autoimmune 

Disorders .......................................................................... 1.306 1.154 1.066 0.949 0.936 

Osteogenesis Imperfecta and Other Osteodystrophies ...... 3.633 3.399 3.262 3.188 3.179 

Congenital/Developmental Skeletal and Connective Tissue 

Disorders .......................................................................... 3.633 3.399 3.262 3.188 3.179 

Cleft Lip/Cleft Palate ............................................................ 1.639 1.453 1.348 1.246 1.236 

Hemophilia ........................................................................... 46.716 46.362 46.145 46.164 46.167 

Myelodysplastic Syndromes and Myelofibrosis ................... 13.937 13.773 13.686 13.711 13.714 

Aplastic Anemia ................................................................... 13.937 13.773 13.686 13.711 13.714 

Acquired Hemolytic Anemia, Including Hemolytic Disease 

of Newborn ....................................................................... 10.383 10.181 10.065 10.058 10.057 

Sickle Cell Anemia (Hb-SS) ................................................. 10.383 10.181 10.065 10.058 10.057 

Thalassemia Major ............................................................... 10.383 10.181 10.065 10.058 10.057 

Combined and Other Severe Immunodeficiencies .............. 5.543 5.353 5.257 5.270 5.272 

Disorders of the Immune Mechanism .................................. 5.543 5.353 5.257 5.270 5.272 

Coagulation Defects and Other Specified Hematological 

Disorders .......................................................................... 3.203 3.085 3.015 2.982 2.978 

Drug Psychosis .................................................................... 3.915 3.627 3.471 3.346 3.332 

Drug Dependence ................................................................ 3.915 3.627 3.471 3.346 3.332 

Schizophrenia ...................................................................... 3.294 3.004 2.852 2.750 2.741 

Major Depressive and Bipolar Disorders ............................. 1.889 1.703 1.590 1.449 1.433 

Reactive and Unspecified Psychosis, Delusional Disorders 1.889 1.703 1.590 1.449 1.433 

Personality Disorders ........................................................... 1.234 1.097 0.994 0.840 0.822 

Anorexia/Bulimia Nervosa .................................................... 2.860 2.670 2.560 2.473 2.462 

Prader-Willi, Patau, Edwards, and Autosomal Deletion 

Syndromes ....................................................................... 2.958 2.806 2.723 2.663 2.655 

Down Syndrome, Fragile X, Other Chromosomal Anomalies, and Congenital Malformation Syndromes ................ 1.262 1.152 1.073 0.972 0.960 

Autistic Disorder ................................................................... 1.234 1.097 0.994 0.840 0.822 

Pervasive Developmental Disorders, Except Autistic Disorder ................................................................................. 1.234 1.097 0.994 0.840 0.822 

Traumatic Complete Lesion Cervical Spinal Cord .............. 14.620 14.420 14.307 14.313 14.313 

Quadriplegia ......................................................................... 14.620 14.420 14.307 14.313 14.313 

Traumatic Complete Lesion Dorsal Spinal Cord ................. 10.397 10.195 10.085 10.079 10.078 

Paraplegia ............................................................................ 10.397 10.195 10.085 10.079 10.078 

Spinal Cord Disorders/Injuries ............................................. 6.455 6.200 6.068 6.041 6.039 

Amyotrophic Lateral Sclerosis and Other Anterior Horn 

Cell Disease ..................................................................... 3.907 3.620 3.478 3.430 3.427 

Quadriplegic Cerebral Palsy ................................................ 1.158 0.914 0.795 0.709 0.701 

Cerebral Palsy, Except Quadriplegic ................................... 0.126 0.080 0.050 0.020 0.017 

Spina Bifida and Other Brain/Spinal/Nervous System Congenital Anomalies ............................................................. 0.090 0.021 0.000 0.000 0.000 

Myasthenia Gravis/Myoneural Disorders and Guillain-Barre 

Syndrome/Inflammatory and Toxic Neuropathy ............... 5.561 5.383 5.290 5.262 5.259 

Muscular Dystrophy ............................................................. 2.284 2.088 1.993 1.902 1.893 

Multiple Sclerosis ................................................................. 9.513 9.024 8.764 8.834 8.842 

Parkinson’s, Huntington’s, and Spinocerebellar Disease, 

and Other Neurodegenerative Disorders ......................... 2.284 2.088 1.993 1.902 1.893 

Seizure Disorders and Convulsions .................................... 1.588 1.408 1.305 1.202 1.192 

Hydrocephalus ..................................................................... 8.049 7.897 7.806 7.777 7.773 

Non-Traumatic Coma, and Brain Compression/Anoxic 

Damage ............................................................................ 10.501 10.329 10.227 10.228 10.227 

Respirator Dependence/Tracheostomy Status .................... 40.044 40.031 40.014 40.103 40.113 

Respiratory Arrest ................................................................ 12.390 12.191 12.082 12.179 12.191 

Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes ............................................ 12.390 12.191 12.082 12.179 12.191 

Heart Assistive Device/Artificial Heart ................................. 37.771 37.451 37.284 37.380 37.392 

Heart Transplant .................................................................. 37.771 37.451 37.284 37.380 37.392 

Congestive Heart Failure ..................................................... 3.598 3.462 3.391 3.390 3.391 


tkelley on DSK3SPTVN1PROD with RULES2
10764 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 

TABLE 1—ADULT RISK ADJUSTMENT MODEL FACTORS—Continued 

Factor Platinum Gold Silver Bronze Catastrophic 

Acute Myocardial Infarction ................................................. 11.768 11.329 11.100 11.278 11.300 

Unstable Angina and Other Acute Ischemic Heart Disease 6.075 5.719 5.555 5.592 5.600 

Heart Infection/Inflammation, Except Rheumatic ................ 7.146 6.980 6.891 6.869 6.867 

Specified Heart Arrhythmias ................................................ 3.350 3.170 3.073 3.007 3.000 

Intracranial Hemorrhage ...................................................... 11.056 10.700 10.519 10.548 10.554 

Ischemic or Unspecified Stroke ........................................... 4.012 3.770 3.665 3.685 3.690 

Cerebral Aneurysm and Arteriovenous Malformation ......... 4.709 4.455 4.331 4.287 4.284 

Hemiplegia/Hemiparesis ...................................................... 6.343 6.218 6.155 6.223 6.231 

Monoplegia, Other Paralytic Syndromes ............................. 3.968 3.805 3.724 3.700 3.699 

Atherosclerosis of the Extremities with Ulceration or Gangrene ................................................................................ 12.395 12.261 12.194 12.299 12.311 

Vascular Disease with Complications .................................. 8.583 8.349 8.230 8.246 8.249 

Pulmonary Embolism and Deep Vein Thrombosis .............. 4.542 4.335 4.229 4.206 4.204 

Lung Transplant Status/Complications ................................ 37.791 37.528 37.388 37.504 37.517 

Cystic Fibrosis ...................................................................... 12.367 11.975 11.747 11.763 11.764 

Chronic Obstructive Pulmonary Disease, Including 

Bronchiectasis .................................................................. 1.090 0.958 0.871 0.762 0.750 

Asthma ................................................................................. 1.090 0.958 0.871 0.762 0.750 

Fibrosis of Lung and Other Lung Disorders ........................ 2.365 2.217 2.143 2.098 2.093 

Aspiration and Specified Bacterial Pneumonias and Other 

Severe Lung Infections .................................................... 8.585 8.482 8.429 8.454 8.457 

Kidney Transplant Status ..................................................... 11.146 10.803 10.642 10.645 10.649 

End Stage Renal Disease ................................................... 42.543 42.217 42.036 42.222 42.243 

Chronic Kidney Disease, Stage 5 ........................................ 2.440 2.308 2.248 2.244 2.245 

Chronic Kidney Disease, Severe (Stage 4) ......................... 2.440 2.308 2.248 2.244 2.245 

Ectopic and Molar Pregnancy, Except with Renal Failure, 

Shock, or Embolism ......................................................... 1.455 1.260 1.139 0.891 0.856 

Miscarriage with Complications ........................................... 1.455 1.260 1.139 0.891 0.856 

Miscarriage with No or Minor Complications ....................... 1.455 1.260 1.139 0.891 0.856 

Completed Pregnancy With Major Complications ............... 4.050 3.489 3.288 3.066 3.065 

Completed Pregnancy With Complications ......................... 4.050 3.489 3.288 3.066 3.065 

Completed Pregnancy with No or Minor Complications ...... 4.050 3.489 3.288 3.066 3.065 

Chronic Ulcer of Skin, Except Pressure .............................. 2.575 2.425 2.354 2.337 2.337 

Hip Fractures and Pathological Vertebral or Humerus 

Fractures .......................................................................... 10.290 10.016 9.873 9.943 9.951 

Pathological Fractures, Except of Vertebrae, Hip, or Humerus ................................................................................ 2.010 1.868 1.782 1.681 1.669 

Stem Cell, Including Bone Marrow, Transplant Status/

Complications ................................................................... 34.090 34.078 34.067 34.095 34.098 

Artificial Openings for Feeding or Elimination ..................... 11.500 11.373 11.306 11.372 11.379 

Amputation Status, Lower Limb/Amputation Complications 5.978 5.779 5.679 5.721 5.728 

.

Severe illness x Opportunistic Infections ............................. 12.043 12.306 12.433 12.560 12.572 

Severe illness x Metastatic Cancer ..................................... 12.043 12.306 12.433 12.560 12.572 

Severe illness x Lung, Brain, and Other Severe Cancers, 

Including Pediatric Acute Lymphoid Leukemia ................ 12.043 12.306 12.433 12.560 12.572 

Severe illness x Non-Hodgkin’s Lymphomas and Other 

Cancers and Tumors ........................................................ 12.043 12.306 12.433 12.560 12.572 

Severe illness x Myasthenia Gravis/Myoneural Disorders 

and Guillain-Barre Syndrome/Inflammatory and Toxic 

Neuropathy ....................................................................... 12.043 12.306 12.433 12.560 12.572 

Severe illness x Heart Infection/Inflammation, Except 

Rheumatic ........................................................................ 12.043 12.306 12.433 12.560 12.572 

Severe illness x Intracranial Hemorrhage ........................... 12.043 12.306 12.433 12.560 12.572 

Severe illness x HCC group G06 (G06 is HCC Group 6 

which includes the following HCCs in the blood disease 

category: 67, 68) .............................................................. 12.043 12.306 12.433 12.560 12.572 

Severe illness x HCC group G08 (G08 is HCC Group 8 

which includes the following HCCs in the blood disease 

category: 73, 74) .............................................................. 12.043 12.306 12.433 12.560 12.572 

Severe illness x End-Stage Liver Disease .......................... 2.634 2.785 2.855 2.974 2.984 

Severe illness x Acute Liver Failure/Disease, Including 

Neonatal Hepatitis ............................................................ 2.634 2.785 2.855 2.974 2.984 

Severe illness x Atherosclerosis of the Extremities with Ulceration or Gangrene ....................................................... 2.634 2.785 2.855 2.974 2.984 

Severe illness x Vascular Disease with Complications ....... 2.634 2.785 2.855 2.974 2.984 

Severe illness x Aspiration and Specified Bacterial Pneumonias and Other Severe Lung Infections ...................... 2.634 2.785 2.855 2.974 2.984 

Severe illness x Artificial Openings for Feeding or Elimination ................................................................................ 2.634 2.785 2.855 2.974 2.984 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 10765 

TABLE 1—ADULT RISK ADJUSTMENT MODEL FACTORS—Continued 

Factor Platinum Gold Silver Bronze Catastrophic 

Severe illness x HCC group G03 (G03 is HCC Group 3 

which includes the following HCCs in the musculoskeletal disease category: 54, 55) ................................... 2.634 2.785 2.855 2.974 2.984 

TABLE 2—HHS HCCS IN THE SEVERITY ILLNESS INDICATOR VARIABLE

Description 

Septicemia, Sepsis, Systemic Inflammatory Response Syndrome/Shock. 

Peritonitis/Gastrointestinal Perforation/Necrotizing Enterocolitis. 

Seizure Disorders and Convulsions. 

Non-Traumatic Coma, Brain Compression/Anoxic Damage. 

Respirator Dependence/Tracheostomy Status. 

Respiratory Arrest. 

Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes. 

Pulmonary Embolism and Deep Vein Thrombosis. 

TABLE 3—CHILD RISK ADJUSTMENT MODEL FACTORS

Factor Platinum Gold Silver Bronze Catastrophic 

Demographic Factors 

Age 2–4, Male ...................................................................... 0.262 0.191 0.097 0.016 0.009 

Age 5–9, Male ...................................................................... 0.179 0.128 0.058 0.000 0.000 

Age 10–14, Male .................................................................. 0.229 0.176 0.099 0.034 0.028 

Age 15–20, Male .................................................................. 0.302 0.241 0.161 0.084 0.077 

Age 2–4, Female ................................................................. 0.212 0.150 0.066 0.004 0.002 

Age 5–9, Female ................................................................. 0.141 0.095 0.036 0.000 0.000 

Age 10–14, Female ............................................................. 0.213 0.162 0.093 0.037 0.033 

Age 15–20, Female ............................................................. 0.358 0.283 0.180 0.079 0.070 

Diagnosis Factors 

HIV/AIDS .............................................................................. 3.905 3.443 3.195 3.035 3.022 

Septicemia, Sepsis, Systemic Inflammatory Response 

Syndrome/Shock .............................................................. 19.194 19.011 18.921 18.952 18.957 

Central Nervous System Infections, Except Viral Meningitis ................................................................................... 12.691 12.467 12.344 12.356 12.357 

Viral or Unspecified Meningitis ............................................ 3.766 3.517 3.386 3.226 3.210 

Opportunistic Infections ....................................................... 25.545 25.461 25.417 25.403 25.402 

Metastatic Cancer ................................................................ 40.241 39.934 39.739 39.739 39.738 

Lung, Brain, and Other Severe Cancers, Including Pediatric Acute Lymphoid Leukemia ....................................... 13.408 13.064 12.852 12.768 12.758 

Non-Hodgkin’s Lymphomas and Other Cancers and Tumors .................................................................................. 10.279 9.971 9.778 9.654 9.639 

Colorectal, Breast (Age < 50), Kidney, and Other Cancers 4.078 3.830 3.661 3.498 3.479 

Breast (Age 50+) and Prostate Cancer, Benign/Uncertain 

Brain Tumors, and Other Cancers and Tumors .............. 3.274 3.044 2.901 2.749 2.731 

Thyroid Cancer, Melanoma, Neurofibromatosis, and Other 

Cancers and Tumors ........................................................ 1.832 1.650 1.520 1.360 1.342 

Pancreas Transplant Status/Complications ......................... 35.005 34.817 34.724 34.753 34.755 

Diabetes with Acute Complications ..................................... 2.695 2.350 2.169 1.832 1.794 

Diabetes with Chronic Complications .................................. 2.695 2.350 2.169 1.832 1.794 

Diabetes without Complication ............................................ 2.695 2.350 2.169 1.832 1.794 

Protein-Calorie Malnutrition ................................................. 15.577 15.458 15.387 15.437 15.442 

Mucopolysaccharidosis ........................................................ 6.759 6.440 6.245 6.182 6.176 

Lipidoses and Glycogenosis ................................................ 6.759 6.440 6.245 6.182 6.176 

Congenital Metabolic Disorders, Not Elsewhere Classified 6.759 6.440 6.245 6.182 6.176 

Amyloidosis, Porphyria, and Other Metabolic Disorders ..... 6.759 6.440 6.245 6.182 6.176 

Adrenal, Pituitary, and Other Significant Endocrine Disorders ............................................................................... 6.759 6.440 6.245 6.182 6.176 

Liver Transplant Status/Complications ................................ 35.005 34.817 34.724 34.753 34.755 

End-Stage Liver Disease ..................................................... 15.326 15.150 15.059 15.061 15.063 

Cirrhosis of Liver .................................................................. 10.171 9.978 9.868 9.837 9.836 

Chronic Hepatitis .................................................................. 1.316 1.149 1.025 0.917 0.908 

Acute Liver Failure/Disease, Including Neonatal Hepatitis 10.916 10.745 10.640 10.615 10.614 

Intestine Transplant Status/Complications .......................... 35.005 34.817 34.724 34.753 34.755 

Peritonitis/Gastrointestinal Perforation/Necrotizing 

Enterocolitis ...................................................................... 17.618 17.189 16.947 16.982 16.986 


tkelley on DSK3SPTVN1PROD with RULES2
10766 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 

TABLE 3—CHILD RISK ADJUSTMENT MODEL FACTORS—Continued 

Factor Platinum Gold Silver Bronze Catastrophic 

Intestinal Obstruction ........................................................... 6.347 6.064 5.897 5.782 5.768 

Chronic Pancreatitis ............................................................. 11.190 10.860 10.691 10.687 10.687 

Acute Pancreatitis/Other Pancreatic Disorders and Intestinal Malabsorption ........................................................... 3.182 3.026 2.921 2.791 2.774 

Inflammatory Bowel Disease ............................................... 6.004 5.576 5.331 5.179 5.161 

Necrotizing Fasciitis ............................................................. 5.256 4.965 4.789 4.706 4.699 

Bone/Joint/Muscle Infections/Necrosis ................................ 5.256 4.965 4.789 4.706 4.699 

Rheumatoid Arthritis and Specified Autoimmune Disorders 3.436 3.177 3.005 2.858 2.843 

Systemic Lupus Erythematosus and Other Autoimmune 

Disorders .......................................................................... 1.257 1.086 0.962 0.795 0.775 

Osteogenesis Imperfecta and Other Osteodystrophies ...... 1.796 1.655 1.544 1.435 1.421 

Congenital/Developmental Skeletal and Connective Tissue 

Disorders .......................................................................... 1.796 1.655 1.544 1.435 1.421 

Cleft Lip/Cleft Palate ............................................................ 1.859 1.618 1.468 1.300 1.281 

Hemophilia ........................................................................... 59.085 58.511 58.167 58.146 58.143 

Myelodysplastic Syndromes and Myelofibrosis ................... 21.395 21.190 21.067 21.051 21.050 

Aplastic Anemia ................................................................... 21.395 21.190 21.067 21.051 21.050 

Acquired Hemolytic Anemia, Including Hemolytic Disease 

of Newborn ....................................................................... 8.368 8.039 7.846 7.752 7.742 

Sickle Cell Anemia (Hb-SS) ................................................. 8.368 8.039 7.846 7.752 7.742 

Thalassemia Major ............................................................... 8.368 8.039 7.846 7.752 7.742 

Combined and Other Severe Immunodeficiencies .............. 7.081 6.862 6.737 6.659 6.649 

Disorders of the Immune Mechanism .................................. 7.081 6.862 6.737 6.659 6.649 

Coagulation Defects and Other Specified Hematological 

Disorders .......................................................................... 5.332 5.169 5.053 4.945 4.932 

Drug Psychosis .................................................................... 5.134 4.831 4.672 4.584 4.576 

Drug Dependence ................................................................ 5.134 4.831 4.672 4.584 4.576 

Schizophrenia ...................................................................... 5.630 5.184 4.940 4.795 4.784 

Major Depressive and Bipolar Disorders ............................. 2.003 1.776 1.618 1.392 1.366 

Reactive and Unspecified Psychosis, Delusional Disorders 1.974 1.745 1.588 1.360 1.334 

Personality Disorders ........................................................... 0.857 0.726 0.603 0.390 0.363 

Anorexia/Bulimia Nervosa .................................................... 2.863 2.630 2.484 2.385 2.374 

Prader-Willi, Patau, Edwards, and Autosomal Deletion 

Syndromes ....................................................................... 3.910 3.649 3.524 3.486 3.481 

Down Syndrome, Fragile X, Other Chromosomal Anomalies, and Congenital Malformation Syndromes ................ 1.795 1.582 1.460 1.334 1.320 

Autistic Disorder ................................................................... 1.899 1.691 1.543 1.329 1.304 

Pervasive Developmental Disorders, Except Autistic Disorder ................................................................................. 0.958 0.819 0.685 0.447 0.417 

Traumatic Complete Lesion Cervical Spinal Cord .............. 14.568 14.494 14.454 14.554 14.565 

Quadriplegia ......................................................................... 14.568 14.494 14.454 14.554 14.565 

Traumatic Complete Lesion Dorsal Spinal Cord ................. 12.632 12.373 12.237 12.245 12.248 

Paraplegia ............................................................................ 12.632 12.373 12.237 12.245 12.248 

Spinal Cord Disorders/Injuries ............................................. 5.814 5.533 5.376 5.274 5.263 

Amyotrophic Lateral Sclerosis and Other Anterior Horn 

Cell Disease ..................................................................... 10.349 10.046 9.870 9.821 9.813 

Quadriplegic Cerebral Palsy ................................................ 4.321 3.997 3.842 3.871 3.876 

Cerebral Palsy, Except Quadriplegic ................................... 1.066 0.840 0.715 0.595 0.582 

Spina Bifida and Other Brain/Spinal/Nervous System Congenital Anomalies ............................................................. 1.352 1.182 1.075 0.973 0.961 

Myasthenia Gravis/Myoneural Disorders and Guillain-Barre 

Syndrome/Inflammatory and Toxic Neuropathy ............... 10.325 10.110 9.984 9.926 9.919 

Muscular Dystrophy ............................................................. 3.561 3.323 3.187 3.077 3.064 

Multiple Sclerosis ................................................................. 6.515 6.125 5.899 5.854 5.850 

Parkinson’s, Huntington’s, and Spinocerebellar Disease, 

and Other Neurodegenerative Disorders ......................... 3.561 3.323 3.187 3.077 3.064 

Seizure Disorders and Convulsions .................................... 2.308 2.110 1.968 1.774 1.751 

Hydrocephalus ..................................................................... 6.416 6.260 6.175 6.167 6.166 

Non-Traumatic Coma, and Brain Compression/Anoxic 

Damage ............................................................................ 9.357 9.165 9.058 9.011 9.005 

Respirator Dependence/Tracheostomy Status .................... 43.573 43.432 43.370 43.553 43.572 

Respiratory Arrest ................................................................ 14.726 14.485 14.364 14.374 14.375 

Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes ............................................ 14.726 14.485 14.364 14.374 14.375 

Heart Assistive Device/Artificial Heart ................................. 35.005 34.817 34.724 34.753 34.755 

Heart Transplant .................................................................. 35.005 34.817 34.724 34.753 34.755 

Congestive Heart Failure ..................................................... 7.529 7.399 7.313 7.259 7.252 

Acute Myocardial Infarction ................................................. 8.526 8.355 8.262 8.268 8.270 

Unstable Angina and Other Acute Ischemic Heart Disease 4.832 4.731 4.675 4.688 4.692 

Heart Infection/Inflammation, Except Rheumatic ................ 18.137 17.976 17.883 17.866 17.865 

Hypoplastic Left Heart Syndrome and Other Severe Congenital Heart Disorders .................................................... 7.760 7.525 7.350 7.178 7.156 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 10767 

TABLE 3—CHILD RISK ADJUSTMENT MODEL FACTORS—Continued 

Factor Platinum Gold Silver Bronze Catastrophic 

Major Congenital Heart/Circulatory Disorders ..................... 2.184 2.053 1.918 1.752 1.734 

Atrial and Ventricular Septal Defects, Patent Ductus 

Arteriosus, and Other Congenital Heart/Circulatory Disorders ............................................................................... 1.355 1.243 1.121 0.985 0.970 

Specified Heart Arrhythmias ................................................ 5.208 4.988 4.842 4.750 4.739 

Intracranial Hemorrhage ...................................................... 19.273 18.970 18.808 18.815 18.816 

Ischemic or Unspecified Stroke ........................................... 8.661 8.495 8.414 8.461 8.466 

Cerebral Aneurysm and Arteriovenous Malformation ......... 4.442 4.184 4.044 3.962 3.950 

Hemiplegia/Hemiparesis ...................................................... 6.306 6.169 6.101 6.077 6.074 

Monoplegia, Other Paralytic Syndromes ............................. 4.394 4.195 4.095 4.052 4.049 

Atherosclerosis of the Extremities with Ulceration or Gangrene ................................................................................ 15.443 15.201 15.064 14.935 14.918 

Vascular Disease with Complications .................................. 17.744 17.530 17.416 17.432 17.433 

Pulmonary Embolism and Deep Vein Thrombosis .............. 16.259 16.035 15.925 15.959 15.964 

Lung Transplant Status/Complications ................................ 35.005 34.817 34.724 34.753 34.755 

Cystic Fibrosis ...................................................................... 14.929 14.393 14.082 14.107 14.110 

Chronic Obstructive Pulmonary Disease, Including 

Bronchiectasis .................................................................. 0.519 0.439 0.332 0.187 0.170 

Asthma ................................................................................. 0.519 0.439 0.332 0.187 0.170 

Fibrosis of Lung and Other Lung Disorders ........................ 4.441 4.279 4.165 4.066 4.055 

Aspiration and Specified Bacterial Pneumonias and Other 

Severe Lung Infections .................................................... 9.634 9.540 9.477 9.494 9.494 

Kidney Transplant Status ..................................................... 16.696 16.265 16.038 16.049 16.054 

End Stage Renal Disease ................................................... 38.999 38.735 38.594 38.720 38.733 

Chronic Kidney Disease, Stage 5 ........................................ 8.885 8.683 8.557 8.433 8.417 

Chronic Kidney Disease, Severe (Stage 4) ......................... 8.885 8.683 8.557 8.433 8.417 

Ectopic and Molar Pregnancy, Except with Renal Failure, 

Shock, or Embolism ......................................................... 1.245 1.056 0.919 0.640 0.606 

Miscarriage with Complications ........................................... 1.245 1.056 0.919 0.640 0.606 

Miscarriage with No or Minor Complications ....................... 1.245 1.056 0.919 0.640 0.606 

Completed Pregnancy With Major Complications ............... 3.528 3.009 2.801 2.513 2.500 

Completed Pregnancy With Complications ......................... 3.528 3.009 2.801 2.513 2.500 

Completed Pregnancy with No or Minor Complications ...... 3.528 3.009 2.801 2.513 2.500 

Chronic Ulcer of Skin, Except Pressure .............................. 1.703 1.596 1.500 1.407 1.397 

Hip Fractures and Pathological Vertebral or Humerus 

Fractures .......................................................................... 6.420 6.099 5.893 5.758 5.744 

Pathological Fractures, Except of Vertebrae, Hip, or Humerus ................................................................................ 1.784 1.641 1.509 1.327 1.308 

Stem Cell, Including Bone Marrow, Transplant Status/

Complications ................................................................... 35.005 34.817 34.724 34.753 34.755 

Artificial Openings for Feeding or Elimination ..................... 16.599 16.457 16.401 16.574 16.594 

Amputation Status, Lower Limb/Amputation Complications 9.440 9.135 8.972 8.856 8.841 

TABLE 4—INFANT RISK ADJUSTMENT MODELS FACTORS

Group Platinum Gold Silver Bronze Catastrophic 

Extremely Immature *, Severity Level 5 (Highest) .............. 434.244 432.604 431.540 431.548 431.554 

Extremely Immature *, Severity Level 4 .............................. 218.568 216.965 215.930 215.892 215.892 

Extremely Immature *, Severity Level 3 .............................. 63.306 62.118 61.302 60.931 60.895 

Extremely Immature *, Severity Level 2 .............................. 63.306 62.118 61.302 60.931 60.895 

Extremely Immature *, Severity Level 1 (Lowest) ............... 63.306 62.118 61.302 60.931 60.895 

Immature *, Severity Level 5 (Highest) ............................... 218.648 217.060 216.033 216.039 216.046 

Immature *, Severity Level 4 ............................................... 97.820 96.171 95.105 95.087 95.091 

Immature *, Severity Level 3 ............................................... 56.283 54.855 53.924 53.770 53.758 

Immature *, Severity Level 2 ............................................... 33.845 32.464 31.571 31.302 31.279 

Immature *, Severity Level 1 (Lowest) ................................ 33.845 32.464 31.571 31.302 31.279 

Premature/Multiples *, Severity Level 5 (Highest) ............... 177.856 176.320 175.329 175.253 175.251 

Premature/Multiples *, Severity Level 4 .............................. 36.022 34.500 33.543 33.349 33.338 

Premature/Multiples *, Severity Level 3 .............................. 19.582 18.378 17.607 17.163 17.121 

Premature/Multiples *, Severity Level 2 .............................. 10.730 9.739 9.072 8.420 8.342 

Premature/Multiples *, Severity Level 1 (Lowest) ............... 7.152 6.431 5.831 5.073 4.987 

Term *, Severity Level 5 (Highest) ...................................... 155.054 153.597 152.653 152.503 152.492 

Term *, Severity Level 4 ...................................................... 19.318 18.169 17.434 16.891 16.841 

Term *, Severity Level 3 ...................................................... 7.022 6.305 5.738 4.947 4.851 

Term *, Severity Level 2 ...................................................... 4.219 3.676 3.163 2.300 2.193 

Term *, Severity Level 1 (Lowest) ....................................... 1.785 1.511 1.033 0.268 0.196 

Age 1 *, Severity Level 5 (Highest) ..................................... 42.616 41.994 41.549 41.337 41.318 

Age 1 *, Severity Level 4 ..................................................... 7.142 6.731 6.402 6.146 6.123 

Age 1 *, Severity Level 3 ..................................................... 2.678 2.410 2.191 1.927 1.899 

Age 1 *, Severity Level 2 ..................................................... 1.625 1.426 1.231 0.958 0.931 


tkelley on DSK3SPTVN1PROD with RULES2
10768 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 

TABLE 4—INFANT RISK ADJUSTMENT MODELS FACTORS—Continued 

Group Platinum Gold Silver Bronze Catastrophic 

Age 1 *, Severity Level 1 (Lowest) ...................................... 0.636 0.527 0.321 0.138 0.124 

Age 0 Male ........................................................................... 0.728 0.673 0.659 0.607 0.594 

Age 1 Male ........................................................................... 0.158 0.137 0.128 0.094 0.090 

TABLE 5—HHS HCCS INCLUDED IN INFANT MODEL MATURITY CATEGORIES

Maturity category HCC/Description 

Extremely Immature ......................................... Extremely Immature Newborns, Birthweight <500 Grams. 

Extremely Immature ......................................... Extremely Immature Newborns, Including Birthweight 500–749 Grams. 

Extremely Immature ......................................... Extremely Immature Newborns, Including Birthweight 750–999 Grams. 

Immature ........................................................... Premature Newborns, Including Birthweight 1000–1499 Grams. 

Immature ........................................................... Premature Newborns, Including Birthweight 1500–1999 Grams. 

Premature/Multiples .......................................... Premature Newborns, Including Birthweight 2000–2499 Grams. 

Premature/Multiples .......................................... Other Premature, Low Birthweight, Malnourished, or Multiple Birth Newborns. 

Term ................................................................. Term or Post-Term Singleton Newborn, Normal or High Birthweight. 

Age 1 ................................................................ All age 1 infants. 

TABLE 6—HHS HCCS INCLUDED IN INFANT MODEL SEVERITY CATEGORIES

Severity category HCC 

Severity Level 5 (Highest) ........... Metastatic Cancer. 

Severity Level 5 ........................... Pancreas Transplant Status/Complications. 

Severity Level 5 ........................... Liver Transplant Status/Complications. 

Severity Level 5 ........................... End-Stage Liver Disease. 

Severity Level 5 ........................... Intestine Transplant Status/Complications. 

Severity Level 5 ........................... Peritonitis/Gastrointestinal Perforation/Necrotizing Enterocolitis. 

Severity Level 5 ........................... Respirator Dependence/Tracheostomy Status. 

Severity Level 5 ........................... Heart Assistive Device/Artificial Heart. 

Severity Level 5 ........................... Heart Transplant. 

Severity Level 5 ........................... Congestive Heart Failure. 

Severity Level 5 ........................... Hypoplastic Left Heart Syndrome and Other Severe Congenital Heart Disorders. 

Severity Level 5 ........................... Lung Transplant Status/Complications. 

Severity Level 5 ........................... Kidney Transplant Status. 

Severity Level 5 ........................... End Stage Renal Disease. 

Severity Level 5 ........................... Stem Cell, Including Bone Marrow, Transplant Status/Complications. 

Severity Level 4 ........................... Septicemia, Sepsis, Systemic Inflammatory Response Syndrome/Shock. 

Severity Level 4 ........................... Lung, Brain, and Other Severe Cancers, Including Pediatric Acute Lymphoid Leukemia. 

Severity Level 4 ........................... Mucopolysaccharidosis. 

Severity Level 4 ........................... Major Congenital Anomalies of Diaphragm, Abdominal Wall, and Esophagus, Age <2. 

Severity Level 4 ........................... Myelodysplastic Syndromes and Myelofibrosis. 

Severity Level 4 ........................... Aplastic Anemia. 

Severity Level 4 ........................... Combined and Other Severe Immunodeficiencies. 

Severity Level 4 ........................... Traumatic Complete Lesion Cervical Spinal Cord. 

Severity Level 4 ........................... Quadriplegia. 

Severity Level 4 ........................... Amyotrophic Lateral Sclerosis and Other Anterior Horn Cell Disease. 

Severity Level 4 ........................... Quadriplegic Cerebral Palsy. 

Severity Level 4 ........................... Myasthenia Gravis/Myoneural Disorders and Guillain-Barre Syndrome/Inflammatory and Toxic Neuropathy. 

Severity Level 4 ........................... Non-Traumatic Coma, Brain Compression/Anoxic Damage. 

Severity Level 4 ........................... Respiratory Arrest. 

Severity Level 4 ........................... Cardio-Respiratory Failure and Shock, Including Respiratory Distress Syndromes. 

Severity Level 4 ........................... Acute Myocardial Infarction. 

Severity Level 4 ........................... Heart Infection/Inflammation, Except Rheumatic. 

Severity Level 4 ........................... Major Congenital Heart/Circulatory Disorders. 

Severity Level 4 ........................... Intracranial Hemorrhage. 

Severity Level 4 ........................... Ischemic or Unspecified Stroke. 

Severity Level 4 ........................... Vascular Disease with Complications. 

Severity Level 4 ........................... Pulmonary Embolism and Deep Vein Thrombosis. 

Severity Level 4 ........................... Aspiration and Specified Bacterial Pneumonias and Other Severe Lung Infections. 

Severity Level 4 ........................... Chronic Kidney Disease, Stage 5. 

Severity Level 4 ........................... Hip Fractures and Pathological Vertebral or Humerus Fractures. 

Severity Level 4 ........................... Artificial Openings for Feeding or Elimination. 

Severity Level 3 ........................... HIV/AIDS. 

Severity Level 3 ........................... Central Nervous System Infections, Except Viral Meningitis. 

Severity Level 3 ........................... Opportunistic Infections. 

Severity Level 3 ........................... Non-Hodgkin’s Lymphomas and Other Cancers and Tumors. 

Severity Level 3 ........................... Colorectal, Breast (Age <50), Kidney and Other Cancers. 

Severity Level 3 ........................... Breast (Age 50+), Prostate Cancer, Benign/Uncertain Brain Tumors, and Other Cancers and Tumors. 

Severity Level 3 ........................... Lipidoses and Glycogenosis. 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 10769 

TABLE 6—HHS HCCS INCLUDED IN INFANT MODEL SEVERITY CATEGORIES—Continued 

Severity category HCC 

Severity Level 3 ........................... Adrenal, Pituitary, and Other Significant Endocrine Disorders. 

Severity Level 3 ........................... Acute Liver Failure/Disease, Including Neonatal Hepatitis. 

Severity Level 3 ........................... Intestinal Obstruction. 

Severity Level 3 ........................... Necrotizing Fasciitis. 

Severity Level 3 ........................... Bone/Joint/Muscle Infections/Necrosis. 

Severity Level 3 ........................... Osteogenesis Imperfecta and Other Osteodystrophies. 

Severity Level 3 ........................... Cleft Lip/Cleft Palate. 

Severity Level 3 ........................... Hemophilia. 

Severity Level 3 ........................... Disorders of the Immune Mechanism. 

Severity Level 3 ........................... Coagulation Defects and Other Specified Hematological Disorders. 

Severity Level 3 ........................... Prader-Willi, Patau, Edwards, and Autosomal Deletion Syndromes. 

Severity Level 3 ........................... Traumatic Complete Lesion Dorsal Spinal Cord. 

Severity Level 3 ........................... Paraplegia. 

Severity Level 3 ........................... Spinal Cord Disorders/Injuries. 

Severity Level 3 ........................... Cerebral Palsy, Except Quadriplegic. 

Severity Level 3 ........................... Muscular Dystrophy. 

Severity Level 3 ........................... Parkinson’s, Huntington’s, and Spinocerebellar Disease, and Other Neurodegenerative Disorders. 

Severity Level 3 ........................... Hydrocephalus. 

Severity Level 3 ........................... Unstable Angina and Other Acute Ischemic Heart Disease. 

Severity Level 3 ........................... Atrial and Ventricular Septal Defects, Patent Ductus Arteriosus, and Other Congenital Heart/Circulatory Disorders. 

Severity Level 3 ........................... Specified Heart Arrhythmias. 

Severity Level 3 ........................... Cerebral Aneurysm and Arteriovenous Malformation. 

Severity Level 3 ........................... Hemiplegia/Hemiparesis. 

Severity Level 3 ........................... Cystic Fibrosis. 

Severity Level 3 ........................... Fibrosis of Lung and Other Lung Disorders. 

Severity Level 3 ........................... Pathological Fractures, Except of Vertebrae, Hip, or Humerus. 

Severity Level 2 ........................... Viral or Unspecified Meningitis. 

Severity Level 2 ........................... Thyroid, Melanoma, Neurofibromatosis, and Other Cancers and Tumors. 

Severity Level 2 ........................... Diabetes with Acute Complications. 

Severity Level 2 ........................... Diabetes with Chronic Complications. 

Severity Level 2 ........................... Diabetes without Complication. 

Severity Level 2 ........................... Protein-Calorie Malnutrition. 

Severity Level 2 ........................... Congenital Metabolic Disorders, Not Elsewhere Classified. 

Severity Level 2 ........................... Amyloidosis, Porphyria, and Other Metabolic Disorders. 

Severity Level 2 ........................... Cirrhosis of Liver. 

Severity Level 2 ........................... Chronic Pancreatitis. 

Severity Level 2 ........................... Inflammatory Bowel Disease. 

Severity Level 2 ........................... Rheumatoid Arthritis and Specified Autoimmune Disorders. 

Severity Level 2 ........................... Systemic Lupus Erythematosus and Other Autoimmune Disorders. 

Severity Level 2 ........................... Congenital/Developmental Skeletal and Connective Tissue Disorders. 

Severity Level 2 ........................... Acquired Hemolytic Anemia, Including Hemolytic Disease of Newborn. 

Severity Level 2 ........................... Sickle Cell Anemia (Hb-SS). 

Severity Level 2 ........................... Drug Psychosis. 

Severity Level 2 ........................... Drug Dependence. 

Severity Level 2 ........................... Down Syndrome, Fragile X, Other Chromosomal Anomalies, and Congenital Malformation Syndromes. 

Severity Level 2 ........................... Spina Bifida and Other Brain/Spinal/Nervous System Congenital Anomalies. 

Severity Level 2 ........................... Seizure Disorders and Convulsions. 

Severity Level 2 ........................... Monoplegia, Other Paralytic Syndromes. 

Severity Level 2 ........................... Atherosclerosis of the Extremities with Ulceration or Gangrene. 

Severity Level 2 ........................... Chronic Obstructive Pulmonary Disease, Including Bronchiectasis. 

Severity Level 2 ........................... Chronic Ulcer of Skin, Except Pressure. 

Severity Level 1 (Lowest) ............ Chronic Hepatitis. 

Severity Level 1 ........................... Acute Pancreatitis/Other Pancreatic Disorders and Intestinal Malabsorption. 

Severity Level 1 ........................... Thalassemia Major. 

Severity Level 1 ........................... Autistic Disorder. 

Severity Level 1 ........................... Pervasive Developmental Disorders, Except Autistic Disorder. 

Severity Level 1 ........................... Multiple Sclerosis. 

Severity Level 1 ........................... Asthma. 

Severity Level 1 ........................... Chronic Kidney Disease, Severe (Stage 4). 

Severity Level 1 ........................... Amputation Status, Lower Limb/Amputation Complications. 

Severity Level 1 ........................... No Severity HCCs. 

e. Cost-Sharing Reductions Adjustments 

We proposed to continue to include 

an adjustment for the receipt of costsharing reductions in the model, and 

proposed to continue not to adjust for 

receipt of reinsurance payments in the 

model. We have updated the 

adjustments to the HHS risk adjustment 

models for individuals who receive 

cost-sharing reductions to be consistent 

with the cost-sharing reductions 

advance payment formula finalized in 

the 2015 Payment Notice, for 

implementation in 2015 benefit year 

risk adjustment. The silver plan 

variation and zero cost sharing factors 

are unchanged from those finalized in 

the 2014 Payment Notice. The 


tkelley on DSK3SPTVN1PROD with RULES2
10770 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 

10Winkleman, Ross and Syed Mehmud. ‘‘A 

Comparative Analysis of Claims-Based Tools for 

Health Risk Assessment.’’ Society of Actuaries. 

April 2007. 

adjustment factors are set forth in Table 

7. These adjustments are multiplied 

against the sum of the demographic, 

diagnosis, and interaction factors. We 

will continue to evaluate this 

adjustment as more data becomes 

available. We received no comments on 

this approach, and are finalizing it as 

proposed. 

TABLE 7—COST-SHARING REDUCTION ADJUSTMENT

Household income Plan AV 

Induced 

utilization 

factor 

Silver Plan Variation Recipients 

100–150% of FPL ....................................................................... Plan Variation 94% .................................................................... 1.12 

150–200% of FPL ....................................................................... Plan Variation 87% .................................................................... 1.12 

200–250% of FPL ....................................................................... Plan Variation 73% .................................................................... 1.00 

>250% of FPL ............................................................................. Standard Plan 70% .................................................................... 1.00 

Zero Cost Sharing Recipients 

<300% of FPL ............................................................................. Platinum (90%) .......................................................................... 1.00 

<300% of FPL ............................................................................. Gold (80%) ................................................................................. 1.07 

<300% of FPL ............................................................................. Silver (70%) ............................................................................... 1.12 

<300% of FPL ............................................................................. Bronze (60%) ............................................................................. 1.15 

Limited Cost Sharing Recipients 

>300% of FPL ............................................................................. Platinum (90%) .......................................................................... 1.00 

>300% of FPL ............................................................................. Gold (80%) ................................................................................. 1.07 

>300% of FPL ............................................................................. Silver (70%) ............................................................................... 1.12 

>300% of FPL ............................................................................. Bronze (60%) ............................................................................. 1.15 

f. Model Performance Statistics 

To evaluate model performance, we 

examined R-squared statistics and 

predictive ratios. The R-squared 

statistic, which calculates the 

percentage of individual variation 

explained by a model, measures the 

predictive accuracy of the model 

overall. The predictive ratios measure 

the predictive accuracy of a model for 

different validation groups or 

subpopulations. The predictive ratio for 

each of the HHS risk adjustment models 

is the ratio of the weighted mean 

predicted plan liability for the model 

sample population to the weighted 

mean actual plan liability for the model 

sample population. The predictive ratio 

represents how well the model does on 

average at predicting plan liability for 

that subpopulation. A subpopulation 

that is predicted perfectly would have a 

predictive ratio of 1.0. For each of the 

HHS risk adjustment models, the Rsquared statistic and the predictive ratio 

are in the range of published estimates 

for concurrent risk adjustment 

models.10 Because we are averaging the 

coefficients from separately solved 

models based on MarketScan 2011, 2012 

and 2013 data, we are publishing the Rsquared statistic for each model and 

year separately to verify their statistical 

validity. The R-squared statistic for each 

model is shown in Table 8. 

TABLE 8—R-SQUARED STATISTIC FOR HHS RISK ADJUSTMENT MODELS

Risk adjustment model 

R-squared statistic 

2011 2012 2013 

Platinum Adult .............................................................................................................................. 0.368 0.394 0.382 

Platinum Child .............................................................................................................................. 0.283 0.286 0.277 

Platinum Infant ............................................................................................................................. 0.337 0.284 0.322 

Gold Adult .................................................................................................................................... 0.363 0.389 0.377 

Gold Child .................................................................................................................................... 0.278 0.280 0.272 

Gold Infant ................................................................................................................................... 0.335 0.282 0.319 

Silver Adult ................................................................................................................................... 0.360 0.387 0.374 

Silver Child ................................................................................................................................... 0.275 0.277 0.268 

Silver Infant .................................................................................................................................. 0.334 0.281 0.318 

Bronze Adult ................................................................................................................................ 0.358 0.384 0.372 

Bronze Child ................................................................................................................................ 0.272 0.273 0.265 

Bronze Infant ............................................................................................................................... 0.334 0.281 0.318 

Catastrophic Adult ....................................................................................................................... 0.358 0.384 0.371 

Catastrophic Child ....................................................................................................................... 0.271 0.273 0.265 

Catastrophic Infant ....................................................................................................................... 0.334 0.281 0.318 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 10771 

g. Overview of the Payment Transfer 

Formula 

We do not propose to alter our 

payment transfer methodology. Plan 

average risk scores would be calculated 

as the member month-weighted average 

of individual enrollee risk scores. We 

defined the calculation of plan average 

actuarial risk and the calculation of 

payments and charges in the Premium 

Stabilization Rule. In the 2014 Payment 

Notice, we combined those concepts 

into a risk adjustment payment transfer 

formula. Risk adjustment transfers 

(payments and charges) will be 

calculated following the completion of 

issuer risk adjustment data reporting. 

The payment transfer formula includes 

a set of cost adjustment terms that 

require transfers to be calculated at the 

geographic rating area level for each 

plan (that is, HHS will calculate two 

separate transfer amounts for a plan that 

operates in two rating areas). 

The payment transfer formula is 

designed to provide a per member per 

month (PMPM) transfer amount. The 

PMPM transfer amount derived from the 

payment transfer formula will be 

multiplied by each plan’s total member 

months for the benefit year to determine 

the total payment due or charge owed 

by the issuer for that plan in a rating 

area. 

(1) Overview of the Payment Transfer 

Formula 

Though we did not propose to change 

the payment transfer formula from what 

was finalized in the 2014 Payment 

Notice (78 FR 15430–15434), we believe 

it useful to republish the formula in its 

entirety, since we are finalizing 

recalibrated HHS risk adjustment 

models. Transfers (payments and 

charges) will be calculated as the 

difference between the plan premium 

estimate reflecting risk selection and the 

plan premium estimate not reflecting 

risk selection. As finalized in the 2014 

Payment Notice, the HHS risk 

adjustment payment transfer formula is: 

Where: 

P ̄ S = State average premium; 

PLRSi = plan i’s plan liability risk score; 

AVi = plan i’s metal level AV; 

ARFi = allowable rating factor; 

IDFi = plan i’s induced demand factor; 

GCFi = plan i’s geographic cost factor; 

si = plan i’s share of State enrollment; 

and the denominator is summed across 

all plans in the risk pool in the market 

in the State. 

The difference between the two 

premium estimates in the payment 

transfer formula determines whether a 

plan pays a risk transfer charge or 

receives a risk transfer payment. Note 

that the value of the plan average risk 

score by itself does not determine 

whether a plan would be assessed a 

charge or receive a payment—even if the 

risk score is greater than 1.0, it is 

possible that the plan would be assessed 

a charge if the premium compensation 

that the plan may receive through its 

rating practices (as measured through 

the allowable rating factor) exceeds the 

plan’s predicted liability associated 

with risk selection. Risk adjustment 

transfers are calculated at the risk pool 

level and catastrophic plans are treated 

as a separate risk pool for purposes of 

risk adjustment. 

h. HHS Risk Adjustment Methodology 

Considerations 

In the 2014 Payment Notice, we 

finalized the methodology that HHS will 

use when operating a risk adjustment 

program on behalf of a State. In the 

second Program Integrity Rule (78 FR 

65046), we clarified the modification to 

the transfer formula to accommodate 

community rated States that utilize 

family tiering rating factors. We further 

clarified this formula in the proposed 

rule to ensure that the allowable rating 

factor (ARF) is appropriately applied in 

the transfer formula in community rated 

States for 2014 risk adjustment. In the 

second Program Integrity Rule, we 

stated that the ARF formula should be 

modified so that the numerator is a 

summation over all subscribers of the 

product of the family tiering factor and 

the subscriber member months, and the 

denominator the sum of billable 

member months. However, we do not 

believe the revised formula accurately 

reflects that description, as it does not 

distinguish between subscriber months 

(months attributed to the sole 

subscriber) and billable member months 

(months attributed to all allowable 

members of the family factored into the 

community rating). The calculation of 

ARF for family tiering States that was 

published in the second Program 

Integrity Rule that would be calculated 

at the level of the subscriber, was as 

follows: 

Where: 

ARFs is the rating factor for the subscriber(s) 

(based on family size/composition), and 

Ms is the number of billed person-months 

that are counted in determining the 

premium(s) for the subscriber(s). 

While the preamble description in the 

second Program Integrity Rule is correct, 

as we noted, the formula itself is 

incorrect in that it does not distinguish 

between billable member months and 

subscriber months by using the same 

variable for both. Therefore, we 

proposed a technical change to the ARF 

calculation for family tiering States, as 

follows: 

Where: 

ARFi is the allowable rating factor for plan i, 

ARFs is the allowable rating factor—also 

known as the family rating tier—for 

subscriber (family) s in plan i, 

MSs is the number of subscriber months for 

subscriber s, and 

MBs is the number of billable member 

months for subscriber (family) s. 

The numerator is summed over the 

product of the allowable rating factor 

and the number of subscriber months 

(that is, months of family subscription), 

and the denominator is the sum over all 

billable members. Each family unit 

covered under a single contract is 

considered a single ‘‘subscriber.’’ 

Therefore, a family of four that 

purchases coverage for a period from 

January through December will 

accumulate 12 subscriber months (MSs), 

although coverage is being provided for 

48 member months (both billable and 

non-billable). Billable members are 

individuals who are counted for 

purposes of placing the subscriber in a 

family tier. For example, in a 

community rated State that rates based 

on two adults and one or more children 

with one full year of enrollment, the 

family of four would have 36 billable 

member months (MBs), (12 billable 

member months for the subscriber, 12 

billable member months for the second 

adult, and 12 billable months for the 

first child). We received no comments 

on this correction and are finalizing it 

as proposed. 


tkelley on DSK3SPTVN1PROD with RULES2ER27FE15.000</GPH> ER27FE15.001</GPH> ER27FE15.002</GPH>
10772 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 

11 Group Health Plans that Fail to Cover In-Patient 

Hospitalization Services, Notice 2014–69, available 

at: http://www.irs.gov/pub/irs-drop/n-14-69.pdf. 

12Available at: http://www.cms.gov/CCIIO/

Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs13.html. 

i. State-Submitted Alternate Risk 

Adjustment Methodology 

For 2016, we are recertifying the 

alternate risk adjustment methodology 

submitted by Massachusetts and 

certified in the 2014 Payment Notice (78 

FR 15439–15452). 

3. Provisions and Parameters for the 

Transitional Reinsurance Program 

The Affordable Care Act directs that 

a transitional reinsurance program be 

established in each State to help 

stabilize premiums for coverage in the 

individual market from 2014 through 

2016. In the 2014 Payment Notice, we 

expanded on the standards set forth in 

subparts C and E of the Premium 

Stabilization Rule and established the 

reinsurance payment parameters and 

uniform reinsurance contribution rate 

for the 2014 benefit year. In the 2015 

Payment Notice, we established the 

reinsurance payment parameters and 

uniform reinsurance contribution rate 

for the 2015 benefit year and certain 

oversight provisions related to the 

operation of the reinsurance program. 

a. Common Ownership Clarification 

The definition of a ‘‘contributing 

entity’’ at § 153.20 provides that for the 

2015 and 2016 benefit years, a 

contributing entity is (i) a health 

insurance issuer or (ii) a self-insured 

group health plan, including a group 

health plan that is partially self-insured 

and partially insured, where the health 

insurance coverage does not constitute 

major medical coverage, that uses a TPA 

in connection with claims processing or 

adjudication, including the management 

of internal appeals, or plan enrollment 

for services other than for pharmacy 

benefits or excepted benefits within the 

meaning of section 2791(c) of the PHS 

Act. Solely for purposes of the 

reinsurance program, a self-insured 

group health plan will not be deemed to 

use a TPA if it uses an unrelated third 

party: (a) To obtain a provider network 

and related claims repricing services; or 

(b) for up to 5 percent of claims 

processing or adjudication or plan 

enrollment, based on either the number 

of transactions processed by the third 

party, or the value of the claims 

processing and adjudication and plan 

enrollment services provided by the 

third party. 

The definition of a ‘‘contributing 

entity’’ does not include qualifying selfadministered, self-insured group health 

plans for the purpose of the requirement 

to make reinsurance contributions for 

the 2015 and 2016 benefit years. In the 

preamble to the 2015 Payment Notice, 

we indicated that we consider a TPA to 

be, with respect to a self-insured group 

health plan, an entity that is not under 

common ownership or control with the 

self-insured group health plan or its 

plan sponsor that provides the specified 

core administrative services (79 FR 

13773). 

We received a number of inquiries 

seeking clarification on how to 

determine common ownership or 

control for purposes of the definition of 

a ‘‘contributing entity’’ in § 153.20. In 

response, in the proposed rule, we 

proposed to clarify that principles 

similar to the controlled group rules of 

section 414(b) and (c) of the Code be 

used to determine whether the TPA is 

under common ownership or control 

with the self-insured group health plan 

or the plan sponsor, because these rules 

are familiar to many stakeholders. We 

also noted that similar ownership or 

control rules apply for other purposes 

under the Affordable Care Act, such as 

the shared responsibility payment for 

applicable large employers that do not 

offer full-time employees and 

dependents the opportunity to enroll in 

minimum essential coverage, and the 

annual fee on health insurance issuers 

under section 9010 of the Affordable 

Care Act. 

We sought comment on this proposal 

and on alternative definitions that 

would be familiar to stakeholders for 

determining whether a TPA is under 

common ownership or control with the 

self-insured group health plan or its 

sponsor for purposes of the definition of 

‘‘contributing entity’’ at § 153.20. 

We finalize this proposal with one 

clarification—we are limiting the 

incorporation of the section 414 rules to 

sections 414(b) and (c). 

Comment: One commenter stated that 

the common ownership or control test 

should mirror, ‘‘not use similar 

principles to,’’ the section 414 

controlled group rules, so that one 

consistent test of determining common 

ownership applies for all employer 

compliance purposes under the 

Affordable Care Act. 

Response: The section 414 controlled 

group rules address a variety of 

structures for related corporations and 

businesses, some of which are not 

relevant to defining a ‘‘contributing 

entity,’’ such as sections 414(m), (n), 

and (o). The intent of the proposed 

language was to limit the incorporation 

of the section 414 rules to sections 

414(b) and (c), the provisions most 

applicable to defining a contributing 

entity. Therefore, we are finalizing the 

proposal with that clarification. 

b. Reinsurance Contributing Entities and 

Minimum Value 

Section 1341(b)(3)(B) of the 

Affordable Care Act and the 

implementing regulations at 

§ 153.400(a)(1) require contributing 

entities to make reinsurance 

contributions for major medical 

coverage that is considered to be part of 

a commercial book of business. We 

define major medical coverage at 

§ 153.20 as coverage meeting minimum 

value (MV) or that is subject to the 

actuarial value (AV) requirements. In 

light of this definition, stakeholders 

have asked whether plans that do not 

offer inpatient hospital coverage, but 

that are considered to offer MV for 

purposes of the employer shared 

responsibility payment because they 

were in place before HHS and IRS 

guidance 11 on MV was issued 

November 4, 2014, must make 

reinsurance contributions for the 2015 

benefit year. As detailed in the 

November 4, 2014 guidance, we clarify 

that plans that entered into a binding 

agreement or began enrolling employees 

prior to November 4, 2014, with plan 

years beginning by March 1, 2015, are 

considered to meet MV requirements 

until the end of the current plan year for 

purposes of the employer shared 

responsibility penalties. We clarify that 

these plans will therefore also be 

deemed to satisfy the definition of 

‘‘major medical coverage’’ in § 153.20 

for purposes of reinsurance 

contributions, since these plans meet 

the previous definition of MV until plan 

renewal. 

c. Self-Insured Expatriate Plans 

(§ 153.400(a)(1)(iii)) 

Section 1341(b)(3)(B) of the 

Affordable Care Act and the 

implementing regulations at 

§ 153.400(a)(1) require contributing 

entities to make reinsurance 

contributions for major medical 

coverage that is considered to be part of 

a commercial book of business. In the 

2014 Payment Notice (78 FR 15457), we 

stated that we interpret this language to 

exclude expatriate health coverage, as 

defined by the Secretary, and we 

codified this approach in regulatory text 

at § 153.400(a)(1)(iii). In the March 8, 

2013, FAQs about the Affordable Care 

Act Implementation Part XIII,12 an 

expatriate health plan is defined as an 

insured group health plan for which 


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13Available at: http://www.cms.gov/CCIIO/

Resources/Fact-Sheets-and-FAQs/Downloads/

Reinsurance-contributions-process-FAQ-5-22- 

14.pdf. 

14To be comprehensive, we included all 

reinsurance contribution submission dates 

throughout the entirety of the program, 

understanding that some dates noted here have 

passed. 

enrollment is limited to primary insured 

who reside outside of their home 

country for at least 6 months of the plan 

year and any covered dependents, and 

its associated group health insurance 

coverage. Therefore, under our current 

regulation, self-insured expatriate plans 

that would otherwise meet the 

conditions outlined in the March 8, 

2013 FAQ are required to make 

reinsurance contributions if these plans 

provide major medical coverage, unless 

another exemption in § 153.400(a) 

applies, because the definition in the 

FAQ applies only to insured expatriate 

plans. 

We proposed to amend 

§ 153.400(a)(1)(iii), which currently 

exempts expatriate health coverage, as 

defined by the Secretary, from 

reinsurance contributions, so that it also 

exempts, for the 2015 and 2016 benefit 

years only, any self-insured group 

health plan for which enrollment is 

limited to participants, and any covered 

dependents, who reside outside of their 

home country for at least 6 months of 

the plan year. This definition would be 

applicable solely to the transitional 

reinsurance program. 

We received one comment in support 

of this proposal, which also stated that 

the expatriate plan requirements should 

be revised to reflect the effect of the 

recently enacted Expatriate Health 

Coverage Clarification Act of 2014, as 

part of the Consolidated and Further 

Continuing Appropriations Act, 2015, 

H.R. 83 (2014 Expatriate Health 

Coverage Act). Since the expatriate plan 

requirements (and accompanying 

definitions) enacted in the 2014 

Expatriate Health Coverage Act only 

apply to expatriate plans issued or 

renewed on or after July 1, 2015, we are 

finalizing the amendment as proposed, 

and we intend to undertake future 

rulemaking in conjunction with the 

Departments of the Treasury and Labor 

governing the application of the 

Affordable Care Act to expatriate plans 

to harmonize our regulations (as may be 

necessary) with the 2014 Expatriate 

Health Coverage Act. We do not 

anticipate that this future rulemaking 

will affect the availability of the 

exemption for the expatriate plans 

described in this final rule. 

d. Determination of Debt (§ 153.400(c)) 

Consistent with the determination of 

debt provision set forth in § 156.1215(c), 

we proposed to clarify in § 153.400(c) 

that any amount owed to the Federal 

government by a self-insured group 

health plan (including a group health 

plan that is partially self-insured and 

partially insured, where the health 

insurance coverage does not constitute 

major medical coverage), including 

reinsurance contributions that are not 

remitted in full in a timely manner, 

would be a determination of a debt. 

We received no comments on this 

proposal and are finalizing this 

provision as proposed. 

e. Reinsurance Contribution Submission 

Process 

On May 22, 2014, we released an FAQ 

about the reinsurance contribution 

submission process.13 As detailed in 

this FAQ, we implemented a 

streamlined process for the collection of 

reinsurance contributions. A 

contributing entity, or a TPA or 

administrative services-only (ASO) 

contractor on behalf of the contributing 

entity, must complete all required steps 

for the reinsurance contribution 

submission process on www.pay.gov 

(Pay.gov). The ‘‘ACA Transitional 

Reinsurance Program Annual 

Enrollment and Contributions 

Submission Form’’ available on Pay.gov 

must be completed and submitted by a 

contributing entity or a TPA or ASO 

contractor on its behalf no later than 

November 15 of the benefit year under 

§ 153.405(b). 

We proposed to amend § 153.405(b), 

which requires a contributing entity to 

submit its annual enrollment count of 

the number of covered lives of 

reinsurance contribution enrollees for 

the applicable benefit year to HHS no 

later than November 15 of benefit year 

2014, 2015, or 2016. When November 15 

does not fall on a business day, we 

proposed that a contributing entity 

submit its annual enrollment count of 

the number of covered lives of 

reinsurance contribution enrollees for 

the applicable benefit year to HHS no 

later than November 15, 2014, 2015, or 

2016, or, if such date is not a business 

day, the next business day. Similarly, 

because November 15, 2015 and January 

15, 2017 do not fall on a business day, 

we proposed to amend § 153.405(c)(2) 

so that a contributing entity must remit 

reinsurance contributions to HHS no 

later than January 15, 2015, 2016, or 

2017, as applicable, or, if such date is 

not a business day, the next applicable 

business day, if making a combined 

contribution or the first payment of the 

bifurcated contribution; and no later 

than November 15, 2015, 2016, or 2017, 

as applicable, or, if such date is not a 

business day, the next applicable 

business day, if making the second 

payment of the bifurcated 

contribution.14

Although we stated in the 2015 

Payment Notice (79 FR 13776) that, for 

operational reasons, HHS would not 

permit contributing entities to elect to 

make the entire benefit year’s 

reinsurance contribution by January 15, 

2015, 2016, or 2017, as applicable, we 

have resolved those operational barriers, 

and now offer contributing entities the 

option to pay: (1) The entire 2014, 2015 

or 2016 benefit year contribution in one 

payment no later than January 15, 2015, 

2016, or 2017, as applicable (or, if such 

date is not a business day, the next 

applicable business day), reflecting the 

entire uniform contribution rate 

applicable to each benefit year (that is, 

$63 per covered life for 2014, $44 per 

covered life for 2015, and $27 per 

covered life for 2016); or (2) in two 

separate payments for the 2014, 2015, or 

2016 benefit years, with the first 

remittance due by January 15, 2015, 

2016, and 2017, as applicable (or, if 

such date is not a business day, the next 

applicable business day) reflecting the 

first payment of the bifurcated 

contribution (that is, $52.50 per covered 

life for 2014, $33.00 per covered life for 

2015, and $21.60 per covered life for 

2016); and the second remittance due by 

November 15, 2015, 2016, or 2017, as 

applicable (or, if such date is not a 

business day, the next applicable 

business day) reflecting the second 

payment of the bifurcated contribution 

(that is, $10.50 reinsurance fee per 

covered life for 2014, $11.00 per 

covered life for 2015, and $5.40 per 

covered life for 2016). 

Under § 153.405(c)(1), HHS must 

notify the contributing entity of the 

reinsurance contribution amount 

allocated to reinsurance payments and 

administrative expenses to be paid for 

the applicable benefit year following 

submission of the annual enrollment 

count. We clarified that this notification 

will occur when the contributing entity 

enters the gross annual enrollment 

count into the Pay.gov form and the 

form auto-calculates the contribution 

amount owed. No separate notification 

or invoice will be sent to a contributing 

entity, unless a discrepancy in data or 

payment has been identified by the 

entity or HHS after the form is 

submitted. In addition, we proposed to 

delete § 153.405(c)(2), to be consistent 

with HHS permitting flexibility for a 

contributing entity (or the TPA or ASO 

contractor on its behalf) to remit the 


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15We note that for the 2014 benefit year, we 

extended the filing deadline to December 5, 2014. 

16As noted in an FAQ issued on October 21, 

2014, we also encouraged this approach for the 

2014 benefit year. Available at: https://

www.regtap.info/, FAQ# 6037. 

entire contribution in one payment, 

rather than requiring a bifurcated 

payment. Notification of the reinsurance 

contribution amount related to the 

allocation for reinsurance payments, 

administrative expenses, and payments 

to the U.S. Treasury for the applicable 

benefit year will also be made through 

the automatic calculation of this amount 

when a contributing entity (or the TPA 

or ASO contractor on its behalf) 

completes the reinsurance contribution 

submission process and submits the 

form through Pay.gov. 

We also proposed to amend and 

redesignate § 153.405(c)(3) to (c)(2) to 

clarify that a contributing entity must 

schedule its contribution payment for 

the applicable benefit year to occur no 

later than January 15, 2015, 2016, or 

2017, as applicable (or, if such date is 

not a business day, the next applicable 

business day) if making a combined 

payment or the first payment of the 

bifurcated payment, and no later than 

November 15, 2015, 2016, or 2017, as 

applicable (or, if such date is not a 

business day, the next applicable 

business day) if making the second 

payment of the bifurcated payment. 

However, we noted that the form must 

be completed and the reinsurance 

contribution payment(s) must be 

scheduled no later than November 15, 

2014, 2015, or 2016, as applicable, to 

successfully comply with the deadline 

set forth in § 153.405(b) and complete 

the reinsurance contribution submission 

process through Pay.gov.15 The 

reinsurance contribution payments must 

be scheduled by this deadline regardless 

of whether the contributing entity (or 

the TPA or ASO contractor on its behalf) 

is remitting a combined payment or two 

payments under the bifurcated 

schedule. 

We noted that if a contributing entity 

elects to follow the bifurcated schedule, 

then the contributing entity is required 

to submit two separate forms through 

Pay.gov. However, the annual 

enrollment count reported on both 

forms must be the same. This is 

consistent with § 153.405(b) and 

previous guidance, which provide that 

no later than November 15 of benefit 

year 2014, 2015, or 2016, as applicable, 

a contributing entity must submit an 

annual enrollment count of the number 

of covered lives of reinsurance 

contribution enrollees one time for the 

applicable benefit year to HHS. 

Finally, we proposed to amend 

§ 153.405(g)(4)(1)(i) and (ii), which 

require a plan sponsor who maintains 

multiple group health plans to report to 

HHS the average number of covered 

lives calculated, the counting method 

used, and the names of the multiple 

plans being treated as a single group 

health plan as determined by the plan 

sponsor. A plan sponsor would 

continue to be required to determine 

this information, but would only need 

to report to HHS the average number of 

covered lives calculated and the other 

data elements required through the 

Pay.gov reinsurance contribution 

submission process. Under § 153.405(h), 

plan sponsors should retain this 

additional information (that is, the 

counting method used and the names of 

the multiple plans being treated as a 

single group health plan), as this 

information may be requested to assess 

the plan sponsor’s compliance with the 

reinsurance contribution requirements. 

We are finalizing these provisions as 

proposed. 

Comment: Several commenters asked 

that HHS publicize the amount of 

reinsurance contributions collected by 

December 31st of the benefit year for 

issuers to assess the possible proration 

of reinsurance payments. 

Response: We intend to issue a report 

of the estimated total contributions 

collected in the spring of the year 

following the applicable benefit year. 

This estimate would include the amount 

of contributions already paid and 

scheduled to be paid for the entire 

benefit year. 

f. Consistency in Counting Methods for 

Health Insurance Issuers (§ 153.405(d)) 

As noted in the 2014 Payment Notice 

(78 FR 15462), the counting methods for 

the transitional reinsurance program are 

designed to align with the methods 

permitted for purposes of the fee to fund 

the Patient-Centered Outcomes Research 

Trust Fund (PCORTF). The PCORTF 

Final Rule (77 FR 72729) requires 

consistency in the use of counting 

methods for calculating covered lives 

for the duration of the year. We 

proposed for the 2015 and 2016 benefit 

years 16 to amend § 153.405(d) to 

similarly require a contributing entity 

that is a health insurance issuer to use 

the same counting method to calculate 

its annual enrollment count of covered 

lives of reinsurance contribution 

enrollees in a State (including both the 

individual and group markets) for a 

benefit year even if the fully insured 

major medical plans for which 

reinsurance contributions are required 

enroll different covered lives. If a health 

insurance issuer has multiple major 

medical plans covering different lives in 

different States, the issuer may use 

different counting methods for all major 

medical plans in each State (including 

both the individual and group markets). 

We noted that this amendment would 

not prevent an issuer from using 

different counting methods for different 

benefit years. We did not propose a 

similar requirement for self-insured 

group health plans and sought 

comments on whether a similar 

uniformity requirement should extend 

to self-insured group health plans that 

are contributing entities. 

We are finalizing this provision as 

proposed. 

Comment: One commenter stated that 

it is difficult for self-insured plans to 

use consistent counting methods for 

multiple plans. 

Response: In many instances, a plan 

sponsor’s multiple group health plans 

may be administered by different 

entities, making implementation of a 

uniformity of counting method 

requirement potentially more difficult. 

Therefore, we are finalizing this policy. 

g. Snapshot Count and Snapshot Factor 

Counting Methods (§§ 153.405(d)(2) and 

(e)(2)) 

Under § 153.400(a)(1), reinsurance 

contributions are generally required for 

major medical coverage that is 

considered to be part of a commercial 

book of business, but contributions are 

not required to be paid more than once 

for the same covered life. Reinsurance 

contributions are generally calculated 

based on the number of covered lives 

covered by a plan or coverage that 

provides major medical coverage. The 

reinsurance contribution required from 

a contributing entity is calculated by 

multiplying the number of covered lives 

(determined under a permitted counting 

method set forth in § 153.405(d) through 

§ 153.405(g)) during the applicable 

calendar year for all applicable plans 

and coverage of the contributing entity 

by the applicable contribution rate for 

the respective benefit year. 

We proposed to clarify how the 

counting methods set forth in 

§§ 153.405(d)(2) and (e)(2) are to be used 

in those situations when a plan 

terminates or is established in the 

middle of a quarter to effectuate the 

principle that contributions are required 

to be paid once for the same covered 

life. Under the snapshot count method, 

described at § 153.405(d)(2), to 

determine the number of covered lives 

for the purposes of reinsurance 

contributions, the issuer or self-insured 

group health plan must add the total 

number of lives covered on any date (or 


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more dates, if an equal number of dates 

are used for each quarter) during the 

same corresponding month in each of 

the first 3 quarters of the benefit year, 

and divide that total by the number of 

dates on which a count was made. 

Under the snapshot factor method, 

described at § 153.405(e)(2), to 

determine the number of covered lives 

for the purposes of reinsurance 

contributions, the self-insured group 

health plan must add the total number 

of lives covered on any date (or more 

dates, if an equal number of dates are 

used for each quarter) during the same 

corresponding month in each of the first 

3 quarters of the benefit year, and divide 

that total by the number of dates on 

which a count was made, except that 

the number of lives covered on a date 

is calculated by adding the number of 

participants with self-only coverage on 

the date to the product of the number of 

participants with coverage other than 

self-only coverage on the date and a 

factor of 2.35. For each of these counting 

methods, the same months must be used 

for each quarter (for example, January, 

April, July), and the date used for the 

second and third quarter must fall 

within the same week of the quarter as 

the corresponding date used for the first 

quarter. 

We understand that a health 

insurance plan or coverage may be 

established, terminated, or change 

funding mechanisms (that is, from fully 

insured to self-insured or self-insured to 

fully insured), in the middle of a 

quarter. In these circumstances, it is 

possible that the new plan or coverage 

would not have covered lives enrolled 

in the plan or coverage for the entire 

quarter. If this occurs, a contributing 

entity could, due to its selection of 

dates, be required to pay an amount 

significantly greater or lesser than the 

amount that would be due based on its 

average count of covered lives over the 

course of the 9-month counting period. 

To avoid this result, we proposed to 

clarify that, if the plan or coverage in 

question had enrollees on any day 

during a quarter and if the contributing 

entity elects to (and is permitted to) use 

either the snapshot count or snapshot 

factor method, it must choose a set of 

counting dates for the 9-month counting 

period such that the plan or coverage 

has enrollees on each of the dates, if 

possible. However, the enrollment count 

for a date during a quarter in which the 

plan or coverage was in existence for 

only part of the quarter could be 

reduced by a factor reflecting the 

amount of time during the quarter for 

which the plan or coverage was not in 

existence. This approach is intended to 

accurately capture the amount of time 

during the quarter for which major 

medical coverage that is part of a 

commercial book of business and 

subject to reinsurance contributions was 

provided to enrollees, while not 

requiring contributions to be paid more 

than once for the same covered life. For 

example, a contributing entity that has 

a plan that terminates on August 31st 

(that is, 62 days into the third quarter) 

would not be permitted to use 

September 1st as the date for the third 

quarter under the snapshot count or 

snapshot factor methods because this 

would not properly reflect the number 

of covered lives of reinsurance 

contribution enrollees under the plan in 

the third quarter of the benefit year. 

However, it would be entitled to reduce 

its count of covered lives during that 

quarter by 30/92, the proportion of the 

quarter during which the plan had no 

enrollment. This reduction factor would 

only be applicable for the snapshot 

count and snapshot factor methods set 

forth in §§ 153.405(d)(2) and (e)(2), 

respectively, as all of the other 

permitted counting methods 

automatically account for partial year 

enrollment. 

Comment: One commenter asked that 

the 2.35 factor in the snapshot factor 

counting method set forth in 

§ 153.405(e)(2) be optional, rather than 

required, since some plans may only 

cover one employee and a spouse or 

only one employee and one dependent. 

Response: We decline to make this 

change, but note that a number of 

different counting methods are available 

and contributing entities have flexibility 

to choose the one that best meets their 

needs and circumstances. 

h. Uniform Reinsurance Contribution 

Rate for 2016 

Section 153.220(c) provides that HHS 

is to publish in the annual HHS notice 

of benefit and payment parameters the 

uniform reinsurance contribution rate 

for the upcoming benefit year. Section 

1341(b)(3)(B)(iii) of the Affordable Care 

Act specifies that $10 billion for 

reinsurance contributions are to be 

collected from contributing entities for 

the 2014 benefit year (the reinsurance 

payment pool), $6 billion for the 2015 

benefit year, and $4 billion for the 2016 

benefit year. Additionally, sections 

1341(b)(3)(B)(iv) and 1341(b)(4) of the 

Affordable Care Act direct that $2 

billion in funds are to be collected for 

contribution to the U.S. Treasury for the 

2014 benefit year, $2 billion for the 2015 

benefit year, and $1 billion for the 2016 

benefit year. Finally, section 

1341(b)(3)(B)(ii) of the Affordable Care 

Act authorizes the collection of 

additional amounts for administrative 

expenses. Taken together, these three 

components make up the total dollar 

amount to be collected from 

contributing entities for each of the 

2014, 2015, and 2016 benefit years 

under the uniform reinsurance 

contribution rate. 

As discussed in the 2014 and 2015 

Payment Notices, each year, the uniform 

reinsurance contribution rate will be 

calculated by dividing the sum of the 

three amounts (the reinsurance payment 

pool, the U.S. Treasury contribution, 

and administrative costs) by the 

estimated number of enrollees in plans 

that must make reinsurance 

contributions: 

As discussed in greater detail below, we 

proposed collecting $32 million for 

administrative expenses for the 2016 

benefit year. Therefore, the total amount 

to be collected for the 2016 benefit year 

would be approximately $5.032 billion. 

Our estimate of the number of enrollees 

in plans that must make reinsurance 

contributions yields an annual per 

capita contribution rate of $27 for the 

2016 benefit year. 

(1) Allocation of Uniform Reinsurance 

Contribution Rate 

Section 153.220(c) provides that HHS 

is to establish in the annual HHS notice 

of benefit and payment parameters for 

the applicable benefit year the 

proportion of contributions collected 


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17 79 FR 30259. 

under the uniform reinsurance 

contribution rate to be allocated to 

reinsurance payments, payments to the 

U.S. Treasury, and administrative 

expenses. In the 2014 and 2015 Payment 

Notices, we stated that reinsurance 

contributions collected for the 2014 and 

2015 benefit years would be allocated 

pro rata to the reinsurance payment 

pool, administrative expenses, and the 

U.S. Treasury, up to $12.02 billion for 

2014 and up to $8.025 billion for 2015. 

However, we amended this approach in 

the 2015 Market Standards Rule,17 such 

that, if reinsurance collections fall short 

of our estimates for a particular benefit 

year, we will allocate reinsurance 

contributions collected first to the 

reinsurance payment pool, with any 

remaining amounts being then allocated 

to the U.S. Treasury and administrative 

expenses, on a pro rata basis. We 

proposed following a similar approach 

for the 2016 benefit year, such that if 

reinsurance contributions fall short of 

our estimates, contributions collected 

will first be allocated to the reinsurance 

payment pool, with any remaining 

amounts being then allocated to the U.S. 

Treasury and administrative expenses, 

on a pro rata basis. In the proposed rule, 

we also proposed to use any excess 

contributions for reinsurance payments 

for the current benefit year by increasing 

the coinsurance rate for the 2016 benefit 

year up to 100 percent before rolling 

over any remaining funds to the next 

year and sought comment on whether to 

expend all of the contributions in 2016 

or roll over any excess funds to the 2017 

benefit year. 

(2) Administrative Expenses 

In the 2015 Payment Notice, we 

estimated that the Federal 

administrative expenses of operating the 

reinsurance program would be $25.4 

million, based on our estimated contract 

and operational costs. We used the same 

methodology to estimate the 

administrative expenses for the 2016 

benefit year. These estimated costs 

would cover the costs related to 

contracts for developing the uniform 

reinsurance payment parameters and 

the uniform reinsurance contribution 

rate, collecting reinsurance 

contributions, making reinsurance 

payments, and conducting account 

management, data collection, program 

integrity and audit functions, 

operational and fraud analytics, training 

for entities involved in the reinsurance 

program, and general operational 

support. To calculate our reinsurance 

administrative expenses for 2016, we 

divided HHS’s projected total costs for 

administering the reinsurance programs 

on behalf of States by the expected 

number of covered lives for which 

reinsurance contributions are to be 

made for 2016. 

We estimated this amount to be 

approximately $32 million for the 2016 

benefit year. This estimate increased for 

the 2016 benefit year due to increased 

audit and data validation contract costs. 

We believe that this amount reflects the 

Federal government’s significant 

economies of scale, which helps to 

decrease the costs associated with 

operating the reinsurance program. 

Based on our estimate of covered lives 

for which reinsurance contributions are 

to be made for 2016, we proposed a 

uniform reinsurance contribution rate of 

$0.17 annually per capita for HHS 

administrative expenses. We provide 

details below on the methodology we 

used to develop the 2016 enrollment 

estimates. 

Similar to the allocation for 2015, for 

the 2016 benefit year, administrative 

expenses are allocated equally between 

contribution and payment-related 

activities. Because we anticipate that 

our additional activities in the 2016 

benefit year, including our program 

integrity and audit activities, will also 

be divided approximately equally 

between contribution and paymentrelated activities, we again proposed to 

allocate the total administrative 

expenses equally between these two 

functions. Therefore, as shown in Table 

9, we will apportion the annual per 

capita amount of $0.17 of administrative 

expenses as follows: (a) $0.085 of the 

total amount collected per capita for 

administrative expenses for the 

collection of contributions from 

contributing entities; and (b) $0.085 of 

the total amount collected per capita for 

administrative expenses for reinsurance 

payment activities, supporting the 

administration of payments to issuers of 

reinsurance-eligible plans. 

TABLE 9—BREAKDOWN OF ADMINISTRATIVE EXPENSES

[Annual, per capita] 

Activities Estimated 

expenses 

Collecting reinsurance contributions from health insurance issuers and certain self-insured group health plans ............................. $0.085 

Calculation and disbursement of reinsurance payments .................................................................................................................... 0.085 

Total annual per capita administrative expenses for HHS to perform all reinsurance functions ................................................ 0.17 

If HHS operates the reinsurance 

program on behalf of a State, HHS 

would retain the annual per capita fee 

to fund HHS’s performance of all 

reinsurance functions, which would be 

$0.17. If a State establishes its own 

reinsurance program, HHS would 

transfer $0.085 of the per capita 

administrative fee to the State for 

purposes of administrative expenses 

incurred in making reinsurance 

payments, and retain the remaining 

$0.085 to offset HHS’s costs of collecting 

contributions. We note that the 

administrative expenses for reinsurance 

payments will be distributed to those 

States that operate their own 

reinsurance program in proportion to 

the State-by-State total requests for 

reinsurance payments made under the 

uniform reinsurance payment 

parameters. 

We are finalizing the 2016 

contribution rate as proposed and 

finalizing our policy to increase the 

2016 coinsurance rate to 100 percent 

prior to rolling over any excess funds to 

2017. 

Comment: Several commenters 

supported our proposal to increase the 

2016 coinsurance rate to 100 percent if 

collections exceed the requests for 

reinsurance payments. Some 

commenters further supported rolling 

over any excess collections to 2017 if 

excess funds remain after increasing the 

coinsurance rate to 100 percent, while 

other commenters disagreed with our 

proposal to roll over the excess funds to 

2017 asking that HHS instead increase 

the reinsurance cap in 2016 to expend 

all contributions collected in 2016. 

Response: We will continue with our 

policy to increase the coinsurance rate 

to 100 percent for the 2016 benefit year 


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18See the proposed 2014 Payment Notice (77 FR 

73160) and the proposed 2015 Payment Notice (78 

FR 72344) for more information on the ACAHIM 

methodology. 19 79 FR 30259. 

in the event collections exceed the 

requests for reinsurance payments. If 

additional funds remain after the 

increase in the coinsurance rate to 100 

percent, we will roll over the excess 

funds to 2017 to extend the premium 

stabilization effects of the program. 

i. Uniform Reinsurance Payment 

Parameters for 2016 

Section 1341(b)(2)(B) of the 

Affordable Care Act directs the 

Secretary, in establishing standards for 

the transitional reinsurance program, to 

include a formula for determining the 

amount of reinsurance payments to be 

made to issuers for high-risk individuals 

that provides for the equitable allocation 

of funds. In the Premium Stabilization 

Rule, we provided that reinsurance 

payments to eligible issuers will be 

made for a portion of an enrollee’s 

claims costs paid by the issuer (the 

coinsurance rate, meant to reimburse a 

proportion of claims while giving 

issuers an incentive to contain costs) 

that exceeds an attachment point (when 

reinsurance would begin), subject to a 

reinsurance cap (when the reinsurance 

program stops paying claims for a highcost individual). The coinsurance rate, 

attachment point, and reinsurance cap 

together constitute the uniform 

reinsurance payment parameters. 

Given the smaller pool of reinsurance 

contributions to be collected for the 

2016 benefit year, we proposed that the 

uniform reinsurance payment 

parameters for the 2016 benefit year be 

established at an attachment point of 

$90,000, a reinsurance cap of $250,000, 

and a coinsurance rate of 50 percent. We 

estimated that these uniform 

reinsurance payment parameters will 

result in total requests for reinsurance 

payments of approximately $4 billion 

for the 2016 benefit year. We believe 

setting the coinsurance rate at 50 

percent and increasing the attachment 

point allows for the reinsurance 

program to help pay for nearly the same 

group of high-cost enrollees as was the 

case for the 2014 and 2015 benefit years, 

while still encouraging issuers to 

contain costs. 

As discussed in the 2014 and 2015 

Payment Notices, to assist with the 

development of the uniform reinsurance 

payment parameters and the premium 

adjustment percentage index, HHS 

developed the Affordable Care Act 

Health Insurance Model (ACAHIM). The 

ACAHIM generates a range of national 

and State-level outputs for 2016, using 

updated assumptions reflecting more 

recent data, but using the same 

methodology described in the 2014 and 

2015 Payment Notices.18

Specifically, the ACAHIM uses the 

Health Intelligence Company, LLC (HIC) 

database from calendar year 2010, with 

the claims data trended to 2016 to 

estimate total medical expenditures per 

enrollee by age, gender, and area of 

residence. The expenditure 

distributions are further adjusted to take 

into account plan benefit design, or 

‘‘metal’’ level (that is, ‘‘level of 

coverage,’’ as defined in § 156.20) and 

other characteristics of individual 

insurance coverage in an Exchange. To 

describe a State’s coverage market, the 

ACAHIM computes the pattern of 

enrollment using the model’s predicted 

number and composition of participants 

in a coverage market. These estimated 

expenditure distributions were the basis 

for the uniform reinsurance payment 

parameters. 

We are finalizing the 2016 payment 

parameters as proposed. 

Comment: Several commenters 

supported the proposed 2016 uniform 

reinsurance payment parameters. One 

commenter asked that HHS consider 

when setting the parameters that some 

issuers are unable to obtain commercial 

reinsurance and therefore are left 

unprotected from large losses. 

Response: We are finalizing the 2016 

uniform reinsurance payment 

parameters as proposed, and as we 

explained above and in the 2014 and 

2015 Payment Notices, these parameters 

are set in an effort not to interfere with 

commercial reinsurance, although we 

understand not all issuers can obtain 

commercial reinsurance. Additionally, 

we believe that maintaining the 

reinsurance cap for the 2016 benefit 

year while ensuring that the 

coinsurance rate sufficiently 

compensates issuers for high-risk 

individuals will make it easier for 

issuers to estimate the effects of 

reinsurance. 

Comment: Several commenters asked 

that HHS not change the uniform 

reinsurance payment parameters for 

2016 finalized in this rule in subsequent 

rulemaking. 

Response: We are finalizing the 2016 

uniform payment parameters as 

proposed, and do not intend to make 

any future adjustments to these 

parameters. 

j. Uniform Reinsurance Payment 

Parameters for 2015 

In the proposed rule, we proposed 

lowering the 2015 attachment point 

from $70,000 to $45,000 as this would 

allow the reinsurance program to make 

more payments for high-cost enrollees 

in individual market reinsuranceeligible plans without increasing the 

contribution rate. We did not propose to 

adjust the 2015 coinsurance rate of 50 

percent or reinsurance cap of $250,000. 

We are finalizing the reduction of the 

2015 attachment point to $45,000 as 

proposed. 

Comment: Some commenters 

supported our proposal to lower the 

2015 attachment point to $45,000. Other 

commenters disagreed with our 

proposal to lower the 2015 attachment 

point, noting that this change would 

affect premium rates already submitted. 

One commenter noted that lowering the 

attachment point would result in lower 

MLRs, requiring issuers to rebate excess 

funds. Additionally, some noted that 

changing the 2015 payment parameters 

at this point could interfere with any 

State supplemental reinsurance program 

that depends on the national 

reinsurance payment parameters. 

Response: In the 2015 Market 

Standards Rule,19 we signaled our 

intention to propose to lower the 2015 

attachment point from $70,000 to 

$45,000 for the 2015 benefit year in an 

effort to notify issuers of this change in 

advance of rate settings for 2015 

coverage. Additionally, we believe that 

lowering the attachment point to 

$45,000 will further the premium 

stabilization effects of the program in 

2015 as more individuals enroll in nongrandfathered, individual market plans 

that are compliant with §§ 147.102, 

147.104 (subject to § 147.145), 147.106 

(subject to § 147.145), 156.80, and 

subpart B of part 156 than in 2014. 

k. Deducting Cost-Sharing Reduction 

Amounts From Reinsurance Payments 

We proposed to modify the 

methodology finalized in the 2015 

Payment Notice (79 FR 13780) regarding 

the deduction of cost-sharing reduction 

amounts from reinsurance payments. 

Under § 156.410, if an individual is 

determined eligible to enroll in an 

individual market Exchange QHP and 

elects to do so, the QHP issuer must 

assign the individual to a standard plan 

or cost-sharing plan variation based on 

the enrollment and eligibility 

information submitted by the Exchange. 

Issuers of individual market Exchange 

QHPs will receive cost-sharing 

reduction payments for enrollees who 

have effectuated coverage in costsharing plan variations. To avoid double 

payment by the Federal government, we 

indicated in the 2014 Payment Notice 


tkelley on DSK3SPTVN1PROD with RULES2
10778 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 

20Except for limited cost-sharing plan variations, 

for which we stated we would not reduce the QHP 

issuer’s plan paid amounts. 

21We did not propose any changes to the 

approach finalized in the 2015 Payment Notice with 

respect to the QHP issuer’s plan paid amounts for 

purposes of calculating reinsurance payments for an 

Indian in a limited cost-sharing plan variation. 

22Letter to Insurance Commissioners, Center for 

Consumer Information and Insurance Oversight, 

November 14, 2013. Available at: http://

www.cms.gov/CCIIO/Resources/Letters/Downloads/

commissioner-letter-11-14-2013.PDF. 

23HHS extended the transitional policy on March 

5, 2014, permitting issuers to renew transitional 

policies through policy years beginning on or before 

October 1, 2016. 

24As stated in the 2015 Payment Notice, HHS 

will calculate the amount of the adjustment that 

applies to each State based on the State’s membermonth enrollment count for transitional plans and 

non-transitional plans in the individual and small 

group markets. 

25 § 153.530 sets forth the data requirements for 

this information collection. HHS published 60-day 

and 30-day notices in the Federal Register, 

providing the public with an opportunity to submit 

written comments on the information collection. 

The data collection is approved under OMB Control 

Number 0938–1267. 

(78 FR 15499) that the enrollee-level 

claims data submitted by an issuer of a 

reinsurance-eligible plan should be net 

of cost-sharing reductions provided 

through a cost-sharing plan variation 

(which are reimbursed by the Federal 

government). 

In the 2015 Payment Notice (79 FR 

13780), we explained the methodology 

HHS will use to deduct the amount of 

cost-sharing reductions paid on behalf 

of an enrollee enrolled in a QHP in an 

individual market through an Exchange. 

For each enrollee enrolled in a QHP 

plan variation,20 we will subtract from 

the QHP issuer’s total plan paid 

amounts for the enrollee in a 

reinsurance-eligible plan the difference 

between the annual limitation on cost 

sharing for the standard plan and the 

annual limitation on cost sharing for the 

plan variation. For policies with 

multiple enrollees, such as family 

policies, we stated we would allocate 

the difference in annual limitation in 

cost sharing across all enrollees covered 

by the family policy in proportion to the 

enrollees’ QHP issuer total plan paid 

amounts. 

We also stated that for an enrollee 

who is assigned to different plan 

variations during the benefit year, we 

would calculate the adjustment for costsharing reductions based on the annual 

limitation on cost sharing applicable to 

the plan variation in which the enrollee 

was last enrolled during the benefit 

year, because cost sharing accumulates 

over the benefit year across plan 

variations of the same standard plan. 

We proposed a modification to this 

particular policy. 

Specifically, if an enrollee is assigned 

to different plan variations during the 

benefit year, we proposed to calculate 

the adjustment for cost-sharing 

reductions based on the difference 

between the annual limitation on cost 

sharing for the standard plan and the 

average annual limitation on cost 

sharing in the plan variations (including 

any standard plan), weighted by the 

number of months the enrollee is 

enrolled in each plan variation during 

the benefit year.21

We are finalizing this proposal as 

proposed. 

Comment: Several commenters stated 

that our proposed modification was too 

complex, and would increase the 

burden on issuers to make additional 

calculations and data system 

enhancements. 

Response: We believe that our 

modified approach will permit HHS to 

more accurately allocate the difference 

in annual limitations in a family policy 

to individual family members when a 

member exits or enters the policy midyear, or if there are other changes in 

circumstances that impact the costsharing reductions provided to enrollees 

covered by the family policy. We will 

continue to work with issuers and 

provide technical support to help with 

the updates to the calculations and data 

system enhancements that may be 

necessary. 

4. Provisions for the Temporary Risk 

Corridors Program 

a. Application of the Transitional Policy 

Adjustment in Early Renewal States 

On November 14, 2013, the Federal 

government announced a transitional 

policy under which it will not consider 

certain health insurance coverage in the 

individual or small group markets that 

is renewed for a policy year starting 

after January 1, 2014, under certain 

conditions to be out of compliance with 

specified 2014 market rules, and 

requested that States adopt a similar 

non-enforcement policy.22 23 In the 2015 

Payment Notice, HHS implemented an 

adjustment to the administrative cost 

ceiling and profit floor of the risk 

corridors formula for the 2014 benefit 

year to help further offset losses that 

might occur under the transitional 

policy as a result of increased claims 

costs not accounted for when setting 

2014 premiums. Because we believe that 

the Statewide effect on the risk pool in 

States that adopted the Federal 

transitional policy would increase with 

an increase in the percentage enrollment 

in transitional plans in the State, we 

stated that we would vary the Statespecific percentage adjustment to the 

risk corridors formula with the 

percentage of member-months 

enrollment in these transitional plans in 

the State.24

In response to stakeholder questions, 

we proposed to clarify in the 2016 

Payment Notice that the transitional 

adjustment applies only for plans under 

the transitional policy—that is, plans 

that renew after January 1, 2014 for 

which HHS and the applicable State are 

not enforcing market rules. We 

proposed to further clarify that membermonths of enrollees in early renewal 

plans would not be counted towards the 

risk corridors transitional policy 

adjustment (that is, unless and until the 

plan becomes a transitional plan in a 

transitional State upon renewal in 

2014).25 We are finalizing this 

clarification as proposed, and are 

maintaining the policy previously 

finalized in the 2015 Payment Notice 

under § 153.500 and § 153.530 without 

modification. 

Comment: Several commenters 

recommended that HHS modify our 

policy to include the experience of early 

renewal plans. One commenter 

suggested that HHS include early 

renewals in the adjustment because our 

announcement did not occur until 

November 11, 2013, which was too late 

to be reflected in the rates that were 

finalized in July 2013. Another 

commenter requested that HHS modify 

its policy to accommodate issuers in 

States that decided to allow early 

renewals after the announcement of the 

transitional policy. 

Response: We believe that issuers 

were aware of State policy for early 

renewals when they set their 2014 rates; 

moreover, the transitional policy 

adjustment was intended to address the 

Federal transitional policy, not State 

early renewal policies. Under our 

current policy, HHS counts months 

occurring after an early renewal plan 

becomes a transitional plan when we 

calculate the transitional adjustment for 

each State. We believe that this 

approach for counting member months 

towards the risk corridors transitional 

adjustment is consistent with the intent 

of the transitional policy adjustment set 

forth in the 2015 Payment Notice. 

Comment: One commenter suggested 

that the transitional adjustment be 

applied to the risk corridors calculation 

for the entire market for 2014, not just 

in markets where the transitional policy 

is in effect. Another commenter 

requested that HHS implement the 

transitional adjustment in a manner that 

does not disadvantage States that did 

not adopt the Federal transitional policy 

for 2014. 


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26The Centers for Medicare and Medicaid 

Services, Center for Consumer Information and 

Insurance Oversight. ‘‘Risk Corridors and Budget 

Neutrality,’’ April 11, 2014. Available at: https://

www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/Downloads/faq-risk-corridors-04-11-2014.pdf. 

27Because of some differences in the MLR 

numerator and the definition of allowable costs that 

applies with respect to the risk corridors formula, 

in a small number of cases, an issuer with allowable 

costs that are at least 80 percent of after-tax 

premium, may be required to pay MLR rebates to 

consumers. 

Response: We are maintaining the 

policy finalized in the 2015 Payment 

Notice under § 153.500 and § 153.530, 

which provides, for 2014, that the effect 

of the transitional adjustment will vary 

according to the member-month 

enrollment in a State, such that the 3 

percent profit floor and 20 percent 

allowable administrative cost ceiling 

will apply in States that did not adopt 

the Federal transitional policy (QHP 

issuers in these States will receive a risk 

corridors transitional adjustment equal 

to zero). We believe that issuers in 

States that did not adopt the Federal 

transitional policy will not require the 

transitional adjustment to help mitigate 

mispricing that may have occurred due 

to unexpected changes in the risk pool 

resulting from the Federal transitional 

policy. We note that the adjustment will 

account for the effect of the Federal 

transitional policy in the entire market 

within a State that adopted the 

transitional policy, such that a QHP 

issuer in a transitional State will be 

eligible to receive an adjustment to its 

risk corridors calculation even if the 

issuer has not issued transitional 

policies. 

b. Risk Corridors Payments for 2016 

On April 11, 2014, we issued a 

bulletin titled ‘‘Risk Corridors and 

Budget Neutrality,’’ which described 

how we intend to administer risk 

corridors over the 3-year life of the 

program.26 Specifically, we stated that if 

any risk corridors funds remain after 

prior and current year payment 

obligations have been met, they will be 

held to offset potential insufficiencies in 

risk corridors collections in the next 

year. We also stated that we would 

establish in future guidance how we 

would calculate risk corridors payments 

in the event that cumulative risk 

corridors collections do not equal 

cumulative risk corridors payment 

requests. 

In the proposed 2016 Payment Notice, 

we proposed that if, for the 2016 benefit 

year, cumulative risk corridors 

collections exceed cumulative risk 

corridors payment requests, we would 

make an adjustment to our 

administrative expense definitions (that 

is, the profit margin floor and the ceiling 

for allowable administrative costs) to 

account for the excess funds. That is, if, 

when the risk corridors program 

concludes, cumulative risk corridors 

collections exceed both 2016 payment 

requests under the risk corridors 

formula and any unpaid risk corridors 

amounts from previous years, we would 

increase the administrative cost ceiling 

and the profit floor in the risk corridors 

formula by a percentage calculated to 

pay out all collections to QHP issuers. 

The administrative cost ceiling and the 

profit floor would be adjusted by the 

same percentage. 

We proposed to determine the 

percentage adjustment to the 

administrative cost ceiling and profit 

margin floor by evaluating the amount 

of excess risk corridors collections (if 

any) available after risk corridors 

payments for benefit year 2016 have 

been calculated. As stated in our 

bulletin on risk corridors and budget 

neutrality, after receiving charges from 

issuers for the 2016 benefit year, we 

would first prioritize payments to any 

unpaid risk corridors payments 

remaining from the 2015 benefit year. 

We would then calculate benefit year 

2016 risk corridors payments for eligible 

issuers based on the 3 percent profit 

floor and 20 percent allowable 

administrative cost ceiling, as required 

by regulation. If, after making 2015 

payments and calculating (but not 

paying) risk corridors payments for 

benefit year 2016, we determine that the 

aggregate amount of collections 

(including any amounts collected for 

2016 and any amounts remaining from 

benefit years 2014 and 2015) exceed 

what is needed to make 2016 risk 

corridors payments, we would 

implement an adjustment to the profit 

floor and administrative cost ceiling to 

increase risk corridors payments for 

eligible issuers for benefit year 2016. We 

would examine data that issuers have 

submitted for calculation of their 2016 

risk corridors ratios (that is, allowable 

costs and target amount) and determine, 

based on the amount of collections 

available, what percentage increase to 

the administrative cost ceiling and 

profit floor could be implemented for 

eligible issuers while maintaining 

budget neutrality for the program 

overall. Although all eligible issuers 

would receive the same percentage 

adjustment, we proposed that the 

amount of additional payment made to 

each issuer would vary based on the 

issuer’s allowable costs and target 

amount. We proposed that, once HHS 

calculated the adjustment and applied it 

to eligible issuers’ risk corridors 

formulas, it would make a single risk 

corridors payment for benefit year 2016 

that would include any additional, 

adjusted payment amount. 

Because risk corridors collections are 

a user fee to be used to fund premium 

stabilization under risk corridors and no 

other programs, we proposed to limit 

this adjustment to excess amounts 

collected. We also proposed to apply 

this adjustment to allowable 

administrative costs and profits for the 

2016 benefit year only to plans whose 

allowable costs (as defined at § 153.500) 

are at least 80 percent of their after-tax 

premiums, because issuers under this 

threshold would generally be required 

to pay out MLR rebates to consumers.27

For plans whose ratio of allowable costs 

to after-tax premium is below 80 

percent, we proposed that the 3 percent 

risk corridors profit margin and 20 

percent allowable administrative cost 

ceiling would continue to apply. 

Furthermore, we proposed that, to the 

extent that applying the proposed 

adjustment to a plan could increase its 

risk corridors payment and affect its 

MLR calculation, the MLR calculation 

would ignore these adjustments. 

As previously stated, we anticipate 

that risk corridors collections will be 

sufficient to pay for all risk corridors 

payments. HHS recognizes that the 

Affordable Care Act requires the 

Secretary to make full payments to 

issuers. In the unlikely event that risk 

corridors collections, including any 

potential carryover from the prior years, 

are insufficient to make risk corridors 

payments for the 2016 program year, 

HHS will use other sources of funding 

for the risk corridors payments, subject 

to the availability of appropriations. 

We are finalizing this policy as 

proposed. 

Comment: We received one comment 

on the proposed approach for allocating 

excess risk corridors collections at the 

end of the program. The commenter 

supported our approach. Another 

commenter supported language in the 

proposed Payment Notice that 

reaffirmed HHS’s commitment to make 

full risk corridors payments if 

collections are insufficient to fund 

payments. 

Response: We are finalizing the policy 

regarding allocation of excess risk 

corridors collections for 2016 as 

proposed. 


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28 78 FR 65046. 

29We note that HHS also clarified in a March 28, 

2014 FAQ that CMPs would not be imposed on an 

issuer for non-compliance during the 2014 calendar 

year, if the issuer made good efforts to comply with 

these requirements. See, FAQ 1212, published 

March 28, 2014. Available at: https://

www.regtap.info/faq_viewu.php?id=1212. 30According to § 153.740(b), if an issuer of a risk 

adjustment covered plan fails to establish a 

dedicated distributed data environment or fails to 

provide HHS with access to the required data in 

such environment in accordance with § 153.610(a), 

§ 153.700, § 153.710, or § 153.730 such that HHS 

cannot apply the applicable Federally certified risk 

adjustment methodology to calculate the risk 

adjustment payment transfer amount for the risk 

adjustment covered plan in a timely fashion, HHS 

will assess a default risk adjustment charge. 

5. Distributed Data Collection for the 

HHS-Operated Risk Adjustment and 

Reinsurance Programs 

a. Good Faith Safe Harbor (§ 153.740(a)) 

In the second Program Integrity 

Rule,28 HHS finalized a good faith safe 

harbor policy which provided that civil 

money penalties (CMPs) will not be 

imposed for non-compliance with the 

HHS-operated risk adjustment and 

reinsurance data requirements during 

2014, if the issuer has made good faith 

efforts to comply with these 

requirements.29 That safe harbor 

parallels a similar safe harbor for QHP 

issuers in FFEs under § 156.800. 

We proposed to amend § 153.740(a) to 

extend the safe harbor for noncompliance with the HHS-operated risk 

adjustment and reinsurance data 

requirements during the 2015 calendar 

year if the issuer has made good faith 

efforts to comply with these 

requirements. This proposal 

acknowledged that the distributed data 

collection requirements have been the 

subject of modifications through the 

2014 calendar year, including the 

introduction of cloud-based virtual 

options for the distributed data 

environment. We note that good faith 

efforts could include notifying, 

communicating with, and cooperating 

with HHS for issues that arise with the 

establishment and provisioning of the 

issuers’ dedicated distributed data 

environment. 

The extension of this good faith safe 

harbor would not affect HHS’s ability to 

assess issuers of risk adjustment covered 

plans a default risk adjustment charge 

under § 153.740(b).30 Additionally, we 

noted that the good faith safe harbor 

would not apply to non-compliance 

with dedicated distributed data 

environment standards applicable 

during 2016, even if the non-compliance 

in the 2016 calendar year relates to data 

for the 2015 benefit year. For example, 

the data loading schedule applicable to 

the 2015 benefit year for risk adjustment 

and reinsurance data extends into the 

2016 calendar year (the final loading 

deadline is April 30, 2016). Therefore, 

the good faith safe harbor would not 

apply to non-compliance with the 

dedicated distributed data environment 

standards applicable during 2016. 

Comment: Several commenters 

supported our proposal to extend the 

good faith safe harbor to the 2015 

benefit year. The commenters asked that 

we clarify that the safe harbor extension 

would apply to conduct that occurred in 

a covered year (2014 or 2015) regardless 

of when an enforcement action is 

initiated. These commenters also asked 

that the good faith safe harbor apply for 

any risk adjustment or reinsurance data 

requirements that apply to the 2015 

benefit year, even if the data is reported 

in 2016. 

Response: As we clarified in the 2015 

Payment Notice (79 FR 13791), HHS 

will not impose CMPs for 

noncompliance for dedicated 

distributed data environment standards 

for the 2014 benefit year, if the issuer 

attempted in good faith to comply, 

simply by waiting until 2015 to initiate 

the enforcement action. We will follow 

the same approach with respect to the 

extension of the good faith safe harbor 

through the 2015 calendar year. 

However, the good faith safe harbor will 

not apply to non-compliance with 

dedicated distributed data environment 

standards applicable during the 2016 

calendar year, even if the noncompliance in 2016 relates to data for 

the 2015 benefit year. 

Comment: One commenter asked that 

we extend the good faith safe harbor to 

2016. 

Response: We are not extending the 

good faith compliance safe harbor to 

2016. 

b. Default Risk Adjustment Charge 

(§ 153.740(b)) 

In the second Program Integrity Rule 

and the 2015 Payment Notice, HHS 

indicated that a default risk adjustment 

charge will be assessed if an issuer does 

not establish a dedicated distributed 

data environment or submits inadequate 

risk adjustment data. However, we did 

not establish how the money collected 

from the default charge will be allocated 

among risk adjustment covered plans. 

We proposed to allocate collected per 

member per month default charge funds 

proportional to each plan’s relative 

revenue requirement, the product of 

PLRS*IDF*GCF (Plan Liability Risk 

Score * Induced Demand Factor * 

Geographic Cost Factor) relative to the 

market average of these products, across 

all risk adjustment covered plans in the 

market in the State. This approach 

would allocate funds proportionally to a 

plan’s enrollment, adjusted for factors 

such as health risk, actuarial value, and 

geographic cost differences. This 

approach would also allocate the default 

charge funds in accordance with plans’ 

expected revenue requirements as 

calculated in the transfer formula. By 

contrast, an approach that allocates risk 

adjustment default charge funds in 

accordance with enrollment or 

premiums, for example, would favor 

plans with lower metal levels, low risk 

selection, or lower geographic costs. 

This allocation would occur only in 

risk adjustment markets with at least 

one noncompliant plan, and these steps 

would be used to calculate each 

compliant plan’s allocation of the 

default charges collected from the 

noncompliant plan(s). We would 

calculate risk transfers among the 

compliant plans only and exclude all 

data from noncompliant plans. Using 

the same inputs of the compliant plans 

as used in the transfer formula, we 

would calculate the distribution of 

default charges paid by noncompliant 

plans among the compliant plans using 

the following formula: 

Where: 

DCi is the total amount of default charges 

allocated to plan i; 

‘‘Total default charges collected’’ is the sum, 

in dollars, collected from all 

noncompliant plans (aggregate dollars, 

that is, not on a per member per month 

basis); 

Other terms are as defined in the usual risk 

transfer calculations, and restricted to 


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31 79 FR 30240. 

compliant plans only (si = plan i’s share 

of State enrollment; PLRSi = plan i’s plan 

liability risk score, IDFi = plan i’s 

induced demand factor, GCFi = plan i’s 

geographic cost factor); 

and i indexes compliant plans, and the 

summation in the denominator is over 

compliant plans only. 

Comment: One commenter agreed 

with the proposed allocation of default 

risk adjustment charges to risk 

adjustment compliant plans, noting that 

it provides an equitable distribution of 

default risk adjustment charges. 

Response: We are finalizing the 

allocation of default risk adjustment 

charges as proposed. 

c. Information Sharing (§ 153.740(c)) 

In § 153.740, we established the 

enforcement remedies available to HHS 

for an issuer of a risk adjustment 

covered plan or a reinsurance-eligible 

plan’s failure to comply with HHSoperated risk adjustment and 

reinsurance data requirements. 

Consistent with the policy set forth at 

§ 156.800(d), as finalized in the 2015 

Market Standards Rule,31 we proposed 

adding paragraph (c) to clarify that HHS 

may consult with and share information 

about issuers of a risk adjustment 

covered plan or a reinsurance-eligible 

plan with other Federal and State 

regulatory and enforcement entities to 

the extent that the consultation or 

information is necessary for HHS to 

determine whether an enforcement 

remedy against the issuer of the risk 

adjustment covered plan or reinsuranceeligible plan under § 153.740 is 

appropriate. For example, HHS may 

consult other Federal and State 

regulatory and enforcement entities to 

identify issuers within a State that have 

failed to establish a dedicated 

distributed data environment. No 

personally identifiable information 

would be transferred as part of such a 

consultation. 

We received no comments on this 

proposal. We are finalizing this 

provision as proposed. 

D. Part 154—Health Insurance Issuer 

Rate Increases: Disclosure and Review 

Requirements 

1. General Provisions 

In the proposed rule, we proposed 

several modifications to enhance the 

transparency and effectiveness of the 

rate review program under part 154. 

These provisions were proposed to 

apply generally beginning with rates 

filed in 2015 for coverage effective on or 

after January 1, 2016. We requested 

comment on whether the proposal 

provides States and issuers sufficient 

time to transition to the new rate review 

requirements. 

Comment: While some commenters 

believed the proposed timeframe was 

adequate, others suggested that issuers 

would not have sufficient time to 

implement the requirements to meet 

deadlines for the 2015 filing year. Some 

commenters noted it would take time 

for HHS to modify the Unified Rate 

Review Template (URRT) to 

accommodate the new plan-level trigger 

under proposed § 154.200(c). 

Commenters recommended the planlevel requirements not apply until the 

2016 filings for plan years beginning in 

2017. 

Response: In response to comments, 

to provide adequate time to make 

necessary adjustments to the URRT, the 

revised definition of ‘‘rate increase’’ and 

plan-level trigger under §§ 154.102 and 

154.200(c) of this final rule will apply 

beginning with rates filed in 2016 for 

coverage effective on or after January 1, 

2017. The uniform rate review and 

disclosure timelines under §§ 154.220 

and 154.301 of this final rule will apply 

beginning with rates filed in 2015 for 

coverage effective on or after January 1, 

2016. As discussed below, the 

individual market annual open 

enrollment period for the 2016 benefit 

year will not begin until November 1, 

2015, which provides additional time to 

meet the filing deadlines for 2016 rates. 

a. Definitions (§ 154.102) 

Under § 154.102, we set forth 

definitions of terms that are used 

throughout part 154. We proposed 

adding a new definition of ‘‘plan’’ and 

revising the definitions of ‘‘individual 

market,’’ ‘‘small group market,’’ and 

‘‘State.’’ For the most part, these terms 

would have the meaning given such 

terms in § 144.103. For a discussion of 

the terms ‘‘plan’’ and ‘‘State,’’ please see 

the preamble for § 144.103 in this final 

rule. 

We also proposed to modify the 

definition of ‘‘rate increase.’’ The 

revisions would conform with our 

proposal in § 154.200 to consider rate 

increases at the plan-level when 

determining whether a rate increase is 

subject to review. 

We did not receive comments on the 

definitions of ‘‘individual market,’’ 

‘‘small group market,’’ and ‘‘rate 

increase.’’ We are finalizing these 

revisions as proposed, except that the 

revised definition of ‘‘rate increase’’ has 

been modified to clarify that the 

changes made to conform with the 

proposal in § 154.200 will apply for 

rates filed for coverage effective on or 

after January 1, 2017. The other 

definitions will apply for rates filed for 

coverage effective on or after January 1, 

2016. 

Comment: Several commenters did 

not agree with our proposal to apply the 

definition of ‘‘plan’’ in the context of the 

rate review program. The commenters 

expressed concern that this would add 

complexity and create delays to the 

product filing and review process. 

Response: Because this final rule 

establishes a trigger for review of rate 

increases at the plan level, we are 

adopting the definition of ‘‘plan’’ at 

§ 144.103 of this final rule for purposes 

of the rate review requirements under 

part 154. While changing to a plan-level 

trigger may increase the number of rate 

filings subject to review, we believe 

doing so will more accurately reflect 

consumer expectations for the rate 

review program. We note that nothing in 

this final rule changes the scope of 

issuer rate filings, which will continue 

to be submitted at the product level. 

2. Disclosure and Review Provisions 

a. Rate Increases Subject to Review 

(§ 154.200) 

In § 154.200, we proposed 

modifications to the standards for rate 

increases that are subject to review. In 

paragraphs (a)(1) and (2), we proposed 

technical corrections to clarify that rate 

increases are applicable to a 12-month 

period that begins on January 1 rather 

than September 1 of each year. 

In paragraph (c), we proposed that 

rate increases would be calculated at the 

plan level (as opposed to the product 

level) when determining whether an 

increase is subject to review. Under this 

approach, if any plan within a product 

in the individual or small group market 

experiences an increase in the planadjusted index rate (as described in 

§ 156.80) that meets or exceeds the 

applicable threshold (either 10 percent 

or a State-specific threshold), the entire 

product would be subject to review to 

determine whether the rate increase is 

unreasonable. This proposal was 

intended to ensure that a plan that 

experiences a significant rate increase 

could not avoid review simply because 

the average increase for the product did 

not meet or exceed the applicable 

threshold. 

We sought comment on all aspects of 

these proposals, including the benefits 

and costs to States of carrying out the 

plan-level trigger for review. 

Comment: We received comments 

that suggested some confusion as to 

whether rate increases would be 

reviewed at the product level or the 

plan level when determining whether 

an increase is an unreasonable rate 

increase. 


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Response: We clarify that the planlevel threshold under this final rule is 

simply a trigger for review. The review 

will continue to occur, as it does today, 

at the product level, taking into account 

the combined experience of the plans 

within the product. 

Comment: Many commenters 

supported the proposal to apply the 

trigger for review at the plan level, 

suggesting it better reflected the intent 

of Congress to protect consumers against 

unreasonable rate increases. Other 

commenters opposed the proposal and 

urged HHS to retain the current 

product-level trigger for review. Many of 

these commenters were concerned that 

the proposed rule would significantly 

increase the number of rate filings 

subject to review, placing greater burden 

on State regulators and increasing 

administrative cost to issuers. Several 

commenters additionally stated the 

plan-level trigger is inappropriate 

because plan-level rates vary naturally 

due to common market factors, such as 

provider contracting and deductible 

leveraging. Multiple other commenters 

urged us to lower the threshold for 

review—for example, tying it to growth 

in national health expenditures. One 

commenter suggested maintaining a 10 

percent threshold at the product level 

and applying a 20 percent threshold at 

the plan level. 

Response: Because consumers are 

affected by rate increases at the plan 

level, we believe that increases for the 

plan, not the product, should be the 

trigger for determining whether an 

increase is subject to review. We 

acknowledge the concerns about 

burden, but believe the consumer 

protection benefits of this policy 

outweigh the costs and further the 

intent of section 2794 of the PHS Act to 

protect consumers against unreasonable 

rate increases. Therefore, we are 

finalizing the trigger for determining 

whether an increase is subject to review 

based on rate increases at the plan level. 

However, as noted above, we are 

modifying the final rule to apply this 

change effective for rates filed for 

coverage beginning on or after January 

1, 2017. We have updated the regulation 

text at § 154.200(a) to maintain the 

current trigger for determining whether 

the increase is subject to review for rates 

filed for coverage effective before 

January 1, 2017. HHS will continue to 

collect and review available data on 

trends in rate and medical increases in 

assessing whether to modify the 10 

percent threshold for review. 

Comment: One commenter 

recommended considering not only 

increases in the plan-adjusted index 

rate, but also changes in premium rating 

factors including those for geography 

and tobacco use. 

Response: We interpret section 2794 

of the PHS Act as requiring the 

Secretary to establish a process for the 

annual review of unreasonable increases 

in the underlying rates that are used to 

develop the premiums, as opposed to 

the actual premiums themselves (75 FR 

81009). Therefore, the final rule 

considers only increases in the planadjusted index rate described in 

§ 156.80 rather than the premium rating 

factors described in § 147.102. We note 

that nothing in this regulation prevents 

a State from reviewing other aspects of 

an insurance rate filing, including 

premium rating factors. 

b. Submission of Rate Filing 

Justification (§ 154.215) 

In § 154.215(a), we proposed a 

technical correction to clarify that 

issuers must submit a rate filing 

justification for all products in the 

issuer’s single risk pool when ‘‘any plan 

within a product’’ in the individual or 

small group market is subject to a rate 

increase. This is true regardless of 

whether the rate increase meets or 

exceeds the subject to review threshold. 

We proposed this clarification take 

effect with the effective date of the final 

rule. We are finalizing this clarification 

as proposed. 

Comment: Some commenters 

encouraged HHS to clarify throughout 

§ 154.215 that issuers must justify rate 

increases at the plan level, in addition 

to justifying them at the product level. 

Response: The final rule does not 

adopt this suggestion. Because rate 

increases that are subject to review are 

reviewed at the product level, issuers 

will likewise submit the rate filing 

justification at the product level rather 

than the plan level. 

c. Timing of Providing the Rate Filing 

Justification (§ 154.220) 

To provide consistency and 

transparency in the rate submission 

process, ensure a more meaningful 

opportunity for public review and 

comment, and reduce the opportunity 

for anti-competitive behavior, we 

proposed to modify § 154.220 to 

establish a uniform timeline by which 

health insurance issuers must submit to 

CMS or the applicable State a completed 

rate filing justification for proposed rate 

increases—for both QHPs and nonQHPs—in the individual and small 

group markets. Under the proposed rule, 

the issuer would be required to submit 

the justification by the earlier of the 

following: (1) The date by which the 

State requires a proposed rate increase 

to be filed with the State; or (2) the date 

specified by the Secretary in guidance. 

We suggested that we were considering 

specifying a deadline to coincide with 

the end of the QHP application window 

for the FFE. States would have 

flexibility to impose earlier rate filing 

deadlines to meet their specific State 

needs. We sought comment on this 

proposal. 

We are finalizing these provisions as 

proposed. We intend to specify the 

submission deadline for the 2015 filing 

year in forthcoming guidance. 

Comment: We received many 

comments regarding the proposal to 

establish a uniform rate filing timeline. 

Commenters who supported the 

proposal generally agreed it would 

increase transparency and encourage 

public participation in the rate review 

process. Commenters also viewed the 

common submission deadline for both 

QHP and non-QHP rate filings as a 

positive step to protect against shadow 

pricing among competing issuers and 

create a level playing field inside and 

outside the Exchange. 

Commenters who opposed the 

proposal were concerned that the HHS 

deadline would not provide issuers 

sufficient time to collect claims data and 

appropriately develop rates for the 

upcoming benefit year. Commenters 

also expressed concern that requiring 

rates for QHPs and non-QHPs to be 

submitted at the same time would 

impose an increased workload on State 

regulators, making it difficult to conduct 

thorough reviews and potentially 

creating delays in the review and 

approval process. Many commenters 

objected to a nationally uniform rate 

review timeline and urged State 

flexibility to set their own filing 

deadlines, particularly in States with 

effective rate review programs and 

States that operate their own Exchanges. 

Some commenters believed it would be 

sufficient for HHS to simply establish a 

deadline for States to complete their 

reviews. 

Several commenters remarked on the 

specific deadline for rate filing 

submissions. One commenter 

recommended HHS establish a rate 

filing deadline of no sooner than May 

15, while another commenter 

recommended a mid-summer deadline. 

Another commenter recommended that 

issuers have 90 days after the end of the 

FFE QHP application window to 

prepare the rate filing justification. 

Some commenters asserted that the 

filing deadline must accommodate a 

sufficient public comment period. 

One commenter suggested that 

grandfathered and transitional plans 

should not be subject to the same filing 

deadlines as single risk pool compliant 


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plans. Finally, some commenters 

recommended the NAIC convene a 

workgroup to make recommendations to 

HHS regarding the rate review timeline. 

Response: We believe the rate review 

process should be both predictable and 

transparent. To achieve this objective, 

we believe it is necessary to establish a 

uniform submission deadline for issuers 

to submit proposed rate increases for 

single risk pool coverage in the 

individual and small group markets. 

Therefore, we are finalizing proposed 

§ 154.220 authorizing the Secretary to 

establish in guidance the deadline for 

issuers to submit the rate filing 

justification for proposed rate increases 

for both QHPs and non-QHPs in the 

individual and small group markets. We 

will carefully consider commenters’ 

suggestions and consult with the NAIC 

and other interested parties when 

developing such guidance which we 

expect to issue soon. We anticipate the 

deadline will provide issuers adequate 

time to develop rates and afford States 

and the public the necessary time for 

review. 

We note that States retain significant 

flexibility to stage the timing of their 

reviews consistent with this final rule. 

This could include establishing filing 

deadlines prior to the HHS deadline, 

staggering the submission of forms and 

rates, or establishing varying deadlines 

for the individual and small group 

markets. 

Finally, we clarify that, while 

transitional plans are generally subject 

to the rate review requirements, the 

uniform submission timeline applies 

only to non-grandfathered individual 

and small group market coverage that is 

subject to the single risk pool 

requirement. Grandfathered health 

plans are not subject to the Federal rate 

review program. 

d. CMS’s Determinations of Effective 

Rate Review Programs (§ 154.301) 

We proposed to amend § 154.301(b) to 

specify the timeframe for a State with an 

effective rate review program to provide 

public access to information about 

proposed and final rate increases. 

Under the proposed rule, for proposed 

rate increases subject to review, the 

State would be required to provide 

public access from its Web site to the 

information contained in Parts I, II, and 

III of the rate filing justification that 

CMS makes available on its Web site (or 

provide CMS’s web address for such 

information). The proposed rule would 

require that the State take this action no 

later than the date specified by the 

Secretary in guidance. We suggested the 

10th business day following receipt of 

all rate filings in the relevant State 

market as the potential timeframe we 

may specify for this purpose. The 

proposed rule would also continue to 

require that the State have a mechanism 

for receiving public comments on those 

proposed rate increases. 

For all final rate increases (including 

those not subject to review), the 

proposed rule would similarly require 

that the State provide public access 

from its Web site to the information 

contained in Parts I, II, and III of the rate 

filing justification that CMS makes 

available on its Web site (or provide 

CMS’s web address for such 

information). The State would be 

required to take this action no later than 

the first day of the individual market 

annual open enrollment period. 

Nothing in this proposal would 

prevent States from making additional 

information available to the public, or 

prevent States from establishing earlier 

timeframes for public disclosure. States 

that elect to establish earlier posting 

timeframes would be required under the 

proposed rule to notify CMS in writing 

at least 30 days prior to the date the 

information will be made public. States 

would also be required to ensure that 

rate information released to the public 

is made available at a uniform time for 

all proposed and final rate increases (as 

applicable) in the relevant market 

segment and without regard to whether 

coverage is offered through an Exchange 

or outside of an Exchange. 

We sought comment on these 

proposals, including how the 

timeframes may interact with current 

State practice and workload. We also 

sought comment on whether States with 

effective rate review programs should be 

required to post rate information on the 

State’s Web site, rather than being 

permitted to provide a link to CMS’s 

Web site for such information. 

We are finalizing these provisions as 

proposed. We are also maintaining the 

option for States to continue to provide 

public access from their Web site via 

link to rate information made available 

on the CMS Web site. 

Comment: Some commenters 

suggested that CMS should not require 

the release of rate information before 

rates are finalized. Another commenter 

requested that all proposed rates be 

made available to the public, not only 

those subject to review. 

Response: Section 2794 of the PHS 

Act requires the Secretary to ensure the 

public disclosure of information, 

including the justification for an 

unreasonable rate increase. We believe 

that Congress intended the rate review 

process to be transparent, and that this 

objective is served by giving consumers 

timely access to basic information 

regarding the proposed increase that is 

under review by CMS or States and 

prior to the implementation of the 

increase. The proposed rule and this 

final rule do not change the existing 

requirements regarding the scope of the 

information that must be disclosed 

under the current regulations. 

Comment: Several commenters 

expressed opposition to our proposal to 

specify the timeframe for posting 

information about proposed rate 

increases that are subject to review. 

Commenters generally asserted that 

States have existing processes for rate 

disclosure and requested State 

flexibility to manage publication 

timeframes in the way most appropriate 

to their market and regulatory structure. 

One commenter suggested CMS 

establish a timeframe of 5 business days 

for States to post information about 

proposed rate increases subject to 

review. Another commenter requested 

clarification about the information CMS 

intends to post on its Web site and how 

the suggested timeframe of 10 business 

days from the filing deadline would 

provide sufficient time to redact issuers’ 

confidential and proprietary 

information protected by the Freedom of 

Information Act. 

Response: We are finalizing the 

proposal for the Secretary to specify the 

timeframe for States with effective rate 

review programs to provide public 

access to information about proposed 

rate increases that are subject to review. 

This timeframe will be specified in 

guidance. We anticipate specifying a 

deadline of the 10th business day after 

receipt of all rate filings in the relevant 

State market. We note this provision 

applies only to products with proposed 

rate increases that are subject to review 

and only includes the information in 

Parts I, II, and III of the rate filing 

justification that CMS makes available 

on its Web site. Under § 154.215(h), 

CMS makes available on its Web site 

only the information that is not 

considered a trade secret or confidential 

commercial or financial information as 

defined in Freedom of Information Act 

regulations, 45 CFR 5.65. We note that 

States may choose to make additional 

information available as permitted by 

applicable State law and regulations. 

Comment: Many commenters 

emphasized the need for sufficient 

opportunity for public review and 

comment before rates are finalized, with 

suggested timeframes ranging from 30 to 

90 days of public comment. 

Response: Under current regulations, 

a State with an effective rate review 

program must have a mechanism for 

receiving public comments on proposed 

rate increases that are subject to review. 


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32Rate filing information can also be accessed at 

http://www.cms.gov/CCIIO/Resources/DataResources/ratereview.html. 

We believe this standard is sufficient to 

encourage public participation in the 

rate review process, while affording 

States flexibility to manage the public 

comment process in the way most 

appropriate for the State. 

Comment: Some commenters stated 

that information about final rate 

increases should be released prior to the 

start of the annual open enrollment 

period to allow consumers, assisters, 

and other interested stakeholders greater 

opportunity to familiarize themselves 

with issuer rates. These commenters 

offered various suggestions, most 

commonly recommending that final 

rates be posted 15 days in advance of 

the annual open enrollment period. 

Other commenters were concerned 

about the workload and burden on 

States of completing reviews for both 

Exchange and non-Exchange plans at 

the same time. 

Response: The final rule retains the 

proposal that information about final 

rate increases must be posted by the first 

day of the annual open enrollment 

period. We believe this timeframe 

strikes the appropriate balance between 

providing State and Federal regulators 

sufficient time to complete their 

reviews, while providing consumers the 

information needed to make informed 

purchasing decisions. We note that 

States may establish earlier posting 

timeframes with appropriate notice to 

CMS. 

Comment: One commenter 

recommended clarifying in 

§ 154.301(b)(1)(ii) that the term ‘‘annual 

open enrollment period’’ refers to the 

open enrollment period in the 

individual market. 

Response: The final rule adopts the 

suggestion to reference the ‘‘individual 

market’’ annual open enrollment period 

under § 154.301(b)(1)(ii). 

Comment: One commenter stated that 

CMS should also establish posting 

deadlines for States in which CMS is 

conducting the reviews. 

Response: While the rate review 

timeline under this final rule establishes 

minimum standards for submission and 

posting of rate information in States 

with effective rate review programs, we 

will also apply these timelines in States 

without effective rate review programs 

where CMS conducts the reviews. 

Comment: Some commenters 

recommended that States be required to 

post rate information directly on their 

Web sites instead of relying on the CMS 

Web site. Other commenters stated it 

would be costly and unnecessary to 

impose this requirement on States, since 

CMS already provides consumers with 

information about rate increases on its 

Web site. These commenters 

recommended that States continue to be 

permitted to link to the CMS Web site. 

Response: We agree that specifying 

that States must separately post rate 

information is not necessary at this 

time. Through CMS’s Web site 

(www.ratereview.healthcare.gov), 

consumers and other stakeholders can 

easily review rate increases requested by 

issuers in every State.32 We therefore 

retain the option for States to continue 

to provide public access from their Web 

site via link to rate information made 

available on the CMS Web site. 

Comment: Some commenters believed 

that States should be required to 

provide public access to the entire rate 

filing justification, rather than only the 

information contained in Parts I, II and 

III that CMS makes available on its Web 

site. Other commenters indicated that 

States have policies and procedures 

governing rate increase disclosure and 

contended that States should have 

discretion to determine what 

information to release. 

Response: The proposed rule and this 

final rule do not change the scope of 

information disclosure under the 

current regulations. The existing rules 

establish the minimum level of 

information that States with effective 

rate review programs must make 

available to the public, either directly 

on their Web sites or via link to the CMS 

Web site. We note that States have 

discretion to make additional 

information available to the public, as 

permitted by applicable State law and 

regulation. 

Comment: Some commenters opposed 

the requirement that States must notify 

CMS in writing 30 days prior to making 

rate information public. The 

commenters were concerned the 30-day 

notice requirement was impractical and 

unnecessary, and may interfere with 

State and issuer rate negotiations and 

timelines. One commenter 

recommended that States simply make a 

good-faith effort to provide advance 

notice to CMS. 

Response: We maintain in the final 

rule the requirement that States must 

provide at least 30-day notice of their 

intent to release proposed or final rate 

information when the State publication 

timeline is earlier than that specified by 

CMS. As we stated in the preamble to 

the proposed rule (79 FR 70703), this 

information will enable CMS to better 

coordinate the availability of rate 

information, increasing transparency 

nationally into the rate-setting process. 

E. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

1. General Provisions 

a. Definitions (§ 155.20) 

In § 155.20, we proposed to amend 

the definitions of ‘‘applicant,’’ 

‘‘enrollee,’’ and ‘‘qualified employee.’’ 

First, we proposed to specify that a 

qualified employer could elect to offer 

coverage through a SHOP to its former 

employees that may include retirees, as 

well as former employees to whom an 

employer might be obligated to provide 

continuation coverage under applicable 

State or Federal law. Second, we 

proposed to specify that a qualified 

employer could also elect to offer 

coverage through the SHOP to 

dependents of employees or former 

employees. Third, we proposed to 

specify that business owners may enroll 

in SHOP coverage provided that at least 

one employee enrolls. We proposed to 

amend these definitions to make it clear 

that SHOPs may allow small group 

enrollment practices that were in place 

before the Affordable Care Act to 

continue, to preserve continuity for 

issuers and employers, and to reduce 

the administrative complexity involved 

with transitioning to SHOP coverage for 

qualified employers. 

We are finalizing the amendments to 

the definitions of applicant and 

qualified employee as proposed, and are 

modifying the amendments to the 

definition of enrollee in light of 

comments we received. 

The preamble to the proposed rule 

also sought comment on whether other 

provisions of the Exchange rules in 

parts 155 and 156 would need to be 

amended to implement the changes 

proposed to these definitions. HHS 

interprets § 155.220(i) to give SHOPs the 

flexibility to permit web-brokers to 

enroll not just ‘‘qualified employees,’’ 

but all enrollees, consistent with the 

expansion of the definition of 

‘‘enrollee’’ that is being finalized in this 

rule. Therefore, we are also modifying 

§ 155.220(i) to refer to facilitating 

enrollment in coverage through the 

SHOP for enrollees instead of qualified 

employees. 

Comment: One commenter 

commented that the proposed definition 

of an ‘‘applicant’’ does not capture all 

situations in which a person could 

become eligible for continuation 

coverage, such as divorce or loss of 

dependent child status. 

Response: Not every person eligible to 

enroll in coverage purchased through 

the SHOP is considered a SHOP 

applicant. In the case of individuals 


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33 26 CFR 54.4980B–6 A–1(b) defines an election 

to enroll in continuation coverage as the date the 

notification is sent to the plan administrator, and 

§ 157.205(f) requires qualified employers 

participating in the SHOP to provide the SHOP 

with information regarding changes in dependent or 

employee eligibility status for coverage. 

34Persons may enroll in coverage available 

through the SHOP only if the plan constitutes a 

group health plan maintained by a small employer. 

A group health plan is an ‘‘employee welfare 

benefit plan’’ as defined by the Employee 

Retirement Income Security Act of 1974 (ERISA), 

and is a form of employee benefit plan, see ERISA 

§ 3(3), 29 U.S.C. 1002(3). An ‘‘employee benefit 

plan’’ does not exist if there are no ‘‘employees’’ 

participating in the plan, 29 CFR 2510.3–3(b), and 

for the purpose of identifying an employee benefit 

plan an ‘‘employee’’ does not include the sole 

owner of a business or a spouse of the business 

owner, Id. §§ 2510.3–3(c), 2590.732(d). 

35See, for example, 29 U.S.C. 1002(7) & (8), 

defining a beneficiary of an employee welfare 

benefit plan in relationship to a participant in such 

a plan. 

36Exchange Establishment Rule, 77 FR 18310 at 

18415. 

37See, for example, § 146.145(a)(1) defining a 

‘‘group health plan’’ as, among other things, a plan 

that provides medical care to current and former 

employees, and § 146.150(b) defining an individual 

eligible to enroll in coverage sold in the small group 

market as an individual eligible to enroll in group 

health insurance coverage offered to a group health 

plan in accordance with the terms of the group 

health plan. 

eligible to enroll in coverage through the 

SHOP due to a continuation coverage 

qualifying event, such as a divorce or a 

loss of dependent status, such an 

individual qualifies for such coverage 

by virtue of his or her coverage through 

the SHOP that existed on the day prior 

to the qualifying event. Such an 

individual need not file an application 

with the SHOP to continue to receive 

coverage after a qualifying event. 

Instead, consistent with current 

business practices, the qualified 

beneficiary should notify the employer 

or plan administrator of his or her desire 

to participate in continuation coverage. 

The employer or plan administrator 

must then notify the SHOP.33 Where 

appropriate, such notification will allow 

the SHOP to individually bill the 

continuation coverage enrollee. 

Comment: One commenter asked for 

clarification on whether at least one 

employee has to be eligible for or 

enrolled in SHOP coverage, and 

requested that HHS clarify whether a 

business owner may enroll in a QHP 

through the SHOP if at least one 

employee is eligible for coverage 

through SHOP but has not enrolled. 

Response: We clarify that where a 

business’s only enrollee(s) in coverage 

through the SHOP would be the 

owner(s) of the business, the owner is 

not eligible to enroll in coverage sold 

through the SHOP.34

Comment: Some commenters 

requested clarification on whether an 

employee may enroll dependents 

without enrolling him or herself in the 

plan. Another commenter opposed the 

exclusion of child-only plans in the 

SHOP and stated that all children 

should have access to coverage even if 

they do not qualify as a ‘‘qualified 

employee.’’ 

Response: We note that under 

common market practice, dependents of 

an employee offered employersponsored coverage generally may 

enroll in such coverage only as a 

dependent, if the employee enrolls in 

the coverage.35 Except for continuation 

coverage, coverage offered through the 

SHOP does not depart from this general 

practice. Except as may be provided 

under otherwise applicable law, 

dependents of a qualified employee may 

enroll in a QHP through the SHOP 

through the qualified employee only if 

the qualified employee also enrolls in 

the same QHP through the SHOP. We 

note that this does not relieve issuers 

from the obligation to offer child-only 

coverage under the group health plan 

where the child is the primary 

subscriber, such as where the employee 

is 18 years old. Consistent with our 

policy for individual market QHPs at 

section 1302(f) of the Affordable Care 

Act, QHP issuers could satisfy this 

standard by offering employee-only 

coverage under the group health plan to 

qualified applicants seeking child-only 

coverage, as long as the QHP includes 

rating for child-only coverage in 

accordance with applicable premium 

rating rules.36

In light of this comment, we note that 

the proposed amendments to the 

definition of ‘‘enrollee’’ did not account 

for a situation in which a person is 

enrolled in coverage because she is 

eligible for continuation coverage, but is 

no longer a dependent of the qualified 

employee or other primary subscriber. 

To account for this situation, we are 

modifying the proposed definition of 

‘‘enrollee’’ to include any other person 

who is enrolled in a QHP through the 

SHOP consistent with applicable law 

and the terms of the group health plan. 

Comment: Some commenters stated 

that the inclusion of ‘‘former 

employees’’ in the definition of 

qualified employee is not appropriate 

except in the case of continuation 

coverage. 

Response: The inclusion of ‘‘former 

employee’’ in the Exchange rules’ 

definitions of ‘‘applicant’’ and 

‘‘qualified employee’’ does not provide 

eligibility for individuals to enroll in 

coverage if they are not otherwise 

eligible to enroll in small group 

coverage under HIPAA, COBRA, and 

other applicable Federal or State law. If 

individuals qualify for coverage under 

the terms of the plan and under existing 

statute and regulations governing 

eligibility to enroll in group health 

coverage, they may enroll in group 

health coverage through the SHOP.37

The SHOP regulations do not impose 

any additional obligation upon 

employers to offer former employees 

coverage sold through the SHOP, and 

employers may do so where permitted 

under the terms of the plan. In light of 

this comment, and to clarify that the 

persons listed in the definition of 

‘‘enrollee’’ are generally meant to 

include all those who have enrolled in 

coverage through the SHOP consistent 

with applicable law and the terms of the 

group health plan, we are modifying the 

definition of ‘‘enrollee’’ to include, in 

addition to the listed individuals, any 

other person who is enrolled in a QHP 

through the SHOP consistent with 

applicable law and the terms of the 

group health plan. 

Comment: One commenter asked how 

expanding the definition of ‘‘enrollee’’ 

to include a business owner will impact 

eligibility thresholds for the Small 

Business Health Care Tax Credit. 

Response: The inclusion of owners in 

the definition of ‘‘enrollee’’ does not 

modify qualification requirements for 

the Small Business Health Care Tax 

Credit, as determinations for the credit 

do not rely on the SHOP’s definition of 

‘‘enrollee.’’ 

2. General Functions of an Exchange 

a. Consumer Assistance Tools and 

Programs of an Exchange (§ 155.205) 

In the proposed rule, we proposed to 

amend § 155.205(c) to specify the oral 

interpretation services that are required 

for certain entities subject to 

§ 155.205(c). Specifically, for each 

Exchange, QHP issuer, and agent or 

broker subject to § 155.220(c)(3)(i) 

(referred to in this section as a ‘‘webbroker’’), we proposed that the 

requirement to provide oral 

interpretation services under 

§ 155.205(c)(2)(i) would include making 

available telephonic interpreters in at 

least 150 languages. We also proposed 

amendments to § 156.250 that are 

discussed below, and that would require 

QHP issuers to provide all information 

that is critical for obtaining health 

insurance coverage or access to health 

care services through the QHP, 

including applications, forms, and 

notices, to qualified individuals, 

applicants, qualified employers, 

qualified employees, and enrollees in 


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accordance with the standards 

described in § 155.205(c), including the 

provision of telephonic interpreter 

services in at least 150 languages. 

We proposed to limit the applicability 

of the proposed 150 languages standard 

for telephonic interpreter services to 

Exchanges, web-brokers, and QHP 

issuers. We did not propose to apply 

this standard to Navigators and nonNavigator assistance personnel because, 

as we stated in the proposed rule, the 

smaller non-profit organizations that 

frequently make up the bulk of these 

consumer assistance entities have 

limited resources. 

In the proposed rule, we also solicited 

comment on whether we should 

consider more or different language 

accessibility standards in § 155.205(c). 

We provided certain examples in the 

preamble. With respect to written 

translations, we gave an example of 

requiring written translations in the 

languages spoken by the top 10 limited 

English proficiency (LEP) groups in the 

State or spoken by 10,000 persons or 

greater, whichever yields the greater 

number of languages. With respect to 

taglines (short statements informing 

individuals of the availability of 

language access services), we gave an 

example of requiring taglines in the top 

30 non-English languages spoken 

nationwide on documents required by 

State or Federal law or containing 

information that is critical to obtaining 

health insurance coverage or access to 

health care services through a QHP. We 

also provided an example that would 

establish a uniform, national standard 

that written translations, taglines on 

notices and Web site content, and oral 

interpretation services be provided in 

the top 15 languages spoken by LEP 

individuals in the United States. 

Finally, we provided an example 

specific to Web site content that would 

have required the content to be 

translated in each non-English language 

spoken by an LEP population that 

reaches 10 percent of the State 

population. 

Based on comments received, as 

discussed below, we are finalizing the 

proposal with the following 

modifications: 

To give new web-brokers more time 

for implementation, we are revising 

§ 155.205(c)(2)(i) to specify that for an 

agent or broker subject to 

§ 155.220(c)(3)(i), the standard to 

provide telephonic interpreter services 

in at least 150 languages applies no later 

than November 1, 2015, the first day of 

the individual market open enrollment 

period for the 2016 benefit year, or 1 

year after such entity has been 

registered with the Exchange, whichever 

is later. 

We are revising § 155.205(c)(2)(iii) to 

specify that, beginning at the start of the 

individual market open enrollment 

period for the 2017 benefit year, for 

Exchanges, QHP issuers, and agents or 

brokers subject to § 155.220(c)(3)(i), the 

general standard to provide taglines in 

non-English languages indicating the 

availability of language services 

includes taglines on Web site content 

and documents that are critical for 

obtaining health insurance coverage or 

access to health care services through a 

QHP for qualified individuals, 

applicants, qualified employers, 

qualified employees, or enrollees 

indicating the availability of language 

services in at least the top 15 languages 

spoken by the LEP population of the 

relevant State, as determined in HHS 

guidance. Documents are considered to 

be ‘‘critical’’ if the entity is required by 

State or Federal law or regulation to 

provide them to a qualified individual, 

applicant, qualified employer, qualified 

employee, or enrollee. We added that 

for an agent or broker subject to 

§ 155.220(c)(3)(i), this standard will 

apply beginning no later than at the start 

of the individual market open 

enrollment period for the 2017 benefit 

year, or when the entity has been 

registered with the Exchange for at least 

1 year, whichever date is later. HHS 

plans to provide sample taglines in all 

languages triggered by this threshold. 

For purposes of § 155.205(c)(2), the 

meaning of the terms ‘‘qualified 

individual,’’ ‘‘applicant,’’ ‘‘qualified 

employer,’’ ‘‘qualified employee,’’ and 

‘‘enrollee’’ is intended to be consistent 

with the definitions for these terms 

under § 155.20. 

We also modified the language 

following § 155.205(c)(2)(i) and 

§ 155.205(c)(2)(iii) to make clear that the 

general standards with respect to oral 

interpretation and taglines continue to 

apply to all entities subject to 

§ 155.205(c). 

We added § 155.205(c)(2)(iv) to create 

a new standard related to translations of 

Web site content for Exchanges, QHP 

issuers, and agents or brokers subject to 

§ 155.220(c)(3)(i). The new standard 

specifies that beginning at the start of 

the individual market open enrollment 

period for the 2017 benefit year, the 

content of a Web site maintained by an 

Exchange or QHP issuer must be 

translated into any non-English 

language that is spoken by an LEP 

population that reaches 10 percent or 

more of the population of the relevant 

State, as determined in HHS guidance. 

For an agent or broker subject to 

§ 155.220(c)(3)(i), this standard will 

apply beginning at the start of the 

individual market open enrollment 

period for the 2017 benefit year or when 

the entity has been registered with the 

Exchange for at least 1 year, whichever 

date is later. We clarify that for 

Exchanges and web-brokers, this 

requirement applies to all content that 

is intended for qualified individuals, 

applicants, qualified employers, 

qualified employees, or enrollees that is 

maintained by the entity on the Web site 

and is not limited to information that is 

critical for obtaining health insurance 

coverage or access to health care 

services through a QHP. We note that 

QHP issuers are not required to translate 

all Web site content that is intended for 

qualified individuals, applicants, 

qualified employers, qualified 

employees, or enrollees; rather, the type 

of Web site content that must be 

translated aligns with the definition of 

‘‘critical’’ information to which QHP 

issuers must provide meaningful access 

under § 156.250 as finalized in this rule. 

In addition, an entity that is required to 

translate Web site content consistent 

with this provision must also still 

include taglines, in accordance with 

§ 155.205(c)(2)(iii), on its English 

version Web pages. This entity would 

not, however, be required to include 

taglines on its non-English version Web 

pages, but it could do so voluntarily. 

Comment: The majority of comments 

received regarding the proposed 

standard for telephonic interpreter 

services in 150 languages were 

supportive. A few commenters stated 

that telephonic interpretation is a costeffective means of providing language 

access relative to written translations, 

which, according to the commenters, are 

demanded with much less frequency 

than oral interpretation. Many 

commenters stated that the proposal 

would help ensure that LEP individuals 

obtain language access, helping them 

enroll in health insurance coverage. 

These commenters suggested requiring 

bilingual customer service 

representatives in addition to language 

lines. Several commenters stated that 

specifying telephonic interpreter 

services in 150 languages was arbitrary, 

overly prescriptive, and potentially 

burdensome for smaller entities. Some 

commenters suggested that telephonic 

interpreter services be available in any 

language requested, as they are under 

certain State laws, like California’s, or in 

as many languages as are necessary to 

serve the oral interpretation needs of 

applicants and enrollees within the 

applicable service area. 

Response: We appreciate the 

comments regarding this proposal. We 

believe that providing telephonic 


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38Section 1311(i)(3)(E) of Affordable Care Act. 

interpreter services in 150 languages is 

a useful and cost-effective tool to ensure 

that most LEP consumers in the service 

area are able to receive oral 

interpretation services that are required 

by existing Federal regulations at 

§ 155.205(c)(2)(i). HHS expects to 

monitor the extent that the industry 

standard for telephonic interpreter 

services might diverge substantially 

from the 150-language threshold. We 

also clarify that this standard should not 

be construed to mean that other ways of 

providing oral interpretation, such as inperson interpreters or bilingual 

customer service representatives, are 

prohibited or should be displaced by 

telephonic interpreter services. We 

recognize that these alternative services 

can provide a superior experience for 

the consumer which, in turn, can 

ultimately benefit the entity. 

Comment: Commenters generally 

supported our proposal that webbrokers provide telephonic interpreter 

services. In particular, one supporter 

reasoned that because web-brokers are 

‘‘standing in’’ for an issuer or Exchange, 

they should be subject to the same 

requirement as issuers and Exchanges. 

Another commenter, while supporting 

the goal of increasing language 

accessibility and extending health 

coverage to diverse populations, 

opposed the requirement and suggested 

that we give new participant webbrokers to the Exchange more time to 

comply. 

Response: We believe that, in regard 

to language access, a web-broker should 

be expected to provide the same 

minimum level of service to a consumer 

as would be expected from an Exchange 

or QHP issuer. In response to the 

concerns that newer web-brokers may 

be smaller companies less able to incur 

the costs of this requirement, we are 

providing web-brokers until November 

1, 2015, the first day of the open 

enrollment period for the 2016 benefit 

year, or 1 year from the date the webbroker registers with the Exchange, 

whichever date is later, to comply. As 

a reminder, we note that a web-broker, 

like every other entity subject to 

§ 155.205(c), is required to provide 

accessible information to individuals 

who are LEP according to the more 

general standards under § 155.205(c)(2), 

even before the web-broker would be 

subject to the more specific standards 

finalized in this rule. Moreover, under 

§ 155.205(c)(3), a web-broker is required 

to inform individuals who are LEP of 

the availability of the full range of 

language access services described in 

§ 155.205(c)(2), and how to access such 

services. If a web-broker is not yet 

providing telephonic interpreter 

services in at least 150 languages 

directly, it must provide oral 

interpretation services and inform 

individuals of the availability of this 

service from other sources, such as the 

Exchange’s Call Center. 

Comment: With respect to our 

proposal to not require Navigators and 

non-Navigator assistance personnel to 

provide telephonic interpreter services 

in at least 150 languages, comments 

were mixed. Some commenters believed 

that our approach of exempting 

Navigators ran counter to a Navigator’s 

statutory duty to provide information in 

a manner that is culturally and 

linguistically appropriate to the needs of 

the population being served by the 

Exchange or Exchanges.38 Others who 

opposed the proposal stated that while 

these entities should strive to hire bi- or 

multi-lingual staff for the most prevalent 

non-English languages spoken by LEP 

individuals in their community, for less 

frequently encountered languages, or for 

smaller entities for whom hiring staff 

with special language skills is not 

possible, requiring access to telephonic 

interpreter services is a cost-effective 

strategy for providing language access 

services. Among those who agreed with 

our proposal, commenters stated that 

specifically requiring each entity to 

provide telephonic interpreter services 

in 150 languages could be cost 

prohibitive and potentially force 

organizations to opt out of serving as 

assisters. At the same time, these 

commenters also stated that Navigators 

and non-Navigator assistance personnel 

should be responsive to and 

accommodate, to the extent possible, 

any LEP consumer’s language access 

needs. These commenters suggested a 

number of options, such as requiring 

referrals to the Exchange’s Call Center if 

an entity cannot meet a specific need; 

partnering with other organizations to 

provide telephonic interpreter services; 

hiring bi- and multi-lingual staff to meet 

the ‘‘most significant’’ language needs of 

the community; or having HHS contract 

with a language line that these entities 

could use so that the entity would not 

bear additional costs. 

Response: We are not extending the 

requirement to provide telephonic 

interpreter services in 150 languages to 

Navigators and non-Navigator assistance 

personnel at this time. We recognize 

that ensuring that the language needs of 

a consumer are met is an important 

component of providing high-quality 

application and enrollment assistance. 

We will continue to consider options for 

making language access services more 

robust for Navigators and non-Navigator 

assistance personnel. 

There are a number of existing 

language access standards under current 

regulations applicable to Navigators that 

are consistent with the requirement 

under section 1311(i)(3)(E) of the 

Affordable Care Act that Navigators 

provide information in a manner that is 

culturally and linguistically appropriate 

to the needs of the population being 

served by the Exchange or Exchanges. 

For example, under § 155.210(e)(5), 

Navigators in all Exchanges must 

provide information in a manner that is 

culturally and linguistically appropriate 

to the needs of the population being 

served by the Exchange, including 

individuals with LEP. Further, the 

general requirements at § 155.205(c) to 

provide oral interpretation, written 

translations, and taglines in non-English 

languages indicating the availability of 

language services, continue to apply to 

all entities carrying out activities under 

§ 155.205(d) and (e), including 

Navigators and non-Navigator assistance 

personnel, even though the more 

specific standards finalized here do not 

apply to those entities. As noted above, 

included in this general requirement is 

the requirement under § 155.205(c)(3) to 

inform individuals who are LEP about 

the availability of the full range of 

language access services described in 

§ 155.205(c)(2) and how to access such 

services. As such, if they lack the 

immediate capacity to help an LEP 

individual, all Navigators and nonNavigator assistance personnel in every 

Exchange should inform that individual 

about the availability of language access 

services through other sources, such as 

the Exchange Call Center. In addition, 

Navigators and non-Navigator assistance 

personnel in FFEs and State Partnership 

Exchanges, and non-Navigator 

assistance personnel funded through an 

Exchange Establishment grant, must 

comply with the standards set forth in 

§ 155.215(c)(3), which require them to 

provide consumers with information 

and assistance in the consumer’s 

preferred language, at no cost to the 

consumer, including the provision of 

oral interpretation of non-English 

languages and the translation of written 

documents in non-English languages 

when necessary or when requested by 

the consumer to ensure effective 

communication. Exempting Navigators 

and non-Navigator assistance personnel 

from the specific requirements finalized 

here does not exempt them from 

complying with other applicable laws 

and regulations that govern the language 

accessibility of their work. 

Comment: We received comments 

regarding whether we should consider 


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39We anticipate releasing this guidance on an 

annual basis beginning in early 2016, soon after the 

most recently published American Community 

Survey data is expected to become available. 

additional, specific standards pertaining 

to written translations, taglines, and 

Web site content, as well as suggestions 

for standards other than those that we 

had specifically mentioned in the 

preamble of the proposed rule, as 

described above. Some commenters 

agreed in principle that improved 

language access services will help 

consumers. While some commenters 

broadly agreed that language access 

services should account for the 

demographics in a particular service 

area, comments were mixed with 

respect to the specific thresholds that 

should trigger written translations. 

Some commenters opposed requiring 

more specific standards beyond the 

proposed telephonic interpreter services 

standard. Still other commenters added 

that written translations should be 

required only upon request, rather than 

automatically, reasoning that limiting 

the standard to requests would help 

reduce the burden on entities as well as 

on State insurance departments, which 

often require issuers to file translated 

versions of previously filed forms for 

State review. One commenter asserted 

that additional standards for stand-alone 

dental plan issuers were not warranted. 

Response: We are not finalizing any 

specific standards with respect to 

written translations at this time. We will 

continue to consider solutions that 

balance the language access needs of 

consumers who apply for and enroll in 

coverage through Exchanges with the 

burdens on entities in providing quality 

written translations in a timely fashion. 

It is important to note that even though 

we are not finalizing specific written 

translations standards, the general 

standard under § 155.205(c)(2)(ii) 

continues to apply to all entities subject 

to § 155.205(c), as do the general 

standards with respect to oral 

interpretation and taglines in nonEnglish languages indicating the 

availability of language services. We 

have modified the language following 

§ 155.205(c)(2)(i) and § 155.205(c)(2)(iii) 

to make clear that the general standards 

with respect to oral interpretation and 

taglines continue to apply to all entities 

subject to § 155.205(c). 

Comment: Some commenters who 

commented on our proposal on 

language accessibility standards for 

taglines suggested that notices and Web 

site content provided by HHS should be 

available in the top 30 languages spoken 

nationwide by LEP populations. Some 

commenters suggested that for all other 

entities besides the FFEs, a Statespecific approach should be adopted, 

specifically recommending that notices 

and Web site content provided by a 

State Exchange, QHP issuer, or webbroker include taglines in the top 15 

languages spoken in the relevant State(s) 

by LEP populations. One commenter 

did not suggest a specific numeric 

threshold, but stressed that a uniform 

standard should be adopted across 

entities. 

Response: We agree with many 

commenters’ views that the 

demographics of a State’s LEP 

population, rather than nationwide 

demographics, should be taken into 

account when taglines are used. This 

approach identifies languages tailored to 

the needs of each State and thus is more 

attuned to the anticipated language 

access needs of individuals serviced by 

entities. We also believe we should 

avoid creating a situation in which 30 

taglines take up significant space on 

written content, potentially adding to 

printing costs. 

In light of these considerations, we 

are finalizing a standard whereby an 

Exchange, QHP issuer, or web-broker 

would be required to include taglines on 

Web site content and any document that 

is critical for obtaining health insurance 

coverage or access to health care 

services through a QHP for qualified 

individuals, applicants, qualified 

employers, qualified employees, or 

enrollees in at least the top 15 languages 

spoken by the LEP population in the 

relevant State. If an entity’s service area 

covers multiple States, the top 15 

languages spoken by LEP individuals 

may be determined by aggregating the 

top 15 languages spoken by all LEP 

individuals among the total population 

of the relevant States. A document is 

deemed to be critical for obtaining 

health insurance coverage or access to 

health care services through a QHP if it 

is required to be provided by State or 

Federal law or regulation to a qualified 

individual, applicant, qualified 

employer, qualified employee, or 

enrollee. Taglines must be included if a 

document is considered ‘‘critical’’ 

information to which QHP issuers must 

provide meaningful access under 

§ 156.250 as finalized in this rule, so 

that most LEP consumers might receive 

notice of language access services 

regardless of whether such ‘‘critical’’ 

information is being provided to them 

by an Exchange, a QHP issuer, or a webbroker. This requirement with respect to 

taglines adds to the standard set forth in 

§ 156.250 because it applies to all Web 

site content that is provided to qualified 

individuals, applicants, qualified 

employers, qualified employees, and 

enrollees by an Exchange, QHP issuer, 

or web-broker, regardless of whether 

such content must be translated in 

accordance with § 155.205(c)(2)(iv) as 

finalized in this rule. We included this 

requirement because all consumers, 

regardless of their English proficiency, 

are encouraged to apply for and enroll 

in coverage through an Exchange online, 

and we believe that consumers with LEP 

should be able to immediately identify 

taglines informing them of their ability 

to obtain language access services on the 

Web sites of entities subject to this 

standard. 

It is also important that LEP 

consumers, whether they are being 

served by an Exchange, QHP issuer, or 

web-broker, are able to obtain the same 

minimum number of taglines on such 

documents, and therefore are applying 

this standard equally across these 

entities. However, in recognition of the 

fact that newer web-brokers are often 

smaller entities that may not as easily 

meet this standard as an Exchange or 

QHP issuer, we are providing them 

additional lead time to comply, 

specifically, until the first day of the 

individual market open enrollment 

period for the 2017 benefit year or when 

such entity has been registered with the 

Exchange for at least 1 year, whichever 

is later. To facilitate compliance with 

this standard, beginning in early 2016, 

we plan to issue guidance which 

identifies the applicable non-English 

languages in each State.39 We also 

expect to provide sample taglines in all 

languages triggered by this threshold 

beginning in early 2016. 

Comment: We received comments 

supporting a possible additional 

standard discussed in the preamble to 

the proposed rule, under which Web 

site content should be translated into 

each non-English language spoken by an 

LEP population that reaches 10 percent 

of the State population, though one 

commenter suggested that we consider 

requiring translation into the top three 

languages spoken by the LEP population 

in a given State. A few commenters 

expressed concerns about costs. Another 

commenter opposed applying the 

standard to web-brokers, and suggested 

that we give new participant webbrokers to the Exchange more time to 

comply. 

Response: We recognize that Web site 

content is an important source of 

information for qualified individuals, 

applicants, qualified employers, 

qualified employees, and enrollees, 

particularly in light of the fact that 

applying for and enrolling into a QHP 

or insurance affordability programs 

online is a generally more efficient 

process than other means. In addition, 


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the Web site content of an Exchange or 

web-broker often contains consumer 

tools and education materials that, 

while not always ‘‘critical’’ for obtaining 

health care coverage or access to health 

care services through a QHP within the 

meaning of § 156.250, nonetheless can 

help consumers understand their 

eligibility for coverage, how much 

financial assistance they might qualify 

for, and other important information 

that help consumers make an informed 

decision. We believe it is appropriate to 

require Exchanges, QHP issuers, and 

web-brokers to translate Web site 

content into each non-English language 

spoken by an LEP population that 

reaches 10 percent or more of a State’s 

population beginning at the start of the 

individual market open enrollment 

period for the 2017 benefit year. We 

note that the FFE is already meeting this 

standard. We clarify that for Exchanges 

and web-brokers, this requirement 

applies to all information intended for 

qualified individuals, applicants, 

qualified employers, qualified 

employees, or enrollees that is 

maintained by the entity on the Web site 

and is not limited to information that is 

critical for obtaining health insurance 

coverage or access to health care 

services through a QHP. We note that 

for QHP issuers, the type of Web site 

content for which translation is required 

aligns with the definition set forth in 

§ 156.250, as finalized in this rule, of 

‘‘critical’’ information to which QHP 

issuers must provide meaningful access. 

If certain Web site content that is 

maintained by an Exchange, QHP issuer, 

or web-broker contains information that 

specifically applies to non-QHPs only 

and does not contain information that is 

either (for Exchanges and web-brokers) 

intended for a qualified individual, 

applicant, qualified employer, qualified 

employee, or enrollee or (for QHP 

issuers) ‘‘critical’’ within the meaning of 

§ 156.250, then the entity is not required 

to translate it into an applicable nonEnglish language. 

Given the substantial effort and 

resources involved in translating Web 

site content, we believe that the 

suggestion to translate Web site content 

in the top three languages spoken by the 

LEP population in the State is too 

burdensome. In addition, partly because 

of concerns raised about burden as well 

as our guiding principle of focusing on 

the demographics and anticipated 

language needs of the community being 

served using stable and reliable data, we 

are also not finalizing the standard 

discussed in the preamble to the 

proposed rule that would have required 

a uniform standard for written 

translations, taglines, and Web site 

content translations in the top 15 

languages spoken nationwide among the 

LEP population. 

We also believe it is important that 

LEP consumers in a given State are able 

to obtain the same minimum level of 

language access services from the 

Exchange, QHP issuers operating in the 

Exchange, and web-brokers operating in 

the State and therefore are applying a 

Web site content translation standard 

across these entities. However, we are 

providing web-brokers additional time 

to comply. Specifically, web-brokers 

will have until the first day of the 

individual market open enrollment 

period for the 2017 benefit year, or 

when such entity has been registered 

with the Exchange for at least 1 year, 

whichever is later. 

As noted above, regardless of whether 

an entity is required to translate Web 

site content into an applicable nonEnglish language under this provision, 

the entity’s English Web site content 

will always be required to display 

taglines in at least the top 15 nonEnglish languages spoken among the 

LEP population of the relevant State, 

consistent with § 155.205(c)(2)(iii) of 

this rule, so that a wider range of LEP 

individuals whose language does not 

meet the 10 percent threshold in 

§ 155.205(c)(2)(iv) may still obtain 

language access services through oral 

interpretation or written translations, as 

applicable. For example, if an entity is 

required to translate Web site content 

into Spanish because the Spanishspeaking LEP population in the 

applicable State reaches 10 percent of 

the State’s population, the entity’s 

English version Web site must still 

display taglines in the top 15 nonEnglish languages spoken by the LEP 

population of the relevant State. To 

facilitate compliance with this standard, 

beginning in early 2016, we plan to 

issue guidance that identifies the 

applicable languages and States meeting 

this threshold. 

We note that for an entity whose 

service area covers multiple States, if at 

least one language in one of the States 

it serves meets the 10 percent threshold 

in § 155.205(c)(2)(iv), then the 

applicable information on the entity’s 

Web site must be translated into that 

language. 

Comment: In regards to our 

solicitation for comment regarding the 

proposed implementation date for the 

150-language standard and other 

possible specific language access 

standards, a few commenters indicated 

that they were already meeting or 

exceeding the 150-language standard for 

their language line. Many commenters 

stated that to the extent additional 

requirements beyond telephonic 

interpreter services are required, 

additional time would be necessary. 

Response: With respect to the 

requirement to provide telephonic 

interpreter services in at least 150 

languages, Exchanges and QHP issuers 

will be required to comply with this 

requirement when this rule takes effect. 

Web-brokers will have until the later of 

November 1, 2015, the first day of the 

individual market open enrollment 

period for the 2016 benefit year, or 1 

year from the date the web-broker 

registers with the Exchange to comply 

with the requirement to provide 

telephonic interpreter services in at 

least 150 languages. For the 

requirements finalized for taglines and 

translation of Web site content, as stated 

in the regulation text, such standards 

will apply for Exchanges and QHP 

issuers no later than the first day of the 

open enrollment period in the 

individual market for the 2017 benefit 

year. To give web-brokers participating 

on an Exchange additional time, the 

specific requirements to provide 

taglines and translated Web site content 

will apply on the first day of the 

individual market open enrollment 

period for the 2017 benefit year, or 

when the web-broker has been 

registered with the Exchange for at least 

1 year, whichever date is later. 

Comment: Several commenters 

requested that we emphasize that the 

provisions set forth in § 155.205(c) do 

not limit or abrogate requirements under 

Title VI of the Civil Rights Act of 1964 

and section 1557 of the Affordable Care 

Act. 

Response: As we stated in the 

preamble of the proposed rule, we 

remind relevant covered entities of the 

obligations they may have under other 

Federal laws to meet existing effective 

communication requirements for 

individuals with disabilities and limited 

English proficiency. Such obligations 

are independent of the responsibilities 

these entities may have under 

§§ 155.205(c), 155.230(b), 156.200(e), 

and 156.250. 

b. Standards Applicable to Navigators 

and Non-Navigator Assistance 

Personnel Carrying Out Consumer 

Assistance Functions Under 

§§ 155.205(d) and (e) and 155.210 in a 

Federally-Facilitated Exchange and to 

Non-Navigator Assistance Personnel 

Funded Through an Exchange 

Establishment Grant (§ 155.215) 

To clarify that only a non-Navigator 

entity must maintain a physical 

presence in the Exchange service area, 

rather than each individual nonVerDate Sep<11>2014 17:26 Feb 26, 2015 Jkt 235001 PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 E:\FR\FM\27FER2.SGM 27FER2

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40See § 155.215(c) for a list of standards regarding 

the provision of culturally and linguistically 

appropriate standards which apply in an Exchange 

operated by HHS during the exercise of its authority 

under § 155.105(f) and to non-Navigator assistance 

personnel funded through an Exchange 

Establishment Grant under section 1311(a) of the 

Affordable Care Act. 

41 79 FR 30287 (May 27, 2014). 

Navigator associated with a nonNavigator entity, we proposed to amend 

§ 155.215(h) to limit the physical 

presence requirement specified under 

that section to non-Navigator entities. In 

the proposed rule, we explained that we 

believe that the amendment would 

strike an appropriate balance in 

allowing individuals providing nonNavigator assistance subject to § 155.215 

to provide assistance via the telephone, 

Internet, or through other remote means, 

particularly in circumstances in which 

remote assistance would be more 

effective or practical than face-to-face 

assistance, while also ensuring that the 

organization with which they are 

affiliated is in a position to understand 

and meet the specific needs of the 

communities they serve and to facilitate 

consumer protection efforts, as 

applicable, in their State. We added that 

if an individual non-Navigator is not 

affiliated with a larger entity, we would 

consider the individual to be the entity 

specified in the amended language 

under proposed § 155.215(h). We also 

proposed to add the title ‘‘Physical 

presence’’ to paragraph (h) for improved 

clarity. 

We are finalizing this clarification as 

proposed. 

Comment: The vast majority of 

commenters expressed support for this 

proposal, indicating that the proposed 

change would benefit consumers 

seeking remote assistance from 

individual non-Navigators who may not 

be physically present in the area served 

by the Exchange but who can 

nonetheless provide effective assistance 

to an individual through the use of 

technology tools. One commenter 

suggested that we require non-Navigator 

entities to ensure that at least half of 

their personnel serving a particular 

State conduct in-person assistance in 

the State. Another opposed the proposal 

on the grounds that it was too 

prescriptive because it would bar an 

otherwise well-suited organization from 

serving consumers in the State if the 

organization maintained no physical 

presence. 

Response: We agree with commenters 

that remote assistance is valuable, 

especially when a consumer is unable to 

meet in person with an individual nonNavigator. We believe that the 

requirement on the organization to 

maintain a physical presence in the 

State is a reasonable measure to 

facilitate a State’s consumer protection 

efforts and enhance the organization’s 

ability to provide culturally competent 

assistance 40 which, at the same time, 

does not preclude an organization’s 

ability to provide remote assistance to 

consumers.41 We also note that an 

organization that is well-suited to 

performing application and enrollment 

assistance but does not maintain a 

physical presence in the Exchange 

service area may be able to participate 

in the certified application counselor 

program because the Federal 

requirements governing this program do 

not include the requirement to maintain 

a physical presence. 

c. Ability of States To Permit Agents 

and Brokers To Assist Qualified 

Individuals, Qualified Employers, or 

Qualified Employees Enrolling in QHPs 

(§ 155.220) 

In § 155.20, we are amending the 

definition of enrollee in the SHOP to 

include individuals other than qualified 

employees. To conform to this 

amendment, we are finalizing a 

modification to § 155.220(i). For a 

discussion of this amendment, please 

see the preamble for § 155.20. 

d. Standards for HHS-Approved 

Vendors of Federally-Facilitated 

Exchange Training and Information 

Verification for Agents and Brokers 

(§ 155.222) 

In § 155.222, we proposed a process 

for HHS to approve vendors to offer 

training and information verification 

services as an additional avenue to the 

available HHS training, by which State 

licensed agents and brokers could 

complete the training requirements 

necessary to assist consumers seeking 

coverage through the FFEs. In 

§ 155.222(a), we proposed an 

application and approval process for 

vendors seeking recognition as HHSapproved vendors of FFE training and 

information verification for agents and 

brokers. As part of an approved training 

and information verification program, 

we proposed that the vendor must 

require agents and brokers to 

successfully complete identity proofing, 

provide identifying information, and 

successfully complete the required 

curriculum. Further, we proposed that 

no training program would be 

recognized unless it included an 

information verification component 

under which the vendor confirms the 

identity and applicable State licensure 

of the person who is credited with 

successful completion of the training 

program. We proposed that only HHSapproved vendors that meet the 

designated standards would have their 

programs recognized by HHS. We 

proposed that vendors be approved for 

one-year terms, and that vendors 

seeking to continue their recognition as 

HHS-approved vendors for FFE agent 

and broker training and information 

verification the following year be reapproved through a process to be 

determined by HHS. 

In paragraph (b), we proposed the 

standards that a vendor must meet to be 

approved by HHS to offer FFE training 

and information verification to agents 

and brokers. In paragraph (b)(1), we 

proposed that the vendor submit a 

complete and accurate application by 

the deadline established by HHS, which 

demonstrates prior experience with 

successfully conducting online training 

and identity proofing, as well as 

providing technical support to a large 

customer base. We proposed in 

paragraph (b)(2) that the vendor be 

required to adhere to HHS specifications 

for content, format, and delivery of 

training and information verification. 

HHS would require vendors to have 

their training approved for continuing 

education units accepted by State 

regulatory entities. In paragraph (b)(3) 

we proposed that vendors be required to 

collect, store, and share with HHS all 

data from agent and broker users of the 

vendor’s training and information 

verification in a manner specified by 

HHS, and protect the data in accordance 

with applicable privacy and security 

laws and regulations. In paragraph 

(b)(4), we proposed that the vendor be 

required to execute an agreement with 

HHS, in a form and manner to be 

determined by HHS, which requires the 

vendor to comply with HHS guidelines 

for interfacing with HHS data systems, 

the implementation of the training and 

information verification processes, and 

the use of all data collected. We also 

proposed to require vendors to adopt a 

fee structure that is consistent with the 

fee structure for comparable trainings 

offered by the vendor to comparable 

audiences. In paragraph (b)(5), we 

proposed that the vendor be required to 

permit any individual who holds a valid 

State license or equivalent State 

authority to sell health insurance 

products to access the vendor’s training 

and information verification process. 

In paragraph (c), we proposed that 

once HHS has completed the approval 

process for vendors for a given year, 

HHS would publish a list of approved 

entities on an HHS Web site. In 

paragraph (d), we proposed that HHS 

may monitor and audit approved 

vendors and their records related to the 


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FFE training and information 

verification functions to ensure the 

approved vendors’ ongoing compliance 

with the standards outlined in 

paragraph (b). We proposed that if HHS 

determines that the approved vendor is 

no longer in compliance with standards 

under paragraph (b), HHS may remove 

the vendor from the list described in 

paragraph (c), and may direct the 

vendor to cease performing the training 

and information verification functions 

described in this section. 

In paragraph (e), we proposed that 

such a vendor may appeal HHS’s 

decision by notifying HHS in writing 

within 15 days of receipt of the 

notification by HHS of not being 

approved or having its approval 

revoked, and submitting additional 

documentation demonstrating how the 

vendor meets the standards in 

paragraph (b) and (if applicable) the 

terms of their agreement with HHS. 

HHS will review the submitted 

documentation and make a final 

determination within 30 days from 

receipt of the submission of the 

additional documentation. 

We are finalizing these provisions as 

proposed, with the modifications 

detailed below. 

Comment: Most commenters generally 

supported the proposal to permit 

approved vendors to provide training 

and information verification to agents 

and brokers assisting consumers in the 

FFEs, so that agents and brokers would 

have more choice and greater 

opportunity to complete the required 

FFE training. Several commenters 

expressed concern that external vendors 

would not be able to provide training 

that is comprehensive, accurate, and 

without bias. These commenters urged 

HHS to provide standards for quality 

control and oversight. 

Response: We agree that expanding 

the available avenues for agents and 

brokers to fulfill the FFE training 

requirements will allow the FFEs to 

leverage the experience, contacts, and 

networks of approved vendors. To 

ensure that the training and information 

verification programs adhere to uniform 

standards for content, format, and 

delivery, under § 155.222(b)(2), HHSapproved vendors will be required to 

adhere to HHS specifications for 

content, format, and delivery of training 

and information verification. Vendors 

may choose to charge agents and brokers 

for their training; HHS will consider 

current training costs for State-licensed 

agents and brokers for comparable 

trainings to comparable audiences when 

reviewing vendor applications with 

proposed fee structures. 

After HHS launches 2016 plan year 

training, planned for the summer of the 

2015 calendar year, HHS intends to 

monitor vendor training programs and 

work with vendors to make sure that the 

FFE training content and delivery 

continues to meet HHS standards. HHS 

may audit approved vendors throughout 

the plan year in accordance with 

§ 155.222(d). HHS intends to issue 

future guidance regarding 

§ 155.222(b)(2) that will outline the 

training specifications for content and 

coverage . If a vendor’s training program 

fails to meet HHS standards after public 

release, HHS may revoke the vendor’s 

approval to offer FFE training, and 

would work with affected agents and 

brokers to ensure they have the required 

training. 

Comment: Several commenters had 

recommendations and requests for 

further clarification of requirements 

relating to the application and the 

agreement between HHS and vendors. 

One commenter requested clarification 

on what constitutes an enforcement 

action for purposes of the application 

and the agreement. One commenter 

asked about demonstrating experience 

with identity proofing, since most 

vendors offering training and continuing 

education programs do not conduct 

identity proofing in the same manner as 

HHS. 

Response: HHS intends to release the 

application form to become an HHS 

approved vendor of FFE training and 

information verification for the 2016 

plan year in the first quarter of 2015. 

HHS further intends to release guidance 

related to the application process in the 

first quarter of 2015 to help interested 

vendors better understand the 

application process. The vendor must 

submit the application by the deadline 

specified by HHS. We intend to issue 

guidance that will provide details on the 

timeline for the application process. We 

expect that vendors will be approved for 

one-year terms. 

In the preamble to paragraph (b)(1) 

(79 FR 70706), we explained that HHS 

would only approve vendors if no 

current or past regulatory, enforcement, 

or legal action has been taken by a State 

or Federal regulator against the entity in 

the 3 years prior to the application or 

renewal application deadline under this 

section. After careful consideration of 

the various events at the State and 

Federal level that may constitute an 

‘‘enforcement’’ action, we note that HHS 

will take into consideration 

justifications, corrective actions taken, 

or other mitigating or aggravating 

circumstances (for example, the 

financial impact of the violation, or the 

number of individuals affected by the 

violation) in evaluating whether a past 

or current violation would exclude a 

potential vendor from participation. 

Vendors whose applications are denied 

will have the opportunity to appeal 

HHS’s decision under § 155.222(e), and 

may submit additional documentation 

for HHS to consider about potential 

mitigating circumstances. 

To more accurately describe the 

information verification functionality 

that vendors must provide to agents and 

brokers, we are adding ‘‘proof of valid 

State licensure’’ in paragraph (a)(2). 

Because HHS expects vendors to 

demonstrate prior experience with 

verifying State licensure on the 

application, we are adding ‘‘verification 

of valid State license’’ in paragraph 

(b)(1)(i). In response to a comment that 

explained that organizations that 

currently conduct agent and broker 

training may not have experience with 

identity proofing, we are amending the 

requirement in paragraph (b)(1)(ii) so 

that vendors must demonstrate the 

ability to conduct identity proofing, but 

do not have to provide proof of prior 

experience. The goal of the information 

verification process is to confirm the 

State licensure and identity of agents 

and brokers who successfully complete 

FFE training before they are permitted 

by HHS to assist consumers with FFE 

eligibility determinations and QHP 

selections as an agent or broker. 

Therefore, vendors must demonstrate a 

current capability of verifying both the 

identity of the person completing the 

training, as well as his or her State 

licenses or equivalent State 

authorizations to sell health insurance 

products. 

Comment: Several commenters made 

suggestions for training content, and the 

format and frequency for exchanging 

training and information verification 

data with HHS. 

Response: All of the recommended 

training topics are currently part of the 

existing HHS FFE training for agents 

and brokers (for example, advance 

payments of the premium tax credit and 

cost-sharing reductions, and Medicaid 

and CHIP eligibility). Vendors approved 

to offer training in the future will be 

required to include those topics in the 

curriculum for their respective FFE 

training programs for agents and 

brokers. Based on the comments we 

received, we are adding language at 

paragraph (b)(3) to indicate that vendors 

must be able to share training and 

information verification data with HHS 

in a manner, format, and frequency 

specified by HHS. Specifically, we are 

adding ‘‘format, and frequency’’ to 

paragraph (b)(3) with respect to the 

collection, storage, and sharing of data 


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to further protect the personally 

identifiable information of agents and 

brokers, and aid HHS in the monitoring 

of vendors’ training and information 

verification programs. We anticipate 

issuing future technical guidance that 

will detail the manner, format, and 

frequency for the exchange of data 

under § 155.222(b)(3). 

Comment: In response to the 

solicitation of comments on what 

additional components a training 

program should include in order to 

qualify for HHS approval, some 

commenters requested that the training 

be applicable across States and that 

vendors be required to offer continuing 

education units (CEUs) in multiple 

States. Other commenters suggested that 

States should incorporate Federal 

materials in existing training and 

licensing programs to promote costeffectiveness and efficiency, and that 

HHS should eliminate the requirement 

that agents and brokers receive approval 

by an Exchange. One commenter 

suggested that States be able to become 

vendors. 

Response: HHS will require vendors 

to offer training that is applicable in all 

FFE States, consistent with the current 

HHS training. As noted in the preamble 

to the proposed rule (79 FR 70706), the 

establishment of standards for HHSapproved vendors of alternative training 

and information verification processes, 

we seek to make the FFE training and 

registration process easier for agents and 

brokers while also attracting greater 

agent and broker participation in the 

FFEs through the development of 

partnerships with vendors. After careful 

consideration of these comments, we 

have amended paragraph (b)(2) to 

require vendors to offer CEU credit for 

their training programs in at least five 

States in which an FFE is operating, 

effective for plan year 2016 training. 

Many businesses, trade associations, 

and States currently offer training that 

qualifies for CEUs, so we do not believe 

this requirement will be a significant 

burden for vendors. We believe five is 

a reasonable number of States in this 

initial year of the vendor-hosted FFE 

training and information verification 

alternative avenue, and we intend to 

monitor and evaluate whether this 

number should be modified in future 

years. States may apply to be recognized 

as HHS-approved vendors to offer FFE 

training and information verification to 

agents and brokers, and must comply 

with the same standards as other vendor 

applicants. HHS will continue to require 

the Exchanges, including FFEs, to enter 

into agreements with and register agents 

and brokers, as described in 

§ 155.220(d) and § 155.260(b). 

We are finalizing these provisions as 

proposed, with the following 

modifications. We are dividing 

proposed paragraph (a) into three 

paragraphs. To add description to the 

information verification functionality 

that vendors must provide to agents and 

brokers, we are adding ‘‘proof of valid 

licensure’’ in paragraph (a)(2), and also 

adding ‘‘verification of valid State 

license’’ to the new paragraph (b)(1)(i). 

We are adding paragraph (b)(1)(ii) to 

clarify that vendors must have the 

ability to host identity proofing, but do 

not need to demonstrate prior 

experience. In paragraph (b)(2), we are 

adding ‘‘offering continuing education 

units (CEUs) for at least five States in 

which an FFE is operating.’’ We are 

adding ‘‘format, and frequency’’ to 

paragraph (b)(3) with respect to the 

collection, storage, and sharing of data 

to further protect the personally 

identifiable information of agents and 

brokers, and aid HHS in the monitoring 

of vendors’ training and information 

verification programs. 

3. Exchange Functions in the Individual 

Market: Eligibility Determinations for 

Exchange Participation and Insurance 

Affordability Programs 

a. Annual Eligibility Redetermination 

(§ 155.335) 

In § 155.335, we proposed permitting 

Exchanges to implement alternative reenrollment hierarchies in future benefit 

years. We sought comment on a default 

re-enrollment hierarchy that consumers 

could opt into that would be triggered 

if the enrollee’s current plan’s premium 

increased from the prior year, or 

increased relative to the premium of 

other similar plans (such as plans of the 

same metal tier), by more than a 

threshold amount, such as 5 percent or 

10 percent. We also sought comment on 

whether SBMs should have the 

flexibility to implement alternative reenrollment hierarchies beginning with 

the 2016 open enrollment and whether 

to adopt any such alternatives in the 

FFE for 2017 open enrollment. 

In light of the comments discussed 

below, we are not finalizing our 

proposal to explore alternative reenrollment hierarchies for the FFE at 

this time. However our current rules 

permit Exchanges to implement 

alternative re-enrollment hierarchies 

under § 155.335(a)(2)(iii) based on a 

showing by the Exchange that the 

alternative procedures would facilitate 

continued enrollment in coverage for 

which the enrollee remains eligible, 

provide clear information about the 

process to the qualified individual or 

enrollee (including regarding any action 

by the qualified individual or enrollee 

necessary to obtain the most accurate 

redetermination of eligibility), and 

provide adequate program integrity 

protections, and we welcome efforts by 

SBEs to develop alternative hierarchies 

consistent with these standards that 

meet the needs of their consumers. 

Comment: We received many 

comments regarding the proposed 

alternative re-enrollment hierarchies. 

Commenters who opposed permitting 

alternative enrollment hierarchies, 

particularly those that prioritize lowpremium plans, noted that, in most 

cases, the plan a consumer chooses 

during open enrollment is one that the 

consumer has shopped for and has 

determined best meets his or her needs. 

Additionally, commenters highlighted 

that low-cost premiums do not 

necessarily lead to lower overall cost of 

coverage because deductibles, 

copayments, coinsurance, and out-ofpocket limits may be higher. 

In contrast, some commenters 

supported the proposal’s emphasis on 

low-cost premiums. One commenter 

believed that multiple re-enrollment 

hierarchies should be available to 

consumers, but cautioned that these 

options should be limited to two, and be 

easy to understand. 

Commenters had concerns that 

consumers may not realize that opting 

into a default enrollment hierarchy 

based on low-cost premiums may result 

in other significant changes to their 

coverage, as noted above. Commenters 

also requested that, if alternative 

hierarchies are implemented, consumers 

be made aware of the consequences of 

selecting this default re-enrollment 

option both at the time of initial 

enrollment when a person could opt 

into this and also prior to re-enrollment. 

Some commenters noted that the 

proposal may not keep consumers 

actively engaged in the process of reenrollment and making coverage 

choices. Commenters emphasized that, 

if alternative hierarchies are 

implemented, Exchanges must educate 

consumers at the time of enrollment 

about their choice and what it may 

mean for their future health coverage 

and costs. Commenters stressed that 

consumer notices should emphasize the 

benefit of returning to the Exchange 

during the open enrollment period to 

examine plan options and encouraged 

focus testing to determine messaging 

that best communicates the implications 

of opting into a re-enrollment hierarchy. 

We received a few alternative ideas 

for re-enrollment hierarchies, including 

basing re-enrollment on factors 

consumers identify as most important to 

them. One commenter recommended 


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permitting consumers to choose 

between a default re-enrollment 

hierarchy that prioritizes the consumer’s 

choice of plan, as the current policy 

does, versus prioritizing the consumer’s 

original choice of premium. The 

commenter believed that presenting 

these two hierarchy choices to 

consumers would greatly increase 

consumer understanding of the 

significance and consequences of 

selecting one hierarchy over the other. 

Another commenter suggested limiting 

the low-cost premium hierarchy option 

to only those consumers who are 

currently enrolled in the lowest-cost or 

second-lowest cost silver plan to target 

consumers who are most likely to notice 

a change in premium and make it 

administratively easier to implement. 

Finally, several commenters 

emphasized the need to continue to 

focus on the development of the current 

redetermination and re-enrollment 

process. Commenters noted 

improvements should be made to the 

technical ability to support automatic 

eligibility redeterminations, particularly 

those including determinations for 

advance payments of the premium tax 

credit and cost-sharing reductions. We 

received several comments 

recommending that HHS wait to 

implement any alternative hierarchies 

until the current enrollment hierarchies 

have operated for a few years and more 

information and lessons can be gleaned 

from the experience. In contrast, a few 

commenters, who supported the 

proposal, encouraged early adoption of 

the policy, and one commenter 

suggested that consumers would not 

want to wait to take advantage of this 

low-cost option. 

Response: We appreciate the many 

comments received regarding alternative 

re-enrollment hierarchies and are 

sensitive to the concerns raised by 

commenters. Consumers consider many 

factors when selecting health coverage 

in addition to the premium, including 

the provider network, cost-sharing, 

deductibles, and other factors which 

affect overall costs, continuity of care, 

and the consumer experience. At the 

same time, we continue to believe that 

default re-enrollment of consumers in 

the same plan (or a similar plan) may 

not best serve consumers’ interests in 

cases where the premium for their plan 

relative to available alternatives has 

changes substantially. Due to concerns 

expressed by commenters, we are not 

finalizing changes to the re-enrollment 

hierarchies. Instead, the existing reenrollment hierarchies will remain in 

place. In accordance with commenters’ 

suggestions, we may revisit alternative 

hierarchies as we learn more about 

consumer preferences and gain 

implementation experience. We will 

also work to continue to improve the 

current annual redetermination and 

renewal processes, including the 

concerns expressed by commenters for 

the need for greater consumer education 

and engagement efforts. As noted below, 

we encourage SBEs to consider 

alternative re-enrollment hierarchies. 

Comment: Most commenters, 

including those representing SBEs, 

supported the proposed flexibility for 

SBEs to implement alternative reenrollment hierarchies. Commenters 

saw this flexibility as a way to further 

test alternative hierarchies before they 

are implemented more widely, and also 

as a way to meet the unique 

characteristics of each Exchange. 

Additionally, one commenter expressed 

opposition to providing State flexibility 

by the 2016 benefit year out of concern 

that consumers would not have enough 

time to be properly educated about reenrollment by operation of the 

alternative hierarchy and because no 

precedent exists for reassigning a 

consumer to an entirely new set of 

coverage benefits. Finally, one 

commenter, who supported permitting 

State flexibility in this regard, did not 

believe HHS should permit States to 

prioritize issuer continuity. 

Response: SBEs play an important 

role in implementing policies and 

providing important feedback regarding 

their success and difficulties, 

particularly because each SBE has a 

unique consumer base and market. As 

noted above, under our current 

regulations, SBEs may gain approval 

from HHS to implement alternative 

default re-enrollment hierarchies. We 

encourage SBEs to consider alternative 

hierarchies and we will closely examine 

the results of any SBE actions in this 

area. 

Comment: We received a few 

comments requesting more information 

regarding how this proposal would 

impact stand-alone dental plans 

(SADPs). Several commenters noted that 

the process for re-enrolling in a SADP 

should be separate and independent 

from re-enrollment in a QHP. 

Response: Because we will not 

implement the proposed alternative reenrollment hierarchies at this time, we 

are not addressing how this policy 

would affect SADPs. However, we 

appreciate the comments raising this 

issue and, if the proposal is revisited in 

the future, we will address concerns 

regarding SADPs then. 

4. Exchange Functions in the Individual 

Market: Enrollment in Qualified Health 

Plans 

a. Enrollment of Qualified Individuals 

Into QHPs (§ 155.400) 

We proposed to amend § 155.400(e) to 

explicitly provide for an Exchange to 

establish a standard policy for setting 

deadlines for payment of the first 

month’s premium. 

For the FFEs, we proposed several 

possible payment deadlines tied to the 

coverage effective date for regular 

effective dates (meaning coverage 

effective the first day of the following 

month for plan selections made between 

the first and fifteenth of the month, and 

coverage effective the first day of the 

second month following a plan selection 

made between the 16th and the end of 

the month). Some options we 

considered included providing 

consumers until the coverage effective 

date, or the day before the coverage 

effective date, to make their first month 

premium payment. Alternatively, we 

considered providing consumers 

additional time after the coverage 

effective date to make their premium 

payment (5 days, 10 days, or 30 days 

after the coverage effective date). We 

sought comment on the period of time 

following the coverage effective date an 

issuer could be required or permitted to 

accept a first month’s premium payment 

for that coverage. 

With respect to effective dates other 

than regular effective dates, meaning 

retroactive or accelerated coverage 

effective dates resulting from enrollment 

under certain special enrollment 

periods (including birth and marriage), 

resulting from the resolution of appeals, 

or resulting from amounts newly due for 

prior coverage based on issuer 

corrections of under-billing, we 

considered a premium payment 

deadline of 10–15 business days from 

when the issuer receives the enrollment 

transaction. 

We sought comment on which 

proposed premium payment deadlines 

give issuers an acceptable amount of 

time to send an invoice and allow for 

timely payment by the consumer, and 

give consumers sufficient time to make 

the payment. We also sought comment 

on how such a policy would likely 

affect issuer operations and consumers’ 

ability to obtain coverage. 

We noted that because this 

rulemaking will likely not be finalized 

until after open enrollment for 2015, 

any such deadlines would not be 

applicable for that open enrollment 

period. 

We are finalizing the provisions 

proposed in § 155.400 of the proposed 


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rule, with the inclusion of premium 

payment deadline policies for the FFEs, 

selected from among the options 

described in the proposed rule. 

Specifically, we revised paragraph 

§ 155.400(e) to establish a standard 

policy for premium payment deadlines 

in the FFEs, while leaving other 

Exchanges the option of establishing 

such policies. We added § 155.400(e)(1) 

to establish a premium payment 

deadline policy for the first month’s 

premium payment for a first-time 

enrollment on an FFE or for an active or 

passive reenrollment in a plan within a 

new product or with a new issuer. 

In new § 155.400(e)(1)(i), we establish 

a policy for the FFEs that premium 

payment deadlines for the first month’s 

premium for a new enrollment must be 

no earlier than the coverage effective 

date, but no later than 30 calendar days 

from the coverage effective date in cases 

where coverage becomes effective with 

regular coverage effective dates, as 

provided for in § 155.410(f) and 

§ 155.420(b)(1). 

We also added § 155.400(e)(1)(ii) 

whereby the premium payment 

deadlines for the first month’s premium 

must be 30 calendar days from the date 

the issuer receives the enrollment 

transaction, in cases where coverage 

becomes effective under special 

effective dates, as provided for in 

§ 155.420(b)(2). 

Comment: We received several 

comments recommending that HHS give 

issuers flexibility surrounding payment 

deadlines, with the rationale that 

flexibility in the first year helped 

maximize enrollment by 

accommodating those who require 

additional time to make payment. 

Several commenters suggested giving 

consumers 30 days to make their first 

month’s premium payment, while a 

large number of commenters supported 

establishing a standard policy requiring 

consumers to make their first month’s 

premium payment prior to the effective 

date. Most concerns raised by 

commenters opposed allowing premium 

payments after the coverage effective 

date due to the uncertainty of payment 

for services provided after the coverage 

effective date if a premium is not paid 

and the enrollee is subsequently 

cancelled. 

Response: We recognize that 

decisions regarding payment of the first 

month’s premium have traditionally 

been business decisions made by 

issuers, subject to State rules. We 

believe that having some minimum 

standards could benefit issuers and 

consumers by ensuring a consistent 

operational procedure while still giving 

issuers flexibility. Within this context, 

we also sought to provide flexibility for 

SBEs to establish their own policies for 

premium payment deadlines. 

Accordingly, we are finalizing 

§ 155.400(e) to indicate that an 

Exchange may establish a standard 

policy for setting premium payment 

deadlines, and are establishing a policy 

for the FFEs, as described above. 

This policy gives issuers flexibility 

while allowing additional time for 

individuals who may have 

circumstances that would not otherwise 

provide standard timeframes for 

payment. 

Comment: Several commenters were 

confused about the additional language 

to allow first month’s premium 

payments after the coverage effective 

date, thinking that a person’s coverage 

could be effectuated prior to the person 

making their payment. Many providers 

and some issuers were opposed to 

allowing more individuals to appear to 

have effective coverage and then have 

the coverage not be effectuated due to 

non-payment of premium by the 

payment deadline, resulting in having to 

reverse claims for payment for services 

rendered during the time between the 

intended coverage effective date and the 

payment deadline. 

Response: Payment for first month’s 

premium is still required prior to 

coverage being effectuated. For the FFE, 

in cases where a person, consistent with 

an issuer’s payment policy, makes their 

premium payment after the coverage 

effective date, but before the premium 

payment deadline set by the issuer, the 

consumer would receive a retroactive 

effective date. Issuers may pend claims 

while waiting for the first month’s 

premium payment and either deny or 

reverse those claims based on whether 

the individual makes their first month’s 

payment by the premium payment 

deadline. We believe that it is better to 

allow payments, if the issuer chooses, 

after the coverage effective date. 

Comment: Several commenters 

supported a uniform payment deadline, 

but wanted clarification that SBEs can 

establish their own policy for premium 

payments. 

Response: While we believe that 

having uniform minimum standards for 

all issuers for payment of a first month’s 

premium to effectuate enrollments 

could benefit issuers and consumers by 

ensuring a consistent operational 

procedure while still giving issuers 

flexibility, our intent in the proposed 

rule was to let each Exchange decide 

whether to develop its own payment 

deadline policy for the first month’s 

premium. We are finalizing a revised 

§ 155.400(e) indicating an Exchange 

may establish a standard policy for 

setting premium payment deadlines, 

and establishing the FFEs premium 

payment deadline policy for the first 

month’s premium payment. 

Comment: Some commenters 

suggested that the if HHS implements a 

uniform policy for the first month’s 

premium payment deadlines, HHS 

should take into account consumers 

who have unusual circumstances (for 

example, when consumers are eligible 

for retroactive effective dates, an issuer 

fails to issue a bill in a timely manner, 

a consumer’s payment is misdirected by 

mail, etc.). 

We also received several comments 

suggesting that for irregular effective 

dates, the premium payment date 

should be 10–15 business days from 

when the consumer receives the invoice 

from the issuer, not when the issuer 

receives the enrollment transaction. 

Commenters suggested that this would 

create a level playing field for 

consumers since some issuers may take 

longer to process their enrollment 

transactions 

Response: In this final rule, we are 

adding § 155.400(e)(1)(ii), which 

accommodates consumers who are 

given an accelerated or retroactive 

effective date based, for example, on a 

change in circumstance. We want to 

give consumers with irregular effective 

dates sufficient time to pay the first 

month’s premium and we believe, based 

on comments received that suggested 

giving consumers with irregular 

effective dates more time to make their 

first month’s premium payment, 30 

calendar days is sufficient and reduces 

the complexity of accounting for 

weekends and holidays. We also 

recognize that issuers do not all have a 

mandated standard for timeliness of 

billing consumers, but we believe 

issuers want to collect the first month’s 

premium payment and have no 

intention to delay billing on their end. 

Furthermore, depending on the issuers 

and how the consumer elects to make 

payment, not all enrollees will be sent 

an invoice (for instance, in cases where 

a consumer is redirected by the FFE to 

the issuer’s Web site and pays the 

premium online), whereas the FFE will 

always send an enrollment transaction 

to the issuer when a consumer selects a 

plan. Therefore, we are finalizing this 

rule with a standard under which these 

individuals are given 30 calendar days 

from the date the issuer receives the 

enrollment transaction to make their 

first month’s premium payment. 

b. Annual Open Enrollment Period 

(§ 155.410) 

In § 155.410, we proposed to amend 

paragraph (e), which provides the dates 


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for the annual open enrollment period 

in which qualified individuals and 

enrollees may apply for or change 

coverage in a QHP. We proposed to 

restructure paragraph (e) by placing the 

current provision regarding the 2015 

benefit year in paragraph (e)(1) and the 

proposed requirement for all benefit 

years beginning on or after 2016 in 

paragraph (e)(2). Specifically, in 

paragraph (e)(2), we proposed that for 

benefit years beginning on or after 

January 1, 2016, the annual open 

enrollment period would begin on 

October 1 and extend through December 

15 of the calendar year preceding the 

benefit year. We also proposed to 

redesignate the annual open enrollment 

coverage effective date provisions in 

paragraphs (f) and (f)(1) through (3) as 

(f)(1) and (f)(1)(i) through (iii), and to 

add a new (f)(2), which would specify 

that, for enrollments made under any 

annual open enrollment periods for 

benefit years beginning on or after 

January 1, 2016, coverage would be 

effective on January 1 of the year 

following the open enrollment period. 

We are finalizing the provisions only 

with regard to the 2016 benefit year, 

with a modification. In response to 

comments, at § 155.410(e)(2), we are 

providing that for the benefit year 

beginning on January 1, 2016, the 

annual open enrollment period begins 

on November 1, 2015 and extends 

through January 31, 2016 (2 weeks 

earlier but the same length as the open 

enrollment period for the 2015 benefit 

year). Additionally, we have revised the 

proposed language at § 155.410(f)(2) and 

added three paragraphs to require that 

for the 2016 benefit year, the Exchange 

must ensure that coverage is effective 

January 1, 2016, for QHP selections 

received by the Exchange on or before 

December 15, 2015, February 1, 2016, 

for QHP selections received by the 

Exchange from December 16, 2015, 

through January 15, 2016, or March 1, 

2016, for QHP selections received by the 

Exchange from January 16, 2016, 

through January 31, 2016. 

Comment: We received a variety of 

comments regarding our proposal to set 

the annual open enrollment period for 

benefit year 2016 and beyond. A large 

portion of comments focused on the 

specific dates proposed for the annual 

open enrollment period. Several 

commenters noted their support for 

establishing a standard annual open 

enrollment period to promote 

consistency from year to year. 

Commenters also supported annual 

open enrollment dates that overlap with 

Medicare’s annual open enrollment 

period as well as the annual open 

enrollment period for much employersponsored coverage, which commenters 

believed would ensure a smoother 

transition for consumers moving 

between the group and individual 

markets. One commenter supported the 

proposed timeframe and noted that 

starting the Exchange annual open 

enrollment period 2 weeks before 

Medicare’s annual open enrollment 

period may reduce stress on resources, 

particularly customer service call 

centers, agents, brokers, and other 

consumer resources that are frequently 

relied on during open enrollment 

periods. 

A few commenters supported 

establishing the annual open enrollment 

period during the last quarter of the 

calendar year, but recommended slight 

variations on the proposed timeframe. 

For example, one commenter 

recommended the annual open 

enrollment period run November 1 

through December 15, suggesting that a 

longer enrollment period does not lead 

to better consumer decisions and that 

issuers may benefit from a later start to 

the annual open enrollment period. 

Another commenter indicated that 

ending the enrollment period on 

December 15 was too late to 

accommodate the operational steps 

necessary to ensure a universal January 

1 coverage effective date, particularly 

given the complexity associated with 

managing active selections, automatic 

renewals, and other changes. The 

commenter suggested ending the 

enrollment period on November 30 to 

give more time to issuers and Exchanges 

to handle renewals. A few commenters 

recommended aligning with Medicare’s 

annual open enrollment period, October 

15 through December 7. In contrast, a 

few commenters requested that HHS 

extend the proposed annual open 

enrollment period to the end of January 

to capture additional consumers. Of 

particular concern for these commenters 

were consumers who are auto-renewed 

into a new plan and will not have an 

opportunity to use the plan before the 

end of the annual open enrollment 

period, following which they could be 

unable to shop for coverage, absent a 

special enrollment period (SEP). 

Finally, a few commenters 

representing State-based Exchanges 

(SBEs) and health insurance issuers 

shared concerns that shifting the annual 

open enrollment period to October 

would significantly strain timelines for 

product development, rate setting, 

product filing, and review. These groups 

questioned whether notices, regulations, 

and templates would be completed by 

HHS in time for issuers and States to 

fulfill their obligations prior to annual 

open enrollment. Commenters noted 

that starting the annual open enrollment 

period earlier would increase 

administrative burden and constrain 

resources and requested giving States 

and issuers additional time to prepare. 

Response: We agree that establishing 

a consistent timeframe for annual open 

enrollment will help reduce consumer 

confusion, and administrative 

complexity. However, we understand 

that beginning annual open enrollment 

more than a month earlier for 2016 than 

for 2015 requires significant advanced 

planning and preparation by Exchanges, 

State regulatory authorities, issuers, and 

assisters. We were persuaded by the 

concerns expressed by many 

commenters about the additional 

burden caused by shifting the annual 

open enrollment period, and therefore 

we are finalizing an annual open 

enrollment period for the 2016 benefit 

year that begins 1 month later than the 

one we had proposed, and that will run 

from November 1, 2015 through January 

31, 2016. We anticipate that this 

timeframe will ease the burden on State 

regulatory authorities, Exchanges, and 

issuers while giving HHS the time to 

conduct a thorough certification 

process. Additionally, the finalized 

timeframe will permit additional time 

for consumers following the winter 

holidays to complete plan selection or 

to select a different plan if they do not 

like the plan into which they were autoenrolled. Finally, the finalized 

timeframe will continue to partially 

overlap with Medicare annual open 

enrollment and most employer 

offerings, which will benefit consumers 

by creating smooth transitions between 

coverage and create process efficiencies 

for issuers handling enrollments and reenrollments during the same period. 

Comment: Many commenters focused 

on the length of the proposed annual 

open enrollment period. Several 

commenters supported establishing a 

shorter annual open enrollment period. 

However, a few commenters considered 

the proposed annual open enrollment 

period too short to provide consumers 

sufficient time to research coverage 

options and seek help from assisters. 

These commenters noted that 

consumers are still becoming familiar 

with Exchange-based coverage and that 

the length of the proposed open 

enrollment period will be a barrier to 

obtaining insurance. Similarly, many 

commenters requested that consumers 

have the opportunity to preview and 

compare plans starting on September 15 

of each year, even if they are unable to 

enroll, to provide additional time for 

consumers to review and compare plans 

to make informed decisions. One 

commenter recommended that plans be 


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made available as soon as they are 

certified so that consumers, assisters, 

non-profit organizations, and 

researchers can review the plan options 

available. 

Response: Recognizing that 

consumers, issuers, State regulatory 

authorities, and Exchanges may still be 

acclimating to the annual open 

enrollment process, we are finalizing 

the provisions with modification to set 

the annual open enrollment period for 

the 2016 benefit year to run from 

November 1, 2015 through January 31, 

2016. We will take these 

recommendations under advisement as 

we consider options for the 2017 annual 

open enrollment period and beyond. 

Comment: Several commenters 

recommended establishing the annual 

open enrollment period so that it either 

overlaps or aligns with tax filing season. 

In support of this idea, commenters 

noted that consumer financial liquidity 

is lowest during the months of 

November and December whereas many 

consumers receive tax refunds 

beginning in late January through April, 

which could encourage consumers to 

enroll in coverage. Commenters also 

noted that incurring a fee at tax filing for 

not being enrolled in coverage could 

create an opportune moment to 

encourage enrollment. One commenter 

maintained that aligning annual open 

enrollment with tax filing would 

alleviate private-sector administrative 

burdens because open enrollment 

periods for Medicare, employer plans, 

and the Exchange will then not all 

overlap, increasing the workload on 

issuers and agents and brokers. Finally, 

commenters noted that tax filing 

provides the best possible income 

information for consumers to increase 

accuracy of eligibility determinations, 

minimize repayments, and strengthen 

program integrity. 

Response: We appreciate the concerns 

that commenters raised. As noted above, 

for the 2016 benefit year, we are 

finalizing the provisions with 

modification to set the annual open 

enrollment period for the 2016 benefit 

year to run from November 1, 2015 

through January 31, 2016. We note that 

there are several SEPs that provide an 

opportunity to enroll in coverage midyear if a qualifying event occurs. In 

addition, there are several exemptions 

available to consumers, including 

hardship-based exemptions, which will 

help prevent a consumer from being 

assessed a fee, and may be claimed on 

a consumer’s Federal income tax return. 

Although commenters saw overlapping 

annual open enrollment with Medicare 

and employer offerings as burdensome, 

we maintain that this overlap 

maximizes process efficiencies for 

issuers and streamlines transitions 

between different forms of coverage for 

consumers. 

Aligning more closely with the 

calendar year permits consumers to plan 

financially on a calendar year basis. We 

also note that consumers who qualify 

for financial assistance can immediately 

receive it with their premium upon 

enrollment, and consumers also may be 

given additional time in which to pay 

their initial premium, pursuant to the 

amendment to § 155.400(e) described in 

section III.E.4.a of this final rule, both of 

which should help alleviate low 

consumer financial liquidity. 

Comment: A few commenters 

representing SBEs requested that SBEs 

be permitted to set their own annual 

open enrollment period and maintain 

their own QHP filing timing. 

Response: Section 1311(c)(6)(B) of the 

Affordable Care Act specifically directs 

the Secretary to provide for annual open 

enrollment periods, as determined by 

the Secretary for calendar years after the 

initial open enrollment period. We have 

determined that permitting multiple 

annual open enrollment periods that 

differ by State will be confusing for 

consumers and create additional 

burdens on issuers to meet variable 

deadlines for QHP certification, recertification, and rate-setting. Therefore, 

we are finalizing this rule with a 

uniform annual open enrollment period 

across all Exchanges for the 2016 benefit 

year. 

Comment: One commenter requested 

that when the end of annual open 

enrollment falls on a weekend (Saturday 

or Sunday) or a Federal holiday, it 

should extend to the next business day. 

Response: While we understand the 

concern raised by this comment, we 

believe the value of establishing set 

dates for the annual open enrollment 

period outweigh it. We anticipate that it 

will be easiest for all stakeholders, 

particularly consumers, to remember 

and implement annual open enrollment 

processes based on a standard set of 

dates from year to year. 

Comment: One commenter requested 

that HHS commit to publishing more 

enrollment data and analyze it to 

maximize enrollment. 

Response: HHS has published weekly 

enrollment reports for the 37 States 

using HealthCare.gov during the 2015 

annual open enrollment period. We 

intend to continue to gather and analyze 

information to improve our processes 

over the course of future annual open 

enrollment periods. 

c. Special Enrollment Periods 

(§ 155.420) 

In § 155.420, we proposed certain 

provisions relating to special enrollment 

periods. We proposed to revise 

paragraphs (b)(2)(i), (b)(2)(ii), (b)(2)(iv), 

and add paragraphs (b)(2)(v), (b)(2)(vi), 

and (b)(2)(vii), which pertain to effective 

dates for special enrollment periods; to 

amend paragraphs (c)(2)(i) and (c)(2)(ii), 

which pertain to availability and length 

of special enrollment periods, and to 

revise paragraphs (d)(1)(ii), (d)(1)(v), 

(d)(2), (d)(4), and remove paragraph 

(d)(10), which pertain to specific types 

of special enrollment periods. We also 

proposed to delete the option for 

consumers to choose a coverage 

effective date of the first of the month 

following the birth, adoption, placement 

for adoption or placement in foster care 

and to permit the Exchange to allow a 

qualified individual or enrollee to elect 

a regular coverage effective date in 

accordance with paragraph (b)(1) of this 

section. 

We proposed to amend paragraph 

(b)(2)(iv) to allow persons who make a 

permanent move as described in 

paragraph (d)(7) to have a coverage 

effective date of the first day of the 

month following the move if plan 

selection is made before or on the day 

of the loss of coverage and, effective 

January 1, 2016, allow consumers 

advanced access to the special 

enrollment period where a qualified 

individual or enrollee, or his or her 

dependent, gains access to new QHPs 

due to a permanent move under 

paragraph (d)(7). 

In addition, we proposed to add new 

paragraphs (b)(2)(v) and (b)(2)(vi), 

which pertain to effective dates for 

coverage that must be obtained under 

court orders, including child support 

orders, and the death of an enrollee or 

his or her dependent. In paragraph 

(b)(2)(v), we proposed to require an 

Exchange to make coverage effective the 

first day the court order is effective to 

minimize any gap in coverage the 

individual may experience and allow 

Exchanges to provide consumers with a 

choice for regular effective dates under 

paragraph (b)(1). In paragraph (b)(2)(vi), 

we proposed to require that an 

Exchange ensure coverage is effective 

the first day of the month following a 

death of the enrollee or his or her 

dependent, and at the option of the 

Exchange and the consumer, allow for 

regular effective dates under paragraph 

(b)(1) of this section. 

We proposed to combine paragraphs 

(c)(2)(i) and (c)(2)(ii) to a new paragraph 

(c)(2) to simplify the regulatory text. In 

addition, we proposed to allow 


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consumers to report a permanent move 

60 days in advance of the move for the 

purposes of receiving special enrollment 

period to reduce the likelihood of a gap 

in coverage. We proposed that this 

change would take effect on January 1, 

2016. 

We proposed to amend paragraph 

(d)(1)(ii) so that this special enrollment 

period is available for a qualified 

individual or his or her dependent who, 

in any year, has coverage under a group 

health plan or an individual plan with 

a plan or policy year that is not offered 

on a calendar year basis. We proposed 

to add paragraph (d)(2)(i) to include 

situations where a court order requires 

a qualified individual to cover a 

dependent or other person. We also 

proposed to add paragraph (d)(2)(ii) to 

allow enrollees who experience a loss of 

a dependent or lose dependent status 

through legal separation, divorce, or 

death to be determined eligible for a 

special enrollment period. We proposed 

to amend paragraph (d)(4), to include 

situations where a non-Exchange entity 

is providing enrollment assistance. 

Concurrently, we proposed to strike 

paragraph (d)(10) which provides a 

separate special enrollment period for 

non-Exchange entity misconduct. 

We proposed to add paragraph 

(d)(6)(iv) to create a special enrollment 

period for a qualified individual in a 

non-Medicaid expansion State who was 

previously ineligible for advance 

payments of the premium tax credit 

solely because the qualified individual 

had a household income below 100 

percent of the FPL, who was ineligible 

for Medicaid during that same 

timeframe, and experienced a change in 

household income that made the 

individual newly eligible for advance 

payments of the premium tax credit. 

We also sought comments on other 

situations that may warrant a special 

enrollment period, particularly 

situations specific to the initial years in 

which consumers have an opportunity 

to purchase coverage through an 

Exchange. 

We are finalizing paragraph (b)(2)(i) 

with a minor modification. Specifically, 

we are retaining the option of the 

Exchange to allow consumers to elect a 

coverage effective date of the first of the 

month following a birth, adoption, 

placement for adoption, or placement in 

foster care or on the date of the birth, 

adoption, placement for adoption, or 

placement in foster care. These options 

are in addition to the option for regular 

effective dates in paragraph (b)(1) of this 

section as proposed. We are amending 

paragraph (b)(2)(iv) to allow these 

persons to have a coverage effective date 

of the first day of the month following 

the move if plan selection is made 

before or on the day of the move. We are 

adding paragraph (b)(2)(v) to make 

coverage effective the first day of the 

court order and to allow Exchanges to 

provide consumers with a choice for a 

regular effective date, in accordance 

with paragraph (b)(1). We are adding 

paragraph (b)(2)(vi) to require 

Exchanges to ensure coverage is 

effective the first day of the month 

following the date of plan selection due 

to a death of the enrollee or his or her 

dependent and to allow Exchanges to 

provide consumer with a choice for a 

regular effective date, as specified in 

paragraph (b)(1). The proposed 

paragraph (b)(2)(vi) incorrectly 

referenced paragraph (d)(2)(iv), which 

was changed to correctly reference 

paragraph (d)(2)(ii) for loss of a 

dependent or dependent status. 

Additionally, we corrected paragraph 

(b)(2)(vi) to state that coverage will be 

effective following the date of plan 

selection, instead of following the date 

of death. 

We are combining paragraphs (c)(2)(i) 

and (c)(2)(ii) to a new paragraph (c)(2), 

and, in paragraph (c)(2), we are also 

adding a reference in this paragraph to 

individuals who receive a special 

enrollment period under paragraph 

(d)(7) to allow these consumers to report 

a permanent move 60 days in advance 

of the move for the purposes of 

receiving a special enrollment period to 

reduce the likelihood of a gap in 

coverage. After consideration of 

comments received, persons who are 

eligible for a special enrollment period 

under paragraph (d)(7) will be able to 

exercise this flexibility effective January 

1, 2017, or earlier at the option of the 

Exchange. In paragraph (c)(3), we are 

removing reference to paragraph (d)(10), 

which is now included in paragraph 

(d)(4). 

As proposed, in paragraph (d)(1)(ii), 

we are deleting the expiration date of 

2014 for non-calendar year health 

insurance policies. We are adding 

paragraph (d)(2)(i), which includes 

when a qualified individual gains a 

dependent or becomes a dependent 

through marriage, birth, adoption, 

placement for adoption, placement in 

foster care, or through a child support 

or other court order. At the option of the 

Exchange, we are adding paragraph 

(d)(2)(ii) for where an enrollee loses a 

dependent or is no longer considered a 

dependent through divorce or legal 

separation, as defined by State law. 

Paragraph (d)(4) is amended to include 

situations where a non-Exchange entity 

is providing enrollment assistance. 

Concurrently, we proposed to strike 

paragraph (d)(10) which provides a 

separate special enrollment period for 

non-Exchange entity misconduct. We 

are adding paragraph (d)(6)(iv) to 

include qualified individuals in nonMedicaid expansion States who were 

previously ineligible for advance 

payments of premium tax credits solely 

because the individual had household 

income under 100 percent of the FPL, 

who was ineligible for Medicaid during 

that same timeframe, and experiences a 

change in household income to become 

eligible for advance payments of the 

premium tax credit. 

Comment: Commenters were divided 

in their responses to the proposed 

changes to coverage effective dates for 

special enrollment periods resulting 

from birth, adoption, placement for 

adoption, and placement in foster care, 

as proposed in paragraph (b)(2)(i) of this 

section. Some commenters expressed 

concern about the potential gap in 

coverage if a parent were to elect a 

prospective coverage effective date for 

the child, while others expressed 

concern regarding our proposal to 

remove the option for coverage to be 

effective the first day of the month 

following the triggering event. We also 

received comments in support of our 

proposal to increase flexibility for 

electing a coverage effective date that 

best fits the family’s needs. 

Response: Current regulations require 

Exchanges to ensure coverage is 

effective retroactive to the date of birth, 

adoption, placement for adoption, or 

placement in foster care and allow 

Exchanges the option to provide 

prospective coverage effective dates to 

the first of the month following the 

triggering event. We agree with 

commenters emphasizing the 

importance of coverage effective dates 

that best fit the needs of a family. 

Accordingly, we are finalizing the 

addition of a new option for coverage to 

be effective following regular effective 

dates, as proposed, and are not 

removing the option for coverage to be 

effective the first of the month following 

a birth, adoption, placement for 

adoption, or placement in foster care. If 

the Exchange allows for prospective 

coverage effective dates, it would be at 

the option of the consumer to elect this 

date or to elect the retroactive coverage 

effective date back to the date of birth, 

adoption, placement for adoption, or 

placement in foster care. 

Comment: Several commenters urged 

HHS to clarify the proposed changes to 

the special enrollment period for a 

permanent move, including specifying 

that consumers must submit proof of a 

change of address and providing 

clarification that changes to the special 

enrollment period for a permanent move 


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includes individuals who are being 

released from incarceration. There was 

also a request to amend the proposed 

implementation effective date for this 

special enrollment period, which was 

set for January 1, 2016. 

Response: Exchanges must verify 

residency information as outlined in 

§ 155.315(d) to make an eligibility 

determination, which includes a 

determination of eligibility for 

enrollment periods, per § 155.305(b). As 

noted in the preamble to Exchange 

Establishment Rule, 77 FR 18310 

(March 27, 2012), qualified individuals 

newly released from incarceration are 

eligible for the special enrollment 

period afforded to individuals who gain 

access to a new qualified health plan as 

a result of a permanent move. Therefore, 

under the rule being finalized, 

incarcerated individuals would be able 

to report a permanent move up to 60 

days in advance of their release from 

incarceration, once a formal release date 

has been set. Recognizing that 

Exchanges may need more time than 

previously afforded in the proposed rule 

to implement this special enrollment 

period, it will be effective January 1, 

2017. Exchanges are encouraged to 

implement as soon as possible. 

Comment: Several commenters 

requested HHS provide authority for 

additional triggering events for special 

enrollment periods. Some commenters 

requested that pregnancy trigger a 

special enrollment period, so that 

women who are either not enrolled or 

are enrolled in a catastrophic plan can 

select and enroll in or change qualified 

health plan coverage prior to the birth 

of a newborn. Other commenters 

requested that, when an individual 

reports that he or she is a victim of 

domestic abuse, it triggers a special 

enrollment period, so that he or she may 

select and enroll in a qualified health 

plan on a separate application from his 

or her abuser, along with any 

dependents. 

Response: We are not finalizing 

additional triggering events based on 

life changes at this time. Specifically, 

flexibility afforded under 

§ 155.420(d)(9) allows the Secretary to 

provide for additional special 

enrollment periods in the case of 

exceptional circumstances, as 

determined appropriate, and HHS will 

continue to exercise that authority 

through sub regulatory guidance. 

Furthermore, a State may establish 

additional special enrollment periods to 

supplement those described in this 

section as long as they are more 

consumer protective than those 

contained in this section and otherwise 

comply with applicable laws and 

regulations. 

Comment: We received comments 

both in support of, and opposed to, 

changes to coverage effective dates for 

the newly proposed special enrollment 

period for court orders, including a 

child support order at § 155.420(b)(2)(v). 

Some commenters supported increased 

flexibility for consumers to elect a 

retroactive coverage effective date back 

to the day of the court order, while other 

commenters requested that changes 

always be made effective the first of the 

month following the court order. 

Response: Based on comments 

received, we believe that it is most 

consistent to treat consumers who gain 

a dependent, regardless of the means, in 

an equitable manner. In addition, a 

court order may be effective in the 

middle of a month and requiring the 

individual to wait until the first of the 

following month to enroll in coverage 

may violate State law. Accordingly, we 

are finalizing the rule as proposed 

whereby the effective date for the 

special enrollment period for a court 

order will be effective in accordance 

with paragraph (b)(2)(i) of this section. 

Comment: We received comments 

that requested changes to coverage 

effective dates for the newly proposed 

special enrollment period for losing a 

dependent as a result of death at 

§ 155.420(b)(2)(vi). Some commenters 

requested coverage be effective 

retroactive to the date of death, others 

supported the proposed regulatory text 

to provide coverage effective the first 

day of the month following the death, 

while other commenters requested that 

HHS limit the number of situations 

which will allow for retroactivity. Some 

commenters also requested that all 

family members, regardless of whether 

they are part of the enrollment group or 

are enrolled in a qualified health plan 

through the Exchange, receive a special 

enrollment period. Another commenter 

requested that no special enrollment 

period be given for death as other 

special enrollment periods likely apply. 

Response: In response to comments, 

we believe it makes sense to limit the 

number of situations that will allow for 

retroactivity, we have modified the 

proposed regulatory text to finalize the 

coverage effective date as the first day 

of the month following the date of plan 

selection, rather than the date of death. 

Providing a coverage effective date of 

the first of the month following the date 

of death would give the consumer 

retroactivity if they are reporting the 

death late in the special enrollment 

period window. We believe this 

balances the need to provide 

dependents of the deceased a special 

enrollment period, while addressing 

requests from commenters to limit the 

middle of the month and retroactive 

coverage effective dates. In addition, we 

encourage issuers to maintain qualified 

health plan coverage for remaining 

members of the enrollment group 

through the end of the month. The 

special enrollment period as a result of 

a death is intended for remaining 

enrollees on an application whose 

health insurance coverage is impacted 

due to the death; therefore, only the 

affected members will be provided a 

special enrollment period. As noted by 

commenters, non-enrollees may be 

determined eligible for other special 

enrollment periods including that for 

loss of coverage. 

Comment: Commenters supported the 

proposed language which provided for a 

special enrollment period for 

individuals enrolled in non-calendar 

year group health plans or individual 

health insurance coverage. One 

commenter requested clarification that 

this would also apply to group health 

plans outside of the Exchange. 

Response: We are finalizing this 

policy as proposed. We note that, as 

specified in the proposed rule, this 

policy provides a special enrollment 

period inside the Exchange for 

individuals whose coverage in group 

health plans and individual market 

plans offered outside of the Exchange is 

expiring, including grandfathered and 

transitional plans. Under § 147.104, this 

special enrollment period also applies 

to individuals who seek to enroll in 

individual market coverage off the 

Exchange. 

Comment: Commenters requested that 

HHS provide additional clarification 

and flexibility for the special enrollment 

period for loss of a dependent or 

dependent status due to legal 

separation, divorce, or death. Comments 

included requests to extend this special 

enrollment period to individuals not 

currently enrolled in a qualified health 

plan, to include same sex couples who 

enter into a legally recognized 

relationship other than marriage, such 

as domestic partnerships and civil 

unions, and to provide Exchanges 

increased flexibility for implementation. 

Response: We believe the text 

provides flexibility for consumers to be 

determined eligible for the special 

enrollment period if the separation or 

termination of a civil union or domestic 

partnership is in accordance with State 

law. In addition, we note that 

consumers not currently enrolled in a 

qualified health plan who experience 

one of the life events described in this 

provision may be determined eligible 

for a special enrollment period in 


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accordance with existing special 

enrollment period provisions, 

specifically loss of coverage. 

Recognizing that Exchanges may need 

more time to implement the necessary 

functional IT changes, we are making 

paragraph (d)(2)(ii) effective January 1, 

2017. Exchanges are encouraged to 

implement the policy as soon as 

possible. 

Comment: Several commenters 

requested that the special enrollment 

period provided in paragraph (d)(8) of 

this section be extended to include the 

dependents of Indians to allow them to 

change enrollment in a qualified health 

plan once per month. 

Response: An Indian as provided 

under section 4(d) of the Indian SelfDetermination and Education 

Assistance Act (ISDEAA) and section 4 

of the Indian Health Care Improvement 

Act (IHCIA) is defined as an individual 

who is a member of an Indian tribe. 

Both ISDEAA and IHCIA have nearly 

identical language that refers to a 

number of Indian entities that are 

included in this definition on the basis 

that they are recognized as eligible for 

the special programs and services 

provide by the United States to Indians 

because of their status as Indians. As 

such, the statute specifically provides 

the special enrollment period defined in 

paragraph (d)(8) of this section as 

applying to the individual who is 

eligible for special programs and 

services because of their status as an 

Indian, and not their dependents. 

Comment: We received many 

comments in response to our proposal 

to extend a special enrollment period to 

individuals below 100 percent of the 

FPL in non-Medicaid expansion States 

that later become eligible for advance 

payments of the premium tax credit at 

§ 155.420(d)(6)(iv). A few commenters 

asked for HHS to clarify that an 

individual would be eligible for the 

special enrollment period if he or she 

experienced a change in household 

composition or size, in addition to a 

change in household income, and one 

commenter requested that change in 

household income required a change in 

percentage of the FPL. 

Response: We are finalizing this 

policy as proposed. We note that for 

purposes of determining eligibility for 

this special enrollment period, an 

individual’s percentage of the FPL is a 

function of household income, 

composition and size; therefore, 

individuals who gain eligibility because 

of a change in income or a change in 

household composition will be eligible 

for this special enrollment period. 

Comment: Several commenters 

requested that HHS include additional 

special enrollment periods pertaining to 

provider networks, specifically when a 

consumer enrolls in a qualified health 

plan with an inaccurate provider 

directory, enrolls in a plan which 

changes their health plan’s provider or 

pharmacy networks mid-year, or enrolls 

in a plan with no in-network providers 

within a 25 mile radius of the consumer. 

Response: We acknowledge the need 

for consumers to have access to correct 

information about their QHPs and 

participating providers and pharmacies, 

and have promulgated provisions 

pertaining to the maintenance and 

dissemination of provider and 

pharmacy directories in this rule. 

However, provider and pharmacy 

network participation changes 

frequently. Therefore, determining who 

would be eligible for the type of special 

enrollment period suggested by 

commenters would require that issuers 

report to the Exchange whenever 

provider and pharmacy network 

participation changes and that the 

Exchange notify consumers potentially 

impacted by such changes. As such, we 

are not making changes in response to 

these comments, and note that 

consumers may be determined eligible 

for the special enrollment period 

provided in paragraph (d)(5) of this 

section if an issuer substantially violates 

their contract with the enrollee. 

Comment: We received comments 

that requested the length of the special 

enrollment period for loss of coverage 

provided in paragraph (d)(1) of this 

section be shortened from 120 days to 

30 or 60 days, to reduce the 

administrative burden on the Exchange 

and issuer to enroll the consumer in 

retroactive coverage. 

Response: We note that the special 

enrollment period for loss of coverage, 

as provided in paragraph (c)(2) of this 

section, is 60 days. We clarify that, 

while an individual has 60 days before 

and after the loss of coverage to select 

a qualified health plan through the 

Marketplace, the coverage generally may 

not be effective until the first day of the 

month following the loss of coverage in 

accordance with paragraph (b)(2)(iv) of 

this section. Both the advanced 

availability of this special enrollment 

period and its duration are intended to 

minimize the likelihood that an 

individual will experience a significant 

gap in coverage. 

Comment: We received comments 

requesting that Exchanges provide 

health insurance companies with the 

specific reason for a special enrollment 

period so that the health insurance 

company may determine during the 

benefit year if a change to a policy is a 

result of a special enrollment period or 

a modification to an existing policy. 

Response: HHS has issued technical 

guidance, including the Standard 

Companion Guide Version 1.5 (issued 

March 22, 2013), which provides 

Exchanges with the information 

necessary to build the ability to send the 

reason for Special Enrollment Periods 

on the enrollment transaction. The FFEs 

also use a casework system to provide 

insurance companies with the type of 

special enrollment period being 

provided to a consumer. 

Comment: A commenter requested 

that HHS reduce the number of special 

enrollment periods other than 

qualifying life events. 

Response: We believe that the current 

special enrollment periods requirements 

appropriately account for changes in 

circumstances that necessitate when 

individuals would need to select a new 

or different qualified health plan and 

balance these needs with the 

administrative burdens of enrollment 

changes for issuers. 

Comment: A commenter requested 

that all special enrollment periods be 

available both through the Exchange, 

and individual and small group market 

plans. 

Response: We note that in accordance 

with § 147.104(b)(2) health insurance 

issuers in the individual market must 

provide a limited open enrollment 

period for the special enrollment 

periods provided in paragraph (d) of 

this section, with the exclusion of 

paragraphs (3), (8), and (9). 

Comment: We received general 

support for the proposed changes to 

include non-Exchange entities in the 

special enrollment period where 

enrollment or non-enrollment in a 

qualified health plan through the 

Marketplace is a result of the error of the 

Exchange. Commenters noted concern 

regarding the subjectivity of defining an 

error of the Exchange and requested 

CMS outline the specific scenarios 

which would warrant such a special 

enrollment period. 

Response: We believe the flexibility 

for Exchanges to determine when a 

special enrollment period is warranted 

due to an error of the Exchange protects 

consumers. HHS has issued guidance 

and will continue to issue guidance, as 

needed, related to how Exchanges 

define errors of the Exchange in 

accordance with paragraph (d)(4) of this 

section. 

Comment: We received a comment 

that HHS provide clarification that the 

existing special enrollment period 

available for loss of minimum essential 

coverage (MEC) at paragraph (d)(1)(i) 

should not be triggered when a 


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consumer’s policy ends at the end of the 

benefit year because guaranteed 

renewability prevents the consumer 

from losing their coverage. 

Response: We do not think the 

recommended clarification is necessary. 

The existing language in the final rule 

specifies that the date of the loss of 

coverage is the last day the consumer 

would have coverage under his or her 

previous plan is sufficient. We also note 

the availability of the special enrollment 

period in § 155.420(d)(1)(ii) for 

consumers in individual market plans 

with non-calendar year plan years. 

d. Termination of Exchange Enrollment 

or Coverage (§ 155.430) 

Under our current rules, 

§ 155.430(b)(1) requires an Exchange to 

permit an enrollee to terminate his or 

her coverage in a qualified health plan 

(QHP) following appropriate notice to 

the Exchange or the QHP. We proposed 

to amend this paragraph by adding a 

sentence to clarify that, to the extent the 

enrollee has the right to cancel the 

coverage under applicable State laws, 

including ‘‘free look’’ cancellation 

laws—that is, laws permitting 

cancellation within a certain period of 

time, even following effectuation of the 

enrollment, the enrollee may do so, in 

accordance with the requirements of 

such laws. Furthermore, we proposed to 

amend § 155.430(d)(2) to add a new 

paragraph (d)(2)(v) allowing a 

retroactive termination effective date 

when an enrollee initiates the 

termination, if specified by applicable 

State laws, such as ‘‘free look’’ 

provisions. 

Additionally, we proposed to amend 

§ 155.430(b)(1) by removing the 

language requiring the appropriate 

notice to the Exchange or QHP since the 

notice requirement is addressed in 

§ 155.430(d) and this would give greater 

flexibility for other enrollee initiated 

terminations where appropriate notice 

is not defined. 

We also proposed to explicitly state 

that the requirement for Exchanges to 

ensure appropriate actions are taken in 

connection with retroactive 

terminations, currently set forth in 

paragraph (d)(6) regarding special 

enrollment periods, applies to all 

retroactive terminations, including valid 

cancellations of coverage under a ‘‘free 

look’’ law. To do so, we proposed to 

move the applicable language to a new 

paragraph (d)(8). We also proposed to 

add reconciliation of Exchange user fees 

to the list of items Exchanges would 

need to address. Under that 

requirement, the Exchange will ensure 

that appropriate actions are taken to 

make necessary adjustments to advance 

payments of the premium tax credit, 

cost-sharing reductions, Exchange user 

fees, premiums, and claims, while 

adhering to any State law. We noted 

that, under our proposal, the enrollee 

would not become eligible to receive a 

special enrollment period as a direct 

result of the ‘‘free look’’ cancellation. 

We also proposed to add a new 

paragraph (b)(1)(iii) which would 

require Exchanges to establish processes 

for a third party to report the death of 

a consumer. 

We noted that we interpret marketwide guaranteed availability and 

renewability requirements to mean that 

a QHP offered through the Exchange 

must generally be available and 

renewable outside the Exchange. We 

proposed to make changes to Exchange 

regulations that could be construed to 

limit coverage in a QHP to coverage 

through the Exchange. For example, we 

proposed to amend Exchange 

regulations referencing ‘‘termination of 

coverage’’ so that they appropriately 

refer to termination of enrollment 

through the Exchange and not 

necessarily termination of the coverage 

altogether. 

We are finalizing the provisions 

proposed in § 155.430 of the proposed 

rule, with a minor modification. We are 

revising § 155.430(b)(1)(i) to specify that 

an enrollee has a right to terminate, and 

not just cancel coverage according to 

any applicable State law. Cancellation is 

a specific type of termination and, as 

further explained below, we want to 

accommodate State laws that provide 

for termination, not just cancellation. 

We also corrected a typographical error 

in § 155.430(b)(1)(iii). We also make 

conforming revisions to §§ 155.430, 

155.735, 156.270, 156.285 and 156.290 

of the Exchange and SHOP regulations 

to align them with our interpretation of 

the guaranteed availability and 

guaranteed renewability requirements, 

changing references to ‘‘coverage’’ to 

now also refer to ‘‘enrollment through 

the Exchange,’’ ‘‘enrollment through the 

SHOP,’’ or ‘‘enrollment,’’ as applicable. 

Comment: Commenters, mainly 

issuers, opposed allowing termination 

of coverage after the coverage effective 

date, citing an increase in 

administrative costs and a potential to 

create a less healthy risk pool; many 

consumer advocates and the NAIC 

supported the free-look proposal. Other 

commenters stated that HHS should not 

establish specific requirements related 

to free look periods, but should 

explicitly state that issuers should 

continue to adhere to existing State laws 

for Exchange enrollees. 

Response: Our intent in the proposed 

rule was to accommodate State laws that 

provided consumer protections such as 

‘‘free look’’ provisions, to give 

consumers in States with such laws the 

right to terminate coverage in 

accordance with those laws. Therefore, 

the intent of the regulation is to ensure 

that issuers adhere to existing State laws 

for Exchange enrollees, not to create 

new Federal laws. Thus, this change 

should not increase the burden on 

issuers. To make sure that we do not 

unintentionally limit the applicability of 

these types of laws, we are finalizing 

§ 155.430(b)(1)(i) to use the word 

‘‘terminate’’ in place of ‘‘cancel,’’ 

specifying that the enrollee has the right 

to terminate their coverage under any 

applicable State laws. 

Comment: Some commenters were 

concerned with the cost and burden of 

correcting financial information for 

retroactive terminations, and the 

uncertainty of payment for services as a 

result of retroactive terminations. 

Response: We acknowledge that 

retroactive terminations may cause 

some administrative burden for 

correcting financial information. 

However, there are scenarios that 

currently exist in the Exchange that 

result in retroactive terminations. 

Furthermore, it remains necessary that 

the enrollment group pay the correct 

amounts for a given policy as already 

codified in § 155.430(d)(6). We note 

issuers and providers should continue 

to follow existing policies when dealing 

with retroactive terminations. Therefore, 

we are finalizing § 155.430(d)(8) to 

ensure that appropriate actions are 

taken to make necessary adjustments to 

advance payments of the premium tax 

credit, cost-sharing reductions, 

Exchange user fees, premiums, and 

claims, while to adhering to State law. 

Comment: We received several 

comments urging that an SEP be given 

to consumers who exercise their freelook provision outside of open 

enrollment. These commenters 

suggested that the unavailability of an 

SEP significantly undercuts the value of 

the free-look provision. 

Response: Granting an SEP for an 

individual exercising a retroactive 

termination under State law could result 

in multiple successive enrollments and 

terminations pursuant to a free look law, 

which we believe would create 

unwarranted burden on issuers and 

providers. 

Comment: Several commenters asked 

us to clarify that the protection outlined 

in § 155.430 applies in States with ‘‘free 

look laws.’’ One commenter 

recommended that the protection apply 

more widely, including for States that 

have policies related to termination of 

coverage, like ‘‘free look provisions,’’ 


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that may not be law but that are 

otherwise enforceable by the State. 

Another commenter expressed concern 

on deferring to State laws because of the 

resulting variance in applicable 

standards. The commenter 

recommended establishing Federal 

standards and allowing States the 

option to establish more protective 

standards. 

Response: Our intent was to clarify 

that consumers in States with such laws 

have the right to terminate coverage in 

accordance with those laws. We do not 

intend to create Federal standards that 

give consumers additional reasons to 

terminate coverage. For States that have 

policies related to termination of 

coverage, like ‘‘free look provisions,’’ 

that may not be law but that are 

otherwise enforceable by the State, 

issuers must adhere to such policy as 

enforced by the State. Accordingly, we 

are finalizing § 155.430(b)(1)(i) to 

specify that the enrollee has the right to 

terminate their coverage under 

applicable State laws. 

Comment: We received a comment 

recommending that HHS reflect 

retroactive termination dates on 834s 

and include termination reason codes. 

Response: The 834s currently include 

the effective date of the termination as 

well as a high-level maintenance reason 

(INS04) and an additional maintenance 

reason indicating that the transaction is 

a termination or cancellation. We are 

working on future functionality to 

indicate more specific additional 

maintenance reasons for terminations 

and cancellations. 

Comment: Commenters generally 

supported the proposed provisions that 

require Exchanges to establish a process 

for a third party to report the death of 

a qualified health plan enrollee. One 

commenter requested clarification 

regarding whether the report of death 

may be made to the issuer or the 

Exchange. 

Response: We are finalizing this 

provision as proposed, and clarify that 

Exchanges have flexibility to establish a 

process for reporting the death of an 

enrollee. For instance, in the Federallyfacilitated Exchange, the reporting of a 

death of an enrollee is initiated with the 

Exchange. 

Comment: One commenter requested 

that an individual’s agent or broker be 

able to report their client’s death to the 

Exchange to initiate a termination of 

their coverage. 

Response: An individual’s agent or 

broker may report their client’s death to 

the Exchange in accordance with the 

process established by the Exchange. 

Depending on the Exchange-specific 

procedures, the agent or broker may be 

required to submit documentation 

proving the death of the individual. 

Comment: We received several 

comments on our proposal to conform 

the Exchange regulations with our 

interpretation of the guaranteed 

availability and renewability 

requirements. Many commenters 

supported the proposal. One commenter 

was concerned about Exchanges’ ability 

to distinguish circumstances warranting 

termination of Exchange enrollment 

from circumstances warranting full 

termination of coverage. Another 

commenter was concerned about 

issuers’ ability to seamlessly continue 

coverage of terminated Exchange 

enrollees outside the Exchange and 

recommended that HHS delay finalizing 

the proposal until its operational 

feasibility could be assessed. 

Response: Loss of eligibility for 

enrollment in a QHP through the 

Exchange is not necessarily a basis for 

non-renewal or termination of an 

individual’s or employer’s coverage in 

the market outside the Exchange. 

Therefore, we make conforming 

amendments in this final rule to the 

following sections of the Exchange and 

SHOP rules: §§ 155.430, 155.735, 

156.270, 156.285 and 156.290. These 

amendments are intended to more 

clearly distinguish termination of 

enrollment through the Exchange from 

termination of coverage with the issuer. 

Termination of coverage is governed by 

the guaranteed renewability provisions 

in section 2703 of the PHS Act and 

§ 147.106. Therefore, § 156.270(a) is 

further amended to include to a crossreference to § 147.106 to clarify when 

and how an issuer may terminate 

coverage under applicable law. We also 

made a conforming amendment in 

§ 155.430(b)(2)(vi) clarifying that any of 

the exceptions to guaranteed 

renewability that would permit an 

issuer to terminate an enrollee’s 

coverage also could be a basis for 

terminating enrollment through the 

Exchange. 

We acknowledge the operational 

concerns of commenters, but note that 

these revisions are simply technical 

clarifications to eliminate potential 

conflict with the requirements that 

currently apply to issuers under 

sections 2702 and 2703 of the PHS Act. 

Furthermore, it is anticipated that, in 

most situations involving termination 

by the Exchange, such as decertification 

of the QHP or non-payment of premium, 

the issuer will know the reason for the 

termination. When the issuer knows the 

reason for Exchange termination and it 

is not a basis for non-renewal or 

termination of the enrollee’s coverage, 

the issuer generally must continue the 

coverage outside the Exchange, at the 

option of the enrollee, in order to satisfy 

the issuer’s responsibilities under the 

guaranteed renewability requirements, 

unless an exception applies. When the 

issuer does not know the reason for 

termination of an enrollee’s Exchange 

enrollment, the issuer should continue 

the enrollee’s coverage outside the 

Exchange if approached by the enrollee 

to do so, unless following investigation, 

the reason for the termination will 

permit the issuer to terminate the 

coverage. 

5. Exchange Functions in the Individual 

Market: Eligibility Determinations for 

Exemptions 

a. Eligibility Standards for Exemptions 

(§ 155.605) 

In § 155.605, we proposed 

amendments to two hardship 

exemptions and a correction to a crossreference. First, we proposed to amend 

§ 155.605(g)(3) to permit an individual 

with gross income below the filing 

threshold and who is not a dependent 

of another taxpayer to qualify for a 

hardship exemption through the tax 

filing process and without having to 

obtain an exemption certificate number 

(ECN) from the Exchange. Second, we 

proposed amending § 155.605(g)(6)(i) to 

correct the citation to 42 CFR 447.50 by 

changing it to 42 CFR 447.51, which 

cross-references the Medicaid definition 

for Indian. Third, we proposed new 

paragraph § 155.605(g)(6)(iii) to align 

the exemption process for those 

individuals who are eligible for services 

through the Indian Health Service (IHS), 

a Tribal health facility, or an Urban 

Indian organization (collectively, ITU) 

with the process available to members 

of Federally-recognized Tribes. 

Specifically, the proposed amendment 

will provide individuals who are 

eligible for services through an ITU to 

claim an exemption on their Federal 

income tax return without obtaining an 

ECN. 

We are finalizing the provisions as 

proposed. 

Comment: Comments on this 

provision supported the proposed 

changes. We received a few comments 

noting that, despite this additional 

avenue to receive an exemption, some 

American Indians/Alaskan Natives (AI/ 

ANs) who qualify for a recurring ECN 

may continue to prefer the Exchange 

exemption process rather than claiming 

an exemption annually through the 

Federal tax-filing process. For this 

reason, these commenters encouraged 

CMS to retain and improve the 

Exchange exemption application 

process. 


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42We defined premium growth for this measure 

as the same annually adjusted measure of premium 

growth used below in this rule to establish the 

annual maximum and reduced maximum 

limitations on cost sharing for plan benefit designs. 

That is, the premium adjustment percentage. 

43 29 U.S.C. 1161, et seq. (‘‘COBRA’’) or 

applicable State law. 

Response: We remain committed to 

improving the Exchange exemptions 

process. We note that the Exchange 

exemptions process remains available to 

AI/ANs under § 155.605(f) and (g)(6)(i). 

b. Required Contribution Percentage 

(§ 155.605) 

Under section 5000A of the Code, an 

individual must have minimum 

essential coverage for each month, 

qualify for an exemption, or make a 

shared responsibility payment with his 

or her Federal income tax return. 

Section 5000A of the Code and section 

1311(d)(4)(H) of the Affordable Care Act 

authorizes the Secretary to determine 

individuals’ eligibility for exemptions, 

including the hardship exemption. 

Under section 5000A(e)(1) of the Code, 

an individual is exempt if the amount 

that he or she would be required to pay 

for minimum essential coverage 

(required contribution) exceeds a 

particular percentage (the required 

contribution percentage) of his or her 

actual household income for a taxable 

year. In addition, under § 155.605(g)(2) 

an individual is exempt if his or her 

required contribution exceeds the 

required contribution percentage of his 

or her projected household income for 

a year. Finally, under § 155.605(g)(5), 

certain employed individuals are 

exempt if, on an individual basis, the 

cost of self-only coverage is less than the 

required contribution percentage but the 

aggregate cost of self-only coverage 

through employers exceeds the required 

contribution percentage and no family 

coverage is available through an 

employer at a cost less than the required 

contribution percentage. 

The required contribution percentage 

for 2014 is 8 percent under section 

5000A(e)(1)(A) of the Code. Section 

5000A(e)(1)(D) of the Code and 26 CFR 

1.5000A–3(e)(2)(ii) provide that for plan 

years after 2014, the required 

contribution percentage is the 

percentage determined by the Secretary 

that reflects the excess of the rate of 

premium growth between the preceding 

calendar year and 2013, over the rate of 

income growth for that period. In the 

2015 Market Standards Rule, we 

established a method for determining 

the excess of the rate of premium 

growth over the rate of income growth 

each year, and published the 2015 rate. 

We stated that future adjustments would 

be published annually in the HHS 

notice of benefit and payment 

parameters. 

Under the method previously 

established, the rate of premium growth 

over the rate of income growth for 2016 

is the quotient of (x), which is equal to 

one plus the rate of premium growth 

between the preceding year (in this case, 

2015), and 2013, carried out to ten 

significant digits, divided by (y), which 

is equal to one plus the rate of income 

growth between the preceding year 

(2015), and 2013, carried out to ten 

significant digits.42 The result of this 

calculation is carried out to ten 

significant digits and multiplied by the 

required contribution percentage 

specified in section 5000A(e)(1)(A) of 

the Code (8.00 percent). The result is 

then rounded to the nearest hundredth 

of a percent, to yield the required 

contribution percentage for 2016. 

Under the methodology described 

above, the total rate of premium growth 

for the 2-year period from 2013–2015 is 

1.0831604752, or 8.3 percent. We 

describe the methodology for obtaining 

this number below in § 156.130(e). In 

the 2015 Market Standards rule, we also 

established a methodology for 

calculating the rate of income growth for 

the purpose of calculating the annual 

adjustment to the required contribution 

percentage. 

The measure of income growth is 

based on projections of per capita Gross 

Domestic Product (GDP) used for the 

National Health Expenditure Accounts 

(NHEA), which is calculated by the 

CMS Office of the Actuary. Accordingly, 

using the NHEA data, the rate of income 

growth for 2016 is the percentage (if 

any) by which the most recent 

projection of per capita GDP for the 

preceding calendar year ($56,660 for 

2015) exceeds the per capita GDP for 

2013, ($53,186), carried out to ten 

significant digits. The total rate of 

income growth for the 2-year period 

from 2013–2015 is estimated to be 

1.0653179408 or 6.5 percent. We note 

that the 2013 per capita GDP used for 

this calculation has been updated to 

reflect the latest NHEA data. 

Thus, the excess of the rate of 

premium growth over the rate of income 

growth for 2013–2015 is 1.0831604752/ 

1.0653179408, or 1.0167485534, or 1.7 

percent. This results in a required 

contribution percentage for 2016 of 

8.00*1.0167485534, or 8.13 percent, 

when rounded to the nearest onehundredth of one percent. 

We received no comments on the 

calculation of the required contribution 

percentage and are therefore finalizing 

the percentage as proposed. 

6. Exchange Functions: Small Business 

Health Options Program (SHOP) 

a. Standards for the Establishment of a 

SHOP (§ 155.700) 

We proposed to amend § 155.700(b) 

such that the previous definition of 

‘‘group participation rule’’ would 

conform with the terminology we 

proposed to use in § 155.705(b)(10). 

Specifically, we proposed to modify the 

term to refer to a ‘‘group participation 

rate,’’ which is a minimum percentage 

of all eligible individuals or employees 

of an employer that must be enrolled. 

We received no comments on this 

proposal and we are finalizing this 

amendment as proposed. 

b. Functions of a SHOP (§ 155.705) 

In § 155.705, we proposed to 

redesignate paragraph (b)(4)(ii)(B) as 

new paragraph (b)(4)(ii)(C), redesignate 

paragraph (b)(4)(ii)(A) as new paragraph 

(b)(4)(ii)(B), add new paragraph 

(b)(4)(ii)(A), and amend paragraphs 

(b)(4)(i)(B), (b)(7), and (b)(10). 

In the proposed amendment to 

paragraph (b)(4)(i)(B) and proposed new 

paragraph (b)(4)(ii)(A), we proposed to 

permit the SHOP to assist a qualified 

employer in the administration of 

continuation coverage in which former 

employees seek to enroll through the 

SHOP. We proposed that where a 

qualified employer is offering Federal or 

State continuation coverage,43 and 

where a SHOP has entered into an 

agreement with a qualified employer to 

provide this service, the SHOP may 

assist the employer in administration of 

such coverage by billing for and 

collecting premiums for the 

continuation coverage directly from the 

covered employee or qualified 

beneficiary, rather than the employer, if 

the qualified employer elects to have the 

SHOP carry out this function. We 

sought comment on the interaction of 

the FF–SHOP’s payment grace periods 

and termination policies at § 155.735 

with the COBRA rules the IRS has 

codified at 26 CFR part 54. We are 

finalizing the proposed changes to 

§ 155.705(b) with a modification to 

clarify that individuals other than 

former employees might be enrolled in 

continuation coverage through a SHOP, 

and we are also amending § 155.735 to 

better align the SHOP rules with the 

IRS’s COBRA rules in light of the 

comments discussed below. 

We considered whether the FF–SHOP 

should accept premium payment using 

a credit card. Currently, qualified 

employers participating in the FF– 


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SHOP may only pay premiums to the 

FF–SHOP using a check or bank draft. 

We sought comment on the extent to 

which employers would use this option. 

Some commenters stated that it may be 

more convenient for a small employer to 

pay by credit card than by check or bank 

draft. However, in light of the comments 

discussed below, HHS does not intend 

to take action on this policy at this time. 

We also proposed to revise paragraph 

(b)(7) to align the SHOP regulations 

with the Protecting Access to Medicare 

Act of 2014 (Pub. L. 113–93), which 

repealed requirements related to 

deductible maximums for employersponsored coverage at section 1302(c)(2) 

of the Affordable Care Act. This 

proposal would remove the only 

reference in the SHOP regulations to the 

requirements of Affordable Care Act 

section 1302(c)(2). We did not receive 

any comments on the proposed 

revisions to paragraph (b)(7) of this 

section and are finalizing this proposal 

as proposed. 

In paragraph (b)(10), we proposed to 

modify the calculation of minimum 

participation rates in the SHOP. We 

proposed that a SHOP (either a Statebased or an FF–SHOP) that elects to 

establish a minimum participation rate 

would be required to establish a single, 

uniform rate that applies to all groups 

and issuers in the SHOP, rather than 

establishing general rules about 

minimum participation rates or a 

threshold over which the minimum 

percentage may not be raised. We also 

proposed that if a SHOP authorizes a 

minimum participation rate, such a rate 

would have to be based on the rate of 

employee participation in the SHOP and 

in coverage through another group 

health plan, governmental coverage 

(such as Medicare, Medicaid or 

TRICARE), coverage sold through the 

individual market, or in other minimum 

essential coverage, and not on the rate 

of employee participation in any 

particular QHP or QHPs of any 

particular issuer. We proposed that 

State-based SHOPs would be expected 

to conform to the proposal by its 

effective date. 

In paragraph (b)(10)(i), we proposed 

to amend existing language about 

employees accepting coverage under the 

employer’s group health plan to instead 

refer to employees accepting coverage 

offered by a qualified employer to better 

account for employee choice. 

We also proposed to amend paragraph 

(b)(10)(i) regarding how the minimum 

participation rate would be calculated 

in the FF–SHOP. We proposed to 

calculate the minimum participation 

rate in the FF–SHOP as the number of 

full-time employees accepting coverage 

offered by the qualified employer 

through the SHOP plus the number of 

full-time employees who are enrolled in 

coverage through another group health 

plan, in governmental coverage (such as 

Medicare, Medicaid or TRICARE), in 

coverage sold through the individual 

market, or in other minimum essential 

coverage, divided by the number of fulltime employees offered coverage 

through the SHOP. 

We sought comment on whether this 

definition of which employees would be 

included in the calculation should be 

extended beyond the SHOP to the entire 

small group market to create uniformity 

among issuer practices and prevent 

further gaming by issuers through their 

use of non-standard definitions for other 

acceptable coverage. 

We are finalizing the proposed 

amendments to paragraph (b)(10) with 

modifications. We are modifying the 

proposed amendments to the language 

following (b)(10); adding the 

amendments we proposed at paragraph 

(b)(10)(i) at a new paragraph (b)(10)(ii); 

amending current paragraph (b)(10)(i) to 

reflect that it will remain in effect for 

plan years beginning prior to January 1, 

2016; and redesignating paragraph 

(b)(10)(ii) as (b)(10)(iii) and making a 

minor conforming amendment to that 

paragraph to reflect the addition of new 

paragraph (b)(10)(ii). The modifications 

clarify that the amendments to the 

minimum participation rate calculation 

methodology requiring counting of 

employees accepting coverage offered 

by the qualified employer through the 

SHOP, and counting of employees 

enrolled in coverage through another 

group health plan, in governmental 

coverage (such as Medicare, Medicaid, 

or TRICARE), in coverage sold through 

the individual market, or in other 

minimum essential coverage, will apply 

only to the FF–SHOP, effective for plan 

years beginning on or after January 1, 

2016. For plan years beginning prior to 

January 1, 2016, the FF–SHOP will 

apply the methodology at current 

(b)(10)(i). We are also modifying 

paragraph (b)(10)(i) to explain that 

former employees would be excluded 

from the calculation of minimum 

participation rates in the FF–SHOP 

under the methodology that will remain 

in effect for plan years beginning prior 

to January 1, 2016, to ensure that the 

same methodology currently being used 

will continue to be used after the 

modification to the definition of 

qualified employee in this rule takes 

effect. State-based SHOPs and small 

group markets outside of the Exchanges 

are not expected to conform to the 

amended calculation methodology. 

Comment: Several commenters 

supported the proposal that would 

permit a SHOP to bill for and collect 

premiums for COBRA. One commenter 

disagreed with the policy. One 

commenter requested that HHS preserve 

the flexibility proposed for SHOPs to 

determine whether they wish to offer 

this service. 

Many commenters requested that 

HHS align SHOP rules with applicable 

COBRA standards and work with the 

applicable agencies to ensure clarity. 

These commenters expressed concern 

that a lack of harmony between the 

SHOP rules, COBRA standards, and 

requirements from other Federal 

agencies would lead to confusion. One 

commenter requested HHS specify 

which IRS rules are applicable. 

Response: As we indicated in the 

preamble to the proposed rule, the IRS 

has promulgated rules regarding the 

administration of COBRA continuation 

coverage at 26 CFR 54.4980B, et seq. 

Our SHOP regulations do not affect or 

narrow an individual’s existing 

substantive and procedural rights under 

COBRA or other Federal agencies’ rules 

interpreting COBRA. To harmonize 

existing SHOP rules regarding 

terminations of coverage with the IRS’s 

COBRA rules at § 54.4980B–8, we are 

adding paragraphs (c)(2)(iv) and (c)(3) to 

§ 155.735 in this final rule. Paragraph 

(c)(2)(iv) is necessary because, in cases 

other than COBRA continuation 

coverage, the FF–SHOP does not 

provide an additional grace period for 

payments less than the total premium 

amount due for a group’s cost of 

coverage. Paragraph (c)(3) is necessary 

to specify that the section does not 

modify existing obligations under 26 

CFR 54.4980B. 

To further align with existing COBRA 

requirements, including COBRA 

eligibility for dependents and former 

dependents, we are modifying the 

language of paragraph (b)(4)(ii)(A) of 

§ 155.705 to permit the collection of 

such premiums from any person 

enrolled in continuation coverage 

through the SHOP consistent with 

applicable law and the terms of the 

group health plan. For improved clarity, 

we are also replacing the reference in 

proposed § 155.705(b)(4)(ii)(A) to 

‘‘Federally mandated continuation 

coverage’’ with a reference to 

continuation coverage required under 

29 U.S.C. 1161, et seq. 

Comment: One commenter stated that 

SHOPs should also administer required 

notices that relate to continuation of 

coverage. 

Response: HHS continues to examine 

the feasibility of expanding SHOP’s 

flexibility to support additional COBRA 


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administration functions, including 

COBRA notification requirements. 

Significant modifications may be 

necessary to existing SHOP rules to 

ensure conformity with existing IRS 

rules if a SHOP were to fully administer 

COBRA on behalf of an employer. 

Therefore, HHS does not intend to take 

action on this policy at this time. 

Comment: Some commenters stated 

that both a State-based SHOP’s and a 

FF–SHOP’s implementation of 

continuation coverage administration 

should extend to State-mandated 

continuation coverage. Some 

commenters expressed concern that 

limiting FF–SHOP continuation 

coverage support to COBRA may cause 

confusion among small employers 

regarding responsibility for continuation 

coverage requirements. Another 

commenter requested relief from 

existing SHOP payment rules requiring 

the flow of funds through the SHOP 

where a SHOP fails to provide payment 

support for continuation coverage. 

Response: The finalized language 

does not require SHOPs to limit this 

service to the collection of premiums 

related to Federal continuation 

coverage. Both State-based SHOPs and 

the FF–SHOP may elect to collect 

payments related to State-required 

continuation coverage sold through the 

SHOP on behalf of small employers. 

We continue to examine applicable 

State law to determine the feasibility of 

the FF–SHOP providing this service for 

both State and Federal continuation 

coverage. Variation in State 

continuation coverage laws would add 

substantial complexity to the FF– 

SHOP’s implementation of premium 

collection for State continuation 

coverage. Therefore, the FF–SHOP may 

more quickly provide relief to small 

employers by first supporting COBRA 

continuation coverage administration 

while HHS determines how it may best 

support State-mandated continuation 

coverage. 

HHS continues to believe that the 

flow of funds through the SHOP best 

supports the administration of employee 

choice and therefore is not modifying 

existing requirements related to the flow 

of funds through the SHOP. 

Comment: One commenter sought 

clarification on how continuation 

coverage would be operationalized, 

including whether 820 and 834 

transactions will identify members 

covered under continuation coverage. 

Response: HHS recognizes that QHP 

issuers will need substantially more 

detailed information to effectively 

integrate with a SHOP facilitating 

continuation coverage. If the FF–SHOP 

implements administration of premiums 

for continuation coverage, HHS intends 

to issue further guidance. 

Comment: We received several 

comments about whether the FF–SHOP 

should accept premium payments made 

with a credit card. Several commenters 

were in favor of this idea. However, 

these commenters also noted that HHS 

should consider the benefits of this 

option against the costs that will be 

incurred with this additional 

functionality. Some commenters 

opposed accepting premium payments 

through a credit card and were 

particularly concerned about the fees 

associated with the use of a credit card. 

Some commenters recommended that 

the credit card fee should be included 

as part of the user fee that HHS is 

already collecting, while other 

commenters stated that the credit card 

fee should be borne by the FF–SHOP 

and not issuers. One commenter noted 

that the cost of the credit card fee will 

add to the cost of coverage for 

consumers and may impact the 

calculation of the Medical Loss Ratio if 

it is considered an administrative cost 

payable by an issuer. One commenter 

believed that the use of credit cards to 

make premium payments should not be 

limited to the initial payment, and 

instead should be used for recurring 

payments. 

Response: HHS will continue to 

consider whether there is a costeffective way to permit employers to 

pay premiums through the SHOP with 

a credit card. HHS does not intend to 

take action on this policy at this time. 

Comment: We received one comment 

on our proposed amendments to the 

SHOP rules about the minimum 

participation rate in § 155.705(b)(10), 

asking whether issuers may maintain 

varying participation requirements 

based on group size if this policy is 

finalized to extend to the small group 

market outside the SHOP. We also 

received comments on the proposed 

calculation methodology for calculating 

the minimum participation rate. Some 

commenters supported our proposal and 

some believed that our proposed 

methodology will weaken the ability of 

the FF–SHOP to protect against adverse 

selection and is not considered common 

market practice. One commenter 

recommended not including individuals 

with coverage in the individual market 

Exchanges because it undercuts 

employer-based coverage. One 

commenter stated that minimum 

participation rates are a barrier to 

coverage for businesses. 

While we received some comments 

supporting the extension of our 

proposed policy to the entire small 

group market, several commenters 

opposed such an extension, including 

State-based SHOPs. One commenter 

opposed our proposal because SHOP 

issuers are protected by programs that 

issuers not participating in the SHOP 

are not protected by, such as the risk 

corridors program. Several of these 

commenters stated that the off-Exchange 

market should use a methodology that 

works best for their market and State, 

and that it should be up to the State to 

establish how to calculate the minimum 

participation rate inside and outside of 

the Exchanges. 

In addition to these comments, we 

received queries on how HHS would 

verify the coverage of individuals 

included in the calculation of the 

minimum participation rate. Several 

commenters also asked for details on the 

one-month exception period for 

minimum participation rates. 

Response: We are finalizing a policy 

under which a SHOP (either a Statebased SHOP or an FF–SHOP) that elects 

to establish a minimum participation 

rate would be required to establish a 

single, uniform rate that applies to all 

groups and issuers in the SHOP, rather 

than establishing general rules about 

minimum participation rates or a 

threshold over which the minimum 

percentage may not be raised. Under the 

methodology we have finalized for 

calculating a minimum participation 

rate, a SHOP cannot vary its minimum 

participation rate based on the employer 

group size. In the final rule, we are 

modifying the proposal to give Statebased SHOPs the flexibility to establish 

a different minimum participation rate 

calculation methodology than the one 

being finalized for the FF–SHOP, but 

State-based SHOPs must continue to 

base the rate on employee participation 

in the SHOP or in the SHOP and other 

coverage (as in the FF–SHOP), and may 

not base the rate on employee 

participation in a particular QHP or 

QHPs of any particular issuer. We 

believe that providing State-based 

SHOPs with this flexibility will allow 

States to set a calculation methodology 

that aligns with their current market 

practice. We are also finalizing our 

proposal on the calculation of the 

minimum participation rate in the FF– 

SHOP and who is included in the 

methodology, but are modifying the 

proposal to specify that the new FF– 

SHOP calculation methodology will 

take effect only for plan years beginning 

on or after January 1, 2016. For plan 

years beginning before January 1, 2016, 

the calculation methodology currently 

in place for the FF–SHOP will remain 

in effect. 

We note that consistent with current 

§ 155.705(b)(10)(ii) (which is 


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redesignated at § 155.705(b)(10)(iii) in 

this rule), the FF–SHOP may establish a 

different minimum participation rate in 

a State if there is evidence that a State 

law sets a different minimum 

participation rate or that a higher or 

lower minimum participation rate is 

customarily used by the majority of 

QHP issuers in the State for products in 

the State’s small group market outside 

the SHOP. HHS considered various 

minimum participation rate calculation 

methodologies, and believes that the 

calculation methodology we are 

finalizing for the FF–SHOP aligns with 

current practice in many States’ small 

group markets. The difficulty of 

verifying other coverage exists today in 

the market and is not exacerbated by 

this rule. Additionally, HHS believes 

that using this approach to calculating 

minimum participation rates reduces 

unnecessary barriers for employer 

groups seeking to cover their employees 

because the calculation includes 

individuals with other forms of 

coverage, thus making it easier for 

employer groups to reach the required 

minimum participation rate. By 

including in the calculation individuals 

with individual market coverage, we 

believe this methodology does not 

undercut employer-based coverage, but 

rather treats employers fairly. Under the 

approach taken in the final rule to 

accommodate for State-specific policies, 

State-based SHOPs may use a 

calculation methodology that aligns 

with current market practice in their 

State, and that works best for their 

market and State, and are therefore not 

required to follow the same calculation 

methodology as will apply in the FF– 

SHOPs. 

The final rule does not modify or 

eliminate the one-month period 

between November 15 and December 15 

of each year, during which employer 

groups may enroll in coverage 

notwithstanding any employer 

contribution or group participation rules 

under § 147.104(b)(1)(i)(B). Thus, 

SHOPs may not apply the minimum 

participation rate to prevent initial 

enrollments and renewals that occur 

during this one-month period. 

We do not believe the proposed 

modification to calculation of the FF– 

SHOP minimum participation rate will 

result in significant adverse selection. In 

some States in which the FF–SHOP 

currently operates, its minimum 

participation rate is more restrictive on 

enrollment than the rate currently 

generally applied by issuers in the 

market. The proposed modifications to 

the FF–SHOP’s minimum participation 

rate will align the calculation of the rate 

with current practices in these States by 

including other sources of coverage in 

the calculation. We acknowledge that 

this change will make the FF–SHOP’s 

minimum participation rate more 

inclusive than minimum participation 

rates in the market in some other States. 

However, under current law, no group 

may be excluded from the small group 

market altogether because it fails to 

meet a minimum participation rate. Any 

group may enroll during the annual 

month-long period under 

§ 147.104(b)(1)(B) during which no 

minimum participation rate can be 

applied to deny coverage. Further, the 

new methodology for the participation 

rate calculation is only more permissive 

in that it lets in groups with additional 

sources of other coverage. There is no 

basis to suggest that such a group 

represents worse than average risk. 

c. Eligibility Standards for SHOP 

(§ 155.710) 

In § 155.710, we proposed to amend 

paragraph (e) to specify that where an 

employer has offered dependent 

coverage, a qualified employee would 

be eligible to enroll his or her 

dependents in coverage through the 

SHOP. 

We received a comment supporting 

our proposal. We are finalizing our 

amendment as proposed. 

d. Enrollment of Employees Into QHPs 

Under SHOP (§ 155.720 and § 156.285) 

In § 155.720, we proposed to remove 

paragraph (b)(7),which requires all 

SHOPs to establish effective dates for 

employee coverage in the SHOP, and to 

make minor conforming changes to the 

list structure in paragraph (b). Current 

§ 155.720(b)(7) is redundant in light of 

the proposed requirements to establish 

effective dates under § 155.725, which 

we are finalizing as proposed. 

We received no comments on these 

proposed amendments. We are 

finalizing the amendments as proposed. 

We proposed to amend paragraph (e), 

which provides that issuers must notify 

SHOP consumers regarding coverage 

effective dates so that the provision 

would refer to enrollees and not 

qualified employees, and proposed to 

remove a reference in this section to 

§ 156.260(b), in keeping with the 

proposed amendments to § 155.725 

regarding coverage effective dates. 

Under the proposal, issuers would be 

required to provide this notice to 

anyone who enrolled in coverage 

through the SHOP under the proposed 

amendments to the definitions of 

qualified employee and enrollee, 

including dependents (including a new 

dependent of the employee, when the 

dependent separately joins the plan), 

former employees of a qualified 

employer, and certain business owners. 

We noted that the notices required 

under this proposal could be 

incorporated into existing notifications 

that QHPs provide to their new 

customers, for example in a welcome 

document. We also proposed a 

conforming amendment to § 156.285(c) 

to ensure that QHP issuers participating 

in the SHOP would provide notice to a 

new enrollee of the enrollee’s effective 

date of coverage. 

We are finalizing the provisions with 

the modifications noted below. 

Comment: We received several 

comments on our proposed 

amendments to effective date notices 

pursuant to § 155.720(e). Some 

commenters supported continuing to 

require issuers to send the required 

notices, while others stated that the 

notice requirement should be shifted to 

the SHOP. We also received comments 

on expanding the notice requirement to 

the amended definition of an enrollee, 

which includes dependents. Some 

commenters stated that notices 

regarding the coverage effective date 

should only be provided to qualified 

employees and adult dependents. Some 

commenters stated that these notices 

should be provided separately to 

dependents of qualified employees if 

the last known address for the 

dependent is different from the 

subscriber. We also received one 

comment requesting additional time and 

flexibility for issuers to implement the 

notice requirement for dependents 

under the new definition of an enrollee. 

Response: We agree that generally, 

when a dependent lives with the 

qualified employee, separate 

notification to the dependent is 

duplicative. As such, we are modifying 

the proposal to specify that when a 

primary subscriber and his or her 

dependents live at the same address, a 

separate notice need not be sent to each 

dependent at that address, so long as the 

notice sent to each primary subscriber at 

that address contains all the required 

information about the coverage effective 

date for the primary subscriber and each 

of his or her dependents at that address. 

We note that when dependents live at 

a different address from the primary 

subscriber a separate notice must be 

sent to those dependents. 

Amending the definition of an 

enrollee and amending § 155.720(e) to 

require notice to enrollees will create 

additional notice obligations for issuers. 

To permit issuers to update their 

systems and fulfill this requirement, we 

will provide issuers until plan years 

beginning on or after January 1, 2017 to 

fulfill the requirement of sending 


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effective date notices to enrollees other 

than qualified employees. Because 

issuers have already been providing 

these notices to qualified employees 

under the current rule, we do not 

believe the inclusion of former 

employees that is being finalized in this 

rulemaking presents similar system 

challenges. Thus, issuers will be 

required to send the notices to everyone 

who meets the new definition of 

qualified employee as soon as this rule 

takes effect. We are providing an 

additional year only for issuers to begin 

providing notice to enrollees other than 

qualified employees. 

We are also making minor changes to 

the wording of the proposed 

requirement at 156.285(c)(3), so that the 

final rule refers to a requirement to 

‘‘notify’’ new enrollees, rather than to 

‘‘provide’’ them ‘‘with notice.’’ 

e. Enrollment Periods Under SHOP 

(§ 155.725 and § 156.285) 

We proposed to amend paragraphs (a), 

(g), (h), and (j)(5) of § 155.725 and 

§ 156.285(b)(1) and (b)(4) to provide 

clarity regarding the effective dates for 

coverage that all SHOP Exchanges must 

establish. First, we proposed to remove 

the reference at current § 155.725(a)(1) 

to the start of the initial open 

enrollment period for 2014 coverage, 

and the reference in current 

§ 155.725(a)(2) to § 156.260. We 

proposed to remove the reference to 

effective dates under § 156.260 because 

we are proposing to specify effective 

dates in § 155.725 or to more directly 

cross-reference the appropriate effective 

date. Second, we proposed to amend 

§ 155.725(h) so that SHOPs would need 

only establish effective dates for 

employees enrolling in coverage during 

the initial group enrollment and the 

employee annual open enrollment 

period, rather than for special 

enrollment periods. At proposed 

paragraph (h)(2), we also codified the 

effective dates for coverage in the FF– 

SHOP for enrollments during initial and 

annual open enrollment periods. 

Specifically, we proposed to include 

language in the SHOP regulations 

specifying the same effective dates that 

were previously adopted for the FF– 

SHOP under our interpretation of the 

cross reference in § 156.285(b)(4) to 

§ 156.260, which in turn crossreferences § 155.410(c). We noted that 

the dates set forth in § 155.725(h)(2) 

would apply only to the FF–SHOP and 

State-based SHOPs would be free to 

establish their own effective dates for 

initial and annual open enrollment. 

Third, we proposed several 

amendments to paragraph § 155.725(g) 

regarding enrollment for newly 

qualified employees. A newly qualified 

employee is an employee who becomes 

eligible to participate in the employer’s 

group health plan outside of a qualified 

employer’s initial or annual enrollment 

period; for example, because he or she 

was hired outside of those periods. We 

proposed to move paragraph (g) to 

paragraph (g)(1), and proposed 

amendments to the existing language to 

make explicit our interpretation of 

current paragraph (g), which is that a 

newly qualified employee becomes 

eligible for an enrollment period that 

begins on the first day of becoming a 

newly qualified employee regardless of 

whether the employee is subject to a 

waiting period. Additionally, we 

proposed that the duration of a newly 

qualified employee’s enrollment period 

be at least 30 days. Where the employee 

is subject to a waiting period in excess 

of 45 days, we proposed that the 

duration of the employee’s enrollment 

period extend until 15 days before what 

would be the conclusion of the waiting 

period if the employee selected a plan 

on the first day of becoming eligible. We 

noted that if an employee waits to 

choose a plan until the end of such an 

extended enrollment period, this could 

have the effect of further delaying the 

effective date of coverage, consistent 

with § 147.116(a). We also proposed to 

add a new paragraph (g)(2) in § 155.725 

to provide that the effective date for a 

newly hired employee would be 

determined using the same rule for 

initial and open enrollments that would 

be established by the SHOP under 

proposed § 155.725(h). Thus, in the FF– 

SHOP, coverage effective dates for 

newly qualified employees would be 

established according to § 155.725(h)(2): 

Plan selections made between the first 

and the fifteenth day of any month 

would be effective the first day of the 

following month, and plan selections 

made between the 16th and the last day 

of any month would be effective the first 

day of the second following month. A 

newly qualified employee may also be 

subject to a waiting period under 

§ 147.116, however, and in such cases, 

the effective date may be on the first day 

of a month that is later than the month 

in which coverage would take effect 

under the usual rules established by the 

SHOP under § 155.725(h). However, in 

no case could the effective date fail to 

comply with the limitations on waiting 

period durations at § 147.116 of this 

subchapter. 

Fourth, we proposed to amend 

paragraph § 155.725(j)(5) to make it 

clearer that the effective dates for 

special enrollment periods in the SHOP 

should be determined according to 

§ 155.420(b). 

Fifth, we proposed to harmonize 

§ 156.285(b)(1) and (4) with the 

proposed amendments to effective dates 

described above, to specify that QHP 

issuers must abide by the effective dates 

established under § 155.725, and must 

enroll qualified employees in 

accordance with the qualified 

employer’s initial and annual 

enrollment periods in § 155.725. 

We also proposed to amend 

§ 155.725(b) to harmonize rolling 

enrollment in the SHOP with the 

regulations applicable to guaranteed 

availability in States with merged 

individual and small group markets. 

Section 147.104(f), as moved from 

§ 147.104(b)(2) by this rule, requires that 

all individual and small group health 

insurance coverage sold in a State with 

merged individual and small group risk 

pools be offered on a calendar year 

basis, meaning that it must end on 

December 31 of the year in which the 

policy was issued. Section 155.725(b), 

in contrast, requires that SHOPs permit 

qualified employers to purchase 

coverage for a small group at any point 

throughout the calendar year, and that 

SHOPs ensure that a participating 

group’s plan year lasts for 12 months 

beginning with the first effective date of 

coverage. Section 155.725(b) was 

intended to ensure that qualified 

employers can offer health insurance 

through the SHOP at any point during 

the year while receiving a guaranteed 

rate 12 months following the purchase 

of coverage, consistent with the current 

practice in the small group market. We 

proposed to harmonize these two 

provisions in States with merged 

markets, by proposing that SHOP plan 

years in a State with merged risk pools 

would terminate on December 31st of 

the year in which they began, even if 

certain qualified employers’ plan years 

would thus be shorter than 12 months. 

This proposal would not affect a small 

employer’s ability to enroll in coverage 

at any point in the year. Instead, it 

would standardize the renewal date of 

such a plan in a State with merged risk 

pools at the beginning of each calendar 

year. 

We also proposed to modify 

paragraph (i) to permit a SHOP to elect 

to renew a qualified employer’s offer of 

coverage where the employer has taken 

no action during its annual election 

period to modify or withdraw the prior 

year’s offer of coverage. The qualified 

employer’s offer would not be 

automatically renewed under this 

proposal if the employer is no longer 

eligible to participate in the SHOP. 

Renewal of the coverage offer would 


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also not be automatic if the employer is 

offering a single QHP and that QHP will 

no longer be available through the 

SHOP. We proposed this modification at 

the request of State-based SHOPs that 

desire to conform to existing small 

group market practice regarding 

automatic annual renewal of coverage 

for an employer group. A SHOP would 

not be required to implement this rule. 

Finally, we proposed to add 

paragraph (k) to make clear that SHOP 

coverage may not be effectuated if the 

policy may not be issued to the 

employer because the group fails to 

meet an applicable minimum 

participation rate calculated at the time 

of initial group enrollment or renewal, 

subject to § 147.104(b)(1)(i)(B). 

We did not receive comments on the 

proposed amendments to § 156.285(b)(1) 

and (4), and are finalizing them as 

proposed. We are also finalizing the 

provisions under § 155.725 as proposed. 

Comment: We received one comment 

on establishing effective dates for 

employees enrolling in coverage during 

the initial group enrollment and the 

annual open enrollment period. The 

commenter supported our proposed 

provision because it establishes 

flexibility for State-based SHOPs to 

establish their own effective dates 

during the initial and annual open 

enrollment periods, including midmonth effective dates. Commenters 

supported the proposed provision to 

keep effective dates for special 

enrollment periods standardized. Some 

commenters supported the proposed 

provision to ensure effective dates for 

special enrollment periods are 

consistent with § 155.420(b). One 

commenter opposed the effective dates 

for special enrollment periods under 

§ 155.725(j) and recommended allowing 

States flexibility to prescribe their own 

effective dates for initial, annual, and 

special enrollment periods, because 

there may be other implications to the 

effectuation of coverage for employees 

and dependents with a special 

enrollment period. 

Response: We are finalizing the 

provisions as proposed. We believe that 

the proposed amendments allow 

flexibility for State-based SHOPs to set 

and maintain effective dates for initial 

and annual open enrollment periods to 

accommodate coverage effective dates 

for a group as soon as possible under 

local market conditions. Coverage 

effective dates for initial and annual 

open enrollment periods for the FF– 

SHOP will be finalized as proposed to 

create a uniform enrollment timeline. 

We continue to believe that the effective 

dates for special enrollment periods 

should be standardized for all SHOPs to 

ensure a minimum standard for special 

enrollment periods. We note that 

pursuant to § 155.420, SHOPs have 

existing authority to set earlier effective 

dates for certain special enrollment 

periods. 

Comment: We received several 

comments on the timeline for an 

employee to select a SHOP plan as it 

relates to employee waiting periods. 

Some commenters supported our 

proposed policy on employee 

enrollment periods and waiting period 

rules. One commenter noted that a 

scenario could arise where an employee 

would need to select a SHOP plan on a 

timeline that does not align with the 

waiting period. 

Response: We are finalizing our 

provision as proposed. SHOPs should 

ensure that an employee waiting period 

does not exceed the duration permitted 

under § 147.116. State-based SHOPs 

may continue to set their own rules 

regarding enrollment timelines for 

newly qualified employees so long as 

such rules comply with § 147.116. 

Comment: We received comments 

supporting the proposed enrollment 

process for newly qualified employees. 

These commenters stated the process 

provides sufficient time for employees 

to select a plan. One commenter stated 

that an employee election period of 

more than 30 days may cause confusion 

to consumers and may cause significant 

IT modifications for issuers. 

Response: We are finalizing the 

provision as proposed. We note that 

while the rule sets a 30-day minimum 

for a newly qualified employee’s 

enrollment period, it does not require a 

SHOP to provide an enrollment period 

in excess of 30 days to newly qualified 

employees. A longer enrollment period 

might, however, be mandated by State 

law or permitted under the terms of the 

plan. Because this rule provides only for 

a minimum length, which already 

constitutes common market practice, 

finalizing this rule is not expected to 

cause consumer confusion or necessitate 

IT modifications. 

Comment: We received several 

comments on our proposed policies to 

harmonize our provision on rolling 

enrollment in a merged market. We 

received a comment supporting rolling 

enrollment in States with a merged 

market. Some commenters stated they 

believed our proposed policies would 

be disruptive to States with merged 

markets. One commenter asked HHS to 

develop a more targeted set of policy 

solutions to address the specific issues 

associated with enrollment timelines in 

States with merged markets. One 

commenter asked HHS to clarify 

whether States with markets that are 

merged only for purposes of State law, 

but not Federal law, are subject to these 

proposed rules. 

Response: We are finalizing our 

provision as proposed. We continue to 

believe that rolling enrollment in States 

with merged markets provides 

employers an opportunity to offer health 

insurance through the SHOP at any 

point during the year, pursuant to our 

policies on guaranteed availability. We 

are not limiting small employer groups 

in States with a merged market to the 

individual market enrollment periods or 

otherwise prohibiting them from 

seeking coverage at any point during the 

year. However, to align with the 

requirements to offer plans in the 

merged market on a calendar year basis 

pursuant to § 147.104(f), as moved from 

§ 147.104(b)(2) by this rule, SHOP 

coverage with a plan year starting at any 

time during the year would have the 

plan year end on December 31 and 

renew effective January 1 of the 

following year. Rolling enrollment in 

the SHOP, as it aligns with this policy, 

would allow for plan years shorter than 

12 months. For coverage that has an 

effective date after January 1, a 12- 

month plan year would not align with 

the requirement for coverage to be 

offered on a calendar year basis, and is 

therefore not permitted in States with 

merged markets. We note that the 

additional language finalized in this 

rule at § 155.725(b) is only applicable in 

States that have merged their markets 

under section 1312(c)(3) of the 

Affordable Care Act. This language does 

not apply in States with markets that are 

not considered to be merged for 

purposes of Federal law. 

Comment: Several commenters 

supported the proposal permitting 

automatic renewal of employers’ offers 

of coverage. One commenter asked HHS 

to specify what it means to become 

ineligible for SHOP coverage and to 

specify whether an employer may be 

eligible for automatic renewal if the 

employer group falls below one nonowner full-time equivalent employee. 

We also received a comment asking 

HHS to specify if States may renew an 

employer’s coverage if the employer’s 

Employee Identification Number (EIN) 

changes provided that the employer 

retains the same legal identity. We also 

received a comment opposing automatic 

renewals and requests that HHS 

streamline processes to allow employer 

groups to quickly update only necessary 

information for a more simplified reenrollment process. It was also 

recommended that agents and brokers 

be provided with an opt-in or opt-out 

choice for employees rather than an 

automatic renewal. 


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44See Exchange Establishment Rule, 77 FR 18310 

at 18399. 

Response: We are finalizing our 

provision as proposed. We do not 

believe that a streamlined process to 

allow employer groups to update 

information about their group is 

necessary because qualified employers 

are already required to update this 

information to the SHOP throughout the 

plan year. See § 157.205(f). We believe 

our broad provision regarding SHOP 

coverage renewal will provide employer 

groups and their employees and 

enrollees an efficient way to renew and 

avoid any gaps in their coverage. 

Because not all groups work with an 

agent or broker, we believe that 

providing agents and brokers with an 

opt-in or opt-out choice for employees 

will not cover the universe of renewals 

that will occur. 

An employer is considered eligible to 

participate in the SHOP if it is a ‘‘small 

employer’’ as defined in § 155.20 and if 

it meets the requirements set forth at 

§ 155.710(b). To qualify, employers 

must have at least one employee who is 

not the owner or the spouse of the 

owner.44 With one limited exception, if 

a group fails to meet any of these 

eligibility criteria, including if it no 

longer has at least one employee who is 

not the owner or the owner’s spouse, it 

may not renew coverage through the 

SHOP. The limited exception applies, 

under § 155.710(d), to employers that 

cease to be small employers solely by 

reason of an increase in the number of 

employees, so long as they otherwise 

meet the eligibility criteria and continue 

to purchase coverage for qualified 

employees through the SHOP. For 

purposes of renewing coverage, if an 

employer’s EIN changes, but it retains 

the same legal identity, then the group 

can renew their coverage as long as they 

continue being eligible for coverage, if 

permitted by applicable State law. HHS 

considers an employer to have the same 

legal identity if the group maintains all 

other identifiable information including 

the business ownership structure and 

State in which the business operates. 

Comment: We received some 

comments related to the calculation of 

and enforcement of minimum 

participation rates, but we did not 

receive specific comments on the 

proposed policy at § 155.725(k). 

Response: We are finalizing the 

provision as proposed, and note that 

applicable minimum participation rates 

are calculated and enforced at the time 

of initial group enrollment or renewal, 

subject to § 147.104(b)(1)(B). 

f. Termination of SHOP Enrollment or 

Coverage (§ 155.735 and § 156.285) 

In § 155.735, we proposed to amend 

paragraph (c)(2)(ii) to specify that in the 

FF–SHOP, a termination of coverage 

due to non-payment of premiums would 

be effective on the last day of the month 

for which the FF–SHOP received full 

payment. Prior to this proposal, the 

effective date of such a termination was 

not specified in the rule. We are 

finalizing this policy as proposed. 

In paragraph (c)(2)(iii), we proposed 

to specify that, in the FF–SHOP, a 

qualified employer whose coverage was 

terminated for non-payment of 

premiums could be reinstated in its 

prior coverage only once per calendar 

year. We are finalizing this provision as 

proposed. 

Paragraphs (c)(2)(iv) and (c)(3) are 

added in light of comments related to 

COBRA continuation coverage, as 

discussed in the preamble discussion of 

§ 155.705. 

In paragraphs (d)(1)(iii) and (g) of 

§ 155.735 and in § 156.285(d)(1)(ii), we 

proposed to amend certain existing 

notice requirements by transferring 

them from QHP issuers to the SHOP. 

Under current § 156.285(d)(1)(ii), a QHP 

issuer must notify an enrollee and a 

qualified employer if the enrollee or 

employer is terminated due to a loss of 

eligibility, due to a qualified employer’s 

non-payment of premiums, due to a 

rescission of coverage for fraud or 

misrepresentation of material fact in 

accordance with § 147.128, or because 

the QHP issuer elects not to seek 

recertification with the Exchange for its 

QHP. We proposed to transfer two of 

these notice requirements to the SHOP. 

At § 155.735(g)(1), we proposed that the 

SHOP be required to provide notice to 

the enrollee if an enrollee is terminated 

due to non-payment of premium or a 

loss of eligibility for participation in the 

SHOP, including when an enrollee loses 

eligibility due to a qualified employer’s 

loss of eligibility. We also proposed at 

§ 155.735(g)(2) that the SHOP be 

required to provide notice to qualified 

employers for termination due to 

nonpayment of premiums or where 

applicable, due to loss of the employer’s 

eligibility. Proposed § 155.735(g)(2) 

would apply to terminations for a 

reason other than the employer 

reporting information to the SHOP 

resulting in a loss of eligibility. 

Through the proposed amendments to 

the definition of ‘‘enrollee’’ discussed 

above, we also proposed to expand the 

class of people who would receive 

notices under the proposed 

amendments to § 155.735 and 

§ 156.285(d)(1)(ii). Additionally, we 

proposed that QHP issuers in the SHOP 

would continue to be required to 

provide notice to qualified employers 

and enrollees when an enrollee’s 

coverage is terminated due to a 

rescission in accordance with § 147.128, 

and when an enrollee’s coverage is 

terminated due to an election by a QHP 

issuer not to seek recertification with 

the Exchange for its QHP. We proposed 

to amend § 155.735(d)(1)(iii), which 

currently refers to terminations of SHOP 

coverage due to a QHP’s termination or 

decertification, by adding a reference to 

terminations of SHOP coverage due to 

the non-renewal of a QHP’s 

certification. By proposing to include a 

cross-reference to § 155.735(d)(1)(iii) in 

§ 156.285(d)(1)(ii), we also proposed to 

expand the notice a QHP issuer must 

provide regarding the discontinuation of 

a product in which a qualified employee 

is enrolled to include circumstances 

where the QHP is terminated or is 

decertified as described in § 155.1080. 

We are finalizing the provisions with 

modifications noted below. 

We also proposed that each notice 

required under § 155.735(g) and the 

proposed amendments to 

§ 156.285(d)(1)(ii) would have to be 

provided by the SHOP or QHP issuer 

promptly and without undue delay. We 

explained that we would consider an 

electronic notice that was sent no more 

than 24 hours after the SHOP or QHP 

issuer determined coverage was to be 

terminated to have been provided 

‘‘promptly and without undue delay.’’ 

In the case of paper notices, we would 

consider notices that were mailed no 

later than 48 hours after the SHOP 

determined coverage was to be 

terminated to have been provided 

‘‘promptly and without undue delay.’’ 

We have revisited these deadlines in 

light of comments received, and are 

finalizing the proposal with a 

modification to allow 3 business days 

for electronic notices and 5 business 

days for mailed notices. New paragraph 

§ 155.735(g) and the corresponding 

amendments related to issuer notice 

requirements at § 156.285(d)(1)(ii) are 

effective on January 1, 2016. 

We are also finalizing amendments to 

§ 155.735 and § 156.285 to conform with 

our interpretation of the guaranteed 

availability and guaranteed renewability 

requirements. For a discussion of these 

revisions, please see the preamble for 

§ 155.430 in this final rule. 

Comment: We received several 

comments in support of HHS codifying 

the termination effective date for nonpayment of premiums as the last day of 

the month for which the FF–SHOP 

received a full payment. 


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Response: We are finalizing the 

provision as proposed regarding 

termination effective dates for the FF– 

SHOP due to non-payment of 

premiums. 

Comment: We received a comment 

recommending HHS provide a more 

‘‘robust approach’’ to reinstatements for 

a given employer. The commenter stated 

that costs resulting from those that fail 

to pay premiums on time are ultimately 

borne by other insurers. However, the 

commenter did not discuss any 

alternative approach. We also received a 

comment asking HHS to specify that 

this provision only applies to the FF– 

SHOP. 

Response: We are finalizing our 

provision as proposed to discourage 

employers from repeatedly failing to 

make timely payments in the FF–SHOP. 

We note that to be reinstated, an 

employer must pay its premium in full 

and, generally, in order for new 

coverage to be effectuated, the FF–SHOP 

would require an employer to pay its 

first month’s premium in full. 

Therefore, we do not believe that in this 

case, an employer’s failure to make 

timely payments will impact another 

issuer. We note this policy, like all the 

policies set forth at § 155.735(c)(2), only 

applies in the FF–SHOP. HHS is not 

regulating the number of reinstatements 

that State-based SHOPs may choose to 

enforce. 

Comment: We received several 

comments on the transfer of certain 

notice requirements from QHP issuers to 

the SHOP. Many commenters supported 

our proposed policies because the SHOP 

has better information regarding the 

timing of non-payment of premiums and 

why an enrollee or employer lost his or 

her eligibility. Some commenters stated 

that the notices should only be provided 

to qualified employees and adult 

dependents, while others stated that the 

notices should be provided to qualified 

employees and their dependents if the 

last known address for the dependent is 

different from the subscriber. 

Additionally, we also received a 

comment requesting HHS specify that 

the notice requirement also applies to 

SADP issuers. One commenter 

recommended employers that actively 

provide to the SHOP information which 

indicates a loss of eligibility also receive 

a notice. We received a comment stating 

issuers should not be required to send 

any notices of termination to individual 

employees as it is not common market 

practice. 

Response: We have modified the final 

notice requirement to specify that when 

a primary subscriber and his or her 

dependents live at the same address, a 

separate notice need not be sent to each 

dependent at that address, so long as the 

notice sent to each primary subscriber at 

that address contains all the required 

information about the termination for 

that primary subscriber and each of his 

or her dependents at that address. We 

note that when dependents live at a 

different address from the primary 

subscriber, a separate notice must be 

sent to those dependents. We note the 

broad language of the notice 

requirement applies to both medical and 

dental coverage sold through the SHOP. 

We do not believe a notice to the 

employer is necessary when an 

employer reports to the SHOP that it no 

longer meets the SHOP eligibility 

criteria. The SHOP eligibility criteria are 

sufficiently simple that we believe that 

under such circumstances the loss of 

eligibility would be self-evident to the 

employer. 

HHS believes that these notices of 

termination should be sent to all 

individual, qualified employees affected 

by the termination of coverage or 

enrollment. By communicating directly 

with qualified employees through a 

notice of termination, the SHOP or the 

issuer can provide more timely notice 

regarding termination of coverage or 

enrollment, allowing employers and 

enrollees to seek other coverage and 

reduce gaps in coverage. 

Comment: A commenter 

recommended that in a State that 

operates its own SHOP, the SHOP 

should provide the notice unless State 

law requires that the notice be provided 

by the issuer. We also received a 

comment requesting that sending these 

notices should be at the discretion of 

issuers so that issuers can communicate 

and maintain relationships that they 

have with employer groups and their 

enrollees. 

Response: We appreciate the 

commenters’ concern regarding 

unnecessary duplication of notices. As 

such, we are finalizing the proposal 

with a modification that provides that if 

a State law requires such notices be 

provided by the issuer, then the SHOP 

is not required to also send these 

notices. In a State with no such law, if 

an issuer would like to send these 

notices to maintain its relationships 

with employer groups and enrollees, it 

may do so. But the fact that the issuer 

sent the notice would not exempt a 

SHOP from the notice requirement. 

Comment: We received a comment 

asking HHS to provide specific 

information on the required termination 

notices about how employer groups can 

maintain coverage or obtain other 

coverage, reinstatement rights and 

processes, how to reapply for coverage, 

and information about other coverage 

options. 

Response: When sending these 

notices in States with an FF–SHOP, 

HHS intends to provide additional 

information about how to avoid a gap in 

coverage and other coverage options. 

However, we do not believe that this 

content is necessary for the notice 

requirement to be met, and are therefore 

not requiring that it be included in the 

notices sent by all SHOPs and issuers. 

Comment: Some commenters support 

a SHOP sending termination notices to 

enrollees and employer groups 

‘‘promptly and without undue delay.’’ 

However, one commenter requested 

flexibility to issuers to ensure notices 

are provided consistent with existing 

State criteria. We also received 

comments requesting that the standard 

for timing be broader, and 

recommending delivery of termination 

notices occur at least 30 days prior to 

the termination effective date, rather 

than timing the notice as proposed. One 

commenter recommended that HHS 

specify that the timing of sending 

notices be expressed in business days. 

Response: We recognize that the 

timeline described as a safe harbor in 

the preamble to the proposed rule might 

not give QHP issuers sufficient time to 

mail notices. We therefore are 

modifying the proposal to specify that 

SHOPs and issuers should send the 

required notices within 3 business days 

where notice is provided electronically 

and within 5 business days when hard 

copy notices are mailed. 

We are also making minor changes to 

the wording of the proposed 

requirements at § 155.735(g) and at 

§ 156.285(d)(1)(ii), so that the final rule 

refers to a requirement to ‘‘notify’’ new 

enrollees, rather than to ‘‘provide’’ them 

‘‘with a notice.’’ We are also finalizing 

new § 155.735(g) and the amendments 

to § 156.285(d)(1)(ii) with an effective 

date of January 1, 2016. 

7. Exchange Functions: Certification of 

Qualified Health Plans 

a. Certification Standards for QHPs 

(§ 155.1000) 

In § 155.1000, we proposed to add 

paragraph (d) to harmonize QHP 

certification with rolling enrollment in 

the SHOP. Under the proposal, where a 

SHOP certifies QHPs on a calendar year 

basis, a QHP’s certification will be in 

effect for the duration of any employer’s 

plan year that began in the calendar year 

for which the plan was certified. 

We are finalizing as proposed with 

the modification noted below. 

Comment: We received some 

comments supporting the proposed 


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policy for QHPs in SHOPs that certify 

QHPs on a calendar year basis to retain 

their certification for the duration of any 

employer’s plan year that began in the 

calendar year for which the plan was 

certified. We also received one comment 

recommending that we specify that this 

proposed policy applies with the 

exception provided in § 155.1080. 

Response: In light of comments 

received, we are amending the proposed 

language to specify that § 155.1000(d) 

does not apply when there is a 

decertification by the Exchange of 

QHPs, pursuant to § 155.1080. 

b. Recertification of QHPs (§ 155.1075) 

We are making a conforming 

amendment to align the date by which 

an Exchange must complete the QHP 

recertification process with the date 

finalized in this rule at § 155.410(e)(2) 

for the beginning of the open enrollment 

period for the benefit year beginning on 

January 1, 2016. In the Exchange 

Establishment Rule, we finalized 

§ 155.1075(b) to state that the Exchange 

must complete the QHP recertification 

process on or before September 15 of the 

applicable calendar year. In that rule, 

we also finalized the open enrollment 

periods for years other than the 2014 

benefit year as running from October 15 

through December 7 of the preceding 

year (77 FR 18462). This gave Exchanges 

until 1 month before the beginning of 

the open enrollment period to complete 

the recertification process. 

In the proposed rule, we proposed 

that the beginning of the open 

enrollment period for the benefit year 

beginning on or after January 1, 2016, 

would begin on October 1, 2015— 

approximately 2 weeks after the QHP 

recertification deadline. As discussed 

elsewhere in this final rule, we are 

finalizing an open enrollment period for 

coverage beginning in 2016 that would 

begin 1 month later, on November 1. To 

align the date by which an Exchange 

must complete recertification and the 

beginning of the open enrollment period 

in a manner that provides issuers, State 

regulators, and Exchanges additional 

time to complete the plan review and 

certification processes without placing 

any substantive burden on consumers, 

we are amending § 155.1075(b) to 

require Exchanges to complete 

recertification of QHPs no later than 2 

weeks prior to the beginning of open 

enrollment. 

F. Part 156—Health Insurance Issuer 

Standards Under the Affordable Care 

Act, Including Standards Related to 

Exchanges 

1. General Provisions 

a. Definitions (§ 156.20) 

In § 156.20, we proposed that for 

purposes of part 156, the term ‘‘plan’’ 

have the meaning given the term in 

§ 144.103, as proposed to be amended in 

this rulemaking. Please refer to section 

III.A.1 for a discussion of the term 

‘‘plan,’’ which is being finalized as 

proposed. 

b. FFE User Fee for the 2016 Benefit 

Year (§ 156.50(c)) 

Section 1311(d)(5)(A) of the 

Affordable Care Act contemplates an 

Exchange charging assessments or user 

fees to participating health insurance 

issuers to generate funding to support 

its operations. If a State does not elect 

to operate an Exchange or does not have 

an approved Exchange, section 

1321(c)(1) of the Affordable Care Act 

directs HHS to operate an Exchange 

within the State. In addition, 31 U.S.C. 

9701 permits a Federal agency to 

establish a charge for a service provided 

by the agency. Accordingly, at 

§ 156.50(c), we specified that a 

participating issuer offering a plan 

through an FFE must remit a user fee to 

HHS each month that is equal to the 

product of the monthly user fee rate 

specified in the annual HHS notice of 

benefit and payment parameters for the 

applicable benefit year and the monthly 

premium charged by the issuer for each 

policy under the plan where enrollment 

is through an FFE. 

OMB Circular No. A–25 Revised 

(Circular No. A–25R) establishes Federal 

policy regarding user fees, and specifies 

that a user charge will be assessed 

against each identifiable recipient for 

special benefits derived from Federal 

activities beyond those received by the 

general public. As in benefit year 2015, 

issuers seeking to participate in an FFE 

in benefit year 2016 will receive two 

special benefits not available to the 

general public: (1) The certification of 

their plans as QHPs; and (2) the ability 

to sell health insurance coverage 

through an FFE to individuals 

determined eligible for enrollment in a 

QHP. Activities performed by the 

Federal government that do not provide 

issuers participating in an FFE with a 

special benefit will not be covered by 

this user fee. 

Circular No. A–25R further states that 

user charges should generally be set at 

a level so that they are sufficient to 

recover the full cost to the Federal 

government of providing the service 

when the government is acting in its 

capacity as sovereign (as is the case 

when HHS operates an FFE). We 

proposed to set the 2016 user fee rate for 

all participating issuers at 3.5 percent of 

the monthly premium charged by the 

issuer. This rate is the same as the 2015 

user fee rate. We are finalizing the 2016 

user fee rate as proposed. Circular No. 

A–25R allows for exceptions to this 

policy, with OMB approval. An 

exception was in place for establishing 

the 2015 user fee rate. To ensure that 

FFEs can support many of the goals of 

the Affordable Care Act, we received an 

exception to this policy again for 2016. 

Comment: We received one comment 

on the underlying structure of the FFE 

user fee, recommending that HHS 

establish broad-based financing for 

FFEs, such as an assessment on all 

health care industry entities. If the 

existing fee structure is kept, the 

commenter stated that it should be paid 

by consumers and small employers that 

purchase coverage through an FFE. The 

commenter also stated that the user fee 

should not be set as a percent of 

premium, as the cost to run an Exchange 

is not related to the cost of coverage. 

Response: We will continue to assess 

the FFE user fee as a percent of the 

monthly premium charged by issuers 

participating in an FFE. In accordance 

with Circular No. A–25R, issuers are 

charged the user fee in exchange for 

receiving special benefits beyond those 

that accrue to the general public. Setting 

the user fee as a percent of premium 

ensures that the user fee generally aligns 

with the business generated by the 

issuer as a result of participation in an 

FFE. 

Comment: One commenter 

recommended that HHS publish cost 

estimates for the FFEs, disclose how 

funds will be spent, and develop 

performance metrics for the FFEs. The 

commenter stated that any increase in 

an issuer’s aggregate liability for FFE 

user fees should be capped at changes 

in the Consumer Price Index, and that 

total user fee collections across all 

issuers should be capped at the level of 

expended costs. The commenter urged 

that if user fee collections exceed FFE 

costs, issuers should receive a rebate or 

credit against future fees. 

Response: HHS will continue to 

publish cost estimates through the 

Federal budget process, and publish 

periodic performance measures, such as 

HHS reports on Marketplace call center 

wait times, and Web site visits and rates 

of eligibility determinations through 

HealthCare.gov. We will also continue 

to set the user fee rate based on the 

expected costs to the Federal 


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45http://www.cms.gov/CCIIO/Resources/Files/

Downloads/uniform-glossary-final.pdf. 

government of providing the special 

benefits to issuers; however, for 2016 as 

noted above, we received an exception 

to this policy because we wish to ensure 

that the FFEs can support many of the 

goals of the Affordable Care Act. 

Because we set the user fee rate below 

that which is expected to cover full 

Federal costs (as in 2014 and 2015), we 

do not see the need at this time to 

address a situation in which user fee 

collections exceed costs. 

2. Essential Health Benefits Package 

a. State Selection of Benchmark 

(§ 156.100) 

We proposed to amend paragraph (c) 

of § 156.100 to delete the language 

regarding the default base-benchmark 

plan in the U.S. Territories of Guam, the 

U.S. Virgin Islands, American Samoa, 

and the Northern Mariana Islands. The 

change reflects HHS’s determination, 

described in more detail in section 

III.A.1.b of this final rule, that certain 

provisions of the PHS Act enacted in 

title I of the Affordable Care Act that 

apply to health insurance issuers are 

appropriately governed by the definition 

of ‘‘State’’ set forth in that title. 

Therefore, the rules regarding EHB 

(section 2707 of the PHS Act) do not 

apply to health insurance issuers in the 

U.S. Territories. We also proposed to 

make a technical change to this section 

by replacing ‘‘defined in § 156.100 of 

this section’’ with ‘‘described in this 

section.’’ We note that this has no effect 

on Medicaid and CHIP programs and 

that Alternative Benefit Plans will still 

have to comply with the essential health 

benefit requirements. 

We did not receive any comments 

regarding this proposal. We are 

finalizing the provisions as proposed. 

b. Provision of EHB (§ 156.115) 

(1) Habilitative Services 

One of the 10 categories of benefits 

that must, under section 1302(b)(1)(G) of 

the Act, be included under the 

Secretary’s definition of EHB is 

rehabilitative and habilitative services 

and devices. If a benchmark plan does 

not include habilitative services, 

§ 156.110(c)(6) of the current EHB 

regulations requires the issuer to cover 

habilitative services as specified by the 

State under § 156.110(f) or, if the State 

does not specify, then the issuer must 

cover habilitative services in the manner 

specified in § 156.115(a)(5). Section 

156.115(a)(5) states that a health plan 

may provide habilitative coverage by 

covering habilitative services benefits 

that are similar in scope, amount, and 

duration to benefits covered for 

rehabilitative services or otherwise 

determine which services are covered 

and report the determination to HHS. In 

some instances, those options have not 

resulted in comprehensive coverage for 

habilitative services. Therefore, we 

proposed amending § 156.115(a)(5) to 

establish a uniform definition of 

habilitative services that may be used by 

States and issuers. In addition, we 

proposed to remove § 156.110(c)(6) 

because that provision gives issuers the 

option to determine the scope of 

habilitative services. 

We believe that adopting a uniform 

definition of habilitative services would 

minimize the variability in benefits and 

lack of coverage for habilitative services 

versus rehabilitative services. Defining 

habilitative services clarifies the 

difference between habilitative and 

rehabilitative services. Habilitative 

services, including devices, are 

provided for a person to attain, 

maintain, or prevent deterioration of a 

skill or function never learned or 

acquired due to a disabling condition. 

Rehabilitative services, including 

devices, on the other hand, are provided 

to help a person regain, maintain, or 

prevent deterioration of a skill or 

function that has been acquired but then 

lost or impaired due to illness, injury, 

or disabling condition. 

We proposed adopting the definition 

from the Glossary of Health Coverage 

and Medical Terms 45: Health care 

services that help a person keep, learn, 

or improve skills and functioning for 

daily living. Examples include therapy 

for a child who is not walking or talking 

at the expected age. These services may 

include physical and occupational 

therapy, speech-language pathology and 

other services for people with 

disabilities in a variety of inpatient and/ 

or outpatient settings. 

We did not propose any changes to 

§ 156.110(f), which allows States to 

determine services included in the 

habilitative services and devices 

category if the base-benchmark plan 

does not include coverage. Several 

States have made such a determination 

following benchmark selection for the 

2014 plan year, and we wish to continue 

to defer to States on this matter as long 

as the State definition complies with 

EHB policies, including nondiscrimination. If the State does not 

supplement missing habilitative 

services or does not supplement the 

services in an EHB-compliant manner, 

issuers should cover habilitative 

services and devices as defined in 

§ 156.115(a)(5)(i). 

We also proposed to revise current 

§ 156.115(a)(5)(ii) to provide that plans 

required to provide EHB cannot impose 

limits on coverage of habilitative 

services that are less favorable than any 

such limits imposed on coverage of 

rehabilitative services. Since the 

statutory category includes both 

rehabilitative and habilitative services 

and devices, we interpret the statute to 

require coverage of each. Therefore, 

issuers that previously excluded 

habilitative services, but subsequently 

added them, would be required under 

our proposal to impose separate limits 

on each service rather than retaining the 

rehabilitative services visit limit and 

having habilitative services count 

toward the same visit limit. Because we 

proposed to establish a uniform 

definition of habilitative services in new 

§ 156.115(a)(5)(i), we also proposed to 

delete § 156.110(c)(6), which would 

remove the option for issuers to 

determine the scope of the habilitative 

services. In § 156.110 we proposed to 

make a technical change to amend the 

list structure of paragraph (c) by 

replacing the ‘‘and’’ in (c)(5) with a 

period and adding an ‘‘and’’ at the end 

of (c)(4). 

We are finalizing our policy as 

proposed, adopting the definition of 

habilitative services from the Uniform 

Glossary in its entirety, to be effective 

beginning with the 2016 plan year and 

requiring separate limits on habilitative 

and rehabilitative services beginning 

with the 2017 plan year. We are 

codifying this final policy in revised 

§ 156.115(a)(5) and removing 

§ 156.110(c)(6). 

Comment: Several commenters 

requested more State flexibility, even in 

cases where the benchmark plan 

includes habilitative services; they 

sought assurance that a Federal 

definition will not supersede a State 

law, and that State-required benefits 

that could be considered habilitative 

services would be treated as EHB. 

Response: States are required to 

supplement the benchmark plan if the 

base benchmark plan does not include 

coverage of habilitative services as 

defined in this final rule. We are 

codifying the definition of habilitative 

services as a minimum for States to use 

when determining whether plans cover 

habilitative services. State laws 

regarding habilitative services are not 

pre-empted so long as they do not 

prevent the application of the Federal 

definition. State laws enacted in order 

to comply with § 156.110(f) are not 

considered benefits in addition to the 

EHB; such laws ensure compliance with 

§ 156.110(a) which requires coverage of 

all EHB categories. Therefore, there is 


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46Section 1201 of the Affordable Care Act added 

section 2704 of the PHS Act, which prohibited 

preexisting condition exclusions. Section 1255 of 

the Affordable Care Act states that the provisions 

of section 2704 of the PHS Act, as they apply to 

enrollees who are under 19 years of age, shall 

become effective for plan years beginning on after 

September 23, 2010. 

47Patient Protection and Affordable Care Act; 

Data Collection to Support Standards Related to 

Essential Health Benefits; Recognition of Entities for 

the Accreditation of Qualified Health Plans, 77 FR 

42658 (July 20, 2013) (codified at part 156). 

no obligation to defray the cost of such 

State-required benefits. 

Comment: Several commenters 

objected to imposing separate limits on 

rehabilitative and habilitative services 

and devices, claiming issuers do not 

have operational capacity to 

differentiate between habilitative and 

rehabilitative services and devices based 

on enrollee diagnosis or whether the 

enrollee is seeking to maintain or 

achieve function. 

Response: We are finalizing the 

requirement to ensure coverage of each 

with separate limits, but the 

requirement will not become effective 

until 2017. This delay is intended to 

provide issuers with the opportunity to 

resolve operational issues with their 

claims systems. 

Comment: Several commenters asked 

that ‘‘devices’’ be included in the 

definition of habilitative services. 

Response: We originally omitted 

devices because the term is already 

included in the statutory description of 

this category of EHB. In response to 

comments, however, we have added 

‘‘devices’’ to our regulatory definition. 

We remind issuers that the statute 

requires coverage of devices for both 

rehabilitative and habilitative services. 

Comment: Several commenters 

requested that we require issuers to 

have an exceptions process similar to 

the process required by OPM for multiState plans, in case a patient needs 

treatment that exceeds the visit limits 

allowed by the plan. 

Response: Enrollees wishing to appeal 

an adverse benefit determination, 

including denial of habilitative services, 

should follow the process established in 

§ 147.136, which implements section 

2719 of the PHS Act for internal claims 

and appeals and external review 

processes. 

Comment: Commenters offered many 

suggestions for specific services and 

devices, such as orthotics and 

prosthetics, which they stated should be 

required to be covered as habilitative 

services and devices by all issuers. 

Response: We are not codifying such 

a list at this time, as we continue to 

allow States to maintain their traditional 

role in defining the scope of insurance 

benefits, but we encourage issuers to 

cover additional services and devices 

beyond those covered by the benchmark 

plan. 

(2) Pediatric Services 

In the preamble of the EHB Rule, we 

stated that pediatric services should be 

provided until at least age 19 (78 FR 

12843). States, issuers, and stakeholders 

requested clarification on this standard. 

To provide this clarification, we 

proposed amending § 156.115(a) to add 

paragraph (6), specifying that EHB 

coverage for pediatric services should 

continue until the end of the plan year 

in which the enrollee turns 19 years of 

age. This was proposed as a minimum 

requirement. 

This age limit is consistent with 

section 1201 of the Affordable Care Act, 

46 which phased in the prohibition on 

preexisting conditions exclusions by 

first prohibiting them for children under 

age 19, as well as the age limit for 

eligibility to enroll in CHIP. In addition, 

as noted in the EHB Rule, this proposed 

policy aligns with Medicaid rules (78 

FR 12843), which require States to cover 

children up to age 19 with family 

incomes up to 100 percent of the FPL as 

a mandatory eligibility category. 

Comment: Many commenters 

requested that pediatric services 

continue only until the end of the 

month in which the enrollee turns 19, 

stating that this is the industry standard. 

Response: Although we proposed to 

require pediatric services until the end 

of the plan year in which the enrollee 

turns 19, we recognize these 

commenters’ concerns. Accordingly, we 

are finalizing a policy in § 156.115(a)(6), 

under which issuers must provide 

coverage for pediatric services until at 

least the end of the month in which the 

enrollee turns 19. We encourage issuers 

to cover services under the pediatric 

services EHB category beyond the 19th 

birthday month if non-coverage of those 

services after that time would negatively 

affect care. 

c. Collection of Data To Define Essential 

Health Benefits (§ 156.120) 

In the Patient Protection and 

Affordable Care Act; Data Collection to 

Support Standards Related to Essential 

Health Benefits; Recognition of Entities 

for the Accreditation of Qualified Health 

Plans final rule (EHB Data Collection 

Rule),47 we required issuers in each 

State to submit certain data regarding 

the three largest health insurance 

products by enrollment (as of March 31, 

2012) to HHS by September 4, 2012. 

These data, gathered from 2012 plans, 

were used to determine, for each State, 

the benefits and limitations of the three 

largest small group products by 

enrollment, which were used to 

establish potential benchmark plans. 

The EHB Rule unintentionally deleted 

§ 156.120, which included the data 

submission requirement. 

We proposed to allow each State to 

select a new base-benchmark plan for 

the 2017 plan year, allowing States to 

choose a 2014 plan that meets the 

requirements of § 156.110 as the new 

EHB-benchmark plan, so that issuers 

can design substantially equal EHBcompliant products for the 2017 plan 

year. We believe that this would 

ultimately create efficiencies for issuers 

in designing plans. As stated in 

§ 156.115(a), provision of EHB means 

that a health plan provides benefits that 

are substantially equal to the EHBbenchmark plan. Therefore, health plans 

offering EHB in the 2017 plan year will 

be required to provide benefits 

substantially equal to the benefit 

amounts, duration and scope of benefits 

covered by the 2014 EHB-benchmark 

plan (supplemented as necessary). 

If a category of base-benchmark plans 

under § 156.100(a)(1)–(4) does not 

include a plan that meets the 

requirements of § 156.110, we 

considered permitting the State to select 

a base-benchmark plan that does not 

meet the requirements of § 156.110 in 

that category and supplement its basebenchmark plan as provided in 

§ 156.110(b) to ensure that all 10 

categories of benefits are covered in a 

benchmark plan. 

We proposed re-codifying part of 

§ 156.120, in a manner similar to that 

which appeared in our regulations prior 

to the effective date of the EHB Rule. We 

proposed to require a State that chooses 

a new benchmark plan in the State or, 

if a State does not choose a new 

benchmark plan, the issuer of the 

default benchmark plan, to provide 

benchmark plan data as of a date 

specified by HHS. We anticipate 

collection of new benchmark plan data 

for the 2017 plan year and the data 

discussed in § 156.120(b), including 

administrative data and descriptive 

information pertaining to all health 

benefits in the plan, treatment 

limitations, drug coverage, and 

exclusions. We believe that this 

information is already included in the 

issuer’s form filing that the issuer 

submitted to the State regulator. The 

definitions previously adopted in 

§ 156.120(a) for the terms health 

benefits, health plan, State, and 

treatment limitations are still applicable 

and would be codified as previously 

defined. However, we are not finalizing 

the definitions for ‘‘health insurance 

market’’ or ‘‘small group market’’ in 


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48CMS–10448; http://www.cms.gov/Regulationsand-Guidance/Legislation/

PaperworkReductionActof1995/PRA-Listing-Items/

CMS-10448.html. 

49Medicare Part D plans are required to maintain 

P&T committees by the Social Security Act section 

1860D–4(b)(3)(G) codified at 42 CFR 423.120(b), 42 

CFR 423.272(b)(2). NAIC has a Model Act entitled 

Health Carriers Prescription Drug Benefit 

Management Model Act (July 2003) that includes 

P&T Committee provisions at: http://www.naic.org/ 

store/free/MDL-22.pdf. 

§ 156.120(a), as they are not used in this 

section. 

Comment: Some commenters 

requested use of a 2014 plan as the 

benchmark for 2016 rather than 2017. 

Several commenters suggested we use a 

2015 plan as the benchmark for 2017, 

noting that the final regulations 

pertaining to the Mental Health Parity 

and Addiction Equity Act will not be 

effective until 2015. 

Response: For the 2016 plan year, 

HHS expects to begin the certification 

process for QHPs in the FFEs in early 

spring of 2015. Because issuers are 

required to design QHP plans that 

provide EHB that are substantially equal 

to the EHB-benchmark plan, based on 

the base-benchmark plan chosen and 

supplemented as necessary by the State, 

it is not operationally possible for us to 

collect and publish new EHBbenchmark plans prior to the QHP 

certification process for the 2016 plan 

year if we allow States to choose a 2014 

plan as their new base-benchmark plan 

and supplement if necessary. As 

codified in § 156.115(a)(3), an EHBcompliant plan must provide mental 

health and substance use disorder 

services, including behavioral health 

treatment services in compliance with 

MHPAEA and its corresponding 

regulations. While we agree that it 

would be easier for issuers to design 

plans if the base-benchmark plan 

chosen by the State were compliant 

with MHPAEA (that is, based on a 2015 

plan), nothing in this rule negates the 

current requirement that EHB-compliant 

plans comply with MHPAEA and any 

associated regulatory requirements in 

effect at the time. Based on the timelines 

needed for issuers to design plans, if we 

permitted States to select 2015 plans as 

new base-benchmark plans, we do not 

believe that issuers would be able to 

design substantially equal EHBcompliant products until the 2018 plan 

year, based on those benchmarks, which 

we believe is not in consumers’ best 

interest. Therefore, we are finalizing the 

re-codification of part of § 156.120 as 

proposed, as well as our proposal to 

allow issuers to design a plan that is 

substantially equal to the newly selected 

2014 benchmark plan for the 2017 plan 

year. 

Comment: Several States and other 

commenters requested more details on 

the process for selection and 

reassurance that they can supplement 

their benchmark plan. 

Response: We did not propose to 

make changes to § 156.100(a) or (b); 

therefore, the options from which a 

base-benchmark plan may be selected 

remain the same. HHS issued a PRA 

package regarding collection of 

benchmark information on November 

26, 2014.48 As stated there, HHS 

proposes to obtain the certificate of 

coverage and other plan documents that 

describe covered services, exclusions, 

limitations, cost sharing, and all other 

terms and conditions of plan benefits 

that are provided to enrollees. States 

that select, or issuers in States that 

default to a benchmark due to lack of 

selection, would submit the documents 

securely via email. HHS intends to work 

collaboratively with States to identify 

responsive documents and to secure 

such documents during the second 

quarter of 2015. HHS then intends to 

publish selected and default benchmark 

plans and supporting documents. States 

retain the ability to supplement the 

base-benchmark plan, as codified in 

§ 156.110(b)(1), and retain the ability to 

determine whether the base-benchmark 

plan covers the EHB category or 

whether supplementation is warranted. 

We also reiterate that supplementation 

is the addition of the entire category of 

such benefits to satisfy § 156.110(a), 

while substitution is the removal of one 

particular item or service for another 

actuarially-equivalent item or service 

within the same category. 

Supplementation ensures that all EHB 

categories are covered. Substitution, 

which is permitted within an EHB 

category at the issuer’s discretion, 

allows for greater variety of plan 

designs. 

Comment: Several States and other 

commenters requested further 

clarification regarding how new 

benchmark plan selection will affect our 

policy at § 155.170 pertaining to Staterequired benefits. 

Response: We did not propose any 

changes to § 155.170. Therefore, only 

new State-required benefits enacted on 

or prior to December 31, 2011 are 

included as EHB, and States are 

expected to continue to defray the cost 

of State-required benefits enacted on or 

after January 1, 2012 unless those Staterequired benefits were required in order 

to comply with new Federal 

requirements. HHS intends to continue 

to publish a list of non-EHB Staterequired benefits on its Web site on an 

annual basis. 

Comment: Some commenters 

expressed their desire for HHS to 

abandon the benchmark policy in the 

future, and specify a list of services that 

issuers must cover in each EHB category 

instead. 

Response: To maintain State 

flexibility while ensuring 

comprehensive coverage, we believe 

that the benchmark policy continues to 

be the most appropriate at this time. 

Therefore, the benchmark policy will 

continue to establish EHBs through plan 

year 2017. Since the first EHB plan year 

just ended, we will examine how the 

policy affected enrollees and what 

changes, if any, should be made in the 

future. We believe that it is important to 

have a more complete sense of how EHB 

policy is working before proposing 

changes to the benchmark approach. 

d. Prescription Drug Benefits (§ 156.122) 

i. § 156.122(a) 

Under our regulations at § 156.122(a), 

EHB plans are required to cover the 

greater of one drug per United States 

Pharmacopeia (USP) category and class 

or the same number of drugs in each 

USP category and class as the State’s 

EHB-benchmark plan. In the proposed 

rule, we proposed several revisions to 

this policy. First, we proposed to retain 

§ 156.122(a)(2), with one modification to 

change ‘‘drug list’’ to ‘‘formulary drug 

list’’ for uniformity purposes for this 

section, and to renumber this paragraph 

from § 156.122(a)(2) to § 156.122(a)(1). 

Due to some concerns detailed in the 

proposed rule about the drug count 

standard under current § 156.122(a)(1), 

we proposed an alternative to the drug 

count standard. Specifically, we 

proposed that plans have a pharmacy 

and therapeutics (P&T) committee and 

use that committee to ensure that the 

plan’s formulary drug list covers a 

sufficient number and type of 

prescription drugs. We proposed that 

the P&T committee standards must be 

met for the prescription drug coverage 

to be considered EHB. We stated our 

belief that the use of a P&T committee 

in conjunction with other standards that 

we proposed would ensure that an 

issuer’s formulary drug list covers a 

broad array of prescription drugs. We 

noted that standards defined by the 

Medicare Part D Prescription Drug 

Program (Medicare Part D), the NAIC,49

and other stakeholders, and we solicited 

comments on these standards and 

whether we should adopt them in lieu 

of or in addition to the standards we are 

proposing. 

In the proposed rule, we proposed to 

specify P&T committee standards on 


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membership, meetings, and 

establishment and development of a 

formulary drug list. For P&T committee 

membership, we proposed requiring the 

P&T committee to include members 

from a sufficient number of clinical 

specialties to adequately represent the 

needs of enrollees. For instance, we 

would expect that the P&T committee 

members include experts in chronic 

diseases and in the care of individuals 

with disabilities. We proposed that the 

majority of members be practicing 

physicians, practicing pharmacists, and 

other practicing health care 

professionals. Additionally, we 

proposed to require that members of the 

P&T committee that have a conflict of 

interest with the issuer or a 

pharmaceutical manufacturer would be 

permitted to sit on the P&T committee 

but would be prohibited from voting on 

matters for which the conflict exists. We 

also proposed that at least 20 percent of 

the P&T committee’s membership have 

no conflict of interest with respect to 

either the issuer or to any 

pharmaceutical manufacturer. Under 

these standards, a member who holds 

more than one health care license, for 

example as a nurse practitioner and a 

pharmacist, would only count as one 

person. We also solicited comments on 

the percentage of committee members 

that should have no conflict of interest, 

and the proposed requirement that the 

members of the P&T committee with 

conflicts of interest should be permitted 

to sit on the P&T committee but would 

be prohibited from voting on matters for 

which the conflict exists. We considered 

requiring a set number of participants to 

be independent and have no conflicts of 

interest, but we were concerned that 

absent a limitation on the total number 

of committee members, requiring a 

specific number of committee members 

to be independent and not have a 

conflict of interest would have a 

variable impact, depending on the size 

of the P&T committee. We also proposed 

that the P&T committee would be 

responsible for defining a reasonable 

definition of conflict of interest and for 

managing the conflicts of interest of its 

committee members. As part of this 

standard, the P&T committee would 

require its P&T committee members to 

sign a conflict of interest statement 

revealing economic or other 

relationships with entities, including 

the issuer and any pharmaceutical 

manufacturers, affected by drug 

coverage decisions that could influence 

committee decisions. We solicited 

comments on this proposed standard, 

including the implementation of this 

conflict of interest standard, whether 

there are additional conflict of interest 

standards that should apply and what 

would constitute a conflict of interest. 

In particular, we sought comments on 

what could be considered a permissible 

relationship with respect to the issuer or 

a pharmaceutical manufacturer. We 

stated that we would consider providing 

further guidance regarding conflicts of 

interest. 

We also proposed that the P&T 

committee must meet at least quarterly, 

and maintain written documentation of 

all decisions regarding development and 

revision of formulary drug lists. For 

formulary drug list establishment and 

management, we proposed that the P&T 

committee must develop and document 

procedures to ensure appropriate drug 

review and inclusion on the formulary 

drug list, as well as make clinical 

decisions based on scientific evidence, 

such as peer-reviewed medical 

literature, and standards of practice, 

such as well-established clinical 

practice guidelines. The P&T committee 

would be required to consider the 

therapeutic advantages of prescription 

drugs in terms of safety and efficacy 

when selecting formulary drugs and 

making recommendations for their 

formulary tier. The P&T committee 

would be required to review both newly 

FDA-approved drugs and new uses for 

existing drugs. We also proposed that 

the P&T committee would be required to 

ensure that an issuer’s formulary drug 

list covers a range of drugs across a 

broad distribution of therapeutic 

categories and classes and 

recommended drug treatment regimens 

that treat all disease states and does not 

discourage enrollment by any group of 

enrollees. 

Lastly, we proposed to require that 

issuers’ formularies provide appropriate 

access to drugs that are included in 

broadly accepted treatment guidelines 

and which are indicative of and 

consistent with general best practice 

formularies in widespread use. Broadly 

accepted treatment guidelines and 

general best practices could be based on 

industry standards or other appropriate 

guidelines that are issued by expert 

organizations that are current at the 

time. For instance, broadly accepted 

treatment guidelines could include 

guidelines provided in the National 

Guideline Clearinghouse (NGC), which 

is a publicly available database of 

evidence-based clinical practice 

guidelines and related documents. As a 

result of this proposed policy, we would 

expect that a health plan’s formulary 

drug list would ensure that appropriate 

access is being afforded to drugs in 

widely accepted national treatment 

guidelines and which are indicative of 

general best practices at the time. Given 

our proposal to use broadly accepted 

treatment guidelines and best practices, 

we would also expect that plans’ 

formulary drug lists be similar to those 

formulary drug lists then currently in 

widespread use. We also noted that 

States have primary responsibility for 

enforcing EHB requirements and, if 

finalized, States would be responsible 

for the oversight and enforcement of the 

P&T committee standards. We sought 

comment on these proposed revisions to 

§ 156.122(a), including on the oversight 

and enforcement of these standards, and 

whether other standards are needed for 

P&T committees. 

As an alternative to, or in 

combination with, the above-proposed 

P&T committee requirements, we 

considered whether to replace the USP 

standard with a standard based on the 

American Hospital Formulary Service 

(AHFS). We sought comments on the 

proposed P&T committee standard, and 

whether we should consider adopting 

AHFS or another drug classification 

system, as well as on any other 

standards that may be appropriate for 

this purpose. For instance, for the AHFS 

system, we considered amending the 

minimum standard established in the 

EHB Final Rule that requires coverage of 

at least the greater of one drug in every 

USP category and class or the same 

number of drugs in each USP category 

and class as the State’s EHB-benchmark 

plan to require at least the greater of one 

drug in each AHFS class and subclass 

or the same number of drugs in each 

AHFS class and subclass as the State’s 

EHB-benchmark plan. We explained 

that if we were to finalize a P&T 

committee process in combination with 

a drug count standard based on either 

the AHFS system or the USP system, we 

would expect the health plan to 

establish and maintain its formulary 

drug list in compliance with the P&T 

committee standards, and in addition, 

the resulting health plan’s formulary 

drug list would also need to comply 

with the drug count standard. We 

discussed continuing to use the existing 

USP drug count standard, and updating 

the USP drug count system to a more 

current version. We proposed to 

implement proposed § 156.122(a)(2) to 

start in the 2017 plan year, seeking 

comments on this proposed timing of 

implementation. Based on comments 


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50See the Essential Health Benefits (EHB) Rx 

Crosswalk Methodology at: https://www.cms.gov/

CCIIO/Resources/Data-Resources/Downloads/ehbrx-crosswalk.pdf. 

received, as described in detail below, 

we are finalizing an approach that 

combines the use of a P&T committee 

(satisfying standards largely as 

proposed) with the current drug count 

standard that requires coverage of at 

least the greater of one drug per USP 

category and class or the same number 

of drugs in each USP category and class 

as the State’s EHB benchmark plan. 

Comment: Some commenters 

supported replacing the current drug 

standard with the P&T committee 

approach only, and some commenters 

recommended that we defer to a health 

plan’s accreditation by the National 

Committee for Quality Assurance 

(NCQA) or URAC, or use Medicare Part 

D standards. Some commenters did not 

support the P&T committee approach 

because they were concerned it could 

result in plans with widely varying 

formularies, leading to consumer 

confusion. They also had concerns 

about oversight and enforcement. 

Several commenters supported 

combining the P&T committee with a 

drug count standard. Of those who 

commented on the drug count standard, 

some supported USP, some supported 

AHFS, and others supported the 

creation of a new standard. Some 

commenters recommended changes to 

the manner in which the drug count is 

calculated. For example, some 

commenters suggested that the drug 

count metric change to the greater of 

two drugs per category and class or the 

number of drugs in the benchmark. 

Other commenters sought clarification 

on the counting of chemically distinct 

drugs and the modes of delivery. 

Response: We are finalizing an 

approach that combines the use of a 

P&T committee with the current drug 

count standard that requires coverage of 

at least the greater of one drug per USP 

category and class or the same number 

of drugs in each USP category and class 

as the State’s EHB benchmark plan. We 

believe that a combination of a 

qualitative and quantitative approach 

will best ensure robust formulary 

design, because the two standards can 

complement each other. For instance, 

the requirement of the P&T committee 

to review new drugs addresses one of 

our concerns that the current drug count 

system does not incentivize coverage of 

new drugs. However, the drug count 

standard can provide a minimum 

standard for coverage. 

For the P&T committee requirements, 

we considered deferring to other 

standards, such as those established by 

NCQA, URAC and Medicare Part D. 

However, § 156.122 establishes a 

market-wide standard, and not all plans 

are required to be accredited by those 

organizations. We also do not believe 

that some accreditation standards are as 

transparent as Medicare Part D 

standards—for example, some 

accreditation standards are proprietary 

and could be costly and burdensome for 

an issuer to implement. Further, 

stakeholders are already familiar with 

Medicare Part D’s P&T committee 

standards and we believe that these 

standards will best ensure the P&T 

committee is able to ensure a robust 

formulary. For these reasons, we are 

finalizing P&T committee standards 

modeled on Medicare Part D’s P&T 

committee standards that have been 

modified, as explained below, to better 

address the private health plan 

population and the needs of plans 

required to cover EHB. We also believe 

that adopting P&T committee standards 

that generally align with the existing 

Medicare Part D standards and 

guidance, where possible, will better 

ensure uniformity between standards to 

help reduce the burden on issuers. As 

explained below, we are finalizing the 

proposed conflict of interest standards. 

Although these standards are different 

than those adopted by Medicare Part D, 

we believe that these standards are 

similar to practices in the private 

insurance market. 

We are retaining the USP drug count 

standard because stakeholders are now 

familiar with the USP system after using 

it for 2 years, and we were persuaded by 

the comments supporting the continued 

use of USP. Issuers have already 

developed 2 years of formularies based 

on it, States have already developed 

systems to review those formularies, 

and stakeholders are familiar with the 

system. Thus, while AHFS had the 

benefit of being updated more 

frequently and incorporating a broader 

set of classes and subclasses, 

commenters did not uniformly support 

its use because of several issues, 

including a lack of transparency, the 

need to supplement certain classes 

when compared with USP, and the 

complexity of the AHFS system. We 

also believe that retaining USP will 

reduce the administrative burden and 

costs on States and issuers in 

implementing a combined P&T 

committee process with a drug count 

standard. In implementing the revised 

§ 156.122(a), we intend to use the most 

up-to-date version of the USP system 

available at the time that we build our 

formulary review tools for each plan 

year, starting with the 2017 plan year, 

and will refer to the version number in 

the methodology document that we 

update each year.50

To codify our final policy, we are 

retaining § 156.122(a)(1) (with one 

technical change to delete the ‘‘and’’), 

we are retaining current § 156.122(a)(2) 

(with one technical correction to replace 

‘‘drug list’’ with ‘‘formulary drug list’’ 

and to add an ‘‘and’’), and we are 

adding a new § 156.122(a)(3). Under the 

new § 156.122(a)(3), a health plan must 

establish and maintain its formulary 

drug list in compliance with the P&T 

committee standards. These standards 

are in addition to the requirement that 

the health plan’s formulary drug list 

comply with the drug count standard 

under § 156.122(a)(1) as the minimum 

standard of coverage, and the 

requirement that the health plan submit 

its formulary drug list to the Exchange, 

the State, or OPM. While issuers must 

have a P&T committee, nothing under 

§ 156.122(a) precludes issuers from 

using the same P&T committee across 

multiple issuers. However, we recognize 

that using the same P&T committee 

across multiple issuers may be complex 

to administer. Because States are 

primarily responsible for enforcing EHB 

requirements, States will be responsible 

for the oversight and enforcement of the 

P&T committee standards and the drug 

count standard. We intend to work with 

States to implement these provisions 

and may consider developing additional 

tools and resources to assist States in 

reviewing formulary drug lists. New 

§ 156.122(a)(3) will apply starting with 

the 2017 plan year to give States, 

issuers, and PBMs time to implement 

the new P&T committee standards. 

Comment: Many commenters wanted 

the P&T committee membership to 

include certain types of representatives. 

Some commenters also wanted 

membership on the P&T committee to 

be limited to a certain number. 

Commenters supported limiting the P&T 

committee membership category for 

‘‘other practicing health professionals’’ 

to ‘‘other practicing health care 

professionals that can prescribe.’’ 

Comments sought clarification that a 

practicing provider on the committee 

could be practicing part-time, and 

clarification on the P&T committee’s 

documentation of its decisions. Some 

commenters supported the proposed 

conflict of interest standards, while 

other commenters were concerned it 

would be difficult to meet the standards. 

Others recommended other conflict of 

interest standards. Some commenters 


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51See the Department of Health and Human 

Services’ Office of the Inspector General Report on 

Gaps in Overview of Conflicts of Interest in 

Medicare Prescription Drug Decisions at: http://

oig.hhs.gov/oei/reports/oei-05-10-00450.pdf. 

supported the conflict of interest 

percentage of 20 percent, and others 

recommended that it be 50 percent. 

Some commenters recommended 

implementing the Office of Inspector 

General’s recommendations on conflicts 

of interest for Medicare Part D P&T 

committees,51 and others sought 

transparency requirements for the 

operation and management of the P&T 

committee. 

Response: We are finalizing the 

requirement that the P&T committee 

must be comprised of members that 

represent a sufficient number of clinical 

specialties to adequately meet the needs 

of enrollees. We would expect that the 

P&T committee membership include 

experts in chronic diseases and in the 

care of individuals with disabilities and 

that it would be composed of a diverse 

set of experts. We have established 

certain minimum standards for 

membership to ensure the integrity of 

the P&T committee and to allow 

flexibility to issuers in designing the 

P&T committee. However, we also 

expect the P&T committee would 

consult with experts in management of 

the relevant condition for each drug 

being considered. The P&T committee’s 

membership is also required to include 

a majority of practicing physicians, 

practicing pharmacists, and other 

practicing health care professionals. The 

other practicing health care 

professionals on the P&T committee, 

excluding pharmacists, must be licensed 

to prescribe drugs. The practicing 

physicians, pharmacists, and other 

health care professionals on the P&T 

committee may be practicing part-time. 

However, under these standards, a 

member who holds more than one 

health care license, for example, as a 

nurse practitioner and a pharmacist, 

only counts as one member of the P&T 

committee. 

We are finalizing the conflict of 

interest requirements as proposed. 

These conflict of interest standards are 

not the same as Medicare Part D’s 

standards, but we believe that issuers 

are currently using similar practices in 

the private health insurance market. 

Members of the P&T committee that 

have a conflict of interest with respect 

to the issuer or a pharmaceutical 

manufacturer are permitted to sit on the 

P&T committee but are prohibited from 

voting on matters for which the conflict 

exists. We would expect that in 

implementing this standard, if a 

particular member of a P&T committee 

has to abstain from a majority of votes, 

that the P&T committee should consider 

removal of the member from the P&T 

committee. Additionally, at least 20 

percent of the P&T committee’s 

membership must have no conflicts of 

interest with respect to either the issuer 

or to any pharmaceutical manufacturer. 

We considered the comments we 

received on other P&T committee 

standards and on the requirements for 

the number and percentage of conflict 

free members. However, due to concerns 

about issuers’ ability to meet a 

requirement with a higher threshold and 

concerns about setting a fixed number of 

members required to be conflict free 

when we did not also set the limit on 

the number of participants on the P&T 

committee, we believe that requiring 20 

percent of the P&T committee’s 

membership to be conflict free is a 

reasonable threshold in combination 

with § 156.122(a)(3)(i)(C). As part of this 

standard, the P&T committee members 

must sign a conflict of interest statement 

at least annually revealing economic or 

other relationships with entities affected 

by the committee’s drug coverage 

decisions, including the issuer and any 

pharmaceutical manufacturers. The P&T 

committee is responsible for 

establishing a reasonable definition of 

conflict of interest and for managing the 

conflicts of interest of its committee 

members. We will consider providing 

further guidance regarding the P&T 

committee’s management and oversight, 

including its operation and management 

of conflicts of interest, in the future. 

Comment: Commenters generally 

supported the requirements regarding 

the establishment and management of 

the formulary drug list, and 

recommended specifying the timing of 

reviews for new drugs as well as other 

specified guidelines or best practices. 

Some commenters wanted the P&T 

committees’ decisions to be binding on 

the plan, and others wanted the P&T 

committee’s decisions to be advisory. 

Some commenters opposed the use of 

treatment guidelines or best practices, 

and some wanted clarification that the 

P&T committee can use 

pharmacoeconomic studies in formulary 

development. Commenters were 

concerned about the documentation 

requirements of P&T committees’ 

decisions and others wanted additional 

standards, such as to require the P&T 

committee to have an appeals process 

for a consumer or provider to request a 

drug to be placed on the formulary. 

Response: To ensure better uniformity 

of P&T committee practice, we are 

finalizing new § 156.122(a)(3)(iii), 

which generally aligns with the 

Medicare Part D standards and guidance 

on this subject. Under 

§ 156.122(a)(3)(iii)(A), the P&T 

committee must develop and document 

procedures to ensure appropriate drug 

review and inclusion. This includes 

documentation of decisions regarding 

formulary development and revision 

and utilization management activities. 

P&T committee recommendations 

regarding which drugs are placed on the 

plan’s formulary are binding on the 

plan. This clarification reflects practices 

by Medicare Part D. We also encourage 

P&T committees to be transparent about 

their operation and function, and while 

we are not requiring that P&T 

committees publicly post information 

on the P&T committee, we encourage 

issuers to consider providing this level 

of transparency to consumers. We are 

also finalizing a new 

§ 156.122(a)(3)(iii)(B), which is 

consistent with Medicare Part D 

standards at 42 CFR 423.120(b)(1)(iv) 

and which requires the P&T committee 

to base clinical decisions on the strength 

of scientific evidence and standards of 

practice, and requires the P&T 

committee to assess peer-reviewed 

medical literature, pharmacoeconomic 

studies, outcomes research data, and 

other such information as it determines 

appropriate. Formulary management 

decisions must be based on scientific 

evidence, and may also be based on 

pharmacoeconomic considerations that 

achieve appropriate, safe, and costeffective drug therapy. Under 

§ 156.122(a)(3)(ii)(C), drugs’ therapeutic 

advantages in terms of safety and 

efficacy must be considered when 

selecting formulary drugs. We are 

finalizing this provision, except we are 

not finalizing the requirement that 

drugs’ therapeutic advantages be 

considered when placing the drugs on 

formulary tiers, to better align with 42 

CFR 423.120(b)(1)(v). 

We are also adding new 

§ 156.122(a)(3)(iii)(D) through (F), which 

are consistent with Medicare Part D 

standards at 42 CFR 423.120(b)(1)(vi), 

(vii), and (ix), respectively. The new 

standard in § 156.122(a)(3)(iii)(D) will 

require the P&T committee to review 

policies that guide exceptions and other 

utilization management processes, 

including drug utilization review, 

quantity limits, and therapeutic 

interchange. The purpose of finalizing 

these reviews, which is a typical 

practice by P&T committees, is to ensure 

that formulary management techniques 

do not undermine access to covered 

drugs. 

The new standard in 

§ 156.122(a)(3)(iii)(E) requires the P&T 

committee to evaluate and analyze 

treatment protocols and procedures 


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related to the plan’s formulary at least 

annually, which is also a typical 

practice of P&T committees today. 

Furthermore, under 

§ 156.122(a)(3)(iii)(F), the P&T 

committee must review and approve all 

clinical prior authorization criteria, step 

therapy protocols, and quantity limit 

restrictions applied to each drug. P&T 

committee recommendations, with 

respect to a P&T committee’s clinical 

appropriateness review of the practices 

and policies for formulary management 

activities, such as prior authorizations, 

step therapies, quantity limitations, and 

other drug utilization activities that 

affect access, are advisory only and not 

binding on the issuer, a standard that 

we believe reflects current practice in 

both the private health insurance and 

Medicare Part D markets. However, 

issuers must take the recommendations 

into good faith consideration. Similar to 

the new standards in 

§ 156.122(a)(3)(iii)(D), the purpose of 

finalizing these reviews is to better 

ensure that formulary management 

techniques do not undermine access to 

covered drugs. 

Under § 156.122(a)(3)(iii)(G), which 

was proposed as § 156.122(a)(3)(iii)(D), 

the P&T committee must review all new 

FDA-approved drugs and new uses for 

existing drugs. To implement this 

requirement, the P&T committee must 

make a reasonable effort to review a new 

FDA approved drug product (or new 

FDA approved indication) within 90 

days, and make a decision on each new 

FDA approved drug product (or new 

FDA approved indication) within 180 

days of its release onto the market, or a 

clinical justification must be 

documented if this timeframe is not 

met. 

A health plan’s formulary drug list, 

under § 156.122(a)(3)(iii)(H), must cover 

a range of drugs across a broad 

distribution of therapeutic categories 

and classes and recommended drug 

treatment regimens that treat all disease 

states and must not discourage 

enrollment by any group of enrollees. 

The formulary drug list must also 

ensure appropriate access to drugs in 

accordance with widely accepted 

national treatment guidelines and 

general best practices at the time. To 

comply with § 156.122(a)(3)(iii)(H), 

broadly accepted treatment guidelines 

and general best practices could be 

based on industry standards or other 

appropriate guidelines that are issued 

by expert organizations that are current 

at the time. For instance, broadly 

accepted treatment guidelines could 

include guidelines provided in the 

National Guideline Clearinghouse 

(NGC), which is a publicly available 

database of evidence-based clinical 

practice guidelines and related 

documents. 

ii. Section 156.122(c) 

Section 156.122(c) currently requires 

issuers of EHB plans to have procedures 

in place that allow an enrollee to 

request and gain access to clinically 

appropriate drugs not covered by the 

plan. This requirement, commonly 

referred to as the ‘‘exceptions process,’’ 

applies to drugs that are not included on 

the plan’s formulary drug list. As 

established in the EHB Final Rule (78 

FR 12834) and the Market Standards 

Rule (79 FR 30240), such procedures 

must include a process that allows an 

enrollee, the enrollee’s designee, or the 

enrollee’s prescribing physician (or 

other prescriber) to request an expedited 

review based on exigent circumstances. 

Exigent circumstances exist when an 

enrollee is suffering from a serious 

health condition that may seriously 

jeopardize the enrollee’s life, health, or 

ability to regain maximum function, or 

when an enrollee is undergoing a 

current course of treatment using a nonformulary drug. A health plan must 

make its coverage determination on an 

expedited review request based on 

exigent circumstances, and notify the 

enrollee or the enrollee’s designee and 

the prescribing physician (or other 

prescriber, as appropriate) of its 

coverage determination no later than 24 

hours after it receives the request. A 

health plan that grants an exception 

based on exigent circumstances must 

provide coverage of the non-formulary 

drug for the duration of the exigency. 

In the proposed rule, we proposed to 

build on the expedited exception 

process by proposing to also adopt 

similar requirements for the standard 

exception process. We also proposed to 

adopt standards for a secondary external 

review process if the first exception 

request is denied by the plan (regardless 

of whether the exception is requested 

using the standard process or the 

expedited process). 

We proposed at § 156.122(c), that a 

health plan providing EHB must have 

certain exception processes in place that 

allow an enrollee, the enrollee’s 

designee, or the enrollee’s prescribing 

physician (or other prescriber) to 

request and gain access to clinically 

appropriate drugs not covered by the 

health plan, and when an exception 

requested under one of these processes 

is granted, the plan must treat the 

excepted drug as EHB for all purposes, 

including accrual to the annual 

limitation on cost sharing. Proposed 

§ 156.122(c)(1) sets forth the standard 

exception process. Under this process, 

we proposed that a health plan have a 

process for an enrollee, the enrollee’s 

designee, or the enrollee’s prescribing 

physician (or other prescriber) to 

request a standard review of a coverage 

decision for a drug that is not covered 

by the plan. We proposed that the 

health plan must make its coverage 

determination on a standard exception 

request and notify the enrollee or the 

enrollee’s designee and the prescribing 

physician (or other prescriber, as 

appropriate) of its coverage 

determination no later than 72 hours 

after it receives the request. We 

proposed to require a health plan that 

grants an exception based on the 

standard review process to provide 

coverage of the non-formulary drug for 

the duration of the prescription, 

including refills, and we stated that in 

such a case the excepted drug would be 

considered EHB for all purposes, 

including for counting towards the 

annual limitation on cost sharing. As 

stated in the EHB Rule, plans are 

permitted to go beyond the number of 

drugs offered by the benchmark without 

exceeding EHB. Therefore, if the plan is 

covering drugs beyond the number of 

drugs covered by the benchmark, all of 

these drugs are EHB and must count 

towards the annual limitation on cost 

sharing. 

We proposed moving the language 

regarding the expedited exceptions 

process from § 156.122(c)(1) to new 

§ 156.122(c)(2) and to replace ‘‘Such 

procedures must include’’ with ‘‘A 

health plan must have’’ in current (c)(1) 

proposed as a new paragraph (c)(2)(i). 

In § 156.122(c)(3), we proposed that if 

the health plan denies an exception 

request for a non-formulary drug, the 

issuer must have a process for an 

enrollee, the enrollee’s designee, or the 

enrollee’s prescribing physician (or 

other prescriber, as appropriate) to 

request that an independent review 

organization review the exception 

request and the denial of that request by 

the plan. For this external exception 

review, we proposed to apply the same 

timing that applied to the initial review. 

Thus, if the enrollee requested the drug 

under the proposed standard process 

and the request was denied, then the 

independent review organization would 

have to make its determination and the 

health plan would have to notify the 

enrollee or enrollee’s designee and the 

prescribing physician (or other 

prescriber, as appropriate) no later than 

72 hours after the time it receives the 

external exception review request. 

Likewise, if the initial exception request 

is for an expedited review and that 

request is denied by the plan, then the 

independent review organization would 


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have to make its coverage determination 

and provide appropriate notification no 

later than 24 hours after the time it 

receives the external exception review 

request. We are finalizing the updated 

standards in § 156.122(c) as proposed, 

with an addition to clarify the duration 

of coverage of the excepted drug when 

accessed through the external review 

process. 

Comment: Many commenters 

supported revising § 156.122(c), relating 

to the exceptions process. Some 

commenters wanted the same standards 

as Medicare Part D, and others wanted 

the same standards as the appeals 

process codified at § 147.136. Other 

commenters had concerns about conflict 

with State requirements, the definitions 

of expedited review and the current 

course of treatment, and the 

administrative cost of the exceptions 

process. Some commenters were 

concerned about time limits and wanted 

clarification on when the time limits 

begin, recommending that the time 

limits should be measured in business 

days instead of hours, or be different for 

the external review process. Others 

sought additional requirements related 

to the operation of the exception process 

such as requiring coverage of the nonformulary drug during the review 

process, requiring issuers to begin the 

external review if the original exception 

request is denied, and requiring issuers 

to submit or release information on its 

consideration of exception requests. 

Although some commenters 

recommended using a separate review 

organization for the external review, 

several commenters supported allowing 

issuers to use the same independent 

review organization for the external 

review as for the final external review 

decision under § 147.136. Commenters 

also supported requiring coverage of the 

excepted drug for the duration of the 

prescription, including refills, and 

others supported permitting the issuer 

to determine and notify the enrollees of 

the duration of the coverage for the 

excepted drug. 

Response: The purpose of revising 

§ 156.122(c) was to establish a more 

uniform exceptions process across plans 

and issuers providing EHB to help 

reduce consumer confusion in 

accessing, understanding, and using the 

exception process. We believe that 

uniform standards in this area will 

better ensure consumers’ ability to 

understand and access this consumer 

protection. Because of the importance of 

this process in ensuring enrollee access 

to clinically appropriate medications, 

we are finalizing the 72-hour review 

period for the standard exception 

review, continuing the 24-hour review 

period for an expedited review, and 

applying the related timing standards to 

the external review periods. This 

exceptions process applies to drugs that 

are not included on the plan’s formulary 

drug list, and § 147.136 applies if an 

enrollee receives an adverse benefit 

determination for a drug that is 

included on the plan’s formulary drug 

list. Because these two processes serve 

different purposes, we believe they are 

not duplicative. Furthermore, while our 

exception process standards are not the 

same as those under Medicare Part D, 

they have similar elements. Since 

issuers that provide EHB are already 

required under our regulations to have 

formulary exceptions processes and 

procedures in place that allow an 

enrollee to request and gain access to 

clinically appropriate drugs not covered 

by the plan, we do not expect that these 

new requirements will significantly 

increase the administrative cost burden 

on issuers. Furthermore, to permit 

flexibility in implementing this policy 

for issuers, we have declined to 

establish additional requirements at this 

time, such as requiring issuers to begin 

the external review absent an enrollee 

request if the original exception request 

is denied, and requiring issuers’ to 

submit or release information on its 

consideration of exception requests. 

The 24-hour timing policy for the 

expedited review was adopted in the 

final rule on the Market Standards Rule 

(79 FR 30240), and we are finalizing the 

72-hour standard review, as well as the 

timing for the external reviews, in this 

final rule. All of these timeframes begin 

when the issuer or its designee receives 

a request. An enrollee or the enrollee’s 

prescribing physician (or other 

prescriber) should strive to submit a 

completed request; however, issuers 

should not fail to commence review if 

they have not yet received information 

that is not necessary to begin review. 

Therefore, we interpret new § 156.122(c) 

to mean that the review must begin 

following the receipt of information 

sufficient to begin review. Issuers 

should not request irrelevant or overly 

burdensome information. Issuers must 

be equipped to accept these requests in 

writing, electronically, and 

telephonically. 

As part of the request for a standard 

review, the prescribing physician or 

other prescriber should support the 

request by including an oral or written 

statement that provides a justification 

supporting the need for the nonformulary drug to treat the enrollee’s 

condition, including a statement that all 

covered formulary drugs on any tier will 

be or have been ineffective, would not 

be as effective as the non-formulary 

drug, or would have adverse effects. 

Following a favorable decision on the 

standard or external review, the enrollee 

must be provided access to the 

prescribed drug without unreasonable 

delay. Therefore, issuers need to be 

prepared to communicate rapidly with 

pharmacies and pharmacy benefit 

managers, as applicable. At a minimum, 

we expect issuers to update certificates 

of coverage to reflect the availability of 

this process, and to be able to provide 

instruction to enrollees or their 

designees and providers or their 

designees on how to use the process. 

For the external exception review, we 

are finalizing a standard under which 

the independent review organization 

that conducts the external review must 

be accredited by a nationally recognized 

private accrediting organization. As part 

of this process, the issuer should 

provide the independent review 

organization with all relevant 

information to conduct the review, 

including the initial denial of the 

exception request. The issuer may use 

the same independent review 

organization for the external review for 

the drug exception process under 

§ 156.122(c)(3) that the plan contracts 

with for the final external review 

decision under § 147.136. As 

established in revised § 156.122(c), any 

drug covered through the exception 

process must be treated as an EHB, 

including by counting any cost sharing 

towards the plan’s annual limitation on 

cost sharing and when calculating the 

plan’s actuarial value. We believe that 

ensuring that an enrollee has the option 

to request an external review of a denied 

exception request and that a drug 

covered through the exception process 

count towards the plan’s annual 

limitation on cost sharing are important 

consumer protections that help ensure 

enrollees’ access to clinically 

appropriate medications. 

We do not believe that enrollees 

should have to continue to make 

requests under § 156.122(c) to access a 

refill of the same clinically appropriate 

drugs that they initially obtained 

through the exceptions process. 

Therefore, we are finalizing a standard 

under which non-grandfathered health 

plans in the individual and small group 

markets that must provide coverage of 

the essential health benefit package 

under section 1302(a) of the Affordable 

Care Act must cover a drug accessed 

through the standard exception process 

for the duration of the prescription, 

including refills. To provide further 

clarification on the operation of the 

external review process, we are also 

finalizing a new standard under which, 


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if a health plan providing EHB grants an 

external exception review of a standard 

exception request, the health plan must 

provide coverage of the non-formulary 

drug for the duration of the prescription, 

including refills. Likewise, if a health 

plan grants an external exception review 

of an expedited exception request, the 

health plan must provide coverage of 

the non-formulary drug for the duration 

of the exigency. Nothing under this 

policy precludes a State from requiring 

stricter standards in this area. Issuers 

will be required to comply with the new 

standard exception process and external 

review process requirements starting 

with the 2016 plan year. 

iii. Section 156.122(d) 

Under § 156.122(d), we proposed 

adding a requirement to the EHB 

prescription drug benefit that a health 

plan must publish an up-to-date, 

accurate, and complete list of all 

covered drugs on its formulary drug list, 

including any tiering structure that it 

has adopted and any restrictions on the 

manner in which a drug can be 

obtained, in a manner that is easily 

accessible to plan enrollees, prospective 

enrollees, the State, the Exchange, HHS, 

OPM, and the general public. We also 

solicited comment on whether the 

formulary tiering information should 

include cost sharing information, such 

as the enrollee’s applicable pharmacy 

deductible (for example, $100), 

copayment (for example, $20), or costsharing percentage for the enrollee (for 

example, 20 percent). We proposed that 

a formulary drug list be considered 

easily accessible when the general 

public is able to view the formulary 

drug list on the plan’s public Web site 

through a clearly identifiable link or tab 

and without creating or accessing an 

account or entering a policy number. 

The general public should be able to 

easily discern which formulary drug list 

applies to which plan if the issuer 

maintains multiple formularies, and the 

plan associated with each formulary 

drug list should be clearly identified on 

the plan’s Web site. As a result of this 

proposed requirement, we would expect 

the issuers’ formulary drug list to be upto-date, meaning that the formulary drug 

list must accurately list all of the health 

plan’s covered drugs at that time. We 

solicited comments on this timing. Also, 

the formulary drug list URL link under 

this section should be the same direct 

formulary drug list URL link for 

obtaining information on prescription 

drug coverage in the Summary of 

Benefits and Coverage, in accordance 

with § 147.200(a)(2)(i)(K). We proposed 

that this requirement would be effective 

beginning with the 2016 plan year. We 

solicited comments on these proposed 

requirements, including whether we 

should require that additional types of 

information be included in the 

formulary drug list. 

As part of this proposed requirement 

that issuers’ formulary drug list must be 

made available to the general public, we 

considered requiring issuers to make 

this information publicly available on 

their Web sites in a machine-readable 

file and format specified by HHS. The 

purpose of establishing machinereadable files with the formulary drug 

list data would be to provide the 

opportunity for third parties to create 

resources that aggregate information on 

different plans. As an alternative, we 

considered whether the formulary drug 

list information could be submitted to 

HHS though an HHS-designed 

standardized template, while 

recognizing that there could be 

challenges with keeping this type of 

template information updated. We 

solicited comments on these options. 

We are finalizing these requirements 

largely as proposed, with language to 

clarify that the requirement to publish 

an up-to-date, accurate and complete 

list of all covered drugs applies 

beginning with the 2016 plan year, and 

to require that QHPs in the FFEs make 

available this information to HHS in a 

format and at times determined by HHS 

beginning with the 2016 plan year. 

Comment: Most commenters generally 

supported the proposed standards 

regarding the ease with which 

consumers should be able to view 

formulary drug lists on issuers’ Web 

sites, and some recommended 

requirements on the format for the 

formulary drug list on the Web site. 

Many commenters wanted detailed costsharing information to be included on 

the formulary drug list, including 

deductible, copay, and specific 

coinsurance dollar amounts. Others 

opposed providing that level of detail 

on the formulary drug list because of 

difficulties in keeping the formulary 

drug list up to date and potential 

consumer confusion because every plan 

design, including each silver plan 

variant, would need a separate 

formulary drug list. Other commenters 

sought clarification on definitions, 

including all covered drugs and any 

restrictions on the manner in which the 

drug can be obtained. Others supported 

or opposed the proposed definition of 

‘‘up to date.’’ 

Response: The purpose of 

§ 156.122(d) is to improve the 

transparency of formulary drug lists for 

plans required to cover the essential 

health benefits by requiring accurate, 

complete and up-to-date information on 

the drugs that the plan covers to assist 

consumers. Thus, while we recognize 

the value in providing consumers with 

detailed cost-sharing information on the 

formulary drug list (such as the 

enrollee’s applicable pharmacy 

deductible, copayment, or cost-sharing 

percentage for the enrollee), our goal 

with this provision is to ensure that the 

formulary drug list is accurate, 

complete, and up-to-date. Providing 

detailed cost-sharing information on the 

formulary drug list is not a typical 

practice in the private health insurance 

market. Therefore, we are finalizing 

§ 156.122(d) as proposed at this time. 

Issuers’ formulary drug lists must 

include any tiering structure that it has 

adopted and any restrictions on the 

manner in which a drug can be 

obtained, and while we are not 

requiring detailed cost-sharing 

information under § 156.122(d) at this 

time, we encourage issuers to provide 

this level of transparency on the 

formulary drug list where feasible to 

help consumers make more informed 

decisions about their health insurance 

coverage. In general, consumers should 

be able to use the formulary drug list in 

conjunction with the summary of 

benefits and coverage or other plan 

documents to determine their applicable 

cost sharing. For example, a formulary 

drug list would list which drugs are in 

Tier 1 (or similar category of 

prescription drug coverage), and the 

SBC would indicate that drugs in Tier 

1, or similar category, have a $20.00 

copayment. While the SBC must list any 

applicable coinsurance and major 

limitations or exceptions, an issuer’s 

SBC would not list the specific dollar 

amounts an enrollee would pay for a 

drug that is subject to coinsurance, 

given that the SBC is only a summary 

of cost-sharing features. For the purpose 

of this section, references to the URL 

have been removed to clarify that our 

standards apply to the actual formulary 

drug list, not the Web address. 

For the purpose of § 156.122(d), for a 

formulary drug list to be considered 

complete, the formulary drug list must 

list all drugs that are EHB and when the 

formulary drug list specifies all drug 

names that are currently covered by the 

plan at that time. This requirement 

means that issuers are prohibited from 

listing only the most commonly 

prescribed medications. The formulary 

drug list does not have to list every 

covered formulation for each covered 

drug, but the issuer should be prepared 

to provide information on the specific 

formulations upon request to the plan’s 

enrollees, prospective enrollees, the 

State, the Exchange, HHS, OPM, and the 


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general public. Issuers must also 

include accurate information on any 

restrictions on the manner in which the 

drug can be obtained in the formulary 

drug list, including prior authorization, 

step therapy, quantity limits, and any 

access restrictions related to obtaining 

the drug from a brick and mortar retail 

pharmacy, such as only being accessible 

through a mail-order pharmacy because 

the drug requires special handling. The 

formulary drug list must be up-to-date, 

which means that the formulary drug 

list must accurately list all of the health 

plan’s covered drugs at that time. To 

meet this requirement, we would expect 

that the issuer would make any coverage 

changes simultaneously with updating 

the formulary drug list and therefore, if 

an issuer makes a change to its 

formulary, it would not implement the 

change until the issuer has posted the 

change to the formulary drug list on its 

Web site. We understand that our 

standard for updating the formulary 

drug list is stricter than is the case for 

the typical private market plan, but we 

believe that the value of increased 

transparency to consumers is critically 

important to ensuring that consumers 

are making informed decisions about 

their health care. Issuers are prohibited 

from limiting the updates to their 

formulary drug list to only formulary 

changes that negatively impact 

enrollees, such as removal of drugs from 

the formulary drug list. Also, the URL 

that takes a consumer to the issuer’s 

formulary drug list on its Web site must 

be the same direct formulary drug list 

URL link for obtaining information on 

prescription drug coverage in the SBC, 

in accordance with § 147.200(a)(2)(i)(K), 

and for QHPs on the Exchanges, this 

link must be the same link displayed to 

prospective enrollees on the applicable 

Exchange Web site. As discussed in the 

preamble to § 156.250, in addition to the 

requirements imposed by § 156.250, 

QHP issuers may also have duties to 

make this information accessible to 

individuals with disabilities and 

individuals with LEP under Federal 

civil rights laws that also might apply, 

including section 1557 of the Affordable 

Care Act, section 504 of the 

Rehabilitation Act of 1973, and Title VI 

of the Civil Rights Act. For the FFEs, 

this URL must be the one that issuers 

provide through the QHP application for 

display on HealthCare.gov. While these 

regulations do not prohibit issuers from 

providing their drug lists in a searchable 

or dynamic format on their Web sites, 

consumers should not have to create an 

account, be an enrollee in the plan, or 

navigate multiple Web pages to view the 

formulary drug list. Specifically, the 

link needs to be the direct link to the 

formulary drug list. Further, if an issuer 

has multiple formulary drug lists, 

consumers should be able to easily 

discern which formulary drug list 

applies to which plan. Also, the Web 

page should clearly list which plans the 

formulary drug list applies to using the 

marketing name for the plan, which for 

Marketplace plans would be the 

marketing name used on 

HealthCare.gov. The revised 

§ 156.122(d) is effective beginning with 

the 2016 plan year, and we expect that 

most issuers already have a formulary 

drug list available via a URL link and 

will only need to make certain minor 

modifications to its link to be in 

compliance with the new 

§ 156.122(d)(1). 

Comment: Several commenters 

supported the proposal for issuers to 

make the formulary drug list 

information available in a machinereadable file or a format specified by 

HHS, stating that this would improve 

transparency and foster development of 

additional tools to help consumers make 

informed decisions about their coverage. 

Commenters recommended types of 

information that should be included and 

the development of tools similar to tools 

developed by the Medicare Part D 

program. Others supported allowing 

various options on how to search for 

covered drugs, such as by the drug name 

or listing alphabetically. Conversely, 

some commenters opposed the 

proposal, expressing concerns about 

data integrity, accuracy, confidentiality, 

and managing third parties’ use of this 

data. Some commenters were concerned 

that the machine-readable data 

collection would be duplicative, and 

noted that implementing any standard 

would be time-consuming and 

requested the opportunity to provide 

additional stakeholder feedback. Some 

commenters suggested use of an 

application programming interface (API) 

to support making formulary drug list 

information more transparent. 

Response: We believe a machinereadable file or a format specified by 

HHS will increase transparency by 

allowing software developers to access 

this information and create innovative 

and informative tools to help enrollees 

better understand plans’ formulary drug 

lists. Based on the comments received 

asking us to make formulary drug list 

information more transparent and 

accessible to consumers, HHS is 

finalizing this rule by adding 

§ 156.122(d)(2) to require QHPs in the 

FFEs to make available the information 

on the formulary drug list on its Web 

site in a HHS specified format and also 

submit this information to HHS, in a 

format and at times determined by HHS. 

We agree with commenters that creating 

a vehicle for consumers to easily 

determine which plans cover which 

drugs will help consumers select QHPs 

that best meet their needs. We recognize 

that this will require issuer resources, 

and will provide further details about 

the specific data elements, frequency of 

updates, file types, and other crucial 

information in future guidance. 

iv. Section 156.122(e) 

Under § 156.122(e), we proposed to 

require that enrollees be provided with 

the option to access their prescription 

drug benefit through retail (brick-andmortar or non-mail order) pharmacies. 

This requirement would mean that a 

health plan that is required to cover the 

EHB package cannot have a mail-order 

only prescription drug benefit. This 

proposed requirement would still allow 

a health plan to charge a different costsharing amount when an enrollee 

obtains a drug at an in-network retail 

pharmacy than he or she would pay for 

obtaining the same covered drug at a 

mail-order pharmacy. However, as a 

part of these requirements, we proposed 

to clarify that this additional cost 

sharing for the covered drug would 

count towards the plan’s annual 

limitation on cost sharing under 

§ 156.130 and would need to be taken 

into account when calculating the 

actuarial value of the health plan under 

§ 156.135. Additionally, under this 

proposed policy, issuers would still 

retain the flexibility to charge a lower 

cost-sharing amount when obtaining the 

drug at an in-network retail pharmacy. 

While this proposal requires coverage of 

a drug at an in-network retail pharmacy, 

for plans that do not have a network, the 

enrollee would be able to go to any 

pharmacy to access their prescription 

drug benefit and those plans would, 

therefore, be in compliance with this 

proposed standard. 

As part of this proposed policy, we 

proposed that the health plan may 

restrict access to a particular drug when: 

(1) The FDA has restricted distribution 

of the drug to certain facilities or 

practitioners (including physicians); or 

(2) appropriate dispensing of the drug 

requires special handling, provider 

coordination, or patient education that 

cannot be met by a retail pharmacy. If 

the health plan finds it necessary to 

restrict access to a drug for either of the 

two reasons listed above, we proposed 

that it must indicate this restricted 

access on the formulary drug list under 

§ 156.122(d). We are finalizing these 

policies as proposed with a technical 

edit to § 156.122(e)(2) to replace 


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52FDA requires a Risk Evaluation and Mitigation 

Strategies (REMS) for certain drugs to ensure that 

the benefits of a drug or biological product 

outweigh its risks. The following is FDA’s list of 

currently approved REMS at: http://www.fda.gov/

drugs/drugsafety/postmarketdrugsafetyinformation

forpatientsandproviders/ucm111350.htm. 

‘‘higher’’ cost sharing with ‘‘different’’ 

cost sharing. 

Comment: Several commenters 

supported proposed § 156.122(e) as 

helping to ensure that plans do not 

discourage enrollment by, and thus 

discriminate against, transient 

individuals and individuals who have 

conditions that they wish to keep 

confidential and discussed other cases 

in which obtaining a prescription from 

a mail-order pharmacy is difficult for an 

enrollee, such as cases where an 

enrollee with a serious health condition 

may be unable to wait for the 

prescription to be filled via a mail-order 

pharmacy. Other commenters opposed 

these requirements, stating that it would 

be costly, limit consumer choice of 

plans that use mail-order benefits, be 

contrary to specialty drug market 

practices, not account for the quality 

standards used by specialty pharmacies, 

be contrary to precedent from other 

Federal programs, and be duplicative. 

Some commenters were concerned that 

the issue is outside the scope of EHB, is 

not reflective of a typical employer plan, 

does not take into account existing 

privacy laws, and should require 

additional rulemaking that, for instance, 

takes into account the NAIC’s pending 

model act on network adequacy. Other 

commenters wanted clarification that 

preventive services drugs must be 

covered at no cost sharing at retail 

pharmacies, and other commenters 

discussed similar and overlapping State 

requirements. Several commenters 

wanted additional exceptions, such as 

an exclusion related to specialty drugs 

and pharmacies, and some commenters 

supported implementing this provision 

in 2016 while others supported a 2017 

implementation date. 

Response: The intention of 

§ 156.122(e) is to ensure all enrollees in 

plans required to cover EHB are able to 

use the prescription drug benefit if 

needed, and is intended to expand 

options for these enrollees. Thus, the 

purpose of this policy is not to limit the 

ability of issuers to use mail-order 

pharmacies—issuers can continue to 

influence consumer choice through cost 

sharing. The issuers need only provide 

enrollees with the option to access 

drugs that are not exempted under 

§ 156.122(e)(1)(i) and (ii) at an innetwork retail pharmacy. There are 

instances in which obtaining a drug 

through a mail-order pharmacy may not 

be a viable option, such as when an 

individual does not have a stable living 

environment and does not have a 

permanent address, or when a retail 

pharmacy option better ensures that 

consumers can access their EHB 

prescription drug benefit on short 

notice. In such cases, we do not believe 

that making drugs available only by 

mail order constitutes fulfilling the 

obligation under section 1302(b)(1)(F) of 

the Affordable Care Act to provide 

prescription drug coverage as part of 

EHB. We also believe that making drugs 

available only by mail order could 

discourage enrollment by, and thus 

discriminate against, transient 

individuals and individuals who have 

conditions that they wish to keep 

confidential. We also believe that this 

provision is important to ensure 

uniformity in benefit design and 

consumer choice. Therefore, we are 

finalizing § 156.122(e) as proposed and 

with a clarification that this policy will 

be effective beginning with the 2017 

plan year. 

Issuers retain the ability to charge 

different cost sharing for drugs obtained 

at a retail pharmacy, but for nongrandfathered health plans in the 

individual and small group markets that 

must provide coverage of the essential 

health benefit package under section 

1302(a) of the Affordable Care Act, all 

cost sharing, including any difference 

between the cost sharing for mail order 

and the cost sharing for retail, must 

count towards the plan’s annual 

limitation on cost sharing in accordance 

with § 156.130(a) and must be taken into 

account when calculating the actuarial 

value of the health plan in accordance 

with § 156.135. We are clarifying that 

these issuers can apply higher or lower 

cost sharing, that is, nothing requires an 

issuer to use higher cost sharing for 

drugs obtained from a retail pharmacy. 

As a result, some or all of the costs 

associated with this option may be 

passed on to the consumer who chooses 

to use it. However, nothing in this 

provision supersedes State law that may 

apply other cost sharing standards to 

mail-order pharmacies. For plans that 

do not have a network, enrollees should 

be able to go to any pharmacy to access 

their prescription drug benefit, and 

those plans would, therefore, be in 

compliance with this standard. In 

addition, this requirement is not 

intended to disrupt or supersede the 

rules regarding cost sharing for 

preventive service benefits when such 

coverage includes drugs. 

In response to comments, we 

considered an exceptions process under 

which an enrollee could make a request 

to obtain the prescription at a brick and 

mortar retail pharmacy. However, we 

are concerned that if we allow an 

exception process, the issuer would 

retain the option to deny the request, 

and such a process could be seen as 

burdensome on the enrollee. In 

particular, an exception process could 

be burdensome for enrollees with 

complex health conditions if they had to 

seek an exception request for each of 

their prescription drugs that they take. 

We understand that specialty 

pharmacies provide more integrated 

services, aimed at improving clinical 

outcomes while limiting costs relating 

to the delivery and management of the 

product, than a typical mail-order 

pharmacy or a brick and mortar retail 

pharmacy. We understand that drugs on 

the specialty tier of a formulary are not 

necessarily the same drugs that a 

specialty pharmacy would provide. Our 

intention with this policy was not to 

disrupt the specialty pharmacy market, 

and we understand that exceptions will 

be needed for many drugs that are only 

accessible via a specialty pharmacy. For 

these reasons, we are finalizing the 

exceptions that allow a health plan to 

restrict access to certain drugs in limited 

circumstances. As part of this 

requirement, a health plan may restrict 

access to mail order, which may include 

specialty pharmacies, for a particular 

drug when: (1) The FDA has restricted 

distribution of the drug to certain 

facilities or practitioners (including 

physicians); or (2) appropriate 

dispensing of the drug requires special 

handling, provider coordination, or 

patient education that cannot be met by 

a retail pharmacy. For instance, certain 

drugs have a Risk Evaluation and 

Mitigation Strategy (REMS) that 

includes Elements to Assure Safe Use 

that may require that pharmacies, 

practitioners, or health care settings that 

dispense the drug be specially certified 

and that may limit access to the drugs 

to certain health care settings.52 If the 

health plan finds it necessary to restrict 

access to a drug for either of the reasons 

listed above, it must indicate this 

restricted access on the formulary drug 

list that plans must make publicly 

available under § 156.122(d). The 

provisions at § 156.122(e)(1)(i) and (ii) 

allow an issuer to restrict access to 

certain drugs at a retail pharmacy for the 

specific reasons noted in those 

paragraphs. Although issuers may 

subject these drugs to reasonable 

utilization management techniques, the 

fact that these drugs have restricted 

access should not in and of itself be a 

justification for applying these 

techniques to these drugs. 

Issuers must implement the revised 

§ 156.122(e) no later than for the start of 


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53 Guide to Reviewing EHB Benchmark Plans— 

http://www.cms.gov/CCIIO/Resources/DataResources/ehb.html#review benchmarks. 

the 2017 plan year, and we have added 

this clarification to the regulation. 

v. Other Comments on the Preamble to 

§ 156.122 

In addition to the proposed provisions 

above, we urged issuers to temporarily 

cover non-formulary drugs (including 

drugs that are on an issuer’s formulary 

but require prior authorization or step 

therapy) as if they were on formulary (or 

without imposing prior authorization or 

step therapy requirements) during the 

first 30 days of coverage. We encouraged 

plans to adopt this policy to 

accommodate the immediate needs of 

enrollees, while allowing the enrollee 

sufficient time to go through the prior 

authorization or drug exception 

processes. 

Comment: Some commenters sought 

clarification about coverage of medical 

drugs and preventive service drugs. 

Others recommended requiring limits to 

formulary changes during the plan year. 

Several commenters recommended that 

we require issuers to temporarily cover 

non-formulary drugs during the first 30 

days of coverage or longer and other 

commenters were against this policy, 

stating that it is not a typical 

requirement in the private market, and 

that it is costly and counterintuitive to 

formulary transparency. Other 

commenters supported transition 

policies, but acknowledged the 

importance of flexibility for issuers in 

developing these policies. 

Response: Preventive services, 

including preventive service drugs, are 

required to be covered as part of EHB. 

Non-grandfathered group health plans 

and health insurance coverage must 

provide benefits for preventive health 

services, including preventive service 

drugs, without cost sharing, consistent 

with the requirements of section 2713. 

Similarly, the rules set forth under 

§ 156.122 are specific to coverage of 

drugs under the prescription drug EHB 

category. Issuers could cover drugs 

administered as part of another service 

(such as during an inpatient 

hospitalization or a physician service) 

under the EHB category that covers that 

service, in addition to covering the drug 

under the prescription drug EHB 

category. We believe this clarification 

reflects the current practice of issuers. 

We are also concerned about issuers 

making mid-year formulary changes, 

especially changes that negatively affect 

enrollees. We are monitoring this issue 

to consider whether further standards 

are needed. We also note that, under 

guaranteed renewability requirements 

and the definitions of ‘‘product’’ and 

‘‘plan,’’ issuers generally may not make 

plan design changes, including changes 

to drug formularies, other than at the 

time of plan renewal. We recognize that 

certain mid-year changes to drug 

formularies related to the availability of 

drugs in the market may be necessary 

and appropriate. 

We are not requiring coverage of a 

transitional fill at this time. As stated in 

the proposed rule, we will consider 

whether additional requirements may be 

needed in this area. We remain 

concerned that new enrollees may be 

unfamiliar with what is covered on their 

new plan’s formulary drug list and the 

process and procedures under the plan. 

Further, some new enrollees whose 

drugs are covered by the plan’s 

formulary may need to obtain prior 

authorization or go through step therapy 

to have coverage for their drugs, and 

others may need time to work with their 

provider to determine which formulary 

drug the individual should be 

transitioned to. For these reasons, we 

urge issuers to temporarily fill drugs 

that are not on the formulary (or are on 

an issuer’s formulary but require prior 

authorization or step therapy) as if they 

were on formulary (or without imposing 

prior authorization or step therapy 

requirements) during the first 30 days of 

coverage. We encourage plans to adopt 

this policy to accommodate the 

immediate needs of enrollees, while 

allowing the enrollee sufficient time to 

go through the prior authorization or 

drug exception processes. 

Comment: Some commenters 

recommended that we implement the 

prescription benefit requirements in 

2017 or later. Others recommended that 

all of the prescription drug benefit 

changes be implemented in 2016. Some 

had separate recommendations for the 

timing or only commented on the timing 

for certain requirements. 

Response: We recognize that certain 

prescription benefit changes under 

§ 156.122 will be easier to implement 

than others. For that reason, we are 

finalizing our proposal effective dates 

for § 156.122(c) and new § 156.122(d), 

such that they are effective for plan 

years beginning or after January 1, 2016. 

These requirements are typical of the 

current market and would require 

updating and modifying of systems and 

procedures to align with the finalized 

policy. We are finalizing our proposed 

effective dates for the revisions to 

§ 156.122(a) and new § 156.122(e) such 

that they are effective for plan years 

beginning on or after January 1, 2017 to 

better ensure a smooth transition in 

implementing these policies. 

e. Prohibition on Discrimination 

(§ 156.125) 

Section 1302(b)(4) of the Affordable 

Care Act directs the Secretary to address 

certain standards in defining EHB, 

including elements related to balance, 

discrimination, the needs of diverse 

sections of the population, and denial of 

benefits. We have interpreted this 

provision, in part, as a prohibition on 

discrimination by issuers providing 

EHB. Under § 156.125, which 

implements the prohibition on 

discrimination provisions, an issuer 

does not provide EHB if its benefit 

design, or the implementation of its 

benefit design, discriminates based on 

an individual’s age, expected length of 

life, present or predicted disability, 

degree of medical dependency, quality 

of life, or other health conditions. 

As described in the proposed rule, 

since we finalized § 156.125, we have 

become aware of benefit designs that we 

believe would discourage enrollment by 

individuals based on age or based on 

health conditions, in effect making 

those plan designs discriminatory, thus 

violating this prohibition. Some issuers 

have maintained limits and exclusions 

that were included in the State EHB 

benchmark plan. As we have previously 

stated in guidance, EHB-benchmark 

plans may not reflect all requirements 

effective for plan years starting on or 

after January 1, 2014. Therefore, when 

designing plans that are substantially 

equal to the EHB-benchmark plan, 

issuers should design plan benefits, 

including coverage and limitations, to 

comply with requirements and 

limitations that apply to plans 

beginning in 2014.53

In the proposed rule, we discussed 

three examples of potentially 

discriminatory practices: (1) Attempts to 

circumvent coverage of medically 

necessary benefits by labeling the 

benefit as a ‘‘pediatric service,’’ thereby 

excluding adults; (2) refusal to cover a 

single-tablet drug regimen or extendedrelease product that is customarily 

prescribed and is just as effective as a 

multi-tablet regimen, absent an 

appropriate reason for such refusal; and 

(3) placing most or all drugs that treat 

a specific condition on the highest cost 

tiers. 

In this final rule, CMS adopts the 

same approach as described in the 

proposed rule. As we indicated in the 

proposed rule and the 2014 Letter to 

Issuers, we will notify an issuer when 

we see an indication of a reduction in 

the generosity of a benefit in some 


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54Letter to Issuers on Federally-facilitated and 

State Partnership Exchanges, April 5, 2013, page 15 

and 2015 Letter to Issuers in the Federally 

facilitated Marketplaces, March 14, 2014, page 29. 

55To inform the determination as to the scope of 

a typical employer plan, section 1302(b)(2)(A) of the 

Affordable Care act requires the Secretary of Labor 

to conduct a survey of employer-sponsored 

coverage to determine the benefits typically covered 

by employers, and to provide a report to the 

Secretary of HHS. These provisions suggest that, 

while detailed requirements for EHB in the 

individual and small group health insurance 

markets were deemed necessary, the benefits 

covered by typical employer plans providing 

primary coverage at the time the Affordable Care 

Act was enacted were seen as sufficient to satisfy 

the Act’s objectives for the breadth of benefits 

needed for health plan coverage and, in fact, to 

serve as the basis for determining EHB. 

56Letter to Issuers on Federally-facilitated and 

State Partnership Exchanges, April 5, 2013, page 15 

and 2015 Letter to Issuers in the Federallyfacilitated Marketplaces, March 14, 2014, page 29. 

manner for subsets of individuals that is 

not based on clinically indicated, 

reasonable medical management 

practices.54 We conduct this 

examination whenever a plan subject to 

the EHB requirement reduces benefits 

for a particular group. Issuers are 

expected to impose limitations and 

exclusions based on clinical guidelines 

and medical evidence, and are expected 

to use reasonable medical management. 

Issuers may be asked to submit 

justification with supporting 

documentation to HHS or the State 

explaining how the plan design is not 

discriminatory. 

We note that other nondiscrimination 

and civil rights laws may apply, 

including the Americans with 

Disabilities Act, section 1557 of the 

Affordable Care Act, Title VI of the Civil 

Rights Act of 1964, the Age 

Discrimination Act of 1975, section 504 

of the Rehabilitation Act of 1973 and 

State law. Compliance with § 156.125 is 

not determinative of compliance with 

any other applicable requirements, and 

§ 156.125 does not apply to the 

Medicaid and CHIP programs, but a 

parallel provision applies to EHBs 

furnished by Medicaid Alternative 

Benefit Plans. 

Comment: Many commenters 

requested that we clarify that the 

examples provided are only examples 

and not per se discriminatory. Other 

commenters requested that we codify 

the examples and suggested additional 

examples of discriminatory practices 

that should be codified as well. 

Response: We are not prohibiting 

certain practices in regulatory text at 

this time. Several factors must be taken 

into consideration during benefit 

design, and a discrimination 

determination is often dependent on the 

specific facts and circumstances. 

However, the examples identified in the 

proposed rule contain indications that 

they are discriminatory, and therefore 

further investigation by the enforcing 

entity may be required. We strongly 

caution issuers that the examples cited 

appear discriminatory in their 

application when looking at the totality 

of the circumstances, and may therefore 

be prohibited. 

Additionally, as described later in this 

preamble, section 1302(b) of the 

Affordable Care requires that the 

definition of EHB be based on the scope 

of benefits provided under a typical 

employer plan, subject to requirements 

under the joint interpretive jurisdiction 

of the Departments of HHS, Labor, and 

the Treasury.55 Because the 

nondiscrimination provisions are 

related to many other such 

requirements, HHS will consult with 

relevant Federal agencies, such as the 

Departments of Labor and the Treasury, 

as necessary, in developing new 

guidance related to discriminatory 

benefit designs. 

Comment: Some commenters asked 

whether discrimination would be 

identified during certification or 

approval and therefore a finding of 

discrimination would be prospective 

only. 

Response: As provided under 

§ 156.125(a), an issuer does not provide 

EHB if the implementation of a benefit 

design discriminates based on an 

individual’s age, expected length of life, 

present or predicted disability, degree of 

medical dependency, quality of life, or 

other health conditions. Some 

discriminatory practices might not be 

discovered until an enrollee files a 

complaint with the appropriate body. 

Once a discriminatory practice is 

identified, the issuer may be asked to 

submit a justification with supporting 

documentation to HHS or the State 

explaining why the practice is not 

discriminatory. 

Comment: Some commenters 

expressed concern regarding the 

example of placing most or all drugs for 

a certain condition on a high cost tier. 

They noted that drug tiering reflects 

current realities of the drug market and 

is based on costs. The commenters 

asked CMS to clarify that having a 

specialty tier is not discriminatory. 

Response: The examples provided in 

the proposed rule are potentially 

discriminatory if there is no appropriate 

non-discriminatory reason for the noted 

practice. Having a specialty tier is not 

on its face discriminatory; however, 

placing most or all drugs for a certain 

condition on a high cost tier without 

regard to the actual cost the issuer pays 

for the drug may often be discriminatory 

in application when looking at the 

totality of the circumstances, and 

therefore prohibited. When CMS or the 

State requests a justification for such a 

practice, issuers should be able to 

identify an appropriate nondiscriminatory reason that supports 

their benefit design, including their 

formulary design. 

Comment: Several commenters 

requested more detailed information 

regarding how CMS and States monitor 

and enforce discrimination. 

Response: Enforcement of the 

requirement to cover EHB is governed 

by section 2723 of the PHS Act, which 

looks first to States for enforcement, 

then to the Secretary where a State 

informs CMS that it is not enforcing the 

requirement, or CMS finds that the State 

has failed to substantially enforce. 

Therefore the State, or CMS in States 

that are not substantially enforcing 

market-wide standards, is responsible 

for enforcing EHB standards, including 

the non-discrimination standard. In an 

FFE, CMS notifies an FFE issuer when 

we see an indication of a reduction in 

the generosity of a benefit for a subset 

of individuals and it is not apparent that 

the reduction is based on a clinical 

indication or reasonable medical 

management practices.56 We conduct 

this examination whenever a plan on an 

FFE reduces benefits for a particular 

group. Limitations and exclusions are 

expected to be based on clinical 

guidelines and medical evidence, and 

medical management standards are 

expected to be reasonable. Issuers may 

be asked to submit a justification with 

supporting documentation to CMS or 

the State explaining how the plan 

design is not discriminatory. 

HHS’s Office for Civil Rights (OCR) 

has independent authority to enforce 

section 1557 of the Affordable Care Act 

(42 U.S.C. 18116), which prohibits 

discrimination on the basis of race, 

color, national origin, sex, age, or 

disability in any health program or 

activity, any part of which receives 

Federal financial assistance. OCR also 

enforces Title VI of the Civil Rights Act 

of 1964 (42 U.S.C. 2000d, et seq.), 

section 504 of the Rehabilitation Act of 

1973 (29 U.S.C. 794), and the Age 

Discrimination Act of 1975 (42 U.S.C. 

6101, et seq.) and their respective 

implementing regulations, which 

prohibit discrimination on the basis of 

race, color, national origin, disability, or 

age in health programs and activities 

that receive Federal financial assistance. 

f. Cost-Sharing Requirements (§ 156.130) 

We proposed to amend § 156.130 to 

clarify how the annual limitation on 


tkelley on DSK3SPTVN1PROD with RULES2
10824 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 

57http://www.cms.gov/CCIIO/Resources/FactSheets-and-FAQs/ 

aca_implementation_faqs18.html. (January 8, 2014). 

cost sharing applies to plans that 

operate on a non-calendar year, and to 

make a technical correction to the 

special rule for network plans. First, we 

proposed to add new § 156.130(b), 

which would provide that non-calendar 

year plans that are subject to the annual 

limitation on cost sharing in section 

1302(c)(1) must adhere to the annual 

limitation that is specific to the calendar 

year in which the plan begins. That 

annual limitation amount would serve 

as the maximum for the entire plan year. 

The purpose of this proposal is to 

ensure that the enrollee would only be 

required to accumulate cost sharing that 

applies to one annual limit per year. We 

also stated that under section 1302(c)(3) 

of the Affordable Care Act, the term 

‘‘cost sharing’’ includes deductibles, 

coinsurance, copayments, or similar 

charges, and any other expenditure 

required of an individual that is a 

qualified medical expense (within the 

meaning of section 223(d)(2) of the 

Code) for EHB covered under the plan. 

Expenditures that meet this definition of 

cost sharing must, under section 1302(c) 

of the Affordable Care Act, count toward 

the annual limitation on cost sharing 

incurred under a health plan that is 

required to cover EHB. Cost sharing 

does not include premiums, balance 

billing amounts for non-network 

providers, or spending for non-covered 

services. This definition was codified in 

§ 155.20. 

Additionally, we proposed to make a 

technical correction to the text at 

§ 156.130(c) on the special rule for 

network plans to replace ‘‘shall not’’ 

with ‘‘is not required to.’’ This proposed 

amendment was intended to clarify that 

issuers have the option to count the cost 

sharing for out-of-network services 

towards the annual limitation on cost 

sharing, but are not required to do so. 

This out-of-network cost sharing would 

not count toward the calculation of 

actuarial value under § 156.135(b)(4) or 

meeting a given level of coverage under 

§ 156.140. 

Lastly, in the proposed rule, we 

proposed clarifying that the annual 

limitation on cost sharing for self-only 

coverage applies to all individuals 

regardless of whether the individual is 

covered by a self-only plan or is covered 

by a plan that is other than self-only. In 

both of these cases, an individual’s cost 

sharing for EHB may never exceed the 

self-only annual limitation on cost 

sharing. For example, under the 

proposed 2016 annual limitation on cost 

sharing, if an other than self-only plan 

has an annual limitation on cost sharing 

of $10,000 and one individual in the 

family plan incurs $20,000 in expenses 

from a hospital stay, that particular 

individual would only be responsible 

for paying the cost sharing related to the 

costs of the hospital stay covered as 

EHB up to the annual limit on cost 

sharing for self-only coverage (assuming 

an annual limitation of $6,850 for 2016, 

the maximum for that year). We sought 

comments on these proposed 

requirements and clarifications as well 

as whether other requirements and 

clarifications were needed. We are 

finalizing our proposal that the annual 

limitation on cost sharing for self-only 

coverage applies to all individuals 

regardless of whether the individual is 

covered by a self-only plan or is covered 

by a plan that is other than self-only and 

the technical correction we proposed to 

make to the text at § 156.130(c). 

Comment: Several commenters were 

supportive of the proposed § 156.130(b) 

as ensuring that cost sharing for noncalendar plans accrues for a 12-month 

period, and ensuring that an enrollee 

only has to accumulate cost sharing 

towards one annual limitation on cost 

sharing. Other commenters opposed the 

proposed § 156.130(b) because small 

employer plans typically operate on a 

non-calendar year basis, but accumulate 

towards a calendar year annual 

limitation on cost sharing. These 

commenters saw the proposed 

requirements as disruptive, confusing to 

consumers, and difficult to implement. 

Commenters asked for an exception 

from the new § 156.130(b) for large and 

self-funded group health plans and 

indicated that issuers would need time 

to implement the rules, and would 

require a clear transitional policy. 

Response: The purpose of proposed 

§ 156.130(b) was to ensure that issuers 

could not reset the annual limitation on 

cost sharing more frequently than once 

a year and was not intended to disrupt 

the employer group health insurance 

market. After careful consideration of 

comments received, we are not 

finalizing this policy at this time. At this 

time, we believe it is important to retain 

flexibility in the employer health 

insurance market on the timeframe 

under which the employer sets the 

annual limitation on cost sharing, but 

we do maintain that the annual 

limitation cost sharing is to apply on an 

annual basis regardless of whether it is 

a calendar year or a non-calendar year 

plan. 

Comment: Some commenters were 

supportive of the proposed technical 

correction to § 156.130(c) to replace 

‘‘shall not’’ with ‘‘is not required to.’’ 

Some commenters recommended that 

we expand this requirement to require 

the counting of out-of-network services 

toward the annual limit on cost sharing, 

including in cases where the issuer is 

failing to meet network adequacy 

standards or in cases of emergency 

services, or to expand the types of cost 

sharing that must count towards the 

annual limitation on cost sharing. 

Response: The purpose of this 

correction was to better align this 

regulation with the Affordable Care Act 

Implementation FAQs (Set 18) that were 

prepared jointly by the Departments of 

Labor, HHS, and the Treasury.57 In this 

final rule, we do not intend to expand 

this requirement to require counting of 

out-of-network services toward the 

annual limitation on cost sharing and 

believe that requiring coverage of out-ofnetwork services for cases where an 

enrollee is unable to access an innetwork provider for covered services is 

beyond the scope of the regulation 

related to cost sharing requirements, 

which applies in different ways in a 

broad range of markets, some of which 

may be subject to varying network 

adequacy requirements. However, 

revised § 156.130(c) ensures that an 

issuer has the option to count the cost 

sharing for these out-of-network services 

towards the annual limitation on cost 

sharing. In addition, issuers’ obligations 

under § 156.130(g) and § 147.138(b)(3) 

regarding coverage of emergency 

services are applicable. Accordingly, we 

are finalizing these changes to 

§ 156.130(c) as proposed. 

Comment: Several commenters 

supported the clarification in the 

preamble that the self-only coverage 

limit for the annual limitation on cost 

sharing applies to all individuals 

regardless of whether the individual has 

other than self-only coverage, as a step 

toward greater consistency in consumer 

protections. Commenters who opposed 

this clarification were primarily 

concerned that this provision would 

limit the ability of issuers to offer high 

deductible health plans with a health 

savings account. Other commenters 

raised concerns about whether this 

clarification was within the 

Congressional intent of the statute, and 

whether this policy would be more 

generous than other Federal programs. 

Other commenters wanted additional 

clarification on how the annual 

limitation on cost sharing may be 

applied for other than self-only 

coverage. 

Response: We believe that this 

clarification is an important consumer 

protection, as we are aware that some 

consumers have been confused by the 

applicability of the annual limitation on 

cost sharing in other than self-only 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 10825 

58See http://www.cms.gov/Research-StatisticsData-and-Systems/Statistics-Trends-and-Reports/ 

NationalHealthExpendData/Downloads/ 

ProjectionsMethodology2012.pdf and Table 17 in 

http://www.cms.gov/Research-Statistics-Data-andSystems/Statistics-Trends-and-Reports/ 

NationalHealthExpendData/Downloads/ 

Proj2012.pdf for additional information. 

59See http://www.irs.gov/pub/irs-drop/rp-13- 

25.pdf. 

plans. Therefore, we are finalizing this 

clarification. The annual limitation on 

cost sharing for self-only coverage 

applies to all individuals regardless of 

whether the individual is covered by a 

self-only plan or is covered by a plan 

that is other than self-only. 

Section 156.130 is specific to the 

annual limitation on cost sharing. While 

cost sharing incurred towards the 

deductible must count towards the 

annual limitation on cost sharing for 

EHB, the deductible limit is not 

regulated in the same manner as the 

annual limitation on cost sharing. 

Therefore, family high deductible health 

plans that count the family’s cost 

sharing to the deductible limit can 

continue to be offered under this policy. 

The only limit will be that the family 

high deductible health plan cannot 

require an individual in the family plan 

to exceed the annual limitation on cost 

sharing for self-only coverage. We also 

note that this policy, that the annual 

limitation on cost sharing for self-only 

coverage applies to all individuals 

regardless of whether the individual is 

covered by a self-only plan or is covered 

by a plan that is other than self-only, 

would also apply to catastrophic plans 

under § 156.155 and that plans are 

required to comply with reduced 

maximum annual limitation on cost 

sharing under § 156.420. We note that 

2016 plans must comply with this 

policy. 

g. Premium Adjustment Percentage 

(§ 156.130) 

Section 1302(c)(4) of the Affordable 

Care Act directs the Secretary to 

determine an annual premium 

adjustment percentage, which is used to 

set the rate of increase for three 

parameters detailed in the Affordable 

Care Act: The maximum annual 

limitation on cost sharing (defined at 

§ 156.130(a)), the required contribution 

percentage by individuals for minimum 

essential health coverage the Secretary 

may use to determine eligibility for 

hardship exemptions under section 

5000A of the Code, and the assessable 

payment amounts under section 

4980H(a) and (b) of the Code (finalized 

at 26 CFR 54.4980H in the ‘‘Shared 

Responsibility for Employers Regarding 

Health Coverage,’’ published in the 

February 12, 2014 Federal Register (79 

FR 8544)). Section 156.130(e) provides 

that the premium adjustment percentage 

is the percentage (if any) by which the 

average per capita premium for health 

insurance coverage for the preceding 

calendar year exceeds such average per 

capita premium for health insurance for 

2013, and that this percentage will be 

published annually in the HHS notice of 

benefit and payment parameters. 

We established a methodology for 

estimating average per capita premium 

for purposes of calculating the premium 

adjustment percentage in the 2015 

Payment Notice. Under that 

methodology, the premium adjustment 

percentage is calculated based on the 

projections of average per enrollee 

employer-sponsored insurance (ESI) 

premiums from the NHEA, which is 

calculated by the CMS Office of the 

Actuary. 

Accordingly, using the ESI data, the 

premium adjustment percentage for 

2016 is the percentage (if any) by which 

the most recent NHEA projection of per 

enrollee ESI premiums for 2015 ($5,744) 

exceeds the most recent NHEA 

projection of per enrollee ESI premiums 

for 2013 ($5,303).58 We are finalizing 

the proposed premium adjustment 

percentage for 2016 at 8.316047520 

percent. We note that the 2013 premium 

used for this calculation has been 

updated to reflect the latest NHEA data. 

We are also finalizing the following 

cost-sharing parameters for calendar 

year 2016, based on our finalized 

premium adjustment percentage for 

2016. 

Maximum Annual Limitation on Cost 

Sharing for Calendar Year 2016. Under 

§ 156.130(a)(2), for the 2016 calendar 

year, cost sharing for self-only coverage 

may not exceed the dollar limit for 

calendar year 2014 increased by an 

amount equal to the product of that 

amount and the premium adjustment 

percentage for 2016, and for other than 

self-only coverage, the limit is twice the 

dollar limit for self-only coverage. 

Under § 156.130(d), these amounts must 

be rounded down to the next lowest 

multiple of 50. Using the premium 

adjustment percentage of 8.316047520 

for 2016 we established above, and the 

2014 maximum annual limitation on 

cost sharing of $6,350 for self-only 

coverage, which was published by the 

IRS on May 2, 2013,59 we are finalizing 

the proposed 2016 maximum annual 

limitation on cost sharing at $6,850 for 

self-only coverage and $13,700 for other 

than self-only coverage. 

Comment: Two commenters 

expressed concern with the increase in 

the maximum limitation on cost 

sharing, and asked HHS to consider 

alternative factors to those that make up 

the methodology or an alternate 

methodology to protect patients from 

increasing out-of-pocket costs. One 

commenter stated that the proposed 

increase of $500 for self-only and $1,000 

for family policies over the 2014 

maximums will deter enrollees from 

using drugs, and continual annual 

increases of this magnitude would 

nullify the protection afforded patients 

from limits on out-of-pocket expenses. 

Another commenter stated that the 

proposed percentage increase far 

exceeds any recent percentage increase 

in the maximum annual limit on 

deductibles proposed by the Internal 

Revenue Service for High Deductible 

Health Plans, the index used to establish 

maximum annual limits on cost sharing 

in the first year of the Affordable Care 

Act. The commenter stated that 

consumers do not commonly experience 

both annual premium increases and 

significant increases in the cost of 

benefits. 

Response: We are finalizing the 2016 

maximum annual limit on cost sharing 

as proposed. As discussed above, 

section 1302(c)(4) of the Affordable Care 

Act directs the Secretary to set the 

maximum limitation on cost sharing 

using an annual premium adjustment 

percentage. Other indices may use 

different factors. HHS recognizes that 

significant annual increases in out-ofpocket expenses would have a 

deleterious effect on consumers’ ability 

to access health care. The methodology 

to establish the maximum annual 

limitation on cost sharing was finalized 

in the 2015 Payment Notice, and as 

stated there, we will consider adjusting 

the methodology in 2017 as additional 

data on health insurance premiums 

become available through the Exchanges 

and other sources. 

h. Reduced Maximum Annual 

Limitation on Cost Sharing (§ 156.130) 

Sections 1402(a) through (c) of the 

Affordable Care Act direct issuers to 

reduce cost sharing for EHBs for eligible 

individuals enrolled in a silver level 

QHP. In the 2014 Payment Notice, we 

established standards related to the 

provision of these cost-sharing 

reductions. Specifically, in part 156 

subpart E, we specified that QHP issuers 

must provide cost-sharing reductions by 

developing plan variations, which are 

separate cost-sharing structures for each 

eligibility category that change how the 

cost sharing required under the QHP is 

to be shared between the enrollee and 

the Federal government. At § 156.420(a), 

we detailed the structure of these plan 

variations and specified that QHP 


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issuers must ensure that each silver plan 

variation has an annual limitation on 

cost sharing no greater than the 

applicable reduced maximum annual 

limitation on cost sharing specified in 

the annual HHS notice of benefit and 

payment parameters. Although the 

amount of the reduction in the 

maximum annual limitation on cost 

sharing is specified in section 

1402(c)(1)(A) of the Affordable Care Act, 

section 1402(c)(1)(B)(ii) of the 

Affordable Care Act states that the 

Secretary may adjust the cost-sharing 

limits to ensure that the resulting limits 

do not cause the AVs of the health plans 

to exceed the levels specified in section 

1402(c)(1)(B)(i) (that is, 73 percent, 87 

percent or 94 percent, depending on the 

income of the enrollee(s)). Accordingly, 

we proposed to use a method we 

established in the 2014 Payment Notice 

for determining the appropriate 

reductions in the maximum annual 

limitation on cost sharing for costsharing plan variations. As finalized 

above, the 2016 maximum annual 

limitation on cost sharing is $6,850 for 

self-only coverage and $13,700 for other 

than self-only coverage. We analyzed 

the effect on AV of the reductions in the 

maximum annual limitation on cost 

sharing described in the statute to 

determine whether to adjust the 

reductions so that the AV of a silver 

plan variation will not exceed the AV 

specified in the statute. Below, we 

describe our analysis for the 2016 

benefit year and the results described in 

the proposed rule, which are being 

finalized as proposed. 

Reduced Maximum Annual 

Limitation on Cost Sharing for Benefit 

Year 2016. Consistent with our analysis 

in the 2014 and 2015 Payment Notices, 

we developed three model silver level 

QHPs, and analyzed the impact on AV 

of the reductions described in the 

Affordable Care Act to the estimated 

2016 maximum annual limitation on 

cost sharing for self-only coverage 

($6,850). The model plan designs are 

based on data collected for 2015 plan 

year QHP certification to ensure that 

they represent a range of plan designs 

that we expect issuers to offer at the 

silver level of coverage through the 

Exchange. For 2016, the model silver 

level QHPs included a PPO with a 

typical cost-sharing structure ($6,850 

annual limitation on cost sharing, 

$2,000 deductible, and 20 percent innetwork coinsurance rate), a PPO with 

a lower annual limitation on cost 

sharing ($4,600 annual limitation on 

cost sharing, $2,550 deductible, and 20 

percent in-network coinsurance rate), 

and an HMO ($6,850 annual limitation 

on cost sharing, $2,700 deductible, 20 

percent in-network coinsurance rate, 

and the following services with copays 

that are not subject to the deductible or 

coinsurance: $500 inpatient stay per 

day, $350 emergency department visit, 

$25 primary care office visit, and $50 

specialist office visit). All three model 

QHPs meet the AV requirements for 

silver level health plans. 

We then entered these model plans 

into the proposed 2016 AV calculator 

developed by HHS and observed how 

the reductions in the maximum annual 

limitation on cost sharing specified in 

the Affordable Care Act affected the AVs 

of the plans. We found that the 

reduction in the maximum annual 

limitation on cost sharing specified in 

the Affordable Care Act for enrollees 

with a household income between 100 

and 150 percent of the FPL (2⁄3

reduction in the maximum annual 

limitation on cost sharing), and 150 and 

200 percent of the FPL (2⁄3 reduction), 

would not cause the AV of any of the 

model QHPs to exceed the statutorily 

specified AV level (94 and 87 percent, 

respectively). In contrast, the reduction 

in the maximum annual limitation on 

cost sharing specified in the Affordable 

Care Act for enrollees with a household 

income between 200 and 250 percent of 

the FPL (1⁄2 reduction), would cause the 

AVs of two of the model QHPs to exceed 

the specified AV level of 73 percent. As 

a result, we are finalizing our proposal 

that the maximum annual limitation on 

cost sharing for enrollees in the 2016 

benefit year with a household income 

between 200 and 250 percent of the FPL 

be reduced by approximately 1⁄5, rather 

than 1⁄2. We are further finalizing as 

proposed a requirement that the 

maximum annual limitation on cost 

sharing for enrollees with a household 

income between 100 and 200 percent of 

the FPL be reduced by approximately 

2⁄3, as specified in the statute, and as 

shown in Table 10. These reductions in 

the maximum annual limitation on cost 

sharing should adequately account for 

unique plan designs that may not be 

captured by our three model QHPs. We 

also note that selecting a reduction for 

the maximum annual limitation on cost 

sharing that is less than the reduction 

specified in the statute will not reduce 

the benefit afforded to enrollees in 

aggregate because QHP issuers are 

required to further reduce their annual 

limitation on cost sharing, or reduce 

other types of cost sharing, if the 

required reduction does not cause the 

AV of the QHP to meet the specified 

level. 

We note that for 2016, as described in 

§ 156.135(d), States are permitted to 

submit for approval by HHS Statespecific data sets for use as the standard 

population to calculate AV. No State 

submitted a data set by the September 

1 deadline. 

TABLE 10—REDUCTIONS IN MAXIMUM ANNUAL LIMITATION ON COST SHARING FOR 2016 

Eligibility category 

Reduced 

maximum annual 

limitation on cost 

sharing for selfonly coverage for 

2016 

Reduced 

maximum annual 

limitation on cost 

sharing for other 

than self-only coverage for 2016 

Individuals eligible for cost-sharing reductions under § 155.305(g)(2)(i) (that is, 100–150 percent of 

FPL) .......................................................................................................................................................... $2,250 $4,500 

Individuals eligible for cost-sharing reductions under § 155.305(g)(2)(ii) (that is, 150–200 percent of 

FPL) .......................................................................................................................................................... 2,250 4,500 

Individuals eligible for cost-sharing reductions under § 155.305(g)(2)(iii) (that is, 200–250 percent of 

FPL) .......................................................................................................................................................... 5,450 10,900 

Comment: We received one comment 

supporting the proposed reductions in 

the maximum annual limitation on cost 

sharing for 2016 for enrollees with a 

household income between 200 and 250 

percent of the FPL, with the caveat that 

HHS design policies in future plan years 

to lower up-front cost sharing, such as 

through lower deductibles. Other 

commenters stated that HHS should 

consider reducing the cost-sharing 

limits for individuals with a household 

income between 200 and 400 percent of 

the FPL as the proposed cost-sharing 

limits may pose significant financial 


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Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 10827 

challenge for enrollees with significant 

expenditures. One commenter urged 

HHS to systematically analyze the 

reduced annual limitation on cost 

sharing provided by cost-sharing 

reduction plans in each State or rating 

area for their impact on people with 

chronic illnesses. 

Response: As discussed in the 

proposed rule, selecting a reduction for 

the maximum annual limitation on cost 

sharing that is less than the reduction 

specified in the statute will not reduce 

the benefit afforded to enrollees in 

aggregate, because QHP issuers are 

required to further reduce their annual 

limitation on cost sharing, or other types 

of cost sharing, to meet the specified AV 

for the plan variation. Therefore, we are 

finalizing the reductions to the 

maximum annual limitation on cost 

sharing for 2016 as proposed. 

i. Minimum Value (§ 156.145) 

Section 1401(a) of the Affordable Care 

Act added a new section 36B to the 

Code, providing a premium tax credit 

for certain individuals with household 

incomes between 100 percent and 400 

percent of the FPL who enroll in, or 

who have one or more family members 

enrolled in an individual market QHP 

through an Exchange, who are not 

otherwise eligible for MEC. An 

employer-sponsored plan is MEC, but 

for purposes of the premium tax credit 

under section 36B(c)(2)(C)(ii) of the 

Code, an employee is generally treated 

as not eligible for MEC under an 

employer-sponsored plan unless the 

plan is affordable and provides 

minimum value (MV). An employersponsored plan provides MV if the 

plan’s share of the total allowed costs of 

benefits provided under the plan is 

greater than or equal to 60 percent of the 

costs. An employee who is eligible for 

coverage under an employer-sponsored 

plan that is both affordable and provides 

MV to the employee may not receive a 

premium tax credit under section 36B of 

the Code for the employee’s coverage in 

a QHP. If the employer coverage does 

not provide MV, the employee may be 

entitled to a premium tax credit even if 

the coverage is affordable. 

Section 1513 of the Affordable Care 

Act added a new section 4980H to the 

Code providing for shared responsibility 

for employers regarding health coverage. 

An applicable large employer that does 

not offer coverage that is affordable and 

provides MV may be liable for an 

employer shared responsibility payment 

under section 4980H of the Code if one 

or more of its full-time employees 

receives a premium tax credit. 

Under our regulations, the MV 

standard of 60 percent of the total 

allowed costs of benefits provided 

under the plan is based on an amount 

equivalent to the plan’s share of total 

allowed costs required for a bronze level 

QHP offered on an Exchange. Section 

1302(d)(2)(C) of the Affordable Care Act 

provides that regulations promulgated 

by the Secretary of HHS under section 

1302(d)(2), addressing actuarial value, 

apply in determining under this title, 

the Public Health Service Act, and the 

Internal Revenue Code . . . the 

percentage of the total allowed costs of 

benefits provided under a group health 

plan or health insurance coverage that 

are provided by such plan or coverage. 

Accordingly, HHS regulations under 

section 1302(d) implementing actuarial 

value requirements, which an insurer 

offering essential health benefits (EHB) 

must meet for a non-grandfathered 

individual market or small group health 

insurance plan to be considered a 

bronze plan under section 1302(d)(1)(3) 

of the Affordable Care Act, also form the 

basis for determining the percentage of 

the total allowed costs of benefits 

provided for purposes of whether the 

value of coverage meets the MV 

standard under section 36B(c)(2)(C)(ii) 

of the Code. 

HHS published final regulations 

implementing section 1302(d)(2) on 

February 25, 2013 (78 FR 12834). The 

regulations at § 156.20 define the 

percentage of the total allowed costs of 

benefits as (1) the anticipated covered 

medical spending for EHB coverage paid 

by a health plan for a standard 

population, (2) computed in accordance 

with the plan’s cost sharing, and (3) 

divided by the total anticipated allowed 

charges for EHB coverage provided to 

the standard population. HHS 

regulations at § 156.145(b)(2) apply this 

definition in the context of MV by 

taking into account benefits a plan 

provides that are included in any one of 

the State EHB benchmarks. 

The IRS and Treasury Department 

published proposed regulations on May 

3, 2013 (78 FR 25909), applying the 

HHS regulations in defining MV for 

employer-sponsored plans. The 

proposed regulations provide that the 

MV percentage is determined by 

dividing a plan’s anticipated medical 

spending (based on the plan’s costsharing) for plan benefits that are EHB 

covered under a particular EHB 

benchmark plan for the MV standard 

population by the total allowed charges 

for EHB coverage for the standard 

population and converting the result to 

a percentage. Proposed 26 CFR 1.36B– 

6(c). Taxpayers may apply the proposed 

regulations for taxable years ending 

before January 1, 2015. 

The final HHS regulations and 

proposed Treasury regulations allow 

plans to determine the MV percentage 

by using the MV Calculator published 

by HHS. It came to our attention that 

certain group health plan designs that 

provide no coverage of inpatient 

hospital services were being promoted, 

and that representations were being 

made, based on the MV Calculator, that 

these plan designs would cover 60 

percent of the total allowed costs of 

benefits provided, and thus provide MV 

under the test in the current regulations. 

We understand that these designs have 

been promoted as a way of both 

minimizing the cost of the plan to the 

employer (a consequence not only of 

excluding inpatient hospitalization 

benefits but also of making an offer of 

coverage that a substantial percentage of 

employees will not accept) and avoiding 

potential liability for employer shared 

responsibility payments. By offering 

coverage that is affordable to the 

employee and that purports to provide 

MV, employers adopting these plan 

designs were seeking, to deny their 

employees the ability to obtain a 

premium tax credit that could result in 

the employer becoming subject to a 

section 4980H employer shared 

responsibility payment. 

In Notice 2014–69 (2014–48 IRB, 

November 24, 2014), released on 

November 4, 2014, HHS and Treasury 

advised that regulations would be 

proposed providing that plans that fail 

to provide substantial coverage of 

inpatient hospital or physician services 

do not provide MV. Allowing these 

designs to be treated as providing MV 

not only would allow an employer to 

avoid the shared responsibility payment 

that the statute imposes when an 

employer does not offer its full-time 

employees adequate health coverage, 

but would adversely affect employees 

(particularly those with significant 

health risks) who understandably would 

find this coverage unacceptable, by 

denying them access to a premium tax 

credit for individual coverage purchased 

through an Exchange. Plans that omit 

critical benefits used disproportionately 

by individuals in poor health will enroll 

far fewer of these individuals, 

effectively driving down employer costs 

at the expense of those who, because of 

their individual health status are 

discouraged from enrolling. 

That the MV standard may be 

interpreted to require that employersponsored plans cover critical benefits 

is evident in the structure of the 

Affordable Care Act, the context in 

which the grant of the authority to the 

Secretary to prescribe regulations under 

section 1302 was enacted, and the 


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10828 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 

60See Department of Labor. Special Report: 

Selected Medical Benefits: A Report from the 

Department of Labor to the Department of Health 

and Human Services. http://www.bls.gov/ncs/ebs/ 

sp/selmedbensreport.pdf. 

policy underlying the legislation. 

Section 1302(b) authorizes the Secretary 

of HHS to define EHB to be offered by 

individual market and small group 

health insurance plans, provided that 

this definition include at least 10 

specified categories of benefits, and that 

the benefits be equal to the scope of 

benefits provided under a typical 

employer plan. To inform this 

determination as to the scope of a 

typical employer plan, section 

1302(b)(2)(A) provides that the 

Secretary of Labor shall conduct a 

survey of employer-sponsored coverage 

to determine the benefits typically 

covered by employers, including 

multiemployer plans, and provide a 

report on such survey to the Secretary 

[of HHS].60 These provisions suggest 

that, while detailed requirements for 

EHB in the individual and small group 

health insurance markets were deemed 

necessary, the benefits covered by 

typical employer plans providing 

primary coverage at the time the 

Affordable Care Act was enacted were 

seen as sufficient to satisfy the Act’s 

objectives for the breadth of benefits 

needed for health plan coverage and, in 

fact, to serve as the basis for 

determining EHB. They also suggest that 

any meaningful standard of minimum 

coverage may require providing certain 

critical benefits. 

Employer-sponsored plans in the 

large group market and self-insured 

employers continue to have flexibility 

in designing their plans. They are not 

required to cover all EHB. Providing 

flexibility, however, does not mean that 

these plans can offer whatever benefits 

they choose and automatically meet MV 

requirements. A plan that excludes 

substantial coverage for inpatient 

hospital and physician services is not a 

health plan in any meaningful sense and 

is contrary to the purpose of the MV 

requirement to ensure that an employersponsored plan, while not required to 

cover all EHB, nonetheless must offer 

coverage with minimum value at least 

roughly comparable to that of a bronze 

plan offered on an Exchange. 

For these reasons, the Secretary has 

concluded that the provisions of section 

1302(d)(2) of the Affordable Care Act— 

requiring that the regulations for 

determining the percentage of the total 

allowed costs of benefits that apply to 

plans that must cover all EHB also be 

applied as a basis for determining 

minimum value—reflect a statutory 

design to provide basic minimum 

standards for health benefits coverage 

through the MV requirement, without 

requiring large group market plans and 

self-insured plans to meet all EHB 

standards. Given the scope of benefits 

covered by typical employer plans, the 

MV requirement is properly viewed as 

a means of ensuring that employersponsored plans satisfy basic minimum 

standards while also accommodating 

flexibility in the design of those plans. 

Employers have been able to claim 

that plans without coverage of inpatient 

hospital services provide MV under the 

current quantitative MV test by 

designing a benefit package that, based 

on standardized actuarial assumptions 

used in the MV calculator, offsets the 

absence of actuarial value derived from 

spending on inpatient hospital coverage 

with increased spending on other 

benefits. Accordingly, some plan 

designs may pass the current 

quantitative test without offering a 

critical benefit universally understood 

to be included in any minimally 

acceptable employer health plan 

coverage, and which the Department of 

Labor study determined was included in 

all employer plans it surveyed. 

As noted previously, we have 

concluded that the quantitative test for 

MV is not exclusive. Accordingly, we 

are finalizing our proposal to amend 

§ 156.145 to require that, to provide MV, 

an employer-sponsored plan not only 

must meet the quantitative standard of 

the actuarial value of benefits, but also 

must provide a benefit package that 

meets a minimum standard of benefits. 

Specifically, we are finalizing as 

proposed the policy to revise § 156.145 

to provide that, to satisfy MV, an 

employer plan must provide substantial 

coverage of both inpatient hospital 

services and physician services. 

We are not requiring that large 

employer or self-insured employer 

group health plans provide all EHB as 

defined under section 1302 of the 

Affordable Care Act. Rather, we are only 

requiring that, to provide MV, 

employer-sponsored plans provide 

substantial coverage of the two types of 

benefits that we believe were envisioned 

for health plan coverage meeting the MV 

standard. We have concluded that plans 

that omit these types of coverage fail to 

meet universally accepted minimum 

standards of value expected from, and 

inherent in the nature of, any 

arrangement that can reasonably be 

called a health plan intended to provide 

the primary health coverage for 

employees. 

Consistent with Notice 2014–69, we 

are finalizing our proposal that these 

changes to our regulations on MV will 

apply to employer-sponsored plans, 

including plans that are in the middle 

of a plan year, immediately on the 

effective date of the final regulations. 

However, because some employers 

adopted plans prior to publication of 

Notice 2014–69, we are finalizing our 

proposal that the final regulations not 

apply before the end of the plan year (as 

in effect under the terms of the plan on 

November 3, 2014) to plans that before 

November 4, 2014, entered into a 

binding written commitment to adopt, 

or began enrolling employees into, the 

plan, so long as that plan year begins no 

later than March 1, 2015. For these 

purposes, a binding written 

commitment exists when an employer is 

contractually required to pay for an 

arrangement, and a plan begins 

enrolling employees when it begins 

accepting employee elections to 

participate in the plan. The Department 

of the Treasury and the IRS are expected 

to publish proposed regulations making 

clear that this delayed applicability date 

applies solely for purposes section 

4980H of the Code. At no time will any 

employee be required to treat a plan that 

fails to provide substantial coverage of 

inpatient hospital services or physician 

services as providing MV for purposes 

of eligibility for the premium tax credit 

under section 36B of the Code. 

Comment: We received several 

comments supporting our proposal and 

urging HHS to broaden the MV 

requirement to include outpatient 

services, emergency services and 

prescription coverage. Several 

commenters recommended establishing 

a clear standard for ‘‘substantial 

coverage’’ to determine whether an 

employer has met the requirements: One 

commenter suggested conducting a 

survey of employer-sponsored plans to 

establish a benchmark, three 

commenters suggested using the Federal 

Employees Health Benefits (FEHB) plan 

as a benchmark, and one commenter 

suggested using 4 days of minimum 

hospital stays coverage as a threshold 

based on an analysis of hospital stays 

among individuals in employersponsored plans. Several commenters 

requested that HHS establish a good 

faith compliance standard for plans 

offering coverage with inpatient hospital 

and physician services for the 2015 plan 

year. 

Response: We are finalizing the policy 

as proposed. As discussed in the 

proposed rule, because under the terms 

of the statute large employers are not 

required to offer EHB as defined by the 

Secretary, we are not requiring that large 

employer or self-insured employer 

group health plans provide all EHB as 

defined under section 1302 of the 

Affordable Care Act. Rather, we are only 


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Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 10829 

61Affordable Care Act Implementation Set 15, 

available at: http://www.cms.gov/CCIIO/Resources/ 

Fact-Sheets-and-FAQs/ 

aca_implementation_faqs15.html. 

62The FAQ also states that because section 2715A 

of the PHS Act simply extends the transparency 

provisions set forth in section 1311(e)(3) of the 

Affordable Care Act to group health plans and 

health insurance issuers offering group and 

individual health insurance coverage, the 

Departments clarified that the reporting 

requirements under section 2715A of the PHS Act 

will become applicable to group health plans and 

health insurance issuers offering group and 

individual health insurance coverage no sooner 

than when the reporting requirements under section 

1311(e)(3) of the Affordable Care Act become 

applicable. Nothing in these proposed regulations 

would apply any transparency reporting 

requirements related to section 2715A of the PHS 

Act, incorporated into section 715(a)(1) of ERISA 

and section 9815(a)(1) of the Code. 

requiring that, to provide MV, 

employer-sponsored plans provide 

substantial coverage of the two types of 

benefits that we believe were envisioned 

as essential to health plan coverage 

meeting the MV standard. We have 

concluded that plans that omit these 

types of coverage fail to meet 

universally accepted minimum 

standards of value expected from, and 

inherent in, the nature of any 

arrangement that can reasonably be 

called a health plan intended to provide 

the primary health coverage for 

employees. We intend to provide further 

clarity on the requirement to provide 

‘‘substantial coverage,’’ as 

circumstances warrant. 

Comment: Several commenters raised 

concerns that the Affordable Care Act 

only requires coverage of 60 percent of 

costs of benefits and HHS is imposing 

other benefits requirements without 

statutory basis. One of the commenters 

recommended HHS create a safe harbor 

for plans establishing coverage designs 

based on good faith belief that the plan 

meets the 60 percent actuarial value 

threshold. 

Response: As discussed above, we 

believe that section 1302(d)(2) of the 

Affordable Care Act—requiring that the 

regulations for determining the 

percentage of the total allowed costs of 

benefits that apply to plans that must 

cover all EHB also be applied as a basis 

for determining minimum value—reflect 

a statutory design to incorporate basic 

minimum standards for health benefits 

coverage similar in scope to EHB 

through the MV requirement, without 

requiring large group market plans and 

self-insured plans to meet all EHB 

standards. Given the scope of benefits 

covered by typical employer plans, the 

MV requirement is properly viewed as 

a means of ensuring that employersponsored plans that prevent employees 

from accessing the premium tax credit 

for comprehensive coverage in the 

Marketplace satisfy basic minimum 

standards while also accommodating 

flexibility in the design of those plans. 

We believe that our rules on effective 

dates adequately address transition 

issues. As described above, for purposes 

of section 4980H of the Code, the 

changes to our regulations on MV 

requirements will not apply before the 

end of the plan year for employers that 

adopted plans prior to November 4, 

2014, so long as the plan begins no later 

than March 1, 2015. However, under no 

circumstances will an employee be 

denied the premium tax credit under 

section 36B of the Code for a plan that 

does not cover at least 60 percent of the 

total allowed costs of benefits, and/or 

fails to provide substantial coverage of 

inpatient hospital services or physician 

services. 

Comment: Several commenters raised 

the concern that the MV requirements 

will increase the number of plans 

affected by the excise tax on high-cost 

employer-sponsored health coverage, 

and that many employers have limited 

benefits to avoid the tax or are 

considering passing off the excise tax 

costs to individuals. 

Response: Our analysis shows plans 

likely to be affected by these 

clarifications of the MV requirements 

generally have annual costs far below 

the thresholds above which the excise 

tax will apply in 2018; $10,200 for selfonly and $27,500 for other-than-selfonly coverage. Pursuant to the statute, 

the thresholds may be increased for 

excess growth in health care costs 

through 2018 and based on inflation 

annually thereafter. We thus do not 

believe that this policy will affect the 

number of employer plans affected by 

the excise tax and are finalizing the 

policy as proposed. 

3. Qualified Health Plan Minimum 

Certification Standards 

a. QHP Issuer Participation Standards 

(§ 156.200) 

We proposed to revise § 156.200(b)(7) 

to require that a QHP issuer comply 

with the standards under part 153 and 

not just the standards related to the risk 

adjustment program. This amendment 

clarifies that a QHP issuer must 

maintain responsibility for its 

compliance and, under § 156.340, the 

compliance of any of its delegated or 

downstream entities with the standards 

set forth in part 153, not just those 

specifically pertaining to risk 

adjustment. We received no comments 

on this proposal. We are finalizing this 

provision as proposed. 

b. Transparency in Coverage (§ 156.220) 

The transparency in coverage 

standards established under section 

1311(e)(3) of the Affordable Care Act, as 

implemented at § 155.1040(a) and 

§ 156.220, require health insurance 

issuers that offer a QHP in accordance 

with a certification from an Exchange to 

provide specified information to HHS, 

the Exchange, and the State insurance 

commissioner and to make this 

information available to the public in 

‘‘plain language.’’ In a frequently asked 

question dated April 29, 2013,61 HHS 

clarified that, to comply with section 

1311(e)(3), issuers offering QHPs 

certified by an Exchange would be 

required to begin submitting this 

information only after QHPs have been 

certified for one benefit year.62 We 

noted in the proposed rule (79 FR 

70726) that because a full year of claims 

data will be available, we anticipate the 

collection and public display of the 

required information listed in § 156.220 

from QHP issuers offering coverage 

through Exchanges beginning in 2016. 

We requested comments to inform 

future policies, regarding the data 

elements, format, and timeframe for the 

data submission, as well as the manner 

in which HHS, the Exchanges, and 

QHPs should publicly display the 

collected information. We also sought 

feedback on how to minimize 

duplication with information that 

issuers must already submit to HHS, 

States, or other entities (for example, 

accreditation organizations). Finally, we 

requested feedback on whether State 

Exchanges should display the same 

information and in the same format and 

manner as in the FFEs. 

Comment: One commenter asked 

whether the transparency in coverage 

standards are applicable to stand-alone 

dental plans. 

Response: The transparency in 

coverage reporting standards, 

established at § 156.220, are applicable 

to all QHPs offered on Exchanges, 

including stand-alone dental plans. 

Comment: Several commenters 

recommended that HHS narrow any 

data elements it collects to reflect only 

information that would be useful to 

consumers as they select a QHP. 

Commenters were concerned with 

duplication of collections that are 

already required by States or HHS. 

Some commenters suggested that data 

collection should rely on what is 

already publicly available when 

possible. Some commenters expressed 

concerns regarding protection of 

proprietary information and suggested 

that HHS should not request or display 

data that could have unintended, 

anticompetitive consequences. A few 


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10830 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 

63 2015 Letter to Issuers in the Federallyfacilitated Marketplaces, March 14, 2014, available 

at: http://www.cms.gov/CCIIO/Resources/ 

Regulations-and-Guidance/Downloads/2015-finalissuer-letter-3-14-2014.pdf. 

commenters suggested examples of data 

elements, the frequency of collection, 

the format of display, and data sources 

that could be used to meet the 

requirements for specific elements. 

Response: We intend to provide detail 

regarding the referenced data collection 

and display at a future date. We will 

take the commenters’ suggestions into 

account when we do so. We intend to 

collect and display information in a 

standardized manner to minimize 

burden on issuers and maximize utility 

for consumers. 

Comment: Some commenters 

recommended that transparency of 

coverage standards not be implemented 

for 1 year following issuance of the final 

guidance operationalizing them. These 

commenters were concerned about 

having sufficient time to put resources 

in place to submit and display data. 

Commenters also suggested that issuers 

be given an opportunity to comment on 

the specific elements that will be 

collected, the definition of those 

elements, and how the data will be 

used. One commenter suggested that 

HHS conduct beta testing before the 

requirements are fully implemented. In 

contrast, a few commenters were 

concerned with the 2016 

implementation date for transparency 

requirements and recommended that 

HHS collect and display the required 

information as soon as possible. 

Response: We believe a 2016 date will 

allow sufficient time for HHS to provide 

detailed guidance regarding the data 

collection, review, and public display of 

transparency elements and will allow 

HHS and Exchanges to collect a full set 

of data reflecting post-2014 experience. 

We intend to solicit additional 

comments on the specific approach 

before it is finalized. 

c. Network Adequacy Standards 

(§ 156.230) 

In § 156.230, we established the 

minimum network adequacy criteria 

that health and dental plans must meet 

to be certified as QHPs, under the 

Secretary’s authority in section 

1311(c)(1)(B) of the Affordable Care Act. 

In this rule, we proposed modifying 

§ 156.230(a) to specify that this section 

only applies to QHPs that use a provider 

network and that a provider network 

includes only providers that are 

contracted as in-network. This means 

that the general availability of out-ofnetwork providers will not be counted 

for purposes of meeting network 

adequacy requirements. 

We believe that networks that provide 

sufficient access to benefits are a 

priority for issuers and consumers. HHS 

continues to take great interest in 

ensuring strong network access, 

particularly for QHPs that must meet the 

standards in § 156.230. As stated in the 

proposed rule, HHS is aware that the 

NAIC has formed a workgroup that is 

drafting a model act relative to network 

adequacy and will await the results of 

this workgroup before proposing 

significant changes to network adequacy 

policy. For 2016, HHS expects to 

continue the reasonable access standard 

adopted in the 2015 Letter to Issuers in 

the Federally-facilitated Marketplaces 63

and assess the provider networks 

information submitted as part of the 

QHP certification process. We urge 

State-based Exchanges to employ the 

same standard when examining network 

adequacy. 

In addition to the changes above, we 

are also cognizant that new enrollees in 

QHPs may need a transition period to 

switch to a provider that is in-network 

in their new plan. We encourage QHP 

issuers that use a network of providers 

to offer new enrollees transitional care 

for an ongoing course of treatment. We 

suggest that this begin with the effective 

date of coverage of a new enrollee and 

last for at least 29 days thereafter (for a 

minimum of 30 days). These benefits 

would extend to health care services 

furnished by any provider to the new 

enrollee, regardless of whether the 

provider is in the plan’s network, as 

long as the enrollee received health 

services from that provider under an 

ongoing course of treatment in the 90 

days prior to the effective date of 

coverage. Because different plans may 

have different provider networks, when 

an individual enrolls in a new health 

plan, he or she may be undergoing a 

course of treatment with a provider that 

is not in the new issuer’s provider 

network. In such a case, it may take time 

for the new enrollee to select a new innetwork provider and to meet with the 

new provider to ensure that there is no 

disruption in treatment. We encourage 

issuers to adopt this policy to 

accommodate the immediate needs of 

enrollees, while allowing the enrollee 

sufficient time to go through the process 

of selecting an in-network provider in 

their new plan. As we stated in the 

proposed rule, we are considering 

whether requirements may be needed in 

this area in the future. 

We are renumbering § 156.230(b), to 

(b)(1) and adding (b)(2) to strengthen the 

provider directory requirement effective 

for plan years beginning on or after 

January 1, 2016. Specifically, we 

proposed that a QHP issuer must 

publish an up-to-date, accurate, and 

complete provider directory, including 

information on which providers are 

accepting new patients, the provider’s 

location, contact information, specialty, 

medical group, and any institutional 

affiliations, in a manner that is easily 

accessible to plan enrollees, prospective 

enrollees, the State, the Exchange, HHS, 

and OPM. As part of this requirement, 

we proposed that a QHP issuer must 

update the directory information at least 

once a month, and that a provider 

directory will be considered easily 

accessible when the general public is 

able to view all of the current providers 

for a plan on the plan’s public Web site 

through a clearly identifiable link or tab 

without having to create or access an 

account or enter a policy number. The 

general public should be able to easily 

discern which providers participate in 

which plan(s) and provider network(s) if 

the health plan issuer maintains 

multiple provider networks, and the 

plan(s) and provider network(s) 

associated with each provider, 

including the tier in which the provider 

is included, should be clearly identified 

on the Web site and in the provider 

directory. We solicited comments on 

this proposal, including comments 

regarding how often updating should 

occur. We are finalizing this policy as 

proposed, retaining the monthly 

timeline. 

We also finalize the requirement for 

issuers to make this information 

publicly available on their Web sites in 

a machine-readable file and format 

specified by HHS. The purpose of 

establishing machine-readable files with 

this data would be to provide the 

opportunity for third parties to create 

resources that aggregate information on 

different plans. We believe this will 

increase transparency by allowing 

software developers to access this 

information and create innovative and 

informative tools to help enrollees better 

understand the availability of providers 

in a specific plan. To facilitate this 

change, we proposed adding 

§ 156.230(c) to require QHP issuers to 

make available and submit to HHS 

information about providers in its 

provider networks. 

We specifically solicited comments 

on this requirement and other options, 

including the technical requirements for 

developing a machine-readable file and 

format for a provider directory, as well 

as other technical considerations, such 

as processes and considerations that 

should be taken into account. We have 

established these requirements to 

enhance transparency of QHP provider 

directories and to help consumers make 


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more informed decisions about their 

health care coverage. We solicited 

comments on these proposed 

requirements, including how frequently 

provider data should be updated, and 

whether additional types of information 

should be required to be included in the 

provider directory. We understand the 

complexity of this undertaking, and 

recognize that this will require issuer 

resources. Therefore, HHS intends to 

provide additional details about the data 

submission requirements. 

We also requested comments on the 

feasibility and merits of incorporating 

information on physical accessibility for 

individuals with disabilities, including 

accessibility information regarding 

facilities and equipment, or other 

information that would be important to 

enrollees and potential enrollees, as a 

part of network adequacy standards in 

the future. 

Comment: A number of commenters 

supported stronger network adequacy 

standards. Commenters were divided 

between supporting our proposal to wait 

for NAIC recommendations before 

taking further action, and urging us to 

act immediately and implement stronger 

network adequacy standards. 

Commenters suggested a wide range of 

network adequacy criteria for HHS to 

adopt, including provider to patient 

ratios; time and distance metrics; 

geographic-based metrics; minimum 

numbers of specialty providers; specific 

criteria for areas of concern including 

pediatric, dialysis centers, and 

autoimmune and rare disorders; 

monitoring of plans; and secret 

shopping. One commenter requested 

increased transparency regarding 

evaluation of network adequacy. This 

commenter suggested that HHS should 

modify the provider data template for 

QHP issuers in the FFEs to allow greater 

flexibility, and should clarify how 

reasonable access will be determined in 

situations where a sufficient number of 

providers are not willing to contract 

with the issuer. 

Response: We are finalizing the rule 

without making any additional changes 

to the network adequacy general 

requirements at this point as the NAIC 

finishes its work on the network 

adequacy model act. We expect that the 

final product of the NAIC work will 

reflect the viewpoints of the various 

stakeholders. This reflects our general 

position that network adequacy is an 

area subject to significant State 

regulation and oversight. We agree with 

commenters that QHP networks should 

provide access to a range of health care 

providers, and we continue to require 

all QHP issuers to provide reasonable 

access to all covered services in 

accordance with § 156.230(a) of this 

rule. We are also planning changes to 

the template used to collect network 

data to improve the collection process 

for QHP issuers in the FFE during the 

QHP certification process. 

Comment: A number of commenters 

support the clarification that only innetwork providers will be considered 

when determining if a plan’s medical 

network meets reasonable access 

requirements, and urged CMS to clarify 

that issuers must be able to provide 

reasonable access with the providers 

available in their lowest cost tier. Other 

commenters also urged CMS to require 

issuers to have an internal exceptions or 

appeals process to obtain out-of-network 

services at in-network cost when 

adequate access is not available, while 

others stressed that out-of-network 

referrals should be rare. Similarly, 

several commenters voiced concerns 

about consumers being charged out-ofnetwork charges while being treated in 

an in-network hospital because not all 

of the treating providers were innetwork. In such circumstances, 

commenters urged that the consumer 

only be charged in-network costs, and 

that in-network hospitals should be 

required to have sufficient in-network 

providers to furnish all covered 

services. Some commenters raised 

concerns about the standard use of outof-network providers for dental 

networks and the lack of availability of 

dentists who will contract with issuers. 

Response: In light of the general 

support of the proposed change, we 

intend to finalize the regulation as 

proposed. We understand the concern 

about confusion created when a hospital 

is listed as in-network and has providers 

that are out-of-network for particular inhouse services. We remind issuers that 

all covered services must be reasonably 

accessible, and in accordance with this 

regulatory change, must be available innetwork. We urge issuers to evaluate 

their in-network hospitals to make 

certain that all required services are 

accessible without unreasonable delay 

from in-network providers. We 

appreciate the concerns voiced 

regarding coverage of dental providers 

and are contemplating whether further 

guidance is warranted. 

Comment: A number of commenters 

strongly supported the transition policy 

allowing new enrollees to have access to 

providers from whom they received 

services before they joined their new 

plan. Some commenters urged HHS to 

require the transition policies, and some 

advocated for longer transition periods, 

such as 60 or 90 days or 6 months with 

reassessment, to determine if continued 

care is necessary at the end of the set 

time period. Some commenters 

suggested expanding transitional 

policies to include current enrollees 

whose in-network providers become 

out-of-network providers mid-year due 

to network changes. Conversely, some 

commenters expressed that clear and 

accurate provider directories make 

transitional policies unnecessary, and 

some believe the policy would 

negatively impact care management and 

that many States already have 

requirements for transitional care. 

Similarly, some suggested that 

transitional policies should have 

specific limits, including specific 

situations and types of care, to reduce 

the impact on premiums. Many 

commenters expressed concern about 

what payment rates would be if there is 

no contract with the out-of-network 

provider and suggested HHS should 

require plans to reimburse providers the 

reasonable and customary value for outof-network services and prohibit 

balance billing of consumers for 

anything above what they would have 

been charged for the services innetwork. Commenters also stated that 

this is an area that many States already 

regulate closely. 

Response: There are strong opinions 

supporting and opposing a requirement 

for a transitional policy, as well as 

varying opinions about the amount of 

time transitional policies should cover. 

We continue to encourage issuers to 

adopt appropriate transitional polices 

and to pay close attention to issues 

around continuity of care for both new 

enrollees and enrollees whose current 

providers become unavailable. We 

expect to continue to analyze this area 

and may propose standards concerning 

this topic in the future. 

Comment: Commenters generally 

supported the proposal to strengthen 

provider directory requirements and 

agreed that provider data should be 

updated at least monthly, especially for 

on-line directories. Some commenters 

urged more frequent updates and urged 

CMS to move towards requiring ‘‘real 

time’’ updates in the future. Concerns 

were raised about penalizing issuers if 

there were errors in the directories 

because providers may fail to notify the 

issuer of changes, and the 

administrative burden and costs 

associated with strengthened provider 

directory requirements. Conversely, 

other commenters urged that issuers be 

required to honor what is listed in the 

provider directory even if it erroneous, 

and that plans be required to monitor 

data for accuracy. 

Response: We are finalizing the 

regulation as proposed. We are requiring 

that directories be updated at least 


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monthly and encourage more frequent 

updating when possible. We also 

understand and appreciate the concern 

about issuers being held accountable for 

errors in directories and encourage 

issuers to work with their providers to 

ensure that their directories are as 

current and accurate as possible. We 

understand that there may be some 

administrative burden associated with 

updating directories, but believe it is 

necessary for consumers to be fully 

informed about network access. 

Similarly, we appreciate commenters 

who stated that issuers should honor 

what is listed in their directories even 

if there are errors, and while we are not 

requiring that at this time, we strongly 

encourage that practice. 

Comment: Some commenters 

supported the inclusion of the proposed 

data elements in provider directories, 

including indicating if the provider is 

accepting new patients. Conversely, 

some commenters were concerned about 

being required to list if the provider is 

accepting new patients, citing the 

administrative burden because that 

status can frequently change. There was 

also concern about consumer confusion 

that could be caused by the requirement 

to indicate whether specialists are 

‘‘accepting new patients.’’ Some 

commenters noted that in the case of 

specialists for whom a referral is 

needed, indicating the specialist is 

‘‘accepting new patients’’ could be 

misleading to consumers, who may 

understand that to mean that they can 

request an appointment directly with 

the specialist. To alleviate confusion 

about referrals, it was suggested that 

another column or notation be included 

that indicates if a referral is needed, and 

it was also suggested that issuers retain 

flexibility in what is included in their 

directories. 

Response: We are finalizing all of 

these requirements as proposed, 

including the requirement that issuers 

must indicate if providers are accepting 

new patients. All of the required data, 

including information on whether 

providers are accepting new patients, 

are critical for consumers to make 

educated decisions about their health 

coverage. 

Comment: Some commenters 

suggested that additional data should be 

required as part of provider directories 

to make it easier for consumers to 

compare plans. Some of the specific 

data elements suggested included: hours 

physician traditionally practices at 

referenced practices, board 

certification(s), sub-specialties 

practiced, language spoken by each 

provider, interpreter services or 

communication and language assistance 

services that are available at the 

provider’s facilities and information 

about how enrollees can obtain such 

services, publication date of directory, 

and a field for providing advance notice 

that the provider will be leaving the 

network. Commenters also urged 

requiring plans to provide a dedicated 

email address to be used to notify the 

plan of inaccuracies in the plan 

directory, and holding the issuer 

accountable for making changes when 

notified. Similarly, it was suggested that 

plans should monitor provider 

directories to determine if they are 

accurate. 

Response: We are finalizing our 

proposal requiring the issuer to publish 

an up-to-date, accurate, and complete 

provider directory, including 

information on which providers are 

accepting new patients, the provider’s 

location, contact information, specialty, 

medical group, and any institutional 

affiliations, in a manner that is easily 

accessible to plan enrollees, prospective 

enrollees, the State, the Exchange, HHS, 

and OPM. We believe the new 

requirements will greatly strengthen 

provider directory requirements and 

provide consumers with valuable 

information to help them determine 

which QHP best meets their needs. We 

encourage issuers to continuously 

evaluate the data they include in their 

directories and aim to provide all of the 

information that will help consumers 

understand their network. We 

appreciate the suggestion that issuers 

have a dedicated email address for 

enrollees and providers to submit 

changes or inaccuracies, and while we 

are not requiring it at this time, we 

encourage the practice. 

Comment: There was some concern 

raised that including items such as 

location, contact information, and 

specialty type on a real time basis could 

conflict with what is in National Plan 

and Provider Enumeration System 

(NPPES), which providers may fail to 

update, and would result in confusion. 

To alleviate possible NPPES confusion, 

it was suggested that issuers only 

include information from the previous 

month’s information in the NPPES 

database. 

Response: We appreciate this concern 

but are finalizing the regulation as 

proposed. The requirement for issuers to 

publish an up-to-date, accurate, and 

complete provider directory takes into 

account the issuers’ obligation to 

develop a system to ensure that the 

information about providers that they 

publish in the provider directory is 

accurate and up-to-date, including 

ensuring it is consistent with what is 

listed in the NPPES database. 

Comment: Some commenters 

supported the requirement that issuers 

provide access to provider directories 

through the issuer’s public Web site 

without the need to create an account or 

enter policy information, and HHS was 

asked to clarify the term ‘‘user-friendly’’ 

when used to describe the location of 

provider directories on issuer Web sites. 

Response: We are finalizing this 

policy as proposed. In response to 

requests for clarification about the term 

‘‘user friendly,’’ we suggest issuers 

adopt common industry standards for 

publishing the provider directory in an 

area of their Web site where it will be 

easy for enrollees to find and that 

enrollees will be able to access without 

the need for an account or policy 

number as stated in this rule at 

§ 156.230(b)(2)(i). To reiterate, 

consumers should not have to create a 

user ID, log on, enter a policy number, 

or be enrolled in a plan to view the 

network. The URL that issuers provide 

to HHS for publication on 

HealthCare.gov for QHPs in an FFE 

should link directly to the applicable 

provider directory. If it does not, it 

should link to a list of the issuer’s 

provider directories, and it should be 

readily discernible to a consumer which 

directory applies to which QHP. 

Comment: Some commenters 

supported the proposal for issuers to 

make available provider information in 

a machine-readable file and format 

specified by HHS, citing that this would 

improve transparency and support 

informed consumer decision-making 

without burdening issuers. Conversely, 

some commenters opposed the proposal 

and voiced concerns about data 

accuracy, including how HHS would 

hold third parties accountable for data 

errors, and cost. Some commenters 

stated that if data are not frequently 

updated, consumers could receive 

inaccurate information, upon which 

they might rely to select a QHP, while 

other commenters were concerned that 

frequent updating would be 

burdensome to issuers. Some 

commenters also noted that 

implementing any standard could be 

time-consuming and requested the 

opportunity to provide additional 

feedback. A number of commenters 

provided suggestions regarding the 

format, structure, file type, and content 

of the data they believe should be 

collected. Some commenters also 

suggested that any machine-readable 

databases should be accessible through 

an API. 

Response: We believe a machinereadable file or a format specified by 

HHS will increase transparency by 

allowing software developers to access 


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this information and create innovative 

and informative tools to help enrollees 

better understand the plan’s provider 

network. Based on the comments 

received asking us to make provider 

information more transparent and 

accessible to consumers, HHS is 

finalizing this rule by adding 

§ 156.230(c), to require QHP issuers in 

the FFEs to make available the 

information on the provider list on its 

Web site in a HHS specified format and 

also submit this information to HHS, in 

a format and at times determined by 

HHS. We agree with commenters that 

creating a vehicle for consumers to 

easily determine which providers are in 

which networks will help consumers 

select QHPs that best meet their needs. 

We recognize that this will require 

issuer resources, and will provide 

further details about the specific data 

elements, frequency of updates, file 

types, and other crucial information in 

future guidance. 

Comment: Commenters supported 

having issuers list detailed information 

in provider directories about physical 

accessibility for individuals with 

disabilities to help consumers choose 

plans and providers. Some sought 

information about exam table access, 

transfer assistance, and wheelchair 

access. One commenter urged caution in 

this area out of concern that including 

information on accessibility features for 

certain providers could be read to imply 

that other providers need not offer such 

features, even though they are legally 

obligated to do so pursuant to the 

Americans with Disabilities Act and 

section 504 of the Rehabilitation Act. 

Response: We appreciate the 

complexity of this topic, and do not 

intend to issue additional regulation on 

this topic at this time. We urge all 

issuers and providers to continue to 

ensure that they are providing full and 

equal access to all covered services to 

all enrollees, including those people 

with disabilities, and we remind them 

of the obligation to adhere to the 

requirements of the Americans with 

Disabilities Act and section 504 of the 

Rehabilitation Act. Issuers are 

encouraged to consult relevant 

Department of Justice guidance on 

accessibility of medical providers and 

effective communications at 

www.ada.gov. We will continue to 

monitor this issue. 

d. Essential Community Providers 

(§ 156.235) 

At § 156.235, we proposed to 

strengthen the essential community 

provider (ECP) standard in accordance 

with section 1311(c)(1)(C) of the 

Affordable Care Act, which requires that 

a QHP’s network include ECPs, where 

available, that serve predominantly lowincome and medically-underserved 

populations. As established in section 

1311(c)(1)(C) of the Affordable Care Act, 

ECPs include entities defined in section 

340B(a)(4) of the PHS Act and providers 

described in section 1927(c)(1)(D)(i)(IV) 

of the Act as set forth by section 211 of 

Pub. L. 111–8. Additionally, we 

proposed that ECPs may include not-forprofit or State-owned providers that 

would be entities described in section 

340B of the PHS Act but do not receive 

Federal funding under the relevant 

section of law, as these providers satisfy 

the same 340B requirements and 

therefore meet the definition of ECPs by 

virtue of the following description in 

section 1311(c)(1)(C) of the Affordable 

Care Act—health care providers defined 

in section 340B(a)(4) of the PHS Act and 

providers in section 1927(c)(1)(D)(i)(IV) 

of the Act. For the same reasons 

described above, we proposed that such 

providers also include not-for-profit or 

governmental family planning service 

sites that do not receive a grant under 

Title X of the PHS Act. Other providers 

that provide health care to populations 

residing in low-income zip codes or 

Health Professional Shortage Areas 

could also be considered ECPs. We 

proposed that the above proposals apply 

to benefit years 2016 and thereafter. 

To assist issuers in ensuring that, in 

future QHP certification years, they are 

providing sufficient consumer access to 

ECPs to satisfy the requirement in 

section 1311(c)(1)(C) of the Affordable 

Care Act, we also proposed in new 

paragraph (a)(2)(i) of this section that, 

for QHP certification cycles beginning 

with the 2016 benefit year, a health plan 

seeking certification to be offered 

through an FFE must satisfy the general 

ECP standard described in paragraph 

(a)(1) of this section by demonstrating in 

its applications for QHP certification 

that a sufficient percentage, as 

determined annually by HHS and 

specified in HHS guidance, of available 

ECPs in the plan’s service area have a 

contractual agreement to participate in 

the plan’s provider network. For 

purposes of this general ECP standard, 

we proposed that multiple providers at 

a single location would count as a single 

ECP toward the issuer’s satisfaction of 

the proposed ECP participation 

standard. Any update to the general ECP 

inclusion standards would be based on 

HHS’s post-certification assessments of 

the adequacy of ECP participation, and 

geographic distribution of such 

providers, and evidence of contractual 

negotiation efforts provided by issuers 

in the ECP supplemental response 

forms. 

In addition, we proposed in paragraph 

(a)(2)(ii) of this section that, to satisfy 

the general ECP standard, the issuer of 

the plan seeking certification as a QHP 

in an FFE would be required to offer 

contracts for participation in the plan 

for which a certification application is 

being submitted to the following: (1) All 

available Indian health providers in the 

service area, applying the special terms 

and conditions necessitated by Federal 

law and regulations as referenced in the 

recommended model QHP addendum 

for Indian health providers developed 

by HHS; and (2) at least one ECP in each 

ECP category (see Table 11) in each 

county in the service area, where an 

ECP in that category is available and 

provides medical or dental services that 

are covered by the issuer plan type. We 

expect that issuers will offer contracts in 

good faith. A good faith contract offer 

should offer the same rates and contract 

provisions as other contracts accepted 

by or offered to similarly situated 

providers that are not ECPs. 

TABLE 11—ECP CATEGORIES AND TYPES IN FFES

Major ECP category ECP provider types 

Federally Qualified Health Centers 

(FQHC).

FQHC and FQHC ‘‘Look-Alike’’ Clinics,64 Outpatient health programs/facilities operated by tribes, tribal organizations, programs operated by Urban Indian Organizations. 

Ryan White Providers .............................. Ryan White HIV/AIDS Providers. 

Family Planning Providers ....................... Title X Family Planning Clinics and Title X ‘‘Look-Alike’’ Family Planning Clinics.65

Indian Health Care Providers .................. Tribes, Tribal Organization and Urban Indian Organization Providers, Indian Health Service Facilities. 

Hospitals .................................................. Disproportionate Share Hospital (DSH) and DSH-eligible Hospitals, Children’s Hospitals, Rural Referral Centers, Sole Community Hospitals, Free-standing Cancer Centers, Critical Access Hospitals. 


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64For more information on FQHC ‘‘Look-Alike’’ 

Clinics, see http://bphc.hrsa.gov/about/lookalike/

index.html and section 1861(a)(4) and section 

1905(l)(2)(B) of the Act. 

65For more information on Title X ‘‘Look-Alike’’ 

Clinics, see section 1927(c)(1)(D)(i)(IV) of the Social 

Security Act. 

66More information on the supplemental 

response can be found on the CCIIO Web site at: 

http://www.cms.gov/cciio/programs-and-initiatives/

health-insurance-marketplaces/qhp.html. 

TABLE 11—ECP CATEGORIES AND TYPES IN FFES—Continued 

Major ECP category ECP provider types 

Other ECP Providers ............................... STD Clinics, TB Clinics, Rural Health Clinics, Black Lung Clinics, Community Mental Health Centers, 

Hemophilia Treatment Centers, and other entities that serve predominantly low-income, medically 

underserved individuals. 

We proposed to add paragraph (a)(3) 

to this section to specify that if an 

issuer’s QHP certification application to 

the FFE does not satisfy the ECP 

standard described in paragraph (a)(2) of 

this section, the issuer must include as 

part of its application a narrative 

justification describing how the 

provider network(s) of the plans for 

which certification applications have 

been submitted provides an adequate 

level of service for individuals residing 

in low-income zip codes or Health 

Professional Shortage Areas within the 

plan’s service area and how the plan’s 

provider network will be strengthened 

toward satisfaction of the ECP standard 

prior to the start of the benefit year. The 

narrative justification should include 

the following: The number of contracts 

offered to ECPs for the benefit year; the 

number of additional contracts the 

issuer expects to offer for the benefit 

year and the timeframe of planned 

negotiations; the names of the ECP 

hospitals FQHCs, Ryan White providers, 

family planning providers, Indian 

health providers, and other ECPs to 

which the issuer has offered contracts, 

but with whom an agreement has not 

yet been reached; and contingency plans 

for how the issuer’s provider network(s), 

as currently designed, will provide 

adequate care to enrollees who might 

otherwise be cared for by relevant ECPs. 

Through HHS’s post-certification 

assessments, HHS may examine an 

issuer’s progress toward satisfying the 

applicable ECP standard to ensure that 

the issuer continues to qualify for 

offering its plan on the Exchange, while 

OPM would retain this responsibility for 

issuers of multi-State plans, acting in 

coordination with HHS as may be 

appropriate. 

We proposed to redesignate current 

paragraph (a)(3) as paragraph (a)(4), in 

which we clarify that nothing in the 

requirements under paragraphs (a)(1) 

through (a)(3) of this section requires 

any QHP to provide coverage for any 

specific medical procedure. We also 

proposed to redesignate current 

paragraph (a)(2) as paragraph (a)(5). 

We proposed in paragraph (b)(1) that 

the alternate ECP standard described in 

§ 156.235(a)(5) will apply to issuers 

with plans that provide a majority of 

covered professional services through 

physicians employed by the issuer or 

through a single contracted medical 

group that offer QHPs in any Exchange. 

Additionally, for plans seeking QHP 

certification in FFEs, we proposed that 

a QHP issuer described in paragraph 

(a)(5) of this section be determined to 

have a sufficient number and geographic 

distribution of employed or contracted 

providers by demonstrating in its QHP 

application that the number of its 

providers in the following locations 

meets a percentage specified in HHS 

guidance of the number of available 

ECPs in the service area: (i) Located 

within a Health Professional Shortage 

Areas; or (ii) located within five-digit 

zip codes in which 30 percent or more 

of the population falls below 200 

percent of the Federal Poverty Line. For 

purposes of this alternate ECP standard, 

multiple providers at a single location 

will count as one ECP toward the 

available ECPs in the plan’s service area 

and toward the issuer’s satisfaction of 

the proposed ECP participation standard 

to ensure a sufficient number and 

geographic distribution of ECPs as 

required under § 156.235(a). Any 

modification to the alternate ECP 

inclusion standard in future benefit 

years would be based on HHS’s postcertification assessments of the 

adequacy of ECP participation and 

geographic distribution of such 

providers to ensure reasonable and 

timely access to such ECPs for lowincome, medically underserved 

individuals. 

Furthermore, we proposed in new 

paragraph (b)(3) of this section that if a 

QHP certification application of a plan 

for the FFE does not satisfy the alternate 

ECP standard described in paragraph 

(b)(2) of this section, the issuer must 

include as part of its QHP application a 

narrative justification describing how 

the issuer’s provider network(s) 

provides an adequate level of service for 

low-income and medically underserved 

enrollees. When assessing whether an 

issuer has provided a satisfactory 

narrative justification under either the 

general or alternate ECP standard, as 

applicable, HHS will take into account 

factors and circumstances identified in 

the ECP Supplemental Response 

Form,66 along with an explanation of 

how the issuer will provide access for 

individuals residing in low-income zip 

codes or Health Professional Shortage 

Areas within the plan’s service area and 

how the plan’s provider network will be 

strengthened toward satisfaction of the 

ECP standard prior to the start of the 

benefit year. Additionally, justifications 

that include verification of contracts 

offered in good faith, that include terms 

that a willing, similarly-situated, nonECP provider would accept or has 

accepted, would be considered toward 

satisfaction of the ECP standard. 

Finally, we proposed in paragraph (c) 

of this section to remove the language 

defining ECPs as meeting the criteria on 

the initial date of the regulation’s 

publication. We proposed this change in 

recognition of the fact that the universe 

of ECPs, as well as the databases we use 

to delineate this universe, may vary over 

time for many reasons, including 

demographic and provider 

characteristics. We requested comment 

on these proposed changes. We are now 

finalizing these changes with 

modifications. The final rule specifies in 

regulation text that entities that could 

receive funding under Title X and 340B 

are ECPs, clarifies the application to 

SADPs, clarifies standards related to 

covered services, and clarifies the 

standard for integrated delivery systems. 

Comment: A number of commenters 

supported the clarification that ECPs 

include not-for-profit or State-owned 

providers that would be entities 

described in section 340B of the PHS 

Act but do not receive Federal funding 

under the relevant section of law, 

including not-for-profit or governmental 

family planning service sites that do not 

receive a grant under Title X of the PHS 

Act. These commenters urged that HHS 

include this clarification in the 

regulation text. Some commenters 

recommended that we provide clear 

language to States and issuers indicating 

that Indian health providers are among 


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67http://www.cms.gov/CCIIO/Programs-andInitiatives/Health-Insurance-Marketplaces/

Downloads/Description-and-Purpose-of-Draft-HHSList-of-ECPs-for-PY-2016_12-24-14.pdf. 

the ECP groups to which issuers must 

extend contract offers in good faith to 

satisfy § 156.235(a) of the ECP standard. 

Response: Based on the comments 

received, we are codifying the inclusion 

of the following entities in the 

definition of an ECP in § 156.235(c): 

Not-for-profit or State-owned providers 

that would be entities described in 

section 340B of the PHS Act but do not 

receive Federal funding under the 

relevant section of law; not-for-profit or 

governmental family planning service 

sites that do not receive a grant under 

Title X of the PHS Act; and Indian 

health care providers. Effective January 

1, 2016, we are making this 

modification to emphasize that these 

providers are among the ECP groups to 

which issuers must extend contract 

offers in good faith to satisfy 

§ 156.235(a). 

Comment: Several commenters 

recommended that HHS clarify that 

providers located in low-income zip 

codes or HPSAs must also serve 

predominately low-income, medically 

underserved individuals to satisfy the 

definition of an ECP. 

Response: We agree with commenters. 

In alignment with the regulatory 

definition of an ECP at § 156.235(c), we 

emphasize that a provider must actually 

serve predominantly low-income, 

medically underserved individuals to be 

considered an ECP, and not simply be 

located in low-income zip codes or 

HPSAs. 

Comment: We received a few 

comments expressing concern that 

removal of the language defining ECPs 

as meeting the criteria on the initial date 

of the regulation’s publication risks the 

stability in the number and scope of 

ECPs and carries the risk that States, 

Exchanges, and other entities will 

attempt to limit the providers identified 

as an ECP. 

Response: While we understand the 

commenters’ desire for providers to 

retain a designated ECP status as of the 

initial date of the regulation’s 

publication, such a policy could conflict 

with the statutory definition of an ECP 

if interpreted to extend past the 

reexamination period for determining 

continued eligibility of such providers 

on the list. To avoid any such 

misinterpretation, we proposed 

removing this language from 

§ 156.235(c) to clarify that such 

providers must continue to qualify each 

benefit year as providers that serve 

predominantly low-income, medically 

underserved individuals to retain their 

ECP status on the list each year. 

Therefore, we are finalizing this 

provision as proposed, effective January 

1, 2016. 

Comment: We received a number of 

comments in support of our proposal 

that a health plan seeking QHP 

certification to be offered through an 

FFE must satisfy the general ECP 

standard by demonstrating in its 

applications for QHP certification that a 

sufficient percentage, as determined 

annually by HHS and specified in HHS 

guidance, of available ECPs in the plan’s 

service area have a contractual 

agreement to participate in the plan’s 

provider network. Some of these 

commenters urged that we increase the 

percentage each year beyond the 

existing 30 percent requirement. Some 

commenters urged that we set a 

minimum percentage requirement in the 

regulation text and encourage plans to 

include a greater number of ECPs in 

their networks as a part of ensuring 

access and continuity of care. One 

commenter pointed out that some States 

have implemented much higher ECP 

inclusion percentage standards. 

In contrast, one commenter stated that 

the QHPs lack complete information to 

adequately identify the universe of 

ECPs. Furthermore, the commenter 

stated that the ECP lists provided to 

issuers in the past have included 

providers that either do not provide 

medical services or include inaccurate 

provider information. The commenter 

recommended that HHS improve the 

utility of ECP information by including 

National Provider Identifiers (NPIs) in 

their database of ECPs, and by 

publishing any revised ECP lists prior to 

the anticipated QHP application 

submission deadline and with any 

modifications made apparent to allow 

issuers to easily reconcile the HHS ECP 

list with their internal records. Some 

commenters recommended that SADP 

issuers be exempt from the ECP 

inclusion standard given that certain 

elements of the ECP requirements are 

less suited for dental issuers than 

medical issuers, and suggested that CMS 

instead require SADPs to provide 

evidence of offering meaningful access 

to lower income enrollees in their 

service areas. 

Response: Based on our QHP 

certification reviews for the 2015 benefit 

year and the ongoing strengthening of 

our ECP list, we believe that specifying 

the ECP inclusion percentage in HHS 

guidance for the 2016 benefit year 

provides desirable flexibility at this time 

for HHS to further examine the 

adequacy of this inclusion standard for 

ensuring access to care for low-income, 

medically underserved individuals for 

future years. Furthermore, we agree 

with the recommendation that the 

accuracy of the ECP list be improved 

prior to increasing the ECP inclusion 

percentage standard. To this effect, we 

have recently published a draft ECP list 

for the 2016 benefit year 67 and solicited 

public comments in an effort to make 

corrections to the list and publish the 

list prior to the anticipated QHP 

application submission deadline. In 

response to comments, we also intend to 

make apparent the modifications to the 

list to allow issuers to easily reconcile 

the HHS ECP list with their internal 

records. We will further examine the 

feasibility of the commenter’s 

recommendation to add NPIs to the ECP 

list in future years in coordination with 

our Federal partners from whom we 

collect the provider data. 

Regarding the commenters’ 

recommendation to exempt SADPs from 

the ECP inclusion standard, we 

proposed to modify the ECP 

requirement at § 156.235(a)(2)(ii)(B) to 

clarify that only the providers in the 

ECP categories that provide dental 

services would be considered available 

for an SADP’s offering of a contract. In 

other words, we have added ‘‘and 

provides medical or dental services that 

are covered by the issuer plan type’’ to 

the end of that paragraph to ensure the 

applicability of this provision to SADPs. 

Given that this was the only ECP 

provision unsuited for SADPs, we 

believe we have addressed the need for 

its suitability by making this proposed 

modification, and are finalizing this 

language as proposed, effective January 

1, 2016. 

Comment: We received comments in 

support of our proposal that an issuer’s 

satisfaction of the ECP inclusion 

percentage of available ECPs in the 

plan’s service area be calculated based 

on multiple providers at a single 

location counting as a single ECP 

toward both the available ECPs in the 

plan’s service area and the issuer’s 

satisfaction of the ECP participation 

standard, stating that the proposal 

would help ensure access to a broad 

range of provider types and geographic 

distribution of ECPs for low-income, 

medically underserved individuals. 

However, several commenters suggested 

that counting multiple providers at a 

single location as only a single ECP may 

overlook availability of different 

services, and recommended that HHS 

count multiple providers at a single 

location as multiple ECPs toward 

satisfaction of the ECP inclusion 

percentage standard. One commenter 

contended that such a policy would 

undermine the ability of integrated 


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10836 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 

delivery systems to provide high levels 

of consistent, quality care. 

Response: We believe it is important 

to clarify the underlying rationale for 

this proposed provision. At 

§ 156.235(a)(1) and (b)(1), we have 

established that a QHP issuer that 

satisfies the ECP inclusion standard 

must include a sufficient number and 

geographic distribution of ECPs in its 

provider network, or through its 

employed providers and hospital 

facilities if the issuer qualifies for the 

alternate ECP standard described at 

§ 156.235(b). Therefore, we believe that 

our proposed provision is critical for 

ensuring that issuers satisfy both the 

sufficient number and geographic 

distribution requirements by not 

concentrating the majority of its 

providers at only one or a few locations. 

Furthermore, such an accounting of 

multiple providers at a single location 

aligns with the crediting of an issuer’s 

inclusion of provider facilities on the 

available HHS ECP list, which includes 

practices and clinics, which generally 

consist of multiple providers at a single 

location. While such a policy may 

reduce the number of credited ECPs for 

an issuer, to the extent that multiple 

provider types practice at a given 

location and may map to different ECP 

categories, these different provider types 

could contribute to satisfying the 

requirement that an issuer offer a 

contract to at least one ECP in each 

category in each county in the plan’s 

service area for multiple ECP categories. 

In response to issuers that qualify for 

the alternate ECP standard, as defined at 

§ 156.235(a)(5), and commenters’ 

concern that such a policy might be 

disruptive to an integrated delivery 

system, the narrative justification 

provision at § 156.235(b)(3) ensures that 

such issuers comply with the ECP 

inclusion standard by describing how 

the plan’s provider networks provide an 

adequate level of service for low-income 

enrollees or individuals residing in 

HPSAs within the plan’s service area. 

After careful consideration of the public 

comments applicable to issuers that 

qualify for both the general and 

alternate ECP standards, we are 

finalizing our proposal that an issuer’s 

satisfaction of the ECP inclusion 

percentage of available ECPs in the 

plan’s service area be calculated based 

on multiple providers at a single 

location counting as a single ECP 

toward both the available ECPs in the 

plan’s service area and the issuer’s 

satisfaction of the ECP participation 

standard, effective January 1, 2016. 

Comment: One commenter 

recommended that HHS require that 

issuers that qualify for the alternate ECP 

standard, as defined at § 156.235(a)(5), 

that are unable to provide all of the 

categories of services provided by 

entities in each of the ECP categories in 

each county in the service area as 

outlined in the general ECP standard, be 

required to contract with outside 

providers or facilities that can provide 

those services to low-income, medically 

underserved individuals. In contrast, 

another commenter expressed concern 

that HHS’s methodology for assessing 

the adequacy of ECP inclusion for 

issuers that provide the majority of their 

covered professional services through 

physicians employed by the issuer or 

through a single contracted medical 

group does not fit well for plans with 

well-established integrated care delivery 

systems. The commenter expressed 

concern that requirements to contract 

with outside providers that use different 

clinical protocols and thus have 

incomplete patient information and lack 

linkages for patients with chronic 

conditions, would fundamentally 

change how integrated delivery systems 

provide care to their patients and would 

undermine the ability of integrated care 

teams to provide high levels of 

consistent, quality care. The commenter 

contended that counting multiple 

providers at a single location as only 

one provider toward satisfaction of the 

alternate ECP standard is problematic 

for an entity that serves its members 

with large facilities and has systems in 

place (for example, telemedicine, etc.) 

that can serve members in a broad 

geographic area. This commenter urged 

CMS to better assess effectiveness of 

networks at delivering quality care, and 

rapid access. 

Response: While we recognize the 

challenges for alternate ECP standard 

issuers that offer an integrated health 

care delivery system, we believe that 

consumers should experience equal 

access to covered benefits, regardless of 

whether they are enrolled in plans 

offered by issuers that qualify for the 

general or the alternate ECP standard. 

To ensure such equal access, issuers 

that qualify for the alternate ECP 

standard must provide access to the 

same categories of services provided by 

entities in each of the ECP categories in 

each county in the plan’s service area as 

issuers that qualify for the general ECP 

standard. Therefore, effective January 1, 

2016, we have modified our proposed 

provision at § 156.235(b)(2)(ii) to require 

issuers to provide within the issuer’s 

integrated delivery system all of the 

categories of services provided by 

entities in each of the ECP categories in 

each county in the plan’s service area as 

outlined in the general standard; or 

otherwise offer a contract to at least one 

ECP outside of the issuer’s integrated 

delivery system per ECP category in 

each county in the plan’s service area 

that can provide those services to lowincome, medically underserved 

individuals. 

Comment: We received several 

comments recommending that CMS 

retain the requirement that QHP issuers 

offer contracts to all Indian health care 

providers in the QHP’s service area. 

These commenters also urged that CMS 

require QHP issuers to use the 

recommended model QHP addendum, 

rather than our proposal to require that 

contract offers apply the special terms 

and conditions necessitated by Federal 

law and regulations as referenced in the 

recommended model QHP addendum. 

These commenters expressed concern 

that not requiring use of the actual 

model QHP addendum could result in 

loss of the following provisions in the 

executed QHP-Indian health care 

provider (ICHP) contracts: (1) A listing 

of each Indian-specific provision in 

Federal law that is applicable to the 

provider contract; and (2) a clear 

statement of the meaning of each 

applicable Indian-specific provision. 

Response: We believe the requirement 

that issuers apply the special terms and 

conditions necessitated by Federal law 

and regulations as referenced in the 

recommended model QHP addendum, 

along with encouraging issuer use of the 

recommended model QHP addendum in 

guidance, strikes the desirable balance 

between allowing the minimal 

flexibility that issuers have requested 

while ensuring inclusion of the 

fundamental provisions of the model 

QHP addendum within the issuer 

contractual offers to the Indian health 

providers. Therefore, while we strongly 

encourage issuers to use the model QHP 

Addendum, we are not requiring that 

they do so. We are finalizing, effective 

January 1, 2016, our proposal requiring 

that health plans seeking certification as 

a QHP in an FFE offer contracts for 

participation in the plan for which a 

certification application is being 

submitted to all available Indian health 

providers in the service area, applying 

the special terms and conditions 

necessitated by Federal law and 

regulations as referenced in the 

recommended model QHP addendum 

for Indian health providers developed 

by HHS. 

Comment: One commenter 

recommended that if issuers met the 

ECP standard in the previous year, 

issuers not be required every year to 

offer contracts to all Indian health care 

providers in the service area and to at 


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68As of January 1, 2014, more than 1,000 rural 

health clinics (RHCs) were designated as an 

automatic Health Professional Shortage Area 

(HPSA), the criteria for which include accepting 

patients regardless of ability to pay; offering a 

sliding fee schedule based on ability to pay 

(income); and accepting Medicare, Medicaid, CHIP 

and private health insurance patients. To receive 

the automatic HPSA designation, each RHC is 

required to complete an attestation form, which is 

available at: http://bhpr.hrsa.gov/shortage/hpsas/

certofeligibility.pdf. CMS intends to include RHCs 

that are not listed on the current non-exhaustive 

ECP list and complete the attestation form to 

receive an automatic HPSA designation through the 

Health Resources and Services Administration in 

future non-exhaustive ECP lists. More information 

about the HPSA designation requirements and 

process is also available at: http://bhpr.hrsa.gov/

shortage/hpsas/ruralhealthhpsa.html. 

least one ECP in each ECP category in 

each county in the service area. 

Response: We share the commenter’s 

interest in minimizing contracting 

burden on both issuers and providers; 

however, given the dynamic nature of 

the health insurance industry, we 

believe that a contract denial the 

previous year should not carry over to 

future years. Therefore, we are 

finalizing, effective January 1, 2016, our 

proposal that health plans seeking 

certification as a QHP in an FFE offer 

contracts for participation in the plan 

for which a certification application is 

being submitted to all available Indian 

health providers in the service area. 

Satisfaction of this requirement in 

previous years does not exempt a QHP 

from satisfying the requirement for 

future QHP application years. 

Comment: Several commenters urged 

CMS to encourage application of the 

ECP inclusion requirement, including 

the requirement that issuers offer 

contracts to all Indian health providers, 

to issuers operating in State Exchanges, 

as well to issuers operating in the FFEs. 

Response: We urge State Exchanges to 

employ the same standard when 

examining adequacy of ECPs as outlined 

in § 156.235, including the requirement 

that issuers offer contracts to all Indian 

health providers in the plan’s service 

area. 

Comment: A number of commenters 

urged that we require issuers to actually 

contract, as opposed to offer a contract, 

with at least one ECP in each ECP 

category in each county in the service 

area, where an ECP in that category is 

available and provides medical or 

dental services that are covered by the 

issuer plan type. Several commenters 

urged that we require issuers to offer 

contracts to all available ECPs in the 

plan’s service area. A few commenters 

suggested that we require that issuers 

offer contracts to at least two ECPs in 

each ECP category in each county in the 

service area, where an ECP in that 

category is available and provides 

medical or dental services that are 

covered by the issuer plan type. 

Several commenters supported the 

inclusion of Rural Health Clinics (RHCs) 

and Community Mental Health Centers 

in the ECP category listing in Table 11 

of the preamble. Commenters expressed 

concern, though, that the requirement 

that QHPs offer contracts to at least one 

ECP in each ECP category in each 

county in the plan’s service area is a 

county-based requirement, and 

suggested that the requirement be based 

on time and distance within the county. 

A few commenters urged that we add 

freestanding birth centers located in 

medically underserved and rural areas 

as a new ECP category. Several 

commenters recommended that we list 

Hemophilia Treatment Centers as a 

separate ECP category, rather than 

grouped in the ‘‘Other ECP Providers’’ 

category. Another commenter suggested 

that we add migrant and community 

health centers as an ECP category. One 

commenter urged that HHS require 

issuers to offer a contract to any willing 

Ryan White provider. One commenter 

suggested adding dental providers, 

substance abuse and mental health 

providers, children’s hospitals, and 

essential pediatric providers to the list 

of ECP categories. 

Several commenters suggested that 

HHS disaggregate the providers listed in 

the ‘‘Hospitals’’ ECP category and the 

‘‘Other ECP Providers’’ category. These 

commenters expressed concern that by 

grouping together providers such as 

Hemophilia Treatment Centers, 

Community Mental Health Centers, and 

Rural Health Clinics into one ECP 

category such that issuers are only 

required to offer a contract to one of 

these and other types of providers in a 

given county, HHS runs the risk that 

low-income, underserved enrollees will 

have inadequate access to key providers 

that are uniquely suited to meet their 

specialized health needs. Another 

commenter urged that HHS identify 

Nurse Managed Clinics within the 

providers listed in the ECP categories in 

Table 11 of the preamble, stating that 

they are primary care clinics similar to 

the FQHCs, but with a different funding 

source. 

One commenter recommended that 

we remove Indian health care providers 

as a major ECP category due to the 

overlapping requirement that issuers 

offer contracts to all Indian health 

providers in the service area. 

Numerous commenters urged HHS to 

continually monitor for issuer 

maintenance of their networks 

throughout the year to ensure that 

issuers do not discriminate against ECPs 

through contract negotiations, and to 

make sure contracts are offered in good 

faith. One commenter urged that HHS 

consider not just the number of ECPs 

included and their geographic 

distribution, but also the breadth of 

services they provide and the type of 

ECP providers and facilities that the 

networks include. 

Response: Given the ongoing 

strengthening of the non-exhaustive 

HHS List of ECPs (available at http://

www.cms.gov/cciio/programs-andinitiatives/health-insurancemarketplaces/qhp.html), we intend to 

revisit this requirement to offer 

contracts in good faith and may 

consider a stronger requirement in 

future benefit years. 

In response to comments regarding 

the groupings of provider types in the 

ECP categories, we agree with the need 

to disaggregate several of these 

categories over time to ensure better 

access to a wider variety of health care 

services. More specifically, we 

considered modifying the ECP category 

listing to include a total of 11 ECP 

categories, by creating a separate ECP 

category each for children’s hospitals 

and free-standing cancer centers, and 

disaggregating hemophilia treatment 

centers, community mental health 

centers, and rural health clinics from 

the ‘‘Other ECP Providers’’ category. 

However, because we recognize that 

issuers are in the process of finalizing 

their networks for 2016, we intend to 

propose this reclassification for 2017. 

We are not removing the Indian health 

care providers as a major ECP category, 

notwithstanding the overlapping 

requirement that issuers offer contracts 

to all Indian health care providers in the 

service area, because many providers 

and issuers rely on Table 11 to identify 

the universe of ECP types. In response 

to public comments supporting the 

inclusion of rural health clinics and 

Community Mental Health Centers as 

ECP provider types within the ‘‘other 

ECP providers’’ category, we are 

finalizing our proposal to include these 

provider types in our ECP category 

listing in Table 11, although we will not 

disaggregate them into their own 

separate ECP categories at this time. 

For purposes of inclusion on the nonexhaustive HHS list of ECPs, we are 

clarifying that only those Medicarecertified rural health clinics that meet 

the following two requirements qualify: 

(1) Based on attestation, the clinic 

accepts patients regardless of ability to 

pay and offers a sliding fee schedule, or 

is located in a primary care Health 

Professional Shortage Area (whether 

geographic, population, or automatic 68); 


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10838 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 

and (2) accepts patients regardless of 

coverage source (whether Medicare, 

Medicaid, CHIP, private health 

insurance, or other source). HHS has 

determined that all rural health clinics 

included on the non-exhaustive HHS 

list of ECPs satisfy these standards. 

Lastly, we agree with commenters 

regarding the importance of monitoring 

issuer compliance with this important 

provision of our ECP standard, and 

intend to continue our post-certification 

monitoring activities to help ensure that 

consumers have access to the essential 

health benefits guaranteed to them 

under the Affordable Care Act. 

Therefore, we are finalizing our 

proposal, effective January 1, 2016, that 

a health plan seeking certification as a 

QHP in an FFE be required to offer 

contracts for participation in the plan 

for which a certification application is 

being submitted to at least one ECP in 

each ECP category in each county in the 

service area, where an ECP in that 

category is available and provides 

medical or dental services that are 

covered by the issuer plan type. 

Comment: Some commenters 

recommended that we eliminate the 

option for an issuer to submit a 

narrative justification in cases where a 

plan’s network does not meet the 

minimum ECP percentage requirement. 

Many of these commenters expressed 

concern that the narrative justification 

might be accepted in lieu of issuer 

compliance with the ECP inclusion 

percentage requirement specified by 

HHS. Commenters suggested that the 

narrative justification is inadequate in 

cases where an issuer fails to meet the 

minimum ECP percentage standard and 

suggested that issuers be required to 

contract with all available ECPs. These 

commenters also recommended that 

HHS make publicly available the 

narrative justifications submitted when 

issuers do not meet the minimum ECP 

percentage standard or other 

requirements of the ECP standard. 

Some commenters stated that if HHS 

permits issuers to continue submitting 

narrative justifications when unable to 

satisfy the statutory ECP requirements, 

HHS should only allow the 

justifications in extremely rare 

circumstances, and issuers should be 

required to provide a reason for why the 

plan has failed to satisfy the standard to 

discourage plans from seeking an 

exemption when unwarranted. 

Several commenters supported the 

requirement that QHPs not meeting the 

ECP standard must submit a 

justification describing how the plan’s 

provider network is adequate for lowincome enrollees in HPSAs. One of 

these commenters suggested that HHS 

clarify that this requirement extends to 

SADPs, as well. 

Response: Based on our QHP 

certification reviews for the 2015 benefit 

year and the ongoing strengthening of 

our ECP list, we believe that the 

narrative justification provides desirable 

flexibility at this time for HHS to further 

assess the adequacy of our ECP 

inclusion standard, given the need to 

provide issuers with the flexibility to 

develop networks that deliver benefits 

at an affordable price to low-income, 

medically underserved individuals. At 

the same time, the vast majority of 

issuers are complying with the 

requirements without submission of a 

narrative justification, and therefore we 

believe this option is being used under 

relatively rare circumstances. Regarding 

the suggestion to make publicly 

available the narrative justifications 

submitted when issuers do not meet the 

ECP inclusion percentage, HHS will 

consider the feasibility of providing 

such increased transparency over the 

next year. We expect the need for 

issuers to submit such justifications to 

decrease over time as issuers further 

develop their networks in adherence to 

HHS standards. Lastly, we clarify that 

the narrative justification standard 

applies to SADPs as well as QHPs that 

provide medical services. 

Comment: One commenter expressed 

concern that the language under 

§ 156.235(a)(4) (that is, ‘‘Nothing in 

paragraphs (a)(1) through (a)(3) of this 

section requires any QHP to provide 

coverage for any specific medical 

procedure provided by an ECP’’) might 

be interpreted by issuers as permitting 

discrimination regarding which covered 

services among those provided by an 

ECP it will contract with the ECP to 

provide. The commenter pointed out 

that section 1311(c)(1)(C) of the 

Affordable Care Act regarding the 

inclusion of ECPs in QHP networks 

states that nothing in this subparagraph 

shall be construed to require any health 

plan to provide coverage for any specific 

medical procedure. The commenter 

expressed concern that our proposed 

regulation adds the additional language 

‘‘provided by an ECP’’ that could permit 

issuers to contract with ECPs for only 

some, but not all, of the services for 

which they are licensed and otherwise 

fully able to provide in accordance with 

the same standards that the QHP applies 

to other non-ECP providers. This 

commenter urged HHS to remove the 

additional language from the regulatory 

text and clarify that, when contracting 

with ECPs, QHPs must do so for the full 

scope of services that the ECPs are 

licensed to provide. 

Response: We agree with the 

commenter in part, and so we are 

removing the additional language 

‘‘provided by an ECP’’ from 

§ 156.235(a)(4), effective January 1, 

2016. However, we emphasize that we 

are not requiring that QHPs contract 

with ECPs for the full scope of services 

that the ECPs are licensed to provide; 

rather, we are continuing to require only 

that they offer the same contract 

provisions as other contracts accepted 

by or offered to similarly situated 

providers. 

Comment: One commenter 

recommended that HHS modify the 

language at § 156.235(d) to reflect the 

language used in the preamble to ensure 

that issuers offer ECPs rates comparable 

to other providers. Specifically, the 

commenter suggested that we replace 

the language ‘‘. . . if such provider 

refuses to accept the generally 

applicable payment rates of such 

issuer,’’ and replace it with language 

that reads ‘‘. . . if such provider refuses 

to accept the same rates and contract 

provisions as included in contracts 

accepted by similarly situated providers 

that are not ECPs.’’ The commenter 

noted that this would provide a clearer 

definition of an issuer’s ‘‘generally 

applicable payment rates’’ and would 

prevent issuers from discriminating 

against ECPs in their payment rates. 

Response: We agree with the 

commenter that such clarification 

would help prevent issuers from 

discriminating against ECPs in their 

payment rates and would align with the 

language used in our preamble. 

Therefore, we are making this change at 

§ 156.235(d), effective January 1, 2016. 

Comment: Several commenters urged 

that we retain the requirement that QHP 

issuers offer contracts in good faith. 

However, these commenters urged that 

HHS clarify that a minimum payment 

rate provision be required rather than 

expected, and that we include such a 

requirement in the regulation rather 

than in only the preamble. 

Response: We do not intend to 

prescribe such specificity regarding 

contract negotiations between parties. 

Therefore, we are not requiring a 

minimum payment rate provision, and 

instead reiterate our expectation that 

QHP issuers offer contracts in good 

faith. 

e. Meaningful Access to Qualified 

Health Plan Information (§ 156.250) 

In the proposed rule, we proposed to 

amend § 156.250 to replace the crossreference to the Exchange application 

and notices provision at § 155.230(b) 

with a cross-reference to § 155.205(c). 

We also proposed to change the title of 


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69Under § 147.200(a)(5), a plan or issuer is 

considered to provide the SBC in a culturally and 

linguistically appropriate manner if the thresholds 

and standards of § 147.136(e), implementing 

standards for the form and manner of notices 

related to internal claims appeals and external 

review, are met as applied to the SBC. When we 

Continued 

the provision to ‘‘Meaningful access to 

qualified health plan information’’ for 

improved clarity. As discussed above, 

amendments to § 155.205(c) for oral 

interpretation services were also 

proposed. 

We also proposed to extend the 

requirements of § 156.250 so that not 

only applications and notices to 

enrollees, but all information that is 

critical for obtaining health insurance 

coverage or access to health care 

services through the QHP to qualified 

individuals, applicants, qualified 

employers, qualified employees, and 

enrollees, would be provided in a 

manner consistent with § 155.205(c). In 

addition, using the summary of benefits 

and coverage (SBC) disclosure required 

under § 147.200 as an example, we 

proposed that information would be 

deemed to be critical for obtaining 

health insurance coverage or access to 

health care services if the issuer were 

required by State or Federal law or 

regulation to provide the document to a 

qualified individual, applicant, 

qualified employer, qualified employee, 

or enrollee. We also indicated that, 

based on our proposed standard, we 

would consider information that is 

critical for obtaining health coverage or 

access to health care services to include: 

Applications; consent, grievance, 

appeal, and complaint forms; notices 

pertaining to the denial, reduction, 

modification, or termination of services, 

benefits, non-payment, or coverage; a 

plan’s explanation of benefits or similar 

claim processing information; QHP 

ratings information; rebate notices; 

correspondence containing information 

about eligibility and participation 

criteria; notices advising individuals of 

the availability of free language 

assistance; and letters or notices that 

require a signature or response from the 

qualified individual, applicant, 

qualified employer, qualified employee, 

or enrollee. We stated that we would not 

consider marketing materials that are 

available for advertising purposes only 

and not otherwise required by law to be 

critical for obtaining health insurance 

coverage or access to health care 

services through the QHP, and therefore 

an issuer would not be required to be 

make such materials accessible to 

individuals with disabilities or limited 

English proficiency. 

We are finalizing this provision as 

proposed. 

Comment: Commenters expressed 

general support for our proposal, 

including our proposed standard for 

determining whether a document was 

‘‘critical’’ such that an issuer would be 

required to provide meaningful access 

to it in accordance with the standards 

set forth in § 155.205(c). A few 

commenters requested that we 

specifically acknowledge other 

documents, such as evidences of 

coverage, or information needed to 

understand coverage, provider 

networks, or enrollment or reenrollment processes, as meeting the 

standard. One commenter expressed 

concern that our identification in 

preamble of certain documents that we 

would consider to meet the standard 

was misplaced. The commenter stated 

that certain documents we had 

identified, such as ‘‘rebate notices’’ 

(concerning medical loss ratio 

requirements) and ‘‘any letter or notice 

requiring a signature or response,’’ were 

not inherent to obtaining services 

through the QHP or accessing health 

coverage. 

Response: We are finalizing the 

provision as proposed. Therefore, QHP 

issuers must provide all information 

that is critical for obtaining health 

insurance coverage or access to health 

care services through the QHP, 

including applications, forms, and 

notices, to qualified individuals, 

applicants, qualified employers, 

qualified employees, and enrollees in 

accordance with the standards 

described in § 155.205(c). Information 

will be deemed to be critical for 

obtaining health insurance coverage or 

access to health care services if the 

issuer is required by Federal or State 

law or regulation to provide the 

document to a qualified individual, 

applicant, qualified employer, qualified 

employee, or enrollee. We agree that 

evidences of coverage, group certificates 

of coverage, contracts of insurance, 

benefits summaries, policies, formulary 

drug lists, provider directories, and 

other similar documents that are relied 

upon by individuals to understand their 

benefits and the full terms of coverage 

of the QHP are critical for obtaining 

health care services through the QHP 

and therefore must be provided by the 

issuer in a manner that satisfies the 

requirements in § 155.205(c). In 

addition, given the general significance 

of information, such as an MLR rebate 

notice, that a QHP issuer is required by 

Federal or State law or regulation to 

communicate to consumers, we believe 

it is appropriate to require a QHP issuer 

to provide meaningful access to such 

legally required information to all 

consumers in a manner that conforms to 

§ 155.205(c) so that all consumers 

serviced by the QHP issuer can access 

and understand the legal rights or duties 

that are frequently discussed in such 

communication. With respect to our 

interpretation stated in the preamble to 

the proposed rule that our proposed 

standard would include any document 

provided by the issuer that requires a 

response or signature from the qualified 

individual, applicant, qualified 

employer, qualified employee, or 

enrollee, in our view, these documents, 

by requiring a signature or response, 

typically confer an agreement or 

important acknowledgement regarding 

benefits or claims payment which an 

individual must be able to access and 

affirmatively understand. Thus, we 

believe consumers receiving such 

documents from a QHP issuer should 

have meaningful access to this 

information within the meaning of 

§ 155.205(c). 

As we noted in the preamble to the 

proposed rule, we consider the SBC to 

be a document subject to § 156.250 for 

which a QHP issuer must provide 

meaningful access in accordance with 

the standards of § 155.205(c). As such, 

like any document that is considered to 

be ‘‘critical’’ within the meaning of 

§ 156.250, in accordance with 

§ 155.205(c)(2)(iii)(A), beginning no 

later than the first day of the Exchange 

individual market open enrollment 

period for the 2017 benefit year, a QHP 

issuer is required to include taglines 

with any SBC that reflects a QHP option 

or plan variation of a standard QHP 

option in the top 15 languages spoken 

by the LEP population in the applicable 

State. An issuer may satisfy this 

requirement if it includes a cover letter 

or other additional pages provided along 

with the SBC that contains all required 

taglines. In addition, in accordance with 

§ 155.205(c)(2)(i), beginning when this 

rule takes effect, a QHP issuer is 

required to provide telephonic 

interpreter services in at least 150 

languages with respect to any SBC that 

reflects a QHP option or plan variation 

of a standard QHP option. Because the 

requirements with respect to oral 

interpretation and taglines that are 

finalized in this rule are different in 

substance than those that apply 

generally to the SBC under 

§ 147.200(a)(5) (which cross-references 

the internal claims and appeals and 

external review processes standards at 

§ 147.136(e)), we clarify that these 

additional specific standards 

supplement the existing ‘‘ten percent 

county-level’’ language access standards 

in § 147.200(a)(5).69 For example, 


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refer to the ‘‘ten percent county-level’’ standards, 

we are referring to the standards set forth under 

§ 147.136(e)(3), which states that with respect to an 

address in any United States county to which a 

notice is sent, a non-English language is an 

applicable non-English language if ten percent or 

more of the population residing in the county is 

literate only in the same non-English language, as 

determined in guidance published by the Secretary. 

70 In the counties for which the ten percent 

threshold triggers an applicable non-English 

language, Spanish is triggered in the vast majority 

of cases. In a few counties, Tagalog, Navajo, or 

Chinese are also triggered. 79 FR 78587 (Dec. 30, 

2014). 

whereas the existing standards under 

§ 147.136(e) require QHP issuers to 

provide taglines and oral language 

services with respect to an applicable 

non-English language spoken by a given 

LEP population that comprises ten 

percent or more of the total population 

residing in the applicable county, QHP 

issuers must also provide taglines on the 

SBC (or in a cover letter or other 

additional pages included with the SBC) 

in the top 15 non-English languages 

spoken by the LEP population in the 

relevant State as well as provide 

telephonic interpreter services in at 

least 150 languages with respect to any 

SBC that reflects a QHP option or plan 

variation of a standard QHP option. We 

note that based on an analysis of current 

data, the top 15 languages Statewide 

standard described in § 155.205(c)(2)(iii) 

will yield any language that is triggered 

by the county-level standards in 

§ 147.136(e)(3).70 In addition, under 

§ 147.136(e)(2)(ii), a QHP issuer is still 

required to provide, upon request, a 

translated version of the SBC in an 

applicable non-English language if at 

least ten percent of the population in 

the applicable county is comprised of an 

LEP population that is literate in the 

same non-English language. 

We make one clarification regarding 

our reference to ‘‘QHP ratings 

information.’’ By using this term, we 

intended to refer to the Quality Rating 

System and QHP Enrollee Experience 

Survey results established under 

sections 1311(c)(3) and (c)(4) of the 

Affordable Care Act. However, we 

recognize that this information, when 

available, is required to be displayed by 

Exchanges on the Exchange Web site, 

rather than by a QHP issuer directly. 

Therefore, unless a QHP issuer is 

required by other Federal or State law 

or regulation to provide QHP ratings 

information directly to consumers, that 

information would not be subject to 

§ 156.250. A QHP issuer voluntarily 

providing the information to consumers 

is encouraged, but not required, to 

provide it in a manner that conforms to 

§ 155.205(c). 

Finally, though we do not consider 

marketing materials that are available 

for advertising purposes only and not 

otherwise required by law to be critical 

for obtaining health insurance coverage 

or access to health care services through 

the QHP, we remind issuers that they 

might have duties to make these 

materials accessible to individuals with 

disabilities and individuals with LEP 

under Federal civil rights laws that also 

might apply, including section 1557 of 

the Affordable Care Act, section 504 of 

the Rehabilitation Act of 1973, and Title 

VI of the Civil Rights Act of 1964. 

f. Enrollment Process for Qualified 

Individuals (§ 156.265) 

Sections 155.240 and 155.400 

explicitly authorize Exchanges to 

establish certain requirements related to 

premium payment for enrollment in 

QHPs through the Exchange. Section 

156.265 currently only cross-references 

§ 155.240. To clarify that both sets of 

requirements apply to QHPs, we 

proposed that a QHP issuer must follow 

the premium payment process 

established by the Exchange in 

accordance with § 155.240 and the 

payment rules established in 

§ 155.400(e). 

We did not receive comments 

concerning the proposed enrollment 

process provisions. We are finalizing the 

provisions proposed in § 156.265 of the 

proposed rule without any 

modifications. 

g. Termination of Coverage or 

Enrollment for Qualified Individuals 

(§ 156.270) 

We are finalizing revisions in this 

section to conform to our interpretation 

of the guaranteed availability and 

guaranteed renewability requirements. 

For a discussion these revisions, please 

see the preamble for § 155.430. 

h. Segregation of Funds for Abortion 

Services (§ 156.280) 

Section 1303 of the Affordable Care 

Act and § 156.280 specify accounting 

and other standards for issuers of QHPs 

through the Exchange in the individual 

market that cover abortion services for 

which public funding is prohibited (also 

referred to as non-excepted abortion 

services). The statute and regulations 

establish that unless otherwise 

prohibited by State law, a QHP issuer 

may elect to cover such services. If an 

issuer elects to cover such services 

under a QHP sold through the 

individual market Exchange, the issuer 

must ensure that no premium tax credit 

or cost-sharing reduction funds are used 

to pay claims for abortion services for 

which public funding is prohibited. 

In the proposed rule, we provided 

guidance on individual market 

Exchange issuer’s responsibilities for 

requirements related to QHP coverage of 

abortion services for which public 

funding is prohibited. HHS works with 

stakeholders, including States and 

issuers, to help them fully understand 

and follow the statutes and regulations 

governing the provision of health 

insurance coverage under a QHP 

through the Exchange. As is the case 

with many provisions in the Affordable 

Care Act, States and State insurance 

commissioners are the entities primarily 

responsible for implementing and 

enforcing the provisions in section 1303 

of the Affordable Care Act related to 

individual market QHP coverage of nonexcepted abortion services. OPM may 

issue guidance related to these 

provisions for multi-State plan issuers. 

Under section 1303(b)(2)(B) of the 

Affordable Care Act, as implemented in 

§ 156.280(e)(2)(i), individual market 

Exchange issuers must collect a separate 

payment from each enrollee, for an 

amount equal to the AV of the coverage 

for abortions for which public funding 

is prohibited. However, section 1303 of 

the Affordable Care Act and § 156.280 

do not specify the method an issuer 

must use to comply with the separate 

payment requirement. As we described 

in the proposed rule, this provision may 

be satisfied in a number of ways. 

Several such ways include: Sending the 

enrollee a single monthly invoice or bill 

that separately itemizes the premium 

amount for non-excepted abortion 

services; sending a separate monthly bill 

for these services; or sending the 

enrollee a notice at or soon after the 

time of enrollment that the monthly 

invoice or bill will include a separate 

charge for such services and specify the 

charge. Section 1303 of the Affordable 

Care Act permits, but does not require, 

a QHP issuer to separately identify the 

premium for non-excepted abortion 

services on the monthly premium bill to 

comply with the separate payment 

requirement. A consumer may pay the 

premium payment for non-excepted 

abortion services and the separate 

payment for all other services in a single 

transaction, with the issuer depositing 

the two separate payments into the 

issuer’s two separate allocation accounts 

as required by section 1301(b)(2)(C) of 

the Affordable Care Act, as 

implemented in § 156.280(e)(2)(ii) and 

(e)(3). 

Section 1303(b)(2)(D) of the 

Affordable Care Act, as implemented in 

§ 156.280(e)(4), establishes requirements 

for individual market Exchange issuers 

for how much they must charge each 

QHP enrollee for coverage of abortions 

for which public funding is prohibited. 

A QHP issuer must estimate the basic 


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per enrollee, per month cost, 

determined on an average actuarial 

basis, for including coverage of nonexcepted abortion services. In making 

this estimate, a QHP issuer may not 

estimate the basic cost of coverage for 

non-excepted abortion services to be 

less than $1 per enrollee, per month. In 

the proposed rule and past guidance, we 

clarified that this means an issuer must 

charge each QHP enrollee a minimum 

premium of $1 per month for coverage 

of non-excepted abortion services. 

Comment: Some commenters 

supported enrollees paying premiums in 

one single transaction for both nonexcepted abortion services and other 

health care services. Commenters 

requested clarification on the guidance 

provided in the proposed rule so 

enrollees will not receive multiple 

notices regarding separate premium 

amounts. These commenters stated that 

a single payment transaction without 

notice to the consumer would minimize 

administrative complexity for issuers. 

Other commenters requested that QHP 

issuers be prohibited from collecting the 

two separate payments for coverage for 

non-excepted abortion services and 

other health care services, respectively, 

in a single transaction (for example, 

having them combined in a single 

check), and instead require that they be 

separated by the enrollee. Commenters 

also recommended HHS clarify the 

guidance regarding itemizing the two 

premium amounts on monthly invoices 

and provide additional technical 

guidance on maintaining separate 

allocation accounts for non-excepted 

abortion services and all other services, 

along with enforcement mechanisms. 

Response: The discussion of § 156.280 

in the proposed rule of the separate 

payment requirement constituted 

clarifying guidance, and did not propose 

to modify existing requirements under 

section 1303 of the Affordable Care Act 

and § 156.280. We affirm the guidance 

in the proposed rule. This guidance 

offers QHP issuers several ways to 

comply with the requirements, while 

minimizing burden on QHP issuers and 

consumers. 

i. Non-Renewal and Decertification of 

QHPs (§ 156.290) 

We are finalizing revisions in this 

section to conform with our 

interpretation of the guaranteed 

availability and guaranteed renewability 

requirements. For a discussion of these 

revisions, please see the preamble for 

§ 155.430. We are also correcting a 

typographical error by inserting the 

words ‘‘adhere to the’’ in 

§ 156.290(a)(1). 

4. Health Insurance Issuer 

Responsibility for Advance Payments of 

the Premium Tax Credit and CostSharing Reductions 

a. Plan Variations (§ 156.420) 

In the proposed rule, we proposed to 

amend § 156.420 to add § 156.420(h) 

and require QHP issuers to provide 

SBCs that accurately represent plan 

variations in a manner consistent with 

the requirements set forth at § 147.200 

to ensure that consumers have access to 

SBCs that accurately represent costsharing responsibilities for all coverage 

options, including plan variations, and 

are provided adequate notice of the plan 

variations. 

We proposed that QHP issuers would 

be required to provide SBCs for plan 

variations no later than the first day of 

the next Exchange open enrollment 

period for the individual market for the 

2016 benefit year, in accordance with 

§ 155.410(e). We sought comments on 

whether the proposed applicability date 

would present implementation 

challenges for QHP issuers as well as on 

other aspects of the proposal. We also 

noted that QHP issuers would be 

required to provide the SBC in a manner 

that is consistent with the meaningful 

access requirements under § 155.205(c). 

We are finalizing this provision as 

proposed, with one modification to 

specify that this standard will apply no 

later than November 1, 2015, which is 

the first day of the individual market 

open enrollment period for the 2016 

benefit year. 

Comment: Commenters expressed 

support for the proposal. Some 

commented that the proposal would 

better enable consumers who are 

eligible for cost-sharing reductions to 

take into account the overall out-ofpocket costs of a given QHP benefit 

package, rather than focusing primarily 

on premiums. 

Response: We agree that requiring the 

provision of plan variation SBCs for 

individual market QHP options will 

increase the likelihood that consumers 

will select a plan option that is 

appropriate for both their financial and 

health care needs. 

Comment: Commenters supported an 

implementation date of no later than the 

open enrollment period for the 2016 

benefit year. Some commenters stated 

that issuers are already providing plan 

variation SBCs to enrollees and did not 

express opposition to our proposed 

implementation timeline. However, one 

commenter opposed the proposed 

implementation date because it did not 

believe issuers could receive State 

approval of their form filings, including 

plan variation SBCs, in time to make 

such SBCs available. 

Response: We are finalizing the 

applicability date as proposed. We 

expect that States and issuers will 

continue to work collaboratively to 

ensure that the applicable form filing 

approvals are received sufficiently in 

advance of the open enrollment period 

for the 2016 benefit year. 

b. Changes in Eligibility for CostSharing Reductions (§ 156.425) 

In the proposed rule, we proposed to 

amend § 156.425 to clarify when a QHP 

issuer would be required to provide an 

SBC if an individual’s assignment to a 

standard plan or plan variation of the 

QHP changes in accordance with 

§ 156.425(a). We proposed that a QHP 

issuer must provide an SBC that 

accurately represents a new plan 

variation (or the standard plan 

variation) as soon as practicable after 

receiving notice from the Exchange of 

the individual’s change in eligibility, 

but in no case later than 7 business days 

following receipt of notice. We 

proposed that this requirement would 

be effective beginning on January 1, 

2016. 

We are finalizing these provisions as 

proposed. 

Comment: Commenters generally 

expressed support. Some commenters 

requested that an additional notice, 

beyond the SBC, be sent to consumers 

whose eligibility for cost-sharing 

variations changes which would explain 

the change to the consumer, the reason 

for the change, and how many costsharing amounts already incurred by the 

consumer during the benefit year would 

be applied toward the new deductible(s) 

and out-of-pocket limit(s). 

Response: While issuers are 

encouraged to develop health literacy 

tools and provide consumer-friendly 

explanatory information to enrollees 

when their eligibility for cost-sharing 

reductions changes, we are not requiring 

issuers to send an additional notice 

beyond the SBC at this time. We will 

continue to monitor the extent to which 

consumers understand cost-sharing 

reductions eligibility and whether other 

information should be provided to 

consumers in this context. 

Comment: Some commenters 

requested additional time to send an 

SBC to an enrollee whose eligibility for 

cost-sharing reduction changes. One 

commenter requested as many as 14 

business days from the date the issuer 

effectuates the assignment into a plan 

variation (or standard plan without costsharing reductions), while the other 

commenter requested 14 calendar days 

to send the SBC. 


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71Percentage of the total allowed costs of benefits 

as defined at § 156.20 means the anticipated 

covered medical spending for EHB coverage (as 

defined in § 156.110(a) of the subchapter) paid by 

a health plan for a standard population, computed 

in accordance with the plan’s cost-sharing, divided 

by the total anticipated allowed charges for EHB 

coverage provided to a standard population, and 

expressed as a percentage. 

72 ‘‘Timing of Reconciliation of Cost-Sharing 

Reductions for the 2014 Benefit Year.’’ February 13, 

2015. https://www.regtap.info/uploads/library/

APTC_CSR_Recon_timing_guidance_5CR_

021315.pdf. 

Response: We are finalizing the 

timing requirement to send the SBC as 

proposed, that is, 7 business days from 

the date the issuer receives notice of the 

change in the enrollee’s eligibility from 

the Exchange. Virtually all issuers 

subject to this requirement have already 

incurred one-time costs to develop 

systems necessary to generate and 

provide SBCs in an automated and 

efficient fashion to meet the timing 

requirements specified in § 147.200. 

Further, in accordance with 

§ 147.200(a)(1)(iv)(D), QHP issuers must 

already send an SBC when an 

individual requests an SBC as soon as 

practicable, but no later than 7 business 

days following the receipt of the 

request. 

c. Cost-Sharing Reductions 

Reconciliation (§ 156.430) 

Sections 1402(a) through (c) of the 

Affordable Care Act provide for costsharing reductions for EHB provided by 

a QHP. Cost-sharing reductions are 

advanced to issuers throughout the 

benefit year, and reconciled following 

the benefit year against actual costsharing amounts provided by issuers to 

enrollees. 

The reconciliation process requires 

QHP issuers to submit to HHS the total 

allowed costs for EHB charged for each 

plan variation policy, the amounts paid 

by the issuer, and the amounts paid by 

or on behalf of the enrollee (other than 

by the Federal government under 

section 1402 of the Affordable Care Act), 

as well as the amounts that would have 

been paid by the enrollee under the 

standard plan. Under the standard 

methodology described at 

§ 156.430(c)(2), costs paid by the issuer 

under the standard plan are calculated 

by applying actual cost-sharing 

requirements for the standard plan to 

the allowed costs for EHB under the 

enrollee’s policy for the benefit year. 

The difference is the amount of costsharing reductions provided. 

In the proposed Payment Notice, we 

reiterated that issuers will not be 

reimbursed for reductions in out-ofpocket spending for benefits other than 

EHB. However, we explained that 

because of technology challenges in 

these early years of the cost-sharing 

reduction program, some issuers are 

presently unable to differentiate on a 

policy level between EHB claims and 

non-EHB claims, as required by HHS 

when applying the standard costsharing reduction reconciliation 

methodology. The difficulty occurs in 

plan designs that allow enrollee out-ofpocket spending for EHB and non-EHB 

claims alike to accumulate toward 

deductibles and the reduced annual 

limit on cost sharing. Such plan designs 

benefit enrollees by allowing them to 

reach their spending limits sooner. As a 

result, for the purpose of cost-sharing 

reduction reconciliation, we proposed 

to allow QHP issuers to submit 

percentage estimates of the portion of 

claims attributable to non-EHB for the 

2014 benefit year, and to reduce the 

total claims amount by that percentage, 

to arrive at an estimated total EHB 

amount. The percentage estimate would 

be the estimate of expected non-EHB 

claims costs previously submitted for 

each plan variation on the Uniform Rate 

Review Template (URRT) 71 and which 

HHS used to calculate 2014 advance 

cost-sharing reduction payments. An 

issuer using this procedure would be 

required to do so for all plan variations 

for which the criteria below are met. 

As described in proposed 

§ 156.430(c)(2)(i), this exception to 

permit QHP issuers to use plan-specific 

URRT estimates of non-EHB claims 

would be limited to plan designs in 

which out-of-pocket expenses for nonEHB benefits accumulate toward the 

deductible and reduced annual 

limitation on cost sharing, but for which 

copayments and coinsurance rates for 

non-EHB are not reduced. This 

limitation helps assure that the 

estimated percentage, which is 

calculated based on the proportion of 

claims attributable to EHB, does not 

overstate the proportion of reduced outof-pocket spending associated with 

EHB. In addition, the exception would 

apply only when non-EHB estimated 

percentages account for less than 2 

percent of total claims, helping assure 

that any inaccuracies in the estimate are 

unlikely to result in significant 

inaccuracies in total cost-sharing 

reduction reimbursement. 

Comment: We received comments in 

support of our proposal to permit 

estimates of non-EHB cost sharing based 

on the URRT. One commenter asked 

HHS to make this exception permanent. 

Another commenter asked HHS to 

extend the exception to the simplified 

method of cost-sharing reduction 

reconciliation since it, too, requires 

comparison of standard plan cost 

sharing to the total allowed EHB costs 

for a plan variation, and issuers face 

similar problems identifying EHB. 

Another commenter asked us to clarify 

what we mean by reducing total claims 

amount by the percentage of non-EHB, 

and specifically whether issuers must 

reduce every claim before readjudication. Finally, a commenter 

asked HHS to permit issuers to use the 

simplified method of cost-sharing 

reduction reconciliation permanently, 

stating that the double adjudication 

required under the standard 

methodology is too complex for the 

variety of plan designs on the individual 

market. 

Response: We are finalizing the 

exception proposed in § 156.430(c)(2)(i) 

to permit QHP issuers to use planspecific URRT estimates of non-EHB 

claims, with two modifications. We are 

expanding this exception to include 

issuers using the simplified 

methodology for cost-sharing reduction 

reconciliation, since they are equally 

affected by technology challenges, and 

we are extending it to the 2015 benefit 

year. We also clarify that issuers should 

reduce total claims at the policy-level 

before re-adjudication. Finally, we 

believe the standard methodology will 

provide the most accurate permanent 

method of reconciling advanced costsharing reduction payments—the 

simplified methodology is an interim 

step.72

5. Minimum Essential Coverage 

a. Other Coverage That Qualifies as 

Minimum Essential Coverage 

(§ 156.602) 

Under § 156.602, State high risk pool 

coverage is designated as minimum 

essential coverage for a plan or policy 

year beginning on or before December 

31, 2014, for a one-year transition 

period. However, many State high risk 

pools have continued into the 2015 

policy year. The proposed rule would 

designate as minimum essential 

coverage any qualified high risk pool (as 

defined by section 2744(c)(2) of the PHS 

Act) established in any State as of the 

publication date of the proposed rule. 

This would provide States additional 

time to evaluate State-administered high 

risk pools and facilitate the transition of 

State high risk pool enrollees into QHPs 

through the Exchange or into other 

forms of minimum essential coverage. 

We sought comment on whether the 

designation should be permanent or 

time-limited (for example, for 2015 

only). We also sought comment on the 

cut-off date for formation of State high 


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73See Notice 2013–41, 2013–29 I.R.B. 60. 

74Patient Protection and Affordable Care Act; 

Program Integrity: Exchange, SHOP, and Eligibility 

Appeals, 78 FR 54074 (August 30, 2013). 

risk pools that will qualify for 

recognition under the regulations. 

Comment: Several commenters 

favored the proposal to permanently 

designate State high risk pool coverage 

as minimum essential coverage. One 

commenter suggested the designation 

should apply only through the 2016 

plan year. Another commenter stated 

that State high risk pools must at least 

be required to provide minimum value 

to be recognized as minimum essential 

coverage after 2015. 

Response: We believe States are in the 

best position to assess the unique 

circumstances in each State and 

determine when it is in the best interest 

of consumers to close Stateadministered high risk pools. While a 

one-year designation as minimum 

essential coverage would allow 

adequate time for some States to phase 

out high risk pools, many State laws 

require the retention of State high risk 

pools after 2015. Additionally, since the 

benefits are generally statutorily 

mandated, many States may not be able 

to easily alter the State high risk pool 

benefits to provide minimum value. 

Imposing a timeline that is not tailored 

to the unique circumstances of a 

particular State potentially 

disadvantages a vulnerable population 

that has significant health costs and that 

may be uninformed about the Exchanges 

and the availability of financial help to 

purchase health coverage. We received 

no comments on the cut-off date for 

formation for State high risk pools. 

Therefore we are establishing a 

permanent minimum essential coverage 

designation for any State high risk pool 

in existence as of November 26, 2014, 

the publication date of the proposed 

rule. The IRS has indicated that as long 

as HHS designates qualified high risk 

pool coverage as minimum essential 

coverage, an individual that is eligible 

but not enrolled in a qualified high risk 

pool will be treated as eligible for QHP 

coverage and the premium tax credit.73

6. Enforcement Remedies in FederallyFacilitated Exchanges 

a. Available Remedies; Scope 

(§ 156.800) 

In the first Program Integrity Rule,74

HHS finalized § 156.800(c), which 

established a good faith compliance 

policy for QHP issuers offering coverage 

through an FFE for the 2014 calendar 

year. Specifically, the first Program 

Integrity Rule provides that HHS will 

not impose sanctions under subpart I of 

part 156 against a QHP issuer in an FFE 

if the QHP issuer has made good faith 

efforts to comply with applicable 

Exchange requirements. HHS adopted 

the good faith compliance policy to help 

QHP issuers become familiar with the 

standards unique to the FFEs during the 

initial stage of operations. 

HHS is committed to ensuring that 

QHP issuers have the opportunity to 

learn from their experiences in 2014 

without undue concern about being 

subject to formal enforcement actions 

when the QHP issuer has made 

reasonable efforts to comply with 

applicable standards. While immediate 

formal enforcement actions may be 

appropriate in some cases, we continue 

to prefer resolving most compliance 

issues by providing technical assistance. 

Accordingly, in the proposed rule we 

proposed extending the good faith 

compliance standard under § 156.800(c) 

through the end of calendar year 2015. 

We also noted, that irrespective of the 

good faith compliance standard, QHP 

issuers are required to comply with all 

applicable FFE standards (and any 

applicable Federal or State laws 

regarding privacy, security and fraud) at 

the time of certification and on an 

ongoing basis. 

We are finalizing the provision as 

proposed. 

Comment: Commenters generally 

supported the proposed extension of the 

good faith compliance standard. One 

commenter did not support the 

proposal, stating that the extension of 

the standard may impede HHS’s efforts 

to enforce FFE standards. Some 

commenters also requested that HHS 

clarify that the good faith compliance 

policy would apply to non-compliance 

occurring during the 2015 benefit year 

that is identified after calendar year 

2015. 

Response: We note that issuers 

seeking to avoid enforcement actions 

under subpart I of part 156 through the 

good faith compliance standard may do 

so only by demonstrating that they 

exercised good faith efforts at complying 

with FFE standards. Consistent with the 

good faith compliance standard for the 

2014 calendar year, HHS will determine 

whether the good faith compliance 

standard applies based on an evaluation 

of various factors surrounding the 

issuer’s participation in the FFEs, 

including past instances of noncompliance, the gravity or severity of 

non-compliance, and the presence or 

absence of HHS guidance on the matter. 

We further clarify that the good faith 

compliance standard would apply to 

conduct occurring during the 2015 

calendar year even if the activity is 

identified after 2015 calendar year. It 

would not apply to conduct that occurs 

in 2016 or later, even if that conduct 

was related to coverage provided in the 

2015 calendar year. 

b. Plan Suppression (§ 156.815) 

In § 156.815(a), we proposed a 

definition of suppression, which would 

mean that a suppressed QHP 

temporarily would not be available for 

enrollment through the FFEs. In 

§ 156.815(b), we proposed the bases for 

suppression of a QHP in the FFEs. Our 

first proposed basis for suppression, 

§ 156.815(b)(1), is the issuer notifying 

HHS of its withdrawal of the QHP from 

the FFEs when one of the exceptions to 

guaranteed renewability of coverage 

related to discontinuing a particular 

product or discontinuing all coverage 

under § 147.106(c) or (d) applies. In 

§ 156.815(b)(2), we proposed as a basis 

to suppress a QHP submission of data 

for the QHP that is incomplete or 

inaccurate. For example, incorrect rates 

submitted by a QHP issuer generally 

would lead to the suppression of the 

QHP until the rating data are corrected. 

In § 156.815(b)(3), we proposed as a 

basis to suppress a QHP that is 

undergoing decertification under 

§ 156.810 or the appeal of a 

decertification under subpart J of part 

156. In § 156.815(b)(4), we proposed as 

a basis to suppress a QHP pending, 

ongoing, or final State regulatory or 

enforcement action against the QHP that 

could affect the issuer’s ability to enroll 

consumers or that otherwise relates to 

the issuer’s ability to offer QHPs in the 

FFEs. In § 156.815(b)(5), we proposed as 

a basis for suppression of a QHP 

application of the special rule for 

network plans under § 147.104(c) or the 

financial capacity limits provision 

under § 147.104(d). In § 156.815(c), we 

proposed a basis for suppression of a 

QHP that is a multi-State plan upon 

notification by OPM of certain findings. 

We solicited comments on this 

proposal, including whether the 

proposed bases for suppression were 

appropriate and whether an appeals 

process should be available following 

suppression decisions. 

We are finalizing the provision as 

proposed. 

Comment: Some commenters 

supported the proposed provisions. 

Commenters requested that HHS clarify 

that QHP suppression would not be 

implemented in violation of State law. 

One commenter did not support QHP 

suppression, stating that it would 

conflict with HIPAA and one State’s law 

on guaranteed renewability. Another 

commenter recommended that HHS 

clarify that, when the QHP continues to 

offer coverage through the FFEs but is 


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75Unless indicated otherwise, references in this 

section to the ‘‘FFE’’ include States performing plan 

management functions. 

being suppressed, consumers should be 

notified of the suppression. One 

commenter asked if the proposed 

process and reasons for QHP 

suppression would apply to QHPs in the 

SHOP. 

Response: We envision suppressing a 

QHP when continuing to allow new 

enrollment in the QHP through an FFE 

is not in the interest of qualified 

individuals and employers, such as 

when the QHP has withdrawn from an 

FFE, when there is incorrect data being 

displayed about the QHP, and when the 

QHP will be decertified. Our experience 

shows that by removing QHPs subject to 

the suppression from an FFE Web site, 

it will minimize confusion by 

consumers, agents and brokers, and 

assisters about the QHPs that are 

available during plan selection. Federal 

regulations on guaranteed renewability 

at § 147.106(c) and (d) provide for 

circumstances under which an issuer 

may discontinue a particular product or 

discontinue all coverage in an 

applicable market. We intend to 

implement QHP suppression in 

coordination with States to ensure that 

conflicts with State law can be avoided 

and adverse effects minimized. We note 

that suppression does not affect reenrollments into the plan, but 

temporarily restricts the availability of 

the plan for new enrollments through an 

FFE. We further note that if suppression 

of a plan ultimately leads to the plan 

being no longer available through an 

FFE, the issuer may be required to offer 

the same plan outside an FFE under 

§§ 147.104 and 147.106. We further 

clarify that the process and reasons for 

QHP suppression would also apply to 

QHPs in the FF–SHOP. 

7. Quality Standards 

a. Quality Improvement Strategy 

(§ 156.1130) 

In § 156.1130(a), we proposed that a 

QHP issuer participating in an Exchange 

for at least 2 years must implement and 

report information regarding a quality 

improvement strategy (QIS), that is a 

payment structure that provides 

increased reimbursement or other 

market-based incentives in accordance 

with the health care topic areas in 

section 1311(g)(1) of the Affordable Care 

Act, for each QHP offered in an 

Exchange, consistent with the 

guidelines developed by HHS under 

section 1311(g)(2) of the Affordable Care 

Act. We noted that the statutory QIS 

requirements, similar to the other 

Exchange quality standards, extend to 

all Exchange types, including a State 

Exchange and the FFEs.75 For the QIS 

standards, we proposed to provide State 

Exchanges flexibility to establish the 

timeline, format, validation, and other 

requirements related to the annual 

submission of QIS data by QHP issuers 

that participate in their respective 

Exchanges. Under this proposal, the 

establishment and implementation of 

such standards and other requirements 

by State Exchanges would support 

compliance with § 155.200(d), which 

requires the Exchange to evaluate and 

oversee implementation of the QIS 

(among other QHP issuer quality 

initiatives for coverage offered through 

Exchanges). We noted that we 

envisioned the standards that will be 

used for the FFEs would provide the 

minimum requirements for State 

Exchanges to build upon. 

We proposed to phase in QIS 

implementation standards and reporting 

requirements to provide QHP issuers the 

necessary time to understand the 

populations enrolling in a QHP offered 

through the Exchange and to build 

quality performance data on their 

respective QHP enrollees. We believe 

that implementation of a QIS should be 

a continuous improvement process for 

which QHP issuers define the health 

outcome needs of their enrollees, set 

goals for improvement, and provide 

increased reimbursement to their 

providers or other market-based 

incentives to reward achievement of 

those goals. This approach is consistent 

with other QHP issuer quality standards 

for coverage offered through an 

Exchange including implementation 

and reporting for the patient safety 

standards, the Quality Rating System 

(QRS), and the Enrollee Satisfaction 

Survey (ESS). We further noted that, 

consistent with existing regulations at 

§ 156.200(h), QHP issuers participating 

in Exchanges would be required to attest 

to compliance with QIS standards, along 

with the other QHP issuer quality 

initiatives for coverage offered through 

Exchanges established under subpart L 

of part 156, as part of the QHP 

application process. 

In paragraph (b), we proposed to 

direct a QHP issuer to submit validated 

data in a form, manner, and reporting 

frequency specified by the Exchange to 

support evaluation of quality 

improvement strategies in accordance 

with § 155.200(d) and § 156.200(b)(5). 

We noted that we anticipate using the 

data collected as part of information 

used to evaluate and oversee 

compliance of QHP issuers in FFEs with 

the Exchange QIS standards and 

encourage State Exchanges to adopt a 

similar approach. State Exchanges 

would maintain the flexibility to add to 

the Federal minimum QIS standards 

and would also have the ability to 

establish their own form, manner, and 

reporting frequency. We proposed that 

beginning in 2016, a QHP issuer 

participating in an Exchange for at least 

2 years would submit a QIS 

implementation plan for the 2017 plan 

year to the applicable Exchange, 

followed by annual progress updates. 

We noted that we anticipate that the 

implementation plan for a QHP issuer’s 

proposed QIS would reflect a payment 

structure that provides increased 

reimbursement or other market-based 

incentives for addressing at least one of 

the topics in section 1311(g)(1) of the 

Affordable Care Act. 

We proposed requesting information 

from QHP issuers regarding percentage 

of payments to providers that is 

adjusted based on quality and cost of 

health care services as this would 

promote transparency and assist 

Exchanges to make better informed QHP 

certification decisions. We also 

proposed that 1 year after submitting the 

QIS implementation plan, the QHP 

issuer would submit information 

including an annual update including a 

description of progress of QIS 

implementation activities, analysis of 

progress using proposed measures and 

targets, and any modifications to the 

QIS. 

We noted that we believe that the 

implementation and reporting for the 

QIS over time would provide 

meaningful QIS data from QHP issuers 

by minimizing administrative effort 

while also allowing for flexibility and 

innovation. In the proposed rule, we 

explained that we anticipate issuing 

technical guidance in the future that 

will provide operational details 

including data validation, other data 

submission processes, timeframes and 

potential minimum enrollment size 

threshold for coverage offered through 

an FFE. We anticipate that this guidance 

would be updated on an annual basis 

(or more frequently as may be 

necessary). We proposed to allow State 

Exchanges to establish the data 

validation and submission requirements 

for QIS data from QHP issuers that 

participate in their respective 

Exchanges. 

In paragraph (c), we proposed to 

direct a QHP issuer to submit data 

annually for activities that are 

conducted related to implementation of 

its QIS, in a manner and timeframe 

specified by the Exchange. For example, 

an issuer that participates in an FFE for 


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2 consecutive years for coverage 

beginning in January 2014 and January 

2015 would submit a QIS 

implementation plan to an FFE during 

the fall 2016 post-certification period, 

and in a format specified by HHS. A 

progress update on the QHP issuer’s QIS 

activities would be required the 

following year. Similarly, an issuer 

participating in an FFE for the first time 

during the 2015 open enrollment period 

for the 2016 coverage year and also 

offering coverage in the 2017 plan year 

would submit an implementation plan 

in the 2018 post-certification period to 

align with our proposed approach of 

phasing in the QIS over time and 

allowing a QHP issuer 2 years to collect 

data and develop quality improvement 

strategies for its QHPs offered through 

an Exchange, before the submission of 

an implementation plan is required. A 

progress update on the QHP issuer’s QIS 

activities would be required the 

following year. We proposed to allow 

State Exchanges to establish the specific 

timeline and format requirements for 

the annual submission of QIS data by 

QHP issuers that participate in their 

respective Exchanges. 

We noted that multi-State plans, as 

defined in § 155.1000(a), are subject to 

reporting QIS data for evaluation, as 

described in paragraph (b). In the 

proposed rule, we proposed to codify 

this general requirement at 

§ 156.1130(d). We noted that we 

anticipate that OPM will provide 

guidance on QIS reporting to issuers 

with whom it holds multi-State plan 

contracts. 

We sought comment on all aspects of 

this proposal, including whether the 

standard should apply to all types of 

QHPs offered through the Exchanges 

(for example, stand-alone dental plans, 

QHPs providing child-only coverage, 

and health savings accounts) or if 

different standards should be developed 

for the different types of QHPs. We also 

solicited feedback on: whether there 

should be a minimum enrollment size 

threshold to trigger the applicability of 

the QIS standards, what information 

should be included to effectively 

monitor and evaluate a QIS, and 

whether the information collected 

should be publically displayed to 

encourage transparency, support 

comparison of QHP issuer QIS 

activities, and align with other quality 

standards for QHP issuers participating 

in Exchanges. 

We are finalizing these provisions as 

proposed, with the following 

modifications. For the initial years of 

implementation, QHPs that are standalone dental plans, provide child-only 

coverage, or are compatible with health 

savings accounts will not be subject to 

the QIS. Additionally, HHS intends to 

establish a minimum enrollment size 

that triggers the QIS obligations in 

alignment with the other Exchange 

quality initiatives (for example, the QRS 

and ESS) and will do so through 

technical guidance. Further, we clarify 

that, in the initial years of QIS 

implementation, HHS will not require 

QHP issuers to select measures from a 

set of standardized or uniform 

performance measures established by 

HHS for inclusion in their respective 

QIS implementation plans. HHS 

anticipates requiring QHP issuers to 

provide information regarding their 

payment structure that provides 

increased reimbursement or other 

incentives such as the percentage of 

payments made across various 

categories including fee-for-service with 

no link of payment to quality; fee-forservice with a link of payment to 

quality; alternative payment models 

built on fee-for-service architecture; and 

population-based payments, to promote 

transparency and align this approach 

with other current CMS and HHS 

payment reform initiatives. As detailed 

above, we intend to issue future 

technical guidance that will provide 

more information regarding these and 

other QIS data collection and 

submission details for QHP issuers 

participating on an FFE. 

Comment: Several commenters 

supported requiring QIS compliance 

from QHP issuers that have been 

participating in an Exchange for at least 

2 years. A few commenters agreed the 

phased-in approach of the QIS program 

would allow for the necessary 

preparations and knowledge building, 

while other commenters recommended 

a delay based on concerns that the 

timeline was too aggressive. While one 

commenter urged HHS to postpone its 

QIS proposals and requirements for the 

private sector until it has had time to 

evaluate lessons learned from the public 

sector, others recommended that HHS 

require all QHP issuers—not only those 

that have been participating in the 

Exchange for 2 or more consecutive 

years—to submit a QIS implementation 

plan, with one stating that QHP issuers 

will have sufficient information at the 

outset to design their quality 

improvement strategies. 

Response: We maintain in the final 

rule the approach outlined in the 

proposed rule that QHP issuers 

participating in an Exchange for at least 

2 consecutive years must implement 

and report information regarding a QIS, 

followed by annual progress updates. 

We believe that 2 years is an appropriate 

time period for QHP issuers to 

understand their populations who have 

enrolled through Exchanges, and 

develop relevant quality improvement 

strategies to meet the needs of that 

population. We anticipate requiring 

compliance with the QIS reporting 

requirements beginning in 2016 for the 

2017 coverage year and will be issuing 

future guidance that addresses this, as 

well as other QIS operational and data 

submission details, for QHP issuers 

participating in the FFEs. 

Comment: Some commenters 

suggested that a minimum QHP 

enrollment size that aligns with the 

minimum threshold requirements of the 

2015 QRS beta test requirement and the 

QHP Enrollee Experience Survey should 

be required to trigger the applicability of 

the QIS certification standard. Other 

commenters suggested that all QHP 

issuers, regardless of enrollment size, 

should be required to develop and 

implement a quality improvement 

strategy. 

Response: We considered the 

feedback regarding the applicability of a 

minimum enrollment size. In an effort 

to maintain consistency with other 

Exchange quality standards in the initial 

years, we will direct QHP issuers to 

comply with the QIS certification 

standard and report QIS data if they 

meet the minimum enrollment size 

threshold. We intend to include 

additional details regarding the 

applicability of the minimum 

enrollment threshold to the QIS 

standards in future technical guidance. 

Comment: Some commenters 

suggested that the QIS should align with 

existing quality standards required as 

part of Exchange participation standards 

to be accredited by a recognized 

accrediting entity and that the 

accreditation certification standard 

should satisfy the QIS standards 

provided in § 156.1130(a). 

Response: We note that the existing 

accreditation standards do not include 

the use of market-based incentives as 

outlined in § 156.1130(a) and required 

by section 1311(g) of the Affordable 

Care Act for QHP issuers participating 

in Exchanges. However, we would not 

restrict a QHP issuer from using quality 

improvement strategy information 

submitted to a recognized accrediting 

entity for QIS purposes as long as the 

information otherwise satisfies the QIS 

requirements included in this final 

rulemaking and future technical 

guidance. 

Comment: Commenters expressed 

general support for the QIS principles 

and goal of improving quality of care 

delivered to Exchange enrollees through 

quality improvement strategies that 

provide for increased reimbursements, 


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benefit designs, and other market-based 

incentives. Commenters supported QIS 

alignment of priorities, performance 

measures, and reporting requirements 

with the National Quality Strategy, the 

CMS Quality Strategy, and other 

national and regional efforts to improve 

the quality of healthcare to reduce both 

QHP issuer and provider burden. 

Commenters remarked on the 

importance of leveraging quality 

improvement efforts in the public and 

private sectors to hasten achievement of 

better patient outcomes and lower costs. 

Response: We made extensive efforts 

to incorporate similar standards and 

requirements from other quality 

initiatives into the QIS, and believe that 

the QIS requirements will align as 

consistently as possible with other 

quality initiatives. At this time, we do 

not intend to require QHP issuers to 

select specific measures from a set 

required by HHS. 

Comment: Comments related to 

whether all QHP types (SADPs, child 

only coverage, and health savings 

accounts) should be required to 

implement a QIS fell into two 

categories. The first category of 

commenters noted that all types of 

QHPs should meet the QIS certification 

standard and be subject to the same QIS 

standards. The second category of 

commenters noted that the QIS should 

apply to all QHPs, but the standards 

should be directly relevant to the 

population(s) covered by the QHP (that 

is, different standards for SADPs, QHPs 

with rural enrollees, integrated delivery 

systems, etc.). Some commenters 

suggested that QHP issuers be allowed 

to target specific populations within 

their network when implementing a QIS 

instead of targeting all their QHP 

enrollees. Others recommended that 

QHP issuers be provided the flexibility 

to address the needs of specific enrollee 

populations while recommending HHS 

review QIS submissions to ensure that 

the strategies do not exclude any 

particular group, either by design or 

effect. Other commenters stressed the 

need to review quality improvement 

strategies to ensure that such strategies 

do not discriminate, either by design or 

by effect, against any one group of 

individuals. Some commenters also 

recommended excluding SADPs, noting 

that SADPs do not have the same ability 

to implement and track measures, and 

therefore should be exempt from the 

QIS requirements. 

Response: We clarify in the final rule 

that the Federal QIS standards will 

apply to same QHP types that are 

required to comply with the QIS 

certification standard across all 

Exchange types. However, a QHP 

issuer’s QIS does not need to apply to 

all populations covered by its QHPs, 

and the issuer has the option of 

developing multiple strategies to ensure 

that each QHP is covered by a QIS. We 

agree that it would be premature at this 

point in time to require all QHP types 

(for example, SADPs, child only 

coverage plans, or QHPs compatible 

with health savings accounts) to 

develop, implement, and track a QIS. 

We therefore clarify in the final rule that 

in the initial years of the QIS, SADPs, 

child only coverage plans, and QHPs 

that are compatible with health savings 

accounts will be exempt from the QIS 

certification and reporting requirements. 

This approach aligns with our current 

approach for other Exchange and QHP 

issuer quality requirements, allows the 

program to mature, and allows for 

additional measures for other QHP types 

to be developed for reporting. 

Consistent with the nondiscrimination 

prohibition in § 156.225, QIS 

implementation plans will be reviewed 

to ensure that they are not designed and 

do not have the effect of discouraging 

the enrollment of individuals with 

significant health needs. 

Comment: We solicited comments on 

whether to require information relating 

to provider payment models, such as an 

issuer’s minimum target or goal set with 

regards to the percentage of provider 

payments adjusted for quality and cost, 

to be submitted for compliance with QIS 

standards proposed in § 156.1130. 

While one commenter agreed with the 

concept, other commenters 

recommended that QHP issuers be 

required to indicate specifically to 

providers how payment is tied to 

performance or questioned the need for 

QHP issuers to report on the details of 

their proprietary contracts with 

providers, and encouraged HHS to let 

market factors drive quality 

improvements. 

Response: We believe that 

understanding how QHP issuers 

participating in Exchanges are adjusting 

provider payments for quality and cost 

is important and directly aligns with the 

statutory definition of a QIS. As such, 

this type of information is subject to the 

periodic reporting of QIS information 

under section 1311(g)(3) of the 

Affordable Care Act. We anticipate 

requiring QHP issuers participating in 

Exchanges to establish and share with 

the applicable Exchange performance 

measure improvement targets and report 

on progress against those targets as they 

relate to QIS implementation. We 

anticipate alignment of QIS information 

collection requirements with current 

payment reform data collection efforts, 

including the adoption of safeguards to 

protect confidential or proprietary 

information. The goal is to collect issuer 

QIS information from QHP issuers 

participating in Exchanges that 

demonstrates compliance with 1311(g) 

of the Affordable Care Act and 

facilitates understanding of the issuer’s 

payment structure framework that 

provides increased reimbursement or 

other market-based incentives for the 

implementation of activities related to 

the topics specified in section 1311 (g). 

We anticipate the display of a subset of 

this information to promote 

transparency and will provide 

additional details through future 

guidance. We do not intend that the 

public display of payment structure 

information will include information 

that is considered confidential or 

proprietary. 

Comment: Commenters provided 

feedback on the definition of a quality 

improvement strategy as a payment 

structure. Various commenters 

recommended not linking incentives to 

cost, including cost-independent 

protections, and suggested that HHS 

recognize different types of provider 

incentives, and emphasize the 

importance of capturing outcome 

variations within a provider’s control. 

Response: We clarify that the 

description of a strategy described in 

1311(g) of the Affordable Care Act is a 

payment structure that provides 

increased reimbursement or other 

market-based incentives. The purpose of 

soliciting comments was to understand 

the types of market-based incentives 

that are currently in use by issuers to 

reward quality and value. HHS intends 

to issue technical guidance to assist 

QHP with compliance with the QIS 

standards and reporting requirements. 

Comment: Some commenters 

expressed concern with HHS’s proposal 

that a QHP issuer could meet the QIS 

requirements by focusing on only one of 

the five topic areas in the Section 

1311(g) of the Affordable Care Act. 

These commenters suggested requiring 

QHP issuers to focus on more than one 

topic area, with some commenters 

suggesting a requirement of at least 

three topic areas be addressed. 

Response: While we agree that ideally 

QHP issuers participating in Exchanges 

would focus on more than one topic 

area as part of their QIS, we are 

cognizant that this could be difficult for 

issuers to accomplish immediately. 

Therefore, consistent with the phase in 

approach to implementation, for the 

initial years of the QIS, QHP issuers will 

have to address at least one of the topic 

areas included in section 1311(g) of the 

Affordable Care Act. 


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Comment: Some commenters 

expressed concern over the impact the 

QIS will have on providers if each QHP 

issuer is allowed to have extensive 

flexibility in designing its quality 

improvement strategies, in particular 

the performance measures used to track 

implementation progress. One 

commenter recommended that QHP 

issuers be required to use quality 

measures already in use by existing 

quality programs and for HHS to require 

QHP issuers to select their QIS quality 

measures from a limited subset of 

existing measures. 

Response: Based on input from 

experts and stakeholders, we anticipate 

allowing QHP issuers to select their own 

performance measures and establish 

targets designed to measure the impact 

of their respective QIS plans. Our 

concern is that imposing specific 

performance measures on QHP issuers 

would limit their ability to target their 

strategies to their specific populations 

and possibly limit innovation. However, 

we will take these comments into 

consideration as we assess whether 

changes are warranted in the future. 

Comment: Commenters strongly 

supported the proposal that QIS 

standards be developed in a public, 

accessible, and transparent manner that 

seeks and incorporates stakeholder 

feedback. Some commenters further 

recommended that HHS explicitly state 

that ‘‘stakeholder feedback’’ must 

include both consumer advocates and 

public and private purchasers, while 

another recommended that HHS reach 

out directly to State consumer health 

advocates, patient advocates, and case 

managers who represent consumer 

health perspectives. 

Response: Consistent with the 

statutory directive at section 1311(g)(2) 

of the Affordable Care Act that requires 

consultation with experts in health care 

quality and stakeholders, HHS 

conducted numerous activities to seek 

feedback and develop the proposed 

approach to the QIS, including meetings 

with a QIS Technical Expert Panel and 

engagement of stakeholders through 

activities such as key informant 

interviews, listening sessions, 

discussions, and a pilot test. We will 

continue to engage a variety of public 

and private stakeholders, and will seek 

to incorporate their feedback to help 

inform the further development and 

evolution of the QIS. 

Comment: Some commenters 

suggested we develop specific formats 

for data collection and reporting to 

ensure consistency, reliability in the 

data, and to reduce provider’s data 

reporting burden. Other commenters 

encouraged HHS to develop a uniform 

standardized reporting format for use by 

QHP issuers in both the FFEs and the 

State Exchanges to allow QHP issuers to 

implement consistent quality 

improvement strategies, as well as 

enable fair comparison between QHP 

issuers operating in State Exchanges and 

the FFEs. Others urged HHS to allow for 

flexibility to ensure that QHP issuers 

can develop various strategies across 

their populations and across their 

provider contracts. 

Response: We appreciate the feedback 

and clarify that we plan on establishing 

a standardized format for which QIS 

data must be submitted for those QHP 

issuers operating in the FFEs. We expect 

that the exact format and the validation 

process will be released as part of the 

operational details in technical 

guidance that will be issued later in 

2015. State Exchanges will have the 

flexibility to add reporting requirements 

beyond the minimum Federal 

requirements, determine how they will 

communicate the process for 

submission, establish the timeframe and 

validation approach for the data 

submission, and any additional quality 

improvement requirements they may 

require beyond the minimum Federal 

requirements. 

Comment: Some commenters felt that 

QIS data should not be made publicly 

available at all, adding that QHP issuers 

may be encouraged to take on more 

challenging or innovative strategies if 

the data are not made public. Other 

commenters suggested that if QIS data 

would be publicly available, HHS 

should create a uniform format for 

displaying the data using consumertested language, as well as provide 

evidence of effectiveness of different 

payment structures for QHP issuers’ use. 

Some commenters urged HHS to make 

QIS data publicly available and require 

evaluation against benchmark data, 

allowing the data to be used for decision 

making by multiple stakeholder groups 

such as State Exchanges, health plans, 

consumers, employers, providers and 

provider organizations. 

Response: We clarify in the final rule 

that HHS seeks to encourage 

transparency and align with other 

Exchange quality standards and data 

collection for QHP issuers, while 

protecting information that may be 

misinterpreted or misused if made 

publicly available. Similar to other 

quality standards and CMS programs 

collecting data from QHP issuers in the 

Exchanges, we do not anticipate 

publicly displaying information that is 

considered confidential or proprietary. 

As noted above, HHS anticipates the 

display of a subset of this information 

to promote transparency and will 

provide additional details through 

future guidance. 

Comment: Many commenters 

recommended that HHS require the use 

of specific performance measures in the 

QIS, specifically those from the 

following organizations: NCQA (HEDIS); 

URAC; the Pediatric Quality 

Measurement Program; and the Dental 

Quality Alliance (DQA). There was also 

strong support for use of National 

Quality Forum (NQF)-endorsed 

measures, and measures that align with 

the National Quality Strategy. 

Commenters noted that requiring QHP 

issuers to include commonly used 

measures in their quality improvement 

strategies would minimize the data 

collection burden on QHP issuers as 

well as providers. Some comments 

supported inclusion of process-level 

and plan-level data and measures of 

improvement when evaluating a QIS. 

Some commenters stated that defining 

the health outcomes that will be the 

focus of interventions, setting goals for 

improvement, and the approach for 

linking improvement to payment 

incentives should be detailed in the 

QHP issuer’s quality improvement 

strategy. They also suggested that these 

elements be fully disclosed so that 

regulators and other interested parties 

can properly evaluate a QHP issuer’s 

quality improvement strategy. Other 

commenters supported collection of 

information such as the rationale for the 

targeted population, proposed 

performance measures, approaches to 

reducing health care disparities, and a 

description of the mitigation strategy. 

Response: HHS will not require QHP 

issuers to include specific performance 

measures in a QIS. Instead, we have 

outlined the elements that should be 

included as part of a QIS, including a 

rationale that describes its relevance to 

the QHP’s enrollee population, 

proposed performance measures and 

targets, a description of activities 

conducted to implement the strategy, a 

description of activities conducted to 

reduce health and health care 

disparities, as well as other chosen 

topics, goals, timeline, and information 

about challenges, barriers, and 

mitigation planning. As noted above, we 

anticipate requiring QHP issuers to 

include information in their respective 

QIS implementation plan regarding 

percentage of payments to providers 

that is adjudicated based on quality and 

cost of services as a range within 

categories of provider payments. 

Comment: Several commenters 

provided comments specifically on 

evaluation. Commenters supported the 

evaluation of QHP issuers’ quality 

improvement strategies, as long as the 


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purpose of the evaluation is to drive 

improvement in the strategies being 

implemented, and to create a national 

set of performance data against which to 

assess the strategies. Some commenters 

noted that evaluating the quality 

improvement strategies could be 

challenging, due to QHP issuers 

changing, removing, or adding QHPs, 

and enrollee movement across plans 

both within and outside of the 

Exchange. Additional challenges noted 

by commenters included aligning 

evaluation requirements with other 

State and Federal requirements and 

ensuring that QHP issuers have 

sufficient time to understand changing 

rules and regulations to meet 

compliance requirements. 

Response: This final rule adopts a 

phased-in approach to implementation 

of the QIS and accompanying reporting 

requirements to provide QHP issuers the 

necessary time to understand the 

population enrolling in their respective 

QHPs offered through the Exchanges 

and to build quality performance data 

on its QHP enrollees. We also finalize 

an approach that requires a QHP issuer 

participating in the FFEs for at least 2 

years to submit a QIS implementation 

plan for each QHP offered in the 

Exchange, followed by annual progress 

updates. The purpose of requiring a 

QHP issuer to submit an annual 

progress update on its QIS 

implementation plan is to evaluate 

progress. As detailed in the proposed 

rule (79 FR 70735), we believe that 

implementation of a QIS should be a 

continuous process under which QHP 

issuers define the health outcome needs 

of their enrollees, set goals for 

improvement, and use increased 

reimbursement to their providers or 

other market-based incentives as a 

reward for quality improvement and to 

stimulate achievement of those goals. As 

such, we anticipate that QHP issuers 

will be engaged in a continuous process 

of evaluating the populations enrolling 

in their respective QHPs offered through 

Exchanges, modifying or otherwise 

adjusting their QIS plan as may be 

appropriate, and building quality 

performance data on its QHP enrollees. 

This approach is designed to account for 

the changes with respect to QHP 

offerings, as well as enrollee movement 

across plans both within and outside of 

Exchanges. We further note that since 

QHP issuers will not be penalized if the 

implementation is not demonstrating an 

effect on the performance targets set out 

in the implementation plan, we believe 

that these challenges are not a barrier to 

performing an annual evaluation 

review. Additional details on the timing 

of the submission of the initial QIS 

implementation plan and the annual 

progress reports will be included in 

technical guidance. 

Comment: Some commenters 

suggested that we provide additional 

technical guidance on the QIS 

requirements in § 156.1130(b), 

specifically those related to data 

validation and which entity will be 

reviewing data submissions for accuracy 

prior to public display. 

Response: HHS intends to publish 

QIS technical guidance in 2015 that will 

establish the minimum enrollment size 

threshold to trigger the applicability of 

the QIS standards, as well as data 

validation, data submission, and 

evaluation requirements for QHP issuers 

participating in the FFEs. We anticipate 

that State Exchanges will be issuing 

similar guidance to their respective QHP 

issuers. 

8. Qualified Health Plan Issuer 

Responsibilities 

a. Administrative Appeals 

(§ 156.1220(c)) 

In the 2015 Payment Notice, we 

established an administrative appeals 

process designed to address unresolved 

discrepancies regarding advance 

payments of the premium tax credit, 

advance payments of cost-sharing 

reductions, FFE user fee payments, 

payments and charges for the premium 

stabilization programs, cost-sharing 

reduction reconciliation payments and 

charges, and assessments of default risk 

adjustment charges. We established a 

three-tier appeals process: a request for 

reconsideration under § 156.1220(a); a 

request for an informal hearing before a 

CMS hearing officer under 

§ 156.1220(b); and a request for review 

by the Administrator of CMS under 

§ 156.1220(c). 

Under § 156.1220(a), we provided that 

an issuer may file a request for 

reconsideration of a processing error by 

HHS, HHS’s incorrect application of the 

relevant methodology, or HHS’s 

mathematical error only for advance 

payments of the premium tax credit, 

advance payments of cost-sharing 

reductions, FFE user fee payments, 

payments and charges for the premium 

stabilization programs, cost-sharing 

reduction reconciliation payments and 

charges, and assessments of default risk 

adjustment charges for a benefit year. In 

§ 156.1220(a)(6), we stated that a 

reconsideration decision would be final 

and binding for decisions regarding the 

advance payments of the premium tax 

credit, advance payments of costsharing reductions, and FFE user fees. A 

reconsideration decision for other 

matters would be subject to the outcome 

of a request for informal hearing filed in 

accordance with § 156.1220(b). 

Under § 156.1220(b), an issuer that 

elects to challenge the reconsideration 

decision may request an informal 

hearing before a CMS hearing officer. 

The CMS hearing officer’s decision 

would be final and binding, but subject 

to any Administrator’s review initiated 

in accordance with § 156.1220(c). 

We stated in § 156.1220(c)(1) that if 

the CMS hearing officer upholds the 

reconsideration decision, the issuer is 

permitted to request a review by the 

Administrator of CMS within 15 

calendar days of the date of the CMS 

hearing officer’s decision. We proposed 

a modification to this process to also 

permit CMS the opportunity to request 

review of the CMS hearing officer’s 

decision, and to permit the 

Administrator of CMS to decline to 

review the CMS hearing officer’s 

decision. Specifically, we proposed to 

amend § 156.1220(c)(1) to permit either 

the issuer or CMS to request review by 

the Administrator of the CMS hearing 

officer’s decision. We proposed to 

provide that any request for review of 

the hearing officer’s decision must be 

submitted to the Administrator of CMS 

within 15 calendar days of the date of 

the hearing officer’s decision, and must 

specify the findings or issues that the 

issuer or CMS challenges. We proposed 

that the issuer or CMS be permitted to 

submit for review by the Administrator 

a statement supporting the decision of 

the CMS hearing officer. 

We also proposed to amend 

§ 156.1220(c)(2) to provide the 

Administrator of CMS with the 

discretion to review or not review the 

decision of the CMS hearing officer after 

receiving a request for review under 

§ 156.1220(c)(1). We believe such 

discretion will permit the Administrator 

to focus resources on the priority 

matters, including disputes with 

implications for other issuers. In 

keeping with our current process set 

forth in § 156.1220(c), we proposed that 

if the Administrator elects to review the 

CMS hearing officer’s decision, the 

Administrator will review the 

statements of the issuer and CMS, and 

any other information included in the 

record of the CMS hearing officer’s 

decision, and will determine whether to 

uphold, reverse, or modify the CMS 

hearing officer’s decision. We proposed 

that the issuer or CMS be required to 

prove its case by clear and convincing 

evidence for issues of fact, and that the 

Administrator will send the decision 

and the reasons for the decision to the 

issuer. As established in 


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76Available at http://www.politico.com/static/

PPM170_100811_taxes.html. 

§ 156.1220(c)(3), the Administrator’s 

decision will be final and binding. 

We received no comments on this 

proposal. We are finalizing these 

amendments as proposed. 

F. Part 158—Issuer Use of Premium 

Revenue: Reporting and Rebate 

Requirements 

1. Treatment of Cost-Sharing Reductions 

in MLR Calculation (§ 158.140) 

The Premium Stabilization rule (77 

FR 17220) aligned the definition of 

‘‘allowable costs’’ under the risk 

corridors program at § 153.500 with the 

definition of incurred claims under the 

MLR program at § 158.140 and 

expenditures for health care quality and 

health information technology under 

§ 158.150-§ 158.151. In the 2014 

Payment Notice, we additionally 

specified that allowable costs under risk 

corridors must be reduced by the 

amount of cost-sharing reduction 

payments received by the issuer, to the 

extent not reimbursed to the provider. 

To align the calculations between the 

two programs, we proposed to specify 

that cost-sharing reduction payments 

should be deducted from incurred 

claims under the MLR program just as 

they are deducted from allowable costs 

under the risk corridors program. As we 

explained in the proposed rule, it is our 

understanding that in capitated 

arrangements, issuers will generally 

retain the cost-sharing reduction 

payments, and in such circumstances 

cost-sharing reduction payments should 

be accounted for as a reduction to 

incurred claims because capitation 

payments (which are reflected directly 

in an issuer’s incurred claims) will be 

raised to account for the reductions in 

the providers’ cost-sharing income. In 

contrast, in most fee-for-service 

arrangements, issuers will pass the costsharing reduction payments through to 

providers, and therefore no adjustment 

to incurred claims for cost-sharing 

reduction payments would be required 

in such situations. 

We are finalizing this provision as 

proposed. 

Comment: Several commenters 

supported our proposal as drafted, 

while one commenter opposed it. 

Several commenters expressed concern 

that the proposal could disadvantage 

issuers in capitated arrangements that 

do pass through the cost-sharing 

reduction payments to the providers. 

Response: We agree with the 

commenters that issuers who pursue 

innovative cost containment practices 

involving capitation and cost-sharing 

reduction payments should not be 

treated differently than issuers in feefor-service arrangements. However, we 

note that our proposed regulation text 

did not distinguish between capitation 

and fee-for-service arrangements. Under 

our proposal, issuers in either type of 

arrangement must deduct cost-sharing 

reduction payments from incurred 

claims, to the extent such payments are 

not reimbursed to the provider 

furnishing the item or service. 

Therefore, we are finalizing the 

clarification of the definition of incurred 

claims in § 158.140 as proposed. 

2. Reporting of Federal and State Taxes 

(§ 158.162) 

The MLR December 1, 2010 interim 

final rule (75 FR 74864) broadly 

describes Federal and State taxes and 

assessments that are excluded from 

premiums in the MLR and rebate 

calculations, and Federal and State 

taxes and assessments not excluded 

from premium in MLR and rebate 

calculations. In the proposed rule (79 

FR 70737), we proposed to further 

clarify for future MLR reporting years 

the treatment of Federal and State 

employment taxes. Specifically, we 

proposed to amend the provisions for 

the reporting of Federal and State taxes 

in § 158.162(a)(2) and (b)(2) to provide 

that Federal and State employment 

taxes (such as the Federal Insurance 

Contributions Act (FICA) and the 

Railroad Retirement Tax Act (RRTA) 

taxes, the Federal Unemployment Act 

(FUTA) and State unemployment taxes, 

and other similar taxes) should not be 

excluded from premium in the MLR and 

rebate calculations. 

Comment: Several commenters 

supported our proposal. One commenter 

noted that our proposal reflected their 

understanding of Congressional intent, 

as evidenced by the 2010 letter to the 

Secretary from six congressional 

committee chairs involved in drafting 

the Affordable Care Act.76 In contrast, 

other commenters opposed our 

proposal, questioning our authority to 

amend the definition of taxes. These 

commenters stated that the reference to 

‘‘excluding Federal and State taxes’’ in 

section 2718 of the PHS Act does not 

require clarification. These commenters 

alternatively asserted that to the extent 

the statute requires interpretation, only 

the NAIC has the authority to do so. 

Consequently, a subset of these 

commenters recommended that we 

obtain an official recommendation from 

the NAIC before adopting any 

modifications to the definition of taxes. 

Some commenters additionally 

expressed concern regarding the 

effective date of the proposed provision. 

Response: We disagree that there is no 

need to clarify the statutory reference to 

taxes or that the NAIC, rather than HHS, 

has the authority to clarify it. Our 

review of the MLR reports submitted by 

issuers identified this issue as one that 

would benefit from further clarification 

for future reporting years due to the fact 

that there appeared to be inconsistent 

treatment among issuers. While most 

issuers do not exclude employment 

taxes from premium, others have 

adopted the opposite approach and 

exclude such taxes from premium. 

Further, as some of the commenters 

point out, section 2718 of the PHS Act 

directed the NAIC to develop the 

uniform definitions and standardized 

methodologies with regard to the MLR 

provisions. It directed the NAIC to 

develop such definitions and 

methodologies no later than December 

31, 2010, and subjected all such 

definitions and methodologies to the 

certification of the Secretary. As a 

Federal agency, HHS retains the 

authority to implement the statute and 

interpret the statutory terms where 

necessary, including the authority to 

adjust the MLR definitions after 2010. 

Furthermore, the NAIC’s 

recommendation to the Secretary 

provided that certain Federal and State 

taxes should not be excluded from 

premiums in MLR and rebate 

calculations, supporting our belief that 

the phrase ‘‘excluding Federal and State 

taxes’’ requires clarification and does 

not mean all taxes of any kind. This 

approach—the identification of those 

Federal and State taxes that must be 

excluded from premium and those that 

cannot be excluded—was codified in 

our regulations at § 158.162 as part of 

the MLR December 1, 2010 interim final 

rule. The use of uniform definitions and 

standardized methodologies when 

calculating the MLR and associated 

rebates (including the treatment of 

employment taxes) is critical to both 

ensuring a level playing field across 

issuers and to deliver to consumers the 

protections promised by the statute. 

Therefore, we are finalizing the 

amendment to the definition of Federal 

and State taxes that may be deducted 

from premium in § 158.162(a)(2) and 

(b)(2) as proposed. In recognition of 

commenters’ concerns regarding the 

effective date of this provision, we note 

that this provision will become effective 

for the 2016 reporting year, and 

therefore must be reflected in reports 

submitted to the Secretary by July 31, 

2017. This should provide adequate 

time for those issuers that previously 


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77OMB Control Number: 0938–1086. 

interpreted the regulation differently to 

adjust their financial planning. We also 

reiterate that this is simply a 

clarification to explicitly require 

inclusion, as our data indicate most 

issuers have been doing. 

3. Distribution of Rebates to Group 

Enrollees in Non-Federal Governmental 

Plans (§ 158.242) 

The December 7, 2011 MLR Rebate 

Requirements for Non-Federal 

Governmental Plans interim final rule 

(76 FR 76596) directs issuers to 

distribute rebates to the group 

policyholders of non-Federal 

governmental plans. Under CMS’s direct 

enforcement authority over non-Federal 

governmental plans, the interim final 

rule further directs the group 

policyholders of such plans to use the 

portion of the rebate attributable to the 

amount of premium paid by subscribers 

of such plans for the benefit of 

subscribers in one of three prescribed 

ways. These provisions were put in 

place to ensure that rebates are used for 

the benefit of enrollees of non-Federal 

governmental plans, who do not receive 

the protections of Employee Retirement 

Income Security Act of 1974 (ERISA), as 

amended. Under ERISA and 

implementing regulations, most plan 

participants are assured that the rebate 

(when the rebate is determined to be a 

plan asset) is applied for their benefit 

within 3 months of receipt by the 

policyholder. 

To afford similar protection to 

subscribers of non-Federal 

governmental plans, we proposed to 

amend the provisions for distribution of 

rebates in § 158.242(b) to require group 

policyholders of non-Federal 

governmental plans to use the 

subscribers’ portion of the rebate for the 

subscribers’ benefit within 3 months of 

receipt of the rebate by the group 

policyholder. Under the proposal, plans 

would continue to be able to use the 

rebate to reduce the subscribers’ portion 

of premium for the subsequent policy 

year (including by spreading it over the 

12 months of the policy year) as long as 

the subsequent policy year commences 

within 3 months of receipt of the rebate 

by the group policyholder. If the 

subsequent policy year commences 

outside this 3-month window, the group 

policyholder of a non-Federal 

governmental plan must distribute the 

subscribers’ portion of the rebate within 

3 months in the form of a cash refund 

or by applying a mid-policy year 

premium credit to the subscriber’s 

portion of the premium. We also noted 

that, because under § 158.242(b)(3) 

group health plans that are not 

governmental plans and are not subject 

to ERISA (such as church plans) must 

follow the same rebate distribution rules 

in order to receive the rebate directly, 

the same distribution deadline would 

apply to such plans. 

We are finalizing the amendments as 

proposed. In addition, we are finalizing 

the December 7, 2011 interim final rule 

(76 FR 76596) with minor changes after 

consideration of the comments received 

on that rule as noted below. 

Comment: We received one comment 

supporting the requirement that 

policyholders that are non-Federal 

governmental or other group health 

plans not subject to ERISA apply or 

distribute rebates within 3 months of 

receipt, or pay interest on the rebates. 

Response: We appreciate the 

comment regarding the distribution of 

rebates to group enrollees in nonFederal governmental and other group 

health plans not subject to ERISA. 

Policyholders that are non-Federal 

governmental or other group health 

plans not subject to ERISA that do not 

apply or distribute rebates within 3 

months of receipt will be required to 

pay interest on the rebates, much the 

same as an issuer is required to do if 

they do not disburse the rebate to the 

policyholder by the due date. 

Comment: We received several 

comments supporting the rules 

governing the distribution of rebates to 

subscribers of non-Federal 

governmental and other group health 

plans not subject to ERISA, which were 

set forth in the December 7, 2011 MLR 

Rebate Requirements for Non-Federal 

Governmental Plans interim final rule 

(76 FR 76596). Other commenters 

requested that we clarify the deadline 

for rebate distribution by such plans. 

One commenter expressed concern that 

the regulation does not afford such 

plans adequate time to use the rebate to 

reduce the subscribers’ portion of 

premium or enhance benefits for a 

subsequent policy year. One commenter 

requested that such plans be permitted 

to distribute rebates directly to 

subscribers in situations where the 

policyholder has modified or ceased to 

offer group coverage. 

Response: We agree with the 

commenters regarding the need for 

clarification of the rebate distribution 

deadline for policyholders that are nonFederal governmental or other group 

health plans not subject to ERISA. As 

noted above, we believe that requiring 

such policyholders to use the rebate for 

the benefit of subscribers no later than 

3 months of receipt of the rebate by the 

policyholder ensures that consumers in 

group health plans not subject to ERISA 

receive the benefit of MLR rebates in a 

timely manner. Accordingly, we have 

clarified the deadline in this final rule, 

as described in more detail above. In 

addition, we agree that policyholders 

that are non-Federal governmental or 

other group health plans not subject to 

ERISA should be allowed to distribute 

rebates directly to subscribers in 

situations where the policyholder does 

not offer the same plan(s) or has ceased 

to offer group coverage. Therefore, we 

are amending the provisions in 

§ 158.242(b)(1)(iii) to specify that as an 

alternative to providing a cash rebate to 

the subscribers enrolled in the plan 

option at the time the policyholder 

receives the rebate, the group 

policyholder may instead provide a cash 

rebate to the subscribers who were 

enrolled in the plan option during the 

MLR reporting year that generated the 

rebate. 

IV. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 30- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. This final rule contains 

information collection requirements 

(ICRs) that are subject to review by 

OMB. A description of these provisions 

is given in the following paragraphs 

with an estimate of the annual burden, 

summarized in Table 12. 

In the November 26, 2014 (79 FR 

70674) proposed rule, we requested 

public comment on each of the 

collection of information requirements 

contained in the proposed rule. The 

comments and our responses to them 

are discussed below: 

A. ICRs Regarding Standards for 

Notification of Change of Ownership 

(§ 147.106(g)) 

When an issuer that offers a QHP, a 

plan otherwise subject to risk corridors, 

a risk adjustment covered plan, or a 

reinsurance-eligible plan experiences a 

change of ownership as recognized by 

the State in which the plan is offered, 

the issuer is required to notify HHS in 

a manner to be specified by HHS and 

provide the legal name, Health 

Insurance Oversight System (HIOS) plan 

identifier,77 tax identification number of 

the original and post-transaction issuers, 

as applicable, and the effective date of 

the change of ownership, and the 

summary description of transaction. The 

information must be submitted by the 

latest of (1) the date the transaction is 

entered into; or (2) the 30th day prior to 


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the effective date of the transaction. The 

burden associated with this requirement 

is the time and effort for the issuer to 

notify HHS of a change of ownership. 

We estimate that it will take an 

insurance operations analyst 30 minutes 

(at an hourly wage rate of $56.63) to 

prepare the data related to the change of 

ownership, and 10 minutes for a senior 

manager (at an hourly wage rate of 

$103.95) to review the data and transmit 

it electronically to HHS. We estimate 

that it will cost an issuer $45.65 to 

comply with this reporting requirement. 

Although at this time we cannot 

precisely estimate the number of issuers 

that will be reporting changes of 

ownership, we expect that no more than 

20 issuers will be subject to this 

reporting requirement annually, for a 

total burden of $913. 

B. ICRs Regarding Effective Rate Review 

Programs (§ 154.301) 

Under § 154.301(b)(2), if a State 

intends to make the information 

contained in Parts I, II, and III of the rate 

filing justification regarding proposed 

rate increases subject to review available 

to the public prior to the date specified 

in guidance by the Secretary, or if it 

intends to make the information 

contained in Parts I, II, and III of the rate 

filing justification regarding final rate 

increases available to the public prior to 

the first day of the annual open 

enrollment period in the individual 

market for the applicable calendar year, 

the State must notify CMS in writing of 

its intent to publish this information at 

least 30 days before it makes the 

information public and the date it 

intends to make the information public. 

We intend to seek OMB approval and 

solicit public comment on this 

information collection requirement, in 

accordance with the Paperwork 

Reduction Act of 1995, at a future date. 

C. ICRs Regarding Standards for HHSApproved Vendors of FederallyFacilitated Exchange Training and 

Information Verification for Agents and 

Brokers (§ 155.222) 

In § 155.222, we describe the 

information collection and disclosure 

requirements that pertain to the 

approval of vendors’ FFE agent and 

broker training programs, including 

information verification and 

administration of identity proofing. The 

burden estimate associated with these 

disclosure requirements includes the 

time and effort required for vendors to 

develop, compile, and submit the 

application information and any 

documentation or agreement necessary 

to support oversight in the form and 

manner required by HHS. We estimate 

that HHS will receive applications from 

nine or fewer vendors, and that it will 

take each vendor approximately 10 

hours to complete an application and 

the agreement, at a cost of $24.10 per 

hour. Therefore, we estimate a total 

burden of approximately 90 hours and 

a cost of $2,169 as a result of this 

requirement. HHS will develop a model 

vendor application that will include 

data elements necessary for HHS review 

and approval. HHS will estimate the 

burden on vendors for complying with 

this provision of the regulation, and 

submit the application for OMB 

approval in the future. For vendors that 

choose to charge for their training, HHS 

will consider current training costs for 

State-licensed agents and brokers for 

comparable training to comparable 

audiences when reviewing vendor 

applications with proposed fee 

structures. 

In § 155.222(d), we establish a process 

through which HHS will monitor 

approved vendors for ongoing 

compliance. HHS may require 

additional information from approved 

vendors to be submitted periodically to 

ensure continued compliance related to 

the obligations described in this section. 

We estimate that HHS will receive 

applications from nine or fewer 

vendors. We estimate that it will take no 

longer than 10 hours (at a cost of $24.10 

per hour) for each vendor to comply 

with any additional monitoring by HHS. 

Therefore, we estimate a total annual 

burden of 90 hours for all vendors for 

a total cost burden estimate of $2,169. 

In § 155.222(e), we establish a process 

by which a vendor whose application is 

not approved or whose approval is 

revoked by HHS can appeal HHS’s 

determination. We discuss the costs 

associated with the appeals process in 

the Regulatory Impact Analysis (RIA) 

section of this rule. 

This section establishes a new method 

by which agents and brokers may 

complete training and information 

verification components of the 

registration process to be authorized to 

assist with enrollment in individual 

market and SHOP coverage through the 

FFE. The information collection 

associated with the current process by 

which agents and brokers may be 

authorized to assist with enrollment 

through the Exchange is approved under 

OMB Control Number 0938–1204. We 

intend to revise the current collection 

request to incorporate this new method 

by which agents and brokers may 

complete training and information 

verification components of the 

registration process. Based on 

information not available when the 

current collection request was 

developed in 2013, we also expect a 

significant reduction in the overall 

burden, both in terms of the total 

number of respondents and the time 

required for each response. We intend to 

seek OMB approval and solicit public 

comment on this information collection 

requirement in accordance with the 

Paperwork Reduction Act of 1995. 

D. ICRs Regarding Notification of 

Effective Date for SHOP (§ 155.720(e)) 

Section § 155.720(e) has been 

amended to refer to enrollees and not 

qualified employees. This amendment 

establishes that issuers must provide a 

coverage effective date notice to anyone 

who enrolled in coverage through a 

SHOP under the new definition of 

‘‘enrollee,’’ including dependents 

(including a new dependent of the 

employee, when the dependent 

separately joins the plan), former 

employees of a qualified employer, and 

certain business owners, who might be 

enrolled in coverage through a SHOP. 

We specify that when a primary 

subscriber and his or her dependents 

live at the same address, a separate 

notice need not be sent to each 

dependent at that address, so long as the 

notice sent to each primary subscriber at 

that address contains all the required 

information about the coverage effective 

date for the primary subscriber and each 

of his or her dependents at that address. 

When dependents live at a different 

address from the primary subscriber, a 

separate notice must be sent to those 

dependents. We note that the notices 

required under this proposal could be 

incorporated into existing notifications 

that QHPs provide to their new 

customers, for example in a welcome 

document. We are also making a 

conforming amendment to 

§ 156.285(c)(3) to ensure that QHP 

issuers participating in a SHOP provide 

notice to a new enrollee of the enrollee’s 

effective date of coverage. We note that 

the effective date for this notice 

requirement will take effect in plan 

years beginning on or after January 1, 

2017 for enrollees that are not qualified 

employees. Issuers have already been 

providing these notices to qualified 

employees and are expected to continue 

sending these notices under the current 

rule. This final rule also expands 

issuers’ obligation to send notices to 

former employees under the amended 

definition of a qualified employee. 

The burden estimate associated with 

this requirement includes the time and 

effort needed to develop the notice and 

to distribute it through an automated 

process to enrollees, as appropriate. We 

estimate that approximately 445 QHP 

issuers (including dental issuers) will 


tkelley on DSK3SPTVN1PROD with RULES2
10852 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 

78http://www.cms.gov/Regulations-andGuidance/Legislation/PaperworkReductionAct

of1995/PRA-Listing-Items/CMS-10448.html

?DLPage=2&DLSort=1&DLSortDir=descending. 

79http://www.cms.gov/Regulations-andGuidance/Legislation/PaperworkReduction

Actof1995/PRA-Listing-Items/CMS-10448.html

?DLPage=2&DLSort=1&DLSortDir=descending. 

80http://www.cms.gov/Regulations-andGuidance/Legislation/PaperworkReduction

Actof1995/PRA-Listing.html. 

participate on the SHOPs in all States. 

We estimate that it will take 

approximately 35 hours annually to 

develop and transmit this notice, 

including 4 hours for a health policy 

analyst (at an hourly wage rate of 

$58.05), 3 hours for an operations 

analyst (at an hourly wage rate of 

$56.63), 25 hours for a computer 

programmer (at an hourly wage rate of 

$48.61), 2 hours for a fulfillment 

manager (at an hourly wage rate of 

$27.00), and 1 hour for a senior manager 

(at an hourly wage rate of $103.95). 

Therefore, we estimate an aggregate 

burden of 15,575 hours and $790,004 for 

QHP issuers participating in a SHOP as 

a result of this requirement. We describe 

this burden in more detail in our 

discussion of the Information Collection 

Reporting section for § 156.285(d) in 

this final rule. 

E. ICRs Regarding Collection of Data To 

Define Essential Health Benefits 

(§ 156.120) 

In § 156.120, we require States that 

select a base-benchmark plan or an 

issuer that offers a default basebenchmark plan to submit to HHS 

certain information in a form and 

manner, and by a date, determined by 

HHS. We are also finalizing our 

proposal to allow each State to select a 

new base-benchmark plan and 

supplement if necessary for the 2017 

plan year. The information collection 

associated with State or issuer 

submission of benchmark plan data is 

currently approved under OMB Control 

Number 0938–1174. We expect to 

collect less information for the 2017 

plan year than we previously collected 

for this purpose, and therefore we have 

revised our current burden estimate to 

reflect the reduced burden on issuers. 

The burden estimate associated with 

this requirement includes the time and 

effort needed for issuers and States to 

file an electronic submission describing 

the benefits, limits, and exclusion of the 

plan chosen as the State benchmark for 

the 2017 benefit year. We estimate that 

approximately 51 entities are subject to 

the reporting requirements and that it 

will take approximately 1.5 hours 

annually to identify and submit the 

responsive records to CMS, including 

1.5 hours for an issuer or health policy 

analyst (at an hourly wage rate of 

$58.05). Therefore, we estimate an 

aggregate burden of 76.5 hours and 

$4,440.83 for issuers and States as a 

result of this requirement. 

We released information regarding 

this data collection requirement, in 

accordance with the Paperwork 

Reduction Act of 1995, on November 26, 

2014 in CMS–10448,78 for a 60-day 

comment period.79 We did not receive 

any comments in relation to that release. 

This final rule serves to provide notice 

of a 30-day public comment period in 

relation to this proposed information 

collection which will be available on 

our Web site.80

F. ICRs Regarding Prescription Drug 

Benefits (§ 156.122) 

In § 156.122, we require health plans 

that are required to comply with EHB, 

as part of a committee that meets the 

standards established in that section. 

We expect that health plans have 

already established P&T committees that 

meet these standards and follow these 

processes. These processes include 

recordkeeping requirements for the P&T 

committee. Because we believe that 

issuers are already required to maintain 

such documentation, such as for 

accreditation purposes, and that issuers 

tend to use the same formulary drug list 

for multiple plans, we believe that the 

recordkeeping requirement will only 

impose a minimal additional burden on 

issuers. Therefore, we estimate that it 

will take a compliance officer 

approximately 8 hours (at an hourly 

wage rate of $43.34) to prepare for and 

attend meetings on a quarterly basis, 

and maintain the required 

documentation. Therefore, for 

approximately 2,400 plans in the 

individual and small group market that 

would be subject to this requirement, 

we estimate an aggregate annual burden 

of 76,800 hours and $3,328,512. 

G. ICRs Regarding Transparency in 

Coverage (§ 156.220) 

In the proposed rule, we solicited 

comment regarding the type of 

information that QHP issuers would be 

required to provide and make available 

to the public in plain language under 

§ 156.220. We intend to provide further 

detail regarding the proposed 

implementation approach in the future. 

We believe that the 2016 

implementation date finalized in this 

rule will allow sufficient time for HHS 

to provide details regarding the data 

collection, review, and public display of 

transparency elements. We intend to 

seek public comments on a proposed 

information collection detailing the 

specific data elements, frequency of 

updates, file types, and other crucial 

information for OMB approval at a 

future date. 

H. ICRs Regarding Termination Notices 

for SHOP (§ 156.285(d)(1)(ii)) and 

§ 155.735(d)(1)(iii) and (g)) 

In § 156.285(d)(1)(ii) and 

§ 155.735(d)(1)(iii) and (g) we require 

QHP issuers participating in the SHOP 

to provide notices to qualified 

employers and enrollees related to 

terminations of enrollment or coverage 

through the SHOP due to rescission in 

accordance with § 147.128 and due to 

the QHP’s termination, decertification, 

or non-renewal of certification, while 

shifting the burden of notifying 

qualified employers and enrollees of 

terminations due to loss of eligibility or 

nonpayment of premiums to the SHOP. 

The amendments to § 156.285(d)(1)(ii) 

and new § 155.735(g) will take effect 

January 1, 2016. We note that, while our 

current rules require issuers to provide 

notice of terminations when coverage 

through the SHOP is rescinded in 

accordance with § 147.128, or when the 

issuer elects not to seek recertification 

for a QHP offered through the SHOP, 

this provision will expand QHP issuers’ 

notice requirements to circumstances in 

which the QHP terminates or is 

decertified in accordance with 

§ 155.1080. The notices must inform the 

enrollee and qualified employer of the 

termination effective date and the 

reason for the termination. We specify 

that when a primary subscriber and his 

or her dependents live at the same 

address, a separate notice need not be 

sent to each dependent at that address, 

so long as the notice sent to each 

primary subscriber at that address 

contains all the required information 

about the termination of coverage for the 

primary subscriber and each of his or 

her dependents at that address. We note 

that when dependents live at a different 

address from the primary subscriber, a 

separate notice must be sent to those 

dependents. The burden estimate 

associated with this requirement 

includes the time and effort needed to 

develop the notice and to distribute it 

through an automated process to 

qualified employer and the enrollee, as 

appropriate. We estimate that 

approximately 445 QHP issuers 

(including dental issuers) will 

participate on the SHOPs in all States. 

We estimate that it will take 

approximately 35 hours annually to 

develop and transmit this notice, 

including 4 hours for a health policy 

analyst (at an hourly wage rate of 

$58.05), 3 hours for an operations 

analyst (at an hourly wage rate of 


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81Summary of Benefits and Coverage and 

Uniform Glossary Final Rule (‘‘SBC Final Rule’’), 77 

FR 8690 (Feb. 14, 2012). We have already received 

OMB approval under OMB control number 0938– 

1146 for the collection of information requirements 

related to the SBC provisions as finalized under 

current rules. 

82Under § 156.420(a), for each of its silver health 

plans that an issuer offers, the issuer must offer 

three variations of the standard silver plan that 

reflect, in addition to the applicable annual 

limitation on cost-sharing, the following: (1) A 

silver plan variation with cost-sharing reductions 

such that the actuarial value (AV) of the variation 

is 94 percent plus or minus the de minimis 

variation for a silver plan variation; (2) a silver plan 

variation with cost-sharing reductions such that the 

AV of the variation is 87 percent plus or minus the 

de minimis variation for a silver plan variation; and 

(3) a silver plan variation with cost-sharing 

reductions such that the AV of the variation is 73 

percent plus or minus the de minimis variation for 

a silver plan variation. Under § 156.420(b), for each 

QHP at any metal level that an issuer offers, the 

issuer must offer two variations to American 

Indians/Alaska Natives that reflect the following: 

(1) A variation of the QHP with all cost sharing 

eliminated; and (2) a variation of the QHP with no 

cost-sharing on any item or service that is an 

essential health benefit furnished directly by the 

Indian Health Service, an Indian Tribe, Tribal 

Organization, or Urban Indian Organization, or 

through referral under contract health services. 

83SBC Final Rule, 77 FR 8691 (Feb. 14, 2012). 

$56.63), 25 hours for a computer 

programmer (at an hourly wage rate of 

$48.61), 2 hours for a fulfillment 

manager (at an hourly wage rate of 

$27.00), and 1 hour for a senior manager 

(at an hourly wage rate of $103.95). 

Therefore, we estimate an aggregate 

burden of 15,575 hours across and 

$790,004 for QHP issuers participating 

in the SHOP as a result of this 

requirement. HHS intends to seek 

public comment on a proposed 

information collection at a later date. 

We note that amendments to the 

definition of ‘‘enrollee’’ that are set forth 

in this final rule and that take effect 

sooner than January 1, 2016, may 

expand the universe of individuals who 

must receive these notices under both 

the current rule and the amendments 

that take effect January 1, 2016. As part 

of developing and proposing the 

information collection for this ICR, HHS 

will estimate the effect of the modified 

definition of ‘‘enrollee’’ on the 

information collection burden. 

Based on the above per-notice 

development wage rates and hours, we 

believe that each State-based SHOP will 

spend roughly 70 hours annually to 

prepare the two termination notices (35 

hours per notice), for a total cost of 

$3,550 to design and implement the 

notices proposed under § 155.735(g). We 

estimate that there will be 

approximately 18 State-based SHOPs, 

and that all State-based SHOPs will be 

subject to this requirement. Therefore, 

we estimate an aggregate burden of 

1,260 hours and $63,900 for State-based 

SHOPs as a result of this requirement. 

I. ICRs Regarding Plan Variation Notices 

and Changes in Eligibility for CostSharing Reductions (§ 156.420 and 

§ 156.425) 

In § 156.420(h), we require an issuer 

to provide a summary of benefits and 

coverage (SBC) for each plan variation 

of a QHP it offers in accordance with the 

rules set forth under § 156.420 (referred 

to in this section as a ‘‘plan variation 

SBC’’), in a manner that is consistent 

with the standards set forth in 

§ 147.200. In § 156.425(c), we provide 

that if an individual’s assignment to a 

plan variation or standard plan without 

cost-sharing reductions changes in the 

course of a benefit year (in accordance 

with § 156.425(a)), an issuer must 

provide an SBC in a manner consistent 

with the standards set forth in 

§ 147.200, as soon as practicable after 

receiving notice from the Exchange of 

the individual’s change in eligibility 

and no later than 7 business days 

following receipt of notice. The burden 

associated with this requirement is the 

time and effort for an issuer to create 

and provide plan variation SBCs to 

affected individuals under § 156.420. 

Nearly all issuers affected by this 

requirement have already incurred onetime start-up costs related to 

implementing the SBC requirements 

established under § 147.200, and are 

already providing SBCs that reflect the 

standard QHPs they offer.81 We believe 

that QHP issuers will leverage existing 

processes to generate and distribute 

plan variation SBCs under § 156.420(h). 

We estimate that issuers would incur 

additional burden to produce and 

distribute plan variation SBCs under the 

proposed §§ 156.420(h) and 156.425(c). 

The additional burden will be 

associated with three tasks: (1) 

Producing plan variation SBCs; (2) 

distributing plan variation SBCs; and (3) 

distributing a plan variation SBC (or 

standard QHP without cost-sharing 

reductions) after a change in eligibility 

in the course of a benefit year. We 

intend to revise the information 

collection approved under OMB Control 

Number 0938–1187 to reflect this 

additional burden. 

1. Producing Plan Variation SBCs 

Because stand-alone dental plans are 

not required to complete SBCs, we 

exclude these plans from the number of 

QHPs that we estimate are required to 

comply with the requirement. We 

estimate that approximately 575 issuers 

participate in the Exchange, and that 

each issuer offers one QHP per metal 

level, with four zero cost-sharing plan 

variations and four limited cost-sharing 

plan variations (two per metal level per 

QHP) and three silver plan variations.82

Therefore, we estimate that each issuer 

offers 11 plan variations, and would 

produce 11 SBCs to reflect each plan 

variation, for a total of 6,325 plan 

variation SBCs annually. We estimate 

that it will take up to 1 hour to produce 

each plan variation SBC, for an annual 

time burden of 11 hours for each issuer. 

We estimate that it would take an 

information technology (IT) professional 

5 hours (at an hourly wage rate of 

$54.39), a benefits/sales professional 5.5 

hours (an hourly wage rate of $44.9) per 

hour, and an attorney 30 minutes (at an 

hourly wage rate of $84.96) to comply 

with the requirements. Therefore, we 

estimate a total annual cost burden of 

$561.44 per issuer, and $322,828 (6,325 

hours) for all issuers affected by this 

requirement. 

2. Distributing Plan Variation SBCs 

We are unable to estimate the number 

of cost-sharing reduction-eligible 

enrollees at this time and the related 

burden on issuers to provide for these 

disclosures. We expect that the vast 

majority (approximately 95 percent) of 

the total number of plan variation SBCs 

provided in accordance with 

§ 156.420(h) would be sent prior to 

enrollment and electronically at 

minimal cost, under the timing and 

form requirements set forth in 

§ 147.200(a)(1)(iv) and (a)(4)(iii). Of the 

remaining number of plan variation 

SBCs, we estimate that approximately 4 

percent of these disclosures will be sent 

in other instances, in accordance with 

the other timing requirements that may 

apply, including, requests for a plan 

variation SBC made by a consumer in 

the course of the benefit year. We expect 

that the vast majority of these 

disclosures will be provided 

electronically at minimal cost. We 

assume that there are costs for paper 

disclosures, but no costs for electronic 

disclosures.83 We expect that up to 1 

percent of plan variation SBCs will be 

provided in paper form. We estimate 

that the labor costs associated with 

distributing each SBC will be $1.63 (3 

minutes for an administrative assistant 

at an hourly wage rate of $32.59), and 

that printing, mailing, and supply costs 

will be $0.69 per SBC ($0.05 to print 

each page and $0.49 for first class 

postage), for a total cost of $2.32 per 

SBC. We estimate an annual burden of 

$331 for each QHP issuer and an 

aggregate burden of $190,240 for all 

issuers that are subject to the 

requirement. 


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10854 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 

3. Notice After Changes in Eligibility for 

Cost-Sharing Reductions 

In § 156.425(c), we require an issuer 

to provide adequate notice to the 

individual about the availability of the 

SBC that accurately reflects the 

applicable plan variation of the QHP (or 

the standard QHP without cost-sharing 

reductions) if an enrollee’s eligibility for 

cost-sharing reductions changes in the 

course of a benefit year. Similarly, if an 

enrollee changes QHPs as the result of 

a special enrollment period in 

accordance with § 155.420(d)(6), the 

issuer of the new QHP will be required 

to provide the individual with an SBC 

that accurately reflects the new QHP. 

We are unable to estimate the number 

of cost-sharing reduction-eligible 

enrollees who would experience a 

change in eligibility for cost-sharing 

reductions at this time and the related 

burden on issuers to provide for these 

disclosures. We expect that the vast 

majority (approximately 99 percent) of 

the total number of SBCs provided in 

accordance with § 156.425(c) will be 

sent electronically at minimal cost. We 

estimate that the labor costs associated 

with producing each SBC will be 

approximately $1.63 (3 minutes for an 

administrative assistant at an hourly 

wage rate of $32.59), and that printing, 

and mailing costs will be $0.69 ($0.05 

to print each page and $0.49 for first 

class postage), for a total cost of $2.32 

per SBC. We estimate a total annual cost 

of $165 for each QHP issuer and $95,120 

for all QHP issuers that are subject to 

this requirement. 

J. ICRs Regarding the Collection and 

Reporting of Quality Improvement 

Strategies (§ 156.1130) 

In § 156.1130, we established 

requirements for QHP issuers related to 

data collection and submission of 

information regarding a quality 

improvement strategy (QIS). QIS 

standards will establish the minimum 

requirements for the FFEs, States with 

plan management functions and that 

State-based Exchanges must follow. 

State-based Exchanges can, if desired, 

build additional reporting requirements 

in accordance with their needs. 

Because SADPs will not be included 

in the initial years, this estimate 

assumes 575 QHP issuers (all issuers in 

all Marketplaces excluding SADPs) and 

covers the annual costs for a QHP issuer 

over a 3-year period (2016–2018). The 

burden associated with submitting 

initial attestations as part of the QHP 

certification process is currently 

accounted for under OMB Control 

Number 0938–1187. We estimate that it 

will take each QHP issuer 48 hours (at 

a cost of $3,372) to collect this QIS data 

and to submit this information to the 

Exchange. Therefore, we estimate an 

aggregate burden of 27,600 hours and 

$1,938,900 for 575 QHP issuers as a 

result of these requirements. 

TABLE 12—ANNUAL REPORTING, RECORDKEEPING AND DISCLOSURE BURDEN

Regulation section(s) Number of 

respondents Responses 

Burden per 

response 

(hours) 

Total annual 

burden 

(hours) 

Hourly labor 

cost of 

reporting 

($) 

Total labor 

cost of 

reporting 

($) 

Total capital/

maintenance 

costs 

($) 

Total cost 

($) 

§ 147.106(g) ............. 20 20 0.67 13.4 68.17 913 0 913 

§ 155.222(a) ............. 9 9 10.00 90 24.10 2,169 0 2,169 

§ 155.222(d) ............. 9 9 10.00 90 24.10 2,169 0 2,169 

§ 155.720(e) and 

§ 156.285(c)(3) ..... 445 445 35.00 15.575 50.72 790,004 0 790,004 

§ 155.735(g) ............. 18 36 35.00 1,260 50.71 63,900 0 63,900 

§ 156.120 .................. 51 51 1.5 76.5 58.05 4,480.83 0 1,480.28 

§ 156.122 .................. 2,400 2,400 32.00 76,800 43.34 3,328,512 0 3,328,512 

§ 156.285(d)(1)(ii) ..... 445 445 35.00 15,575 50.72 790,004 0 790,004 

§ 156.420 .................. 575 6,325 1.00 6,325 51.04 322,828 0 322,828 

§ 156.420(h) ............. 575 81,000 0.05 4,050 32.59 131,990 58,250 190,240 

§ 156.425 .................. 575 41,000 0.05 2,025 32.59 65,995 29,125 95,120 

§ 156.1130 ................ 575 575 48 27,600 70.25 1,938,900 0 1,938,900 

Total .................. 2,400 ........................ .................... 149,504.9 .................... 7,441,865 87,375 7,529,240 

Copies of the supporting statement 

and any related forms for information 

collections identified above can be 

found at: http://www.cms.hhs.gov/ 

PaperworkReductionActof1995 or can 

be obtained by emailing your request, 

including your address, phone number, 

OMB number, and CMS document 

identifier, to: Paperwork@cms.hhs.gov, 

or by calling the Reports Clearance 

Office at: 410–786–1326. If you 

comment on these proposed information 

collection, please reference the CMS 

document identifier and the OMB 

control number. To be assured 

consideration, comments and 

recommendations must be received in 

one of the following ways prior to the 

public comment deadline: 1. 

Electronically. You may submit your 

comments electronically to http://

www.regulations.gov. Follow the 

instructions for ‘‘Comment or 

Submission’’ or ‘‘More Search Options’’ 

to find the information collection 

document(s) accepting comments. 2. By 

regular mail. You may mail written 

comments to the following address: 

CMS, Office of Strategic Operations and 

Regulatory Affairs, Division of 

Regulations Development, Attention: 

Document Identifier (CMS–10523), 

Room C4–26–05, 7500 Security 

Boulevard, Baltimore, Maryland 21244– 

1850, and, OMB Office of Information 

and Regulatory Affairs, Attention: CMS 

Desk Officer, New Executive Office 

Building, Room 10235, Washington, DC 

20503, Fax Number: 202–395– 6974. 

V. Regulatory Impact Analysis 

A. Statement of Need 

This final rule sets forth standards 

related to the premium stabilization 

programs (risk adjustment, reinsurance, 

and risk corridors) for the 2016 benefit 

year, as well as certain modifications for 

the 2015 benefit year, that will protect 

issuers from the potential effects of 

adverse selection and protect consumers 

from increases in premiums due to 

issuer uncertainty. The Premium 

Stabilization Rule and the 2014 and 

2015 Payment Notices provided detail 

on the implementation of these 

programs, including the specific 

parameters for the 2014 and 2015 

benefit years applicable to these 

programs. This final rule sets forth 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 10855 

additional standards related to essential 

health benefits, meaningful access in the 

Exchange, consumer assistance tools 

and programs of an Exchange, nonNavigator assistance personnel, costsharing parameters and cost-sharing 

reduction notices, quality improvement 

strategy standards for issuers of QHPs 

participating in Exchanges, guaranteed 

availability, guaranteed renewability, 

minimum essential coverage, the rate 

review program, the medical loss ratio 

program, the Small Business Health 

Options Program, and FFE user fees. 

B. 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 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). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. A 

regulatory impact analysis (RIA) must 

be prepared for rules with economically 

significant effects ($100 million or more 

in any 1 year). 

OMB has determined that this final 

rule is ‘‘economically significant’’ 

within the meaning of section 3(f)(1) of 

Executive Order 12866, because it is 

likely to have an annual effect of $100 

million in any 1 year. Accordingly, we 

have prepared an RIA that presents the 

costs and benefits of this rule. 

Although it is difficult to discuss the 

wide-ranging effects of these provisions 

in isolation, the overarching goal of the 

premium stabilization, market 

standards, and Exchange-related 

provisions and policies in the 

Affordable Care Act is to make 

affordable health insurance available to 

individuals who do not have access to 

affordable employer-sponsored 

coverage. The provisions within this 

final rule are integral to the goal of 

expanding access to affordable coverage. 

For example, the premium stabilization 

programs help prevent risk selection 

and decrease the risk of financial loss 

that health insurance issuers might 

otherwise expect in 2016 and the 

advance payments of the premium tax 

credit and cost-sharing reduction 

programs assist low- and moderateincome consumers and American 

Indians/Alaska Natives in purchasing 

health insurance. The combined 

impacts of these provisions affect the 

private sector, issuers, and consumers, 

through increased access to health care 

services including preventive services, 

decreased uncompensated care, lower 

premiums, establishment of quality 

improvement strategy standards, and 

increased plan transparency. Through 

the reduction in financial uncertainty 

for issuers and increased affordability 

for consumers, these provisions are 

expected to increase access to affordable 

health coverage. 

HHS anticipates that the provisions of 

this final rule will help further the 

Department’s goal of ensuring that all 

consumers have access to quality, 

affordable health care and are able to 

make informed choices, that Exchanges 

operate smoothly, that premium 

stabilization programs work as 

intended, that SHOPs are provided 

flexibility, and that employers and 

consumers are protected from 

fraudulent and criminal activities. 

Affected entities such as QHP issuers 

will incur costs to comply with the 

provisions specified in the final rule, 

including administrative costs related to 

notices, quality improvement strategy 

requirements, training and 

recertification requirements, and, in 

some cases, establishing a larger 

provider network. In accordance with 

Executive Order 12866, HHS believes 

that the benefits of this regulatory action 

justify the costs. 

C. Impact Estimates of the Payment 

Notice Provisions and Accounting Table 

In accordance with OMB Circular A– 

4, Table 13 below depicts an accounting 

statement summarizing HHS’s 

assessment of the benefits, costs, and 

transfers associated with this regulatory 

action. 

This final rule implements standards 

for programs that will have numerous 

effects, including providing consumers 

with affordable health insurance 

coverage, reducing the impact of 

adverse selection, and stabilizing 

premiums in the individual and small 

group health insurance markets and in 

an Exchange. We are unable to quantify 

certain benefits of this rule—such as 

improved health outcomes and 

longevity due to continuous quality 

improvement and increased insurance 

enrollment—and certain costs—such as 

the cost of providing additional medical 

services to newly-enrolled individuals. 

The effects in Table 13 reflect 

qualitative impacts and estimated direct 

monetary costs and transfers resulting 

from the provisions of this final rule for 

reinsurance contributing entities and 

health insurance issuers. The 

annualized monetized costs described 

in Table 13 reflect direct administrative 

costs to these entities as a result of these 

provisions, and include administrative 

costs related to notices, quality 

improvement strategy requirements, and 

training and recertification requirements 

that are estimated in the Collection of 

Information section of this final rule. 

The annual monetized transfers 

described in Table 13 include costs 

associated with the reinsurance 

contribution fee, FFE user fees, and the 

risk adjustment user fee paid to HHS by 

issuers, and additional MLR rebate 

payments from issuers to consumers. 

We also note that reinsurance 

administrative expenses, included in 

the reinsurance contribution rate, will 

increase slightly from 2015 to 2016. In 

addition, as a result of HHS’s increased 

contract costs related to risk adjustment 

operations and risk adjustment data 

validation, we will collect a total of $50 

million in risk adjustment user fees or 

$1.75 per enrollee per year from risk 

adjustment issuers, which is greater 

than the $0.96 per-enrollee-per-year risk 

adjustment user fee amount established 

for benefit year 2015. This increase is 

due in large part to risk adjustment data 

validation costs that will occur in 2016. 

The increase in FFE user fee collections 

is a result of a constant user fee rate 

from 2015 to 2016 (3.5 percent) but 

expected growth in enrollment in the 

FFEs. We are also including costs 

associated with administrative appeals 

under § 156.1220 in the RIA of this final 

rule. 

TABLE 13—ACCOUNTING TABLE

Benefits: 

Qualitative: 


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TABLE 13—ACCOUNTING TABLE—Continued 

* Increased enrollment in the individual market leading to improved access to health care for the previously uninsured, especially individuals 

with medical conditions, which will result in improved health and protection from the risk of catastrophic medical expenditures. 

* Encourage continuous quality improvement among QHP issuers to improve health outcomes at lower costs. 

* Allow Exchanges to make informed QHP certification decisions. 

* Increasing coverage options for small businesses and their employees while mitigating the effect of adverse selection. 

* Ensure that consumers in group health plans not subject to ERISA receive the benefit of MLR rebates in a timely manner. 

Costs: 

Estimate 

(million) 

Year dollar Discount 

rate 

(percent) 

Period 

covered 

Annualized Monetized ($/year) ........................................................................................ 6.77 2015 7 2015–2018 

6.77 2015 3 2015–2018 

Quantitative: 

* Costs incurred by issuers and contributing entities to comply with provisions in the rule. 

* Costs incurred by States for complying with audits of State-operated reinsurance programs. 

Transfers: 

Estimate 

(million) 

Year dollar Discount 

rate 

(percent) 

Period 

covered 

Annualized Monetized ($/year) ........................................................................................ 418.61 2015 7 2015–2018 

418.52 2015 3 2015–2018 

* Transfers reflect incremental cost increases from 2015–2016 for reinsurance administrative expenses, FFE user fees, and the risk adjustment 

user fee, which are transfers from contributing entities and health insurance issuers to the Federal government. FFE user fees are newly included in the estimated transfers as collections are now projected for the period covered. Transfers also reflect annual transfer from shareholders or nonprofit stakeholders to enrollees of rebates paid by issuers for coverage in the individual and group markets, resulting from clarification regarding MLR methodology to account for Federal and State employment taxes. 

* Unquantified: Lower premium rates in the individual market due to the improved risk profile of the insured, competition, and pooling risk. 

This RIA expands upon the impact 

analyses of previous rules and utilizes 

the Congressional Budget Office’s (CBO) 

analysis of the Affordable Care Act’s 

impact on Federal spending, revenue 

collection, and insurance enrollment. 

Table 14 summarizes the effects of the 

risk adjustment and reinsurance 

programs on the Federal budget from 

fiscal years 2015 through 2018, with the 

additional, societal effects of this 

proposed rule discussed in this RIA. We 

do not expect the provisions of this final 

rule to significantly alter CBO’s 

estimates of the budget impact of the 

risk adjustment, reinsurance, and risk 

corridors programs that are described in 

Table 14. For this RIA, we are shifting 

the estimates for the risk adjustment and 

reinsurance programs to reflect the 4- 

year period from fiscal years 2015 

through 2018, because these payments 

and charges will begin in the 2015 

calendar year for the 2014 benefit year. 

We note that transfers associated with 

the risk adjustment and reinsurance 

programs were previously estimated in 

the Premium Stabilization Rule; 

therefore, to avoid double-counting, we 

do not include them in the accounting 

statement for this final rule (Table 13). 

In addition to utilizing CBO 

projections, HHS conducted an internal 

analysis of the effects of its regulations 

on enrollment and premiums. Based on 

these internal analyses, we anticipate 

that the quantitative effects of the 

provisions finalized in this rule are 

consistent with our previous estimates 

in the 2015 Payment Notice for the 

impacts associated with the cost-sharing 

reduction program, the advance 

payments of the premium tax credit 

program, the premium stabilization 

programs, and FFE user fee 

requirements. 

TABLE 14—ESTIMATED FEDERAL GOVERNMENT OUTLAYS AND RECEIPTS FOR THE RISK ADJUSTMENT, REINSURANCE, AND

RISK CORRIDORS PROGRAMS FROM FY 2014–2018 

[In billions of dollars] 

Year 2015 2016 2017 2018 2019 2015–2019 

Risk Adjustment, Reinsurance, and Risk Corridors Program Payments ............................................................ 17 17.5 19.5 15 17 86 

Risk Adjustment, Reinsurance, and Risk Corridors Program Collections ........................................................... 18 16.5 19.5 15 17 86 

Source: Congressional Budget Office. Updated Estimates of the Insurance Coverage Provisions of the Affordable Care Act, January 2015. 

1. Rate Review 

The final rule will trigger review of 

rate increases that meet or exceed the 

applicable review threshold when such 

increases happen at the ‘‘plan’’ level 

rather than at the ‘‘product’’ level. This 

will protect consumers against 

unreasonable rate increases for their 

plans, since, under current regulations, 


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it is possible for a plan to experience a 

rate increase higher than the threshold 

and still avoid review because the 

average rate increase for the product 

does not meet or exceed the threshold. 

States may have to review more 

submissions and experience an increase 

in related costs. The establishment of a 

uniform timeframe by which issuers in 

every State must submit a completed 

Rate Filing Justification to CMS and the 

applicable State for all rate increases, 

including both QHPs and non-QHPs, 

will provide timely information to 

consumers and other stakeholders and 

ensure that State and Federal regulators 

have adequate time for review prior to 

implementation of a rate increase. The 

amendment to specify the timing for 

States to make proposed and final rate 

increase information available to the 

public will ensure that consumers have 

timely access to this information. These 

provisions will also reduce the potential 

for anti-competitive behavior and 

promote fair market competition 

between issuers inside and outside of 

the Exchange. 

2. Change of Ownership Notification 

Requirement 

This final rule provides that when an 

issuer of a QHP, a plan otherwise 

subject to risk corridors, a risk 

adjustment covered plan, or a 

reinsurance-eligible plan, experiences a 

change in ownership as recognized by 

the State in which the plan is offered, 

the issuer must notify HHS in a manner 

specified by HHS, by the latest of (1) the 

date the transaction is entered into; or 

(2) the 30th day prior to the effective 

date of the transaction. We expect that 

upon notification, issuers may need to 

work with HHS to clarify operational 

processes related to the HHSadministered programs, and will follow 

with guidance related to such 

operational processes. We estimate the 

administrative costs associated with the 

notification requirement in the 

Collection of Information section of this 

final rule. 

3. Appeals Process for HHS-Approved 

Vendors for FFE Training and 

Information Verification for Agents and 

Brokers 

In § 155.222, we proposed 

information collection and disclosure 

requirements that pertain to the 

approval of vendors to have their FFE 

agent and broker training and 

information verification programs 

recognized as sufficient for agents and 

brokers to satisfy the training 

requirement to assist or facilitate 

enrollment in individual market or 

SHOP coverage through the FFEs. We 

also establish a monitoring and appeals 

process for such HHS-approved 

vendors. We estimate that five vendors 

that apply may not have their 

application approved, and one vendor 

may have their approval revoked, and 

all of those vendors will appeal HHS’s 

determination and submit additional 

documentation to HHS. We estimate 

that filing an appeal with HHS will take 

no longer than 1 hour. Therefore, at an 

hourly wage rate of $24.10, we estimate 

a total cost of $144.60 as a result of this 

appeals process. 

4. Risk Adjustment 

The risk adjustment program is a 

permanent program created by the 

Affordable Care Act that transfers funds 

from lower risk, non-grandfathered 

plans to higher risk, non-grandfathered 

plans in the individual and small group 

markets, inside and outside the 

Exchanges. We established standards for 

the administration of the risk 

adjustment program in subparts D and 

G of part 45 of the CFR. 

A State approved or conditionally 

approved by the Secretary to operate an 

Exchange may establish a risk 

adjustment program, or have HHS do so 

on its behalf. As described in the 2014 

and 2015 Payment Notices, if HHS 

operates risk adjustment on behalf of a 

State, it will fund its risk adjustment 

program operations by assessing a risk 

adjustment user fee on issuers of risk 

adjustment covered plans. For the 2016 

benefit year, we estimate that the total 

cost for HHS to operate the risk 

adjustment program on behalf of States 

for 2016 will be approximately $50 

million, and that the risk adjustment 

user fee would be approximately $1.75 

per enrollee per year. The increased risk 

adjustment user fee for 2016 is the result 

of the increased contract costs to 

support the risk adjustment data 

validation process. 

5. Reinsurance 

The Affordable Care Act directs that 

a transitional reinsurance program be 

established in each State to help 

stabilize premiums for coverage in the 

individual market by helping to pay the 

cost of treating high-cost enrollees. In 

the 2014 and 2015 Payment Notices, we 

expanded upon the standards set forth 

in subparts C and E of the Premium 

Stabilization Rule and established the 

2014 and 2015 uniform reinsurance 

payment parameters and national 

contribution rate. In this rule, we 

finalize the 2016 uniform reinsurance 

payment parameters and contribution 

rate and a modification to the 2015 

benefit year attachment point. 

Section 153.220(c) provides that HHS 

will publish the uniform per capita 

reinsurance contribution rate for the 

upcoming benefit year in the annual 

HHS notice of benefit and payment 

parameters. Section 1341(b)(3)(B)(iii) of 

the Affordable Care Act specifies that 

$10 billion for reinsurance contributions 

is to be collected from contributing 

entities for the 2014 benefit year (the 

reinsurance payment pool), $6 billion 

for the 2015 benefit year, and $4 billion 

for the 2016 benefit year. Additionally, 

sections 1341(b)(3)(B)(iv) and 1341(b)(4) 

of the Affordable Care Act direct that $2 

billion in funds is to be collected for 

contribution to the U.S. Treasury for the 

2014 benefit year, $2 billion for the 2015 

benefit year, and $1 billion for the 2016 

benefit year. Finally, section 

1341(b)(3)(B)(ii) of the Affordable Care 

Act allows for the collection of 

additional amounts for administrative 

expenses. Taken together, these three 

components make up the total dollar 

amount to be collected from 

contributing entities for 2014, 2015 and 

2016 benefit years for the reinsurance 

program under the uniform per capita 

contribution rate. 

In the 2015 Payment Notice, we 

estimated that the Federal 

administrative expenses of operating the 

reinsurance program would be $25.4 

million, based on our estimated contract 

and operational costs. We used the same 

methodology to estimate the 

administrative expenses for the 2016 

benefit year. We estimate this amount to 

be approximately $32 million for the 

2016 benefit year. This estimate 

increased for the 2016 benefit year due 

to increased audit and data validation 

contract costs. We believe that this 

figure reflects the Federal government’s 

significant economies of scale, which 

helps to decrease the costs associated 

with operating the reinsurance program. 

Based on our estimate of covered lives 

for which reinsurance contributions are 

to be made for 2016, we are finalizing 

a uniform reinsurance contribution rate 

of $0.17 annually per capita for HHS 

administrative expenses. If a State 

establishes its own reinsurance 

program, HHS would transfer $0.085 of 

the per capita administrative fee to the 

State for purposes of administrative 

expenses incurred in making 

reinsurance payments, and retain the 

remaining $0.085 to offset the costs of 

collecting contributions. We note that 

the administrative expenses for 

reinsurance payments will be 

distributed to those States that operate 

their own reinsurance program in 

proportion to the State-by-State total 

requests for reinsurance payments made 


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84Available at: http://cciio.cms.gov/resources/ 

files/Files2/03162012/hie3r-ria-032012.pdf. 

under the uniform reinsurance payment 

parameters. 

6. Risk Corridors 

The Affordable Care Act creates a 

temporary risk corridors program for the 

years 2014, 2015, and 2016 that applies 

to QHPs, as defined in § 153.500. 

Section 1342 of the Affordable Care Act 

directs the Secretary to establish a 

temporary risk corridors program that 

protects issuers against inaccurate rate 

setting from 2014 through 2016. The 

Affordable Care Act establishes the risk 

corridors program as a Federal program; 

consequently, HHS will operate the risk 

corridors program under Federal rules 

with no State variation. 

We finalize a clarification to the risk 

corridors transitional adjustment for 

benefit year 2014. We clarify that we 

intend to implement the risk corridors 

transitional adjustment for transitional 

plans only, as stated in the 2015 

Payment Notice. This clarification does 

not affect the impact of the risk 

corridors transitional adjustment. 

For benefit year 2016, we are 

finalizing the treatment of excess risk 

corridors collections that may remain 

after the 3-year duration of the program. 

We will adjust the allowable 

administrative cost ceiling and profit 

floor so that any excess risk corridors 

collections that remain in benefit year 

2016 are paid out to eligible QHP 

issuers. We anticipate that collections 

will fully offset payments over the 3- 

year duration of the program. 

Consequently, we do not believe that 

this provision will have a monetary 

impact on QHP issuers or the Federal 

government. 

7. SHOP 

The SHOP facilitates the enrollment 

of eligible employees of small 

employers into small group health 

insurance plans. A qualitative analysis 

of the costs and benefits of establishing 

a SHOP was included in the RIA 

published in conjunction with the 

Exchange Establishment Rule.84

Please see the Collection of 

Information section of this proposed 

rule for the costs expected to be 

incurred by State-based SHOPs and 

QHP issuers participating in the SHOP 

related to the notification requirements 

related to terminations of coverage or 

enrollment through the SHOP and the 

notification requirement for the 

coverage effective date under the new 

definition of an enrollee. We believe the 

cost associated with termination notices 

is justified because SHOPs are best 

positioned to provide meaningful notice 

regarding terminations due to loss of 

eligibility and nonpayment of premiums 

in a timely manner, while issuers are 

best positioned to provide meaningful 

notice when coverage or enrollment 

through the SHOP is terminated due to 

a rescission in accordance with 

§ 147.128 or when the QHP is 

terminated, decertified, or its 

certification is not renewed, as well as 

notices of the effective date of coverage. 

We believe expanding the notice 

requirement under § 155.720(e) benefits 

all individuals with coverage, including 

dependents, former employees of a 

qualified employer, and certain business 

owners, with a notification of effective 

date of coverage. 

8. User Fees 

To support the operation of FFEs, we 

require in § 156.50(c) that a 

participating issuer offering a plan 

through an FFE must remit a user fee to 

HHS each month equal to the product 

of the user fee rate specified in the 

annual HHS notice of benefit and 

payment parameters for the applicable 

benefit year and the monthly premium 

charged by the issuer for each policy 

under the plan where enrollment is 

through an FFE. For the 2016 benefit 

year, we are finalizing a monthly user 

fee rate equal to 3.5 percent of the 

monthly premium. As described in the 

Budget of the United States 

Government, Fiscal Year 2016, we 

expect approximately $1.514 billion in 

user fee collections would be obligated 

in fiscal year 2016. For the user fee 

charge assessed on issuers in the FFE, 

we received an exception to OMB 

Circular No. A–25R, which requires that 

the user fee charge be sufficient to 

recover the full cost to the Federal 

government of providing the special 

benefit. This exception ensures that the 

FFEs can support many of the goals of 

the Affordable Care Act, including 

improving the health of the population, 

reducing health care costs, and 

providing access to health coverage as 

advanced by § 156.50(d). 

9. Essential Health Benefits, Cost 

Sharing, and Actuarial Value 

Issuers may incur minor 

administrative costs associated with 

altering benefits, cost-sharing and/or AV 

parameters of their plan designs to 

ensure compliance with the EHB 

requirements in this rule. For example, 

issuers that do not currently meet the 

standards for EHB prescription drug 

coverage will incur contracting and onetime administrative costs to bring their 

prescription drug benefits into 

compliance. HHS expects that the 

process for compliance with the revised 

EHB requirements will not significantly 

add to existing compliance costs 

because issuers have extensive 

experience in offering products with 

various benefits and levels of cost 

sharing and these modifications are 

expected to be relatively minor for most 

issuers. 

In addition, we are adding standards 

for a health plan’s formulary exception 

process that includes an external 

review. We believe that issuers that 

provide EHB already have formulary 

exceptions processes and procedures in 

place that allow an enrollee to request 

and gain access to clinically appropriate 

drugs not covered by the plan. We do 

not expect these requirements to 

significantly increase the volume of 

reviews conducted under issuers’ 

contracts with Independent Review 

Organizations. Therefore, we do not 

anticipate that these requirements 

would result in any significant new cost 

for issuers. 

10. Network Adequacy 

Issuers may incur minor 

administrative costs associated with 

updating their provider directory to 

ensure compliance with the 

requirements under this final rule. Since 

issuers already maintain a directory and 

the expected modification is to re-locate 

that directory to a more user-friendly 

location on the issuer Web site, HHS 

expects that compliance will not 

demand any additional resources. 

11. Downstream Entities 

We revised § 156.200(b)(7), to clarify 

that a QHP issuer is required to comply 

with the standards under part 153 and 

not just the standards related to the risk 

adjustment program. Under § 156.340, 

notwithstanding any relationship(s) that 

a QHP issuer may have with delegated 

and downstream entities, a QHP issuer 

maintains responsibility for its 

compliance and the compliance of any 

of its delegated or downstream entities, 

as applicable, with all applicable 

standards, including the standards of 

subpart C of part 156 for each of its 

QHPs on an ongoing basis. Because we 

believe that QHP issuers have existing 

agreements with downstream entities 

that define responsibilities, we do not 

believe that this requirement will 

impose an additional burden on QHP 

issuers. 

12. Provisions Related to Cost Sharing 

The Affordable Care Act provides for 

the reduction or elimination of cost 

sharing for certain eligible individuals 

enrolled in QHPs offered through the 

Exchanges. This assistance will help 


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85Brook, Robert H., John E. Ware, William H. 

Rogers, Emmett B. Keeler, Allyson Ross Davies, 

Cathy D. Sherbourne, George A. Goldberg, Kathleen 

N. Lohr, Patricia Camp and Joseph P. Newhouse. 

The Effect of Coinsurance on the Health of Adults: 

Results from the RAND Health Insurance 

Experiment. Santa Monica, CA: RAND Corporation, 

1984. Available at: http://www.rand.org/pubs/

reports/R3055. 

many low- and moderate-income 

individuals and families obtain health 

insurance—for many people, cost 

sharing is a barrier to obtaining needed 

health care.85

To support the administration of the 

cost-sharing reduction program, we set 

forth in this final rule the reductions in 

the maximum annual limitation on cost 

sharing for silver plan variations. 

Consistent with our analysis in the 2014 

and 2015 Payment Notices, we 

developed three model silver level 

QHPs and analyzed the impact on their 

AVs of the reductions described in the 

Affordable Care Act to the estimated 

2016 maximum annual limitation on 

cost sharing for self-only coverage 

($6,850). We do not believe these 

changes will result in a significant 

economic impact. 

We are also finalizing the premium 

adjustment percentage for the 2016 

benefit year. Section 156.130(e) 

provides that the premium adjustment 

percentage is the percentage (if any) by 

which the average per capita premium 

for health insurance coverage for the 

preceding calendar year exceeds such 

average per capita premium for health 

insurance for 2013. The annual 

premium adjustment percentage sets the 

rate of increase for three parameters 

detailed in the Affordable Care Act: The 

annual limitation on cost sharing 

(defined at § 156.130(a)), the required 

contribution percentage by individuals 

for minimum essential health coverage 

the Secretary may use to determine 

eligibility for hardship exemptions 

under Section 5000A of the Code, and 

the section 4980H(a) and section 

4980H(b) assessable payment amounts 

(finalized at 26 CFR 54.4980H in the 

‘‘Shared Responsibility for Employers 

Regarding Health Coverage,’’ published 

in the Federal Register on February 12, 

2014 (79 FR 8544)). We believe that the 

2016 premium adjustment percentage of 

8.316047520 percent is well within the 

parameters used in the modeling of the 

Affordable Care Act, and we do not 

expect that these proposed provisions 

will alter CBO’s January 2015 baseline 

estimates of the budget impact. 

13. Minimum Essential Coverage 

The final rule provides continued 

recognition of State high risk pools as 

minimum essential coverage. This will 

facilitate the transition of State high risk 

pool enrollees into QHPs through the 

Exchange or into other forms of 

minimum essential coverage, while 

ensuring continued access to coverage. 

It will also help ensure that this 

vulnerable population will not be 

subject to the shared responsibility 

payment during this transition, and 

thereby avoid an increase in out-ofpocket costs. 

14. Quality Improvement Strategy 

The standards requiring QHP issuers 

participating in Exchanges to establish 

and submit information regarding a 

quality improvement strategy will 

encourage continuous quality 

improvement among QHP issuers to 

help strengthen system-wide efforts to 

improve health outcomes at lower costs, 

promote provider payment models that 

link quality and value of services, allow 

for flexibility and innovation of diverse 

market-based incentive approaches, 

encourage meaningful improvements as 

well as provide regulators and 

stakeholders with information to use for 

monitoring and evaluation purposes. 

We discuss the administrative costs 

associated with submitting this 

information in the Collection of 

Information section of this proposed 

rule. 

15. Administrative Appeals 

In § 156.1220, we establish an 

administrative appeals process to 

address unresolved discrepancies for 

advance payments of the premium tax 

credit, advance payment and 

reconciliation of cost-sharing 

reductions, FFE user fees, and the 

premium stabilization programs, as well 

as any assessment of a default risk 

adjustment charge under § 153.740(b). 

We estimated the burden associated 

with the administrative appeals process 

in the 2015 Payment Notice, and in the 

Supporting Statement approved under 

OMB Control Number 0938–1155. We 

will revise the information collection 

currently approved OMB Control 

Number 0938–1155 with an October 31, 

2015 expiration date. We do not believe 

that the provisions in this final rule will 

alter the economic impact of this 

requirement that was estimated in the 

2015 Payment Notice. 

16. Medical Loss Ratio 

This final rule clarifies the treatment 

of cost-sharing reductions in the MLR 

calculations. This final rule also ensures 

timely distribution of rebates for the 

benefit of subscribers of group health 

plans not subject to ERISA. Specifically, 

the amendments to the MLR provisions 

governing the distribution of rebates to 

group enrollees in non-Federal 

governmental and other group health 

plans not subject to ERISA ensure that 

group policyholders of such plans do 

not withhold the benefit of rebates from 

the enrollees for longer than 3 months. 

This final rule also provides an 

additional option for distribution of 

rebates by such policyholders. We do 

not anticipate that these provisions will 

have any significant effect on MLR 

program estimates. This final rule also 

amends the MLR regulations to provide 

that premium in MLR and rebate 

calculations should not be reduced by 

the amount of Federal and State 

employment taxes. Based on MLR data 

for the 2013 MLR reporting year, the 

clarification regarding the treatment of 

such taxes in the MLR and rebate 

calculations may result in additional 

rebate payments to consumers of 

approximately $35 million from issuers 

that previously interpreted the MLR 

December 1, 2010 interim final rule to 

permit the reduction of premium by the 

amount of such taxes. 

D. Regulatory Alternatives Considered 

When considering the final 2016 

reinsurance payment parameters we 

also considered a set of uniform 

reinsurance payment parameters that 

would have substantially lowered the 

reinsurance cap, but believe those 

uniform reinsurance payment 

parameters would have raised the 

complexity of estimating the effects of 

reinsurance for issuers. 

We also considered expanding the 

risk corridors transitional adjustment to 

apply to early renewal plans. This 

approach would have increased the 

impact of the risk corridors adjustment 

and altered the impact analysis related 

to the risk corridors transitional 

adjustment that was published in the 

2015 Payment Notice. However, we 

decided not to propose or finalize this 

alternate policy. 

We considered for the 2016 benefit 

year requiring issuers to separate visit 

limits for rehabilitative and habilitative 

services and devices. However, we 

determined that issuers’ claims systems 

are unable to distinguish rehabilitative 

and habilitative services and devices at 

this time. Therefore, we determined that 

this requirement should not be effective 

until 2017 to allow issuers to modify 

their claims systems. 

We considered ending the good faith 

compliance policy for QHP issuers. 

However, we determined that subjecting 

QHP issuers to increased punitive 

actions in the early years of the 

Exchange would be less effective than 

working with issuers to address 

compliance issues. We also considered 


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a more expansive good faith compliance 

policy, but believe that 2 years is a 

sufficient transition period. 

We considered not suppressing QHPs 

on the FFE, but this approach would 

have resulted in less flexibility for the 

FFE to address situations that could 

affect consumers’ interests. For 

example, this alternative could cause 

disruption by requiring consumers to 

select a new QHP mid-year if their QHP 

was decertified rather than just 

suppressed for new enrollments. 

We also considered not recognizing 

vendors as an alternative avenue for FFE 

training and information verification of 

agents and brokers. However, we believe 

that recognizing vendors will make it 

easier for agents and brokers to identify 

appropriate vendors who meet HHS 

standards for training and registration. 

Additionally, we considered not 

requiring QIS reporting for QHP issuers. 

However, we decided to finalize the 

policy in this rule because we believe 

that QIS reporting will result in higher 

quality QHPs being offered in the 

Exchange and make it easier for 

consumers to select a high-quality QHP. 

E. 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 proposed 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 RFA generally defines a ‘‘small 

entity’’ as (1) a proprietary firm meeting 

the size standards of the Small Business 

Administration (SBA), (2) a not-forprofit organization that is not dominant 

in its field, or (3) a small government 

jurisdiction with a population of less 

than 50,000. States and individuals are 

not included in the definition of ‘‘small 

entity.’’ HHS uses a change in revenues 

of more than 3 to 5 percent as its 

measure of significant economic impact 

on a substantial number of small 

entities. 

In this final rule, we set forth 

standards for the risk adjustment, 

reinsurance, and risk corridors 

programs, which are intended to 

stabilize premiums as insurance market 

reforms are implemented and Exchanges 

facilitate increased enrollment. Because 

we believe that insurance firms offering 

comprehensive health insurance 

policies generally exceed the size 

thresholds for ‘‘small entities’’ 

established by the SBA, we do not 

believe that an initial regulatory 

flexibility analysis is required for such 

firms. 

For purposes of the RFA, we expect 

the following types of entities to be 

affected by this rule: 

• Health insurance issuers. 

• Group health plans. 

• Reinsurance entities. 

We believe that health insurance 

issuers and group health plans would be 

classified under the North American 

Industry Classification System (NAICS) 

code 524114 (Direct Health and Medical 

Insurance Carriers). According to SBA 

size standards, entities with average 

annual receipts of $35.5 million or less 

would be considered small entities for 

these NAICS codes. Issuers could 

possibly be classified in 621491 (HMO 

Medical Centers) and, if this is the case, 

the SBA size standard would be $32.5 

million or less. 

In this final rule, we set forth 

standards for employers that choose to 

participate in a SHOP Exchange. Until 

2017, the SHOPs are limited by statute 

to employers with at least one but not 

more than 100 employees. For this 

reason, we expect that many employers 

who would be affected by these 

requirements would meet the SBA 

standard for small entities. We do not 

believe that these provisions impose 

requirements on employers offering 

health insurance through the SHOP that 

are more restrictive than the current 

requirements on small businesses 

offering employer-sponsored insurance. 

We believe the processes that we have 

established constitute the minimum 

amount of requirements necessary to 

implement the SHOP program and 

accomplish our policy goals, and that no 

appropriate regulatory alternatives 

could be developed to further lessen the 

compliance burden. 

Based on data from MLR annual 

report submissions for the 2013 MLR 

reporting year, approximately 141 out of 

500 issuers of health insurance coverage 

nationwide had total premium revenue 

of $38.5 million or less. This estimate 

may overstate the actual number of 

small health insurance companies that 

may be affected, since 77 percent of 

these small companies belong to larger 

holding groups, and many if not all of 

these small companies are likely to have 

non-health lines of business that would 

result in their revenues exceeding $38.5 

million. Only 16 of these small entities 

owed a rebate for the 2013 reporting 

year, and none of these small entities 

are estimated to experience a rebate 

increase of more than 0.1 percent of 

total premium revenue under the MLR 

provisions of this final rule. None of the 

small entities that did not previously 

owe rebates are expected to owe rebates 

as a result of the provisions of this final 

rule. Based on data from MLR annual 

report submissions for the 2013 MLR 

reporting year, approximately 286,750 

out of 1.6 million small group 

policyholders and 13,500 out of 228,000 

large group policyholders nationwide 

were owed rebates for the 2013 

reporting year. It is uncertain how many 

of the group policyholders obtaining 

coverage from health insurance issuers 

subject to MLR are both (a) small 

entities that fall below the size 

thresholds set by the SBA for various 

industries, and (b) enrolled in group 

health plans not subject to ERISA, and 

would therefore be subject to the 

proposed provisions related to MLR. 

However, the provisions of this final 

rule only establish a deadline for the use 

of MLR rebates by certain policyholders 

similar to the deadline that is already 

followed by most group policyholders, 

and do not otherwise alter the 

requirements for rebate use by such 

policyholders. In addition, the 

clarification regarding how health 

insurance issuers must treat cost-sharing 

reductions in their MLR calculations 

simply aligns the MLR regulatory 

language with the risk corridors 

program. 

F. Unfunded Mandates 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

requires that agencies assess anticipated 

costs and benefits and take certain other 

actions before issuing a rule that 

includes any Federal mandate that may 

result in expenditures in any 1 year by 

a State, local, or Tribal governments, in 

the aggregate, or by the private sector, of 

$100 million in 1995 dollars, updated 

annually for inflation. In 2015, that 

threshold is approximately $141 

million. Although we have not been 

able to quantify all costs, the combined 

administrative cost and user fee impact 

on State, local, or Tribal governments 

and the private sector may be above the 

threshold. Earlier portions of this RIA 

constitute our UMRA analysis. 

G. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule that imposes substantial 

direct costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

Because States have flexibility in 

designing their Exchange and Exchangerelated programs, State decisions will 

ultimately influence both administrative 

expenses and overall premiums. States 

are not required to establish an 

Exchange or risk adjustment or 

reinsurance program. For States electing 

to operate an Exchange, risk adjustment 


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or reinsurance program, much of the 

initial cost of creating these programs 

will be funded by Exchange Planning 

and Establishment Grants. After 

establishment, Exchanges will be 

financially self-sustaining, with revenue 

sources at the discretion of the State. 

Current State Exchanges may charge 

user fees to issuers. 

In HHS’s view, while this rule would 

not impose substantial direct 

requirement costs on State and local 

governments, this regulation has 

Federalism implications due to direct 

effects on the distribution of power and 

responsibilities among the State and 

Federal governments relating to 

determining standards relating to health 

insurance that is offered in the 

individual and small group markets. 

Each State electing to establish an 

Exchange must adopt the Federal 

standards contained in the Affordable 

Care Act and in this rule, or have in 

effect a State law or regulation that 

implements these Federal standards. 

However, HHS anticipates that the 

Federalism implications (if any) are 

substantially mitigated because under 

the statute, States have choices 

regarding the structure and governance 

of their Exchanges and risk adjustment 

and reinsurance programs. Additionally, 

the Affordable Care Act does not require 

States to establish these programs; if a 

State elects not to establish any of these 

programs or is not approved to do so, 

HHS must establish and operate the 

programs in that State. 

In compliance with the requirement 

of Executive Order 13132 that agencies 

examine closely any policies that may 

have Federalism implications or limit 

the policy making discretion of the 

States, HHS has engaged in efforts to 

consult with and work cooperatively 

with affected States, including 

participating in conference calls with 

and attending conferences of the 

National Association of Insurance 

Commissioners, and consulting with 

State insurance officials on an 

individual basis. 

Throughout the process of developing 

this proposed rule, HHS has attempted 

to balance the States’ interests in 

regulating health insurance issuers, and 

Congress’ intent to provide access to 

Affordable Insurance Exchanges for 

consumers in every State. By doing so, 

it is HHS’s view that we have complied 

with the requirements of Executive 

Order 13132. 

H. Congressional Review Act 

This rule is subject to the 

Congressional Review Act provisions of 

the Small Business Regulatory 

Enforcement Fairness Act of 1996 (5 

U.S.C. 801, et seq.), which specifies that 

before a rule can take effect, the Federal 

agency promulgating the rule shall 

submit to each House of the Congress 

and to the Comptroller General a report 

containing a copy of the rule along with 

other specified information, and has 

been transmitted to Congress and the 

Comptroller General for review. 

List of Subjects 

45 CFR Part 144 

Health care, Health insurance, and 

Reporting and recordkeeping 

requirements. 

45 CFR Part 147 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements, and State regulation of 

health insurance. 

45 CFR Part 153 

Administrative practice and 

procedure, Adverse selection, Health 

care, Health insurance, Health records, 

Organization and functions 

(Government agencies), Premium 

stabilization, Reporting and 

recordkeeping requirements, 

Reinsurance, Risk adjustment, Risk 

corridors, Risk mitigation, State and 

local governments. 

45 CFR Part 154 

Administrative practice and 

procedure, Claims, Health care, Health 

insurance, Health plans, Penalties, 

Reporting and recordkeeping 

requirements. 

45 CFR Part 155 

Administrative practice and 

procedure, Health care access, Health 

insurance, Reporting and recordkeeping 

requirements, State and local 

governments, Required Contribution 

Percentage, Cost-sharing reductions, 

Advance payments of the premium tax 

credit, Administration and calculation 

of advance payments of the premium 

tax credit, Plan variations, Actuarial 

value. 

45 CFR Part 156 

Administrative appeals, 

Administrative practice and procedure, 

Administration and calculation of 

advance payments of the premium tax 

credit, Advertising, Advisory 

Committees, American Indian/Alaska 

Natives, Brokers, Conflict of interest, 

Consumer protection, Cost-sharing 

reductions, Grant programs-health, 

Grants administration, Health care, 

Health insurance, Health maintenance 

organization (HMO), Health records, 

Hospitals, Individuals with disabilities, 

Loan programs-health, Organization and 

functions (Government agencies), 

Medicaid, Payment and collections 

reports, Public assistance programs, 

Reporting and recordkeeping 

requirements, State and local 

governments, Sunshine Act, Technical 

assistance, Women, and Youth. 

45 CFR Part 158 

Administrative practice and 

procedure, Claims, Health care, Health 

insurance, Health plans, Medical loss 

ratio, Penalties, Premium revenues, 

Rebating Reporting and recordkeeping 

requirements. 

For the reasons set forth in the 

preamble, the Department of Health and 

Human Services amends 45 CFR parts 

144, 147, 153, 154, 155, 156, and 158 as 

set forth below. 

PART 144—REQUIREMENTS 

RELATING TO HEALTH INSURANCE 

COVERAGE 

■ 1. 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. 

■ 2. Section 144.103 is amended by 

revising the definitions of ‘‘Plan’’ and 

‘‘State’’ to read as follows: 

§ 144.103 Definitions. 

* * * * * 

Plan means, with respect to an issuer 

and a product, the pairing of the health 

insurance coverage benefits under the 

product with a particular cost-sharing 

structure, provider network, and service 

area. The product comprises all plans 

offered with those characteristics and 

the combination of the service areas for 

all plans offered within a product 

constitutes the total service area of the 

product. With respect to a plan that has 

been modified at the time of coverage 

renewal consistent with § 147.106 of 

this subchapter— 

(1) The plan will be considered to be 

the same plan if it: 

(i) Has the same cost-sharing structure 

as before the modification, or any 

variation in cost sharing is solely related 

to changes in cost or utilization of 

medical care, or is to maintain the same 

metal tier level described in sections 

1302(d) and (e) of the Affordable Care 

Act; 

(ii) Continues to cover a majority of 

the same service area; and 

(iii) Continues to cover a majority of 

the same provider network. For this 

purpose, the plan’s provider network on 

the first day of the plan year is 

compared with the plan’s provider 


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network on the first day of the 

preceding plan year (as applicable). 

(2) The plan will not fail to be treated 

as the same plan to the extent the 

modification(s) are made uniformly and 

solely pursuant to applicable Federal 

and State requirements if— 

(i) The modification is made within a 

reasonable time period after the 

imposition or modification of the 

Federal or State requirement; 

(ii) The modification is directly 

related to the imposition or 

modification of the Federal or State 

requirement. 

(3) A State may permit greater 

changes to the cost-sharing structure, or 

designate a lower threshold for 

maintenance of the same provider 

network or service area for a plan to still 

be considered the same plan. 

* * * * * 

State means each of the 50 States, the 

District of Columbia, Puerto Rico, the 

Virgin Islands, Guam, American Samoa, 

and the Northern Mariana Islands; 

except that for purposes of part 147, the 

term does not include Puerto Rico, the 

Virgin Islands, Guam, American Samoa, 

and the Northern Mariana Islands. 

* * * * * 

PART 147—HEALTH INSURANCE 

REFORM REQUIREMENTS FOR THE 

GROUP AND INDIVIDUAL HEALTH 

INSURANCE MARKETS 

■ 3. The authority citation for part 147 

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), as amended. 

■ 4. Section 147.104 is amended by— 

■ a. Revising paragraphs (b)(1)(i)(C), 

(b)(2), and (b)(4). 

■ b. Redesignating paragraphs (f) 

through (h) as paragraphs (g) through (i), 

respectively. 

■ c. Adding new paragraph (f). 

The revisions and addition read as 

follows: 

§ 147.104 Guaranteed availability of 

coverage. 

* * * * * 

(b) * * * 

(1) * * * 

(i) * * * 

(C) With respect to coverage in the 

small group market, and in the large 

group market if such coverage is offered 

through a Small Business Health 

Options Program (SHOP) in a State, 

coverage must become effective 

consistent with the dates described in 

§ 155.725 of this subchapter, except as 

provided in paragraph (b)(1)(iii) of this 

section. 

* * * * * 

(2) Limited open enrollment periods. 

A health insurance issuer in the 

individual market must provide a 

limited open enrollment period for the 

events described in § 155.420(d) of this 

subchapter, excluding § 155.420(d)(3) of 

this subchapter (concerning citizenship 

status), § 155.420(d)(8) of this 

subchapter (concerning Indians), and 

§ 155.420(d)(9) of this subchapter 

(concerning exceptional circumstances). 

* * * * * 

(4) Length of enrollment periods. (i) In 

the group market, enrollees must be 

provided 30 calendar days after the date 

of the qualifying event described in 

paragraph (b)(3) of this section to elect 

coverage. 

(ii) In the individual market, enrollees 

must be provided 60 calendar days after 

the date of an event described in 

paragraph (b)(2) and (3) of this section 

to elect coverage, as well as 60 calendar 

days before certain triggering events as 

provided for in § 155.420(c)(2) of this 

subchapter. 

* * * * * 

(f) Calendar year plans. An issuer that 

offers coverage in the individual market, 

or in a merged market in a State that has 

elected to merge the individual market 

and small group market risk pools in 

accordance with section 1312(c)(3) of 

the Affordable Care Act, must ensure 

that such coverage is offered on a 

calendar year basis with a policy year 

ending on December 31 of each calendar 

year. 

* * * * * 

■ 5. Section 147.106 is amended by— 

■ a. Redesignating paragraphs (g) 

through (j) as paragraphs (h) through (k), 

respectively. 

■ b. Adding new paragraph (g). 

The addition reads as follows: 

§ 147.106 Guaranteed renewability of 

coverage. 

* * * * * 

(g) Notification of change of 

ownership. If an issuer of a QHP, a plan 

otherwise subject to risk corridors, a risk 

adjustment covered plan, or a 

reinsurance-eligible plan experiences a 

change of ownership, as recognized by 

the State in which the plan is offered, 

the issuer must notify HHS in a manner 

specified by HHS, by the latest of— 

(1) The date the transaction is entered 

into; or 

(2) The 30th day prior to the effective 

date of the transaction. 

* * * * * 

PART 153—STANDARDS RELATED TO 

REINSURANCE, RISK CORRIDORS, 

AND RISK ADJUSTMENT UNDER THE 

AFFORDABLE CARE ACT 

■ 6. The authority citation for part 153 

continues to read as follows: 

Authority: Secs. 1311, 1321, 1341–1343, 

Pub. L. 111–148, 24 Stat. 119. 

■ 7. Section 153.100 is amended by 

revising paragraph (c) to read as follows: 

§ 153.100 State notice of benefit and 

payment parameters. 

* * * * * 

(c) State notice deadlines. If a State is 

required to publish an annual State 

notice of benefit and payment 

parameters for a particular benefit year, 

it must do so by the later of March 1 of 

the calendar year prior to the applicable 

benefit year, or by the 30th day 

following the publication of the final 

HHS notice of benefit and payment 

parameters for that benefit year. 

* * * * * 

■ 8. Section 153.400 is amended by 

revising paragraph (a)(1)(iii) and adding 

paragraph (c) to read as follows: 

§ 153.400 Reinsurance contribution funds. 

(a) * * * 

(1) * * * 

(iii) Such plan or coverage is 

expatriate health coverage, as defined by 

the Secretary, or for the 2015 and 2016 

benefit years only, is a self-insured 

group health plan with respect to which 

enrollment is limited to participants 

who reside outside of their home 

country for at least 6 months of the plan 

year, and any covered dependents; or 

* * * * * 

(c) Determination of a debt. Any 

amount owed to the Federal government 

by a self-insured group health plan 

(including a group health plan that is 

partially self-insured and partially 

insured, where the health insurance 

coverage does not constitute major 

medical coverage) and its affiliates for 

reinsurance is a determination of a debt. 

■ 9. Section 153.405 is amended by— 

■ a. Revising paragraphs (b), (c)(1), (d) 

introductory text, (g)(4)(i) introductory 

text, and (g)(4)(ii) introductory text. 

■ b. Removing paragraph (c)(2). 

■ c. Redesignating paragraph (c)(3) as 

paragraph (c)(2). 

■ d. Revising newly designated 

paragraph (c)(2). 

The revisions read as follows: 

§ 153.405 Calculation of reinsurance 

contributions. 

* * * * * 

(b) Annual enrollment count. No later 

than November 15 of benefit year 2014, 


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2015, or 2016, as applicable, or, if such 

date is not a business day, the next 

business day, a contributing entity must 

submit an annual enrollment count of 

the number of covered lives of 

reinsurance contribution enrollees for 

the applicable benefit year to HHS. The 

count must be determined as specified 

in paragraphs (d) through (g) of this 

section, as applicable. 

(c) * * * 

(1) Following submission of the 

annual enrollment count described in 

paragraph (b) of this section, HHS will 

notify the contributing entity of the 

reinsurance contribution amount 

allocated to reinsurance payments, 

administrative expenses, and the U.S. 

Treasury to be paid for the applicable 

benefit year. 

(2) A contributing entity must remit 

reinsurance contributions to HHS no 

later than January 15, 2015, 2016, or 

2017, as applicable, or, if such date is 

not a business day, the next business 

day, if making a combined contribution 

or the first payment of the bifurcated 

contribution, and no later than 

November 15, 2015, 2016, or 2017, as 

applicable, or, if such date is not a 

business day, the next business day, if 

making the second payment of the 

bifurcated contribution. 

(d) Procedures for counting covered 

lives for health insurance issuers. A 

health insurance issuer must use the 

same method in a benefit year for all of 

its health insurance plans in the State 

(including both the individual and 

group markets) for which reinsurance 

contributions are required. To 

determine the number of covered lives 

of reinsurance contribution enrollees 

under all health insurance plans in a 

State for a benefit year, a health 

insurance issuer must use one of the 

following methods: 

* * * * * 

(g) * * * 

(4) * * * 

(i) Multiple group health plans 

including an insured plan. If at least one 

of the multiple plans is an insured plan, 

the average number of covered lives of 

reinsurance contribution enrollees must 

be calculated using one of the methods 

specified in either paragraph (d)(1) or 

(2) of this section, applied across the 

multiple plans as a whole. The 

following information must be 

determined by the plan sponsor: 

* * * * * 

(ii) Multiple group health plans not 

including an insured plan. If each of the 

multiple plans is a self-insured group 

health plan, the average number of 

covered lives of reinsurance 

contribution enrollees must be 

calculated using one of the methods 

specified either in paragraph (e)(1) or (2) 

of this section, applied across the 

multiple plans as a whole. The 

following information must be 

determined by the plan sponsor: 

* * * * * 

■ 10. Section 153.500 is amended by 

revising the definition of ‘‘Adjustment 

percentage’’ to read as follows: 

§ 153.500 Definitions. 

* * * * * 

Adjustment percentage means, with 

respect to a QHP: 

(1) For benefit year 2014— 

(i) For a QHP offered by a health 

insurance issuer with allowable costs of 

at least 80 percent of after-tax premium 

in a transitional State, the percentage 

specified by HHS for such QHPs in the 

transitional State; and otherwise 

(ii) Zero percent. 

(2) For benefit year 2015, for a QHP 

offered by a health insurance issuer in 

any State, 2 percent. 

(3) For benefit year 2016— 

(i) For a QHP offered by a health 

insurance issuer with allowable costs of 

at least 80 percent of after-tax premium, 

the percentage specified by HHS; and 

otherwise 

(ii) Zero percent. 

* * * * * 

■ 11. Section 153.740 is amended by 

revising paragraph (a) and adding 

paragraph (c) to read as follows: 

§ 153.740 Failure to comply with HHSoperated risk adjustment and reinsurance 

data requirements. 

(a) Enforcement actions. If an issuer of 

a risk adjustment covered plan or 

reinsurance-eligible plan fails to 

establish a dedicated distributed data 

environment in a manner and timeframe 

specified by HHS; fails to provide HHS 

with access to the required data in such 

environment in accordance with 

§ 153.700(a) or otherwise fails to comply 

with the requirements of §§ 153.700 

through 153.730; fails to adhere to the 

reinsurance data submission 

requirements set forth in § 153.420; or 

fails to adhere to the risk adjustment 

data submission and data storage 

requirements set forth in §§ 153.610 

through 153.630, HHS may impose civil 

money penalties in accordance with the 

procedures set forth in § 156.805 of this 

subchapter. Civil monetary penalties 

will not be imposed for non-compliance 

with these requirements during the 2014 

or 2015 calendar years under this 

paragraph if the issuer has made good 

faith efforts to comply with these 

requirements. 

* * * * * 

(c) Information sharing. HHS may 

consult with and share information 

about issuers of risk adjustment covered 

plans and reinsurance-eligible plans 

with other Federal and State regulatory 

and enforcement entities to the extent 

the consultation or information is 

necessary for purposes of Federal or 

State oversight and enforcement 

activities. 

PART 154—HEALTH INSURANCE 

ISSUER RATE INCREASES: 

DISCLOSURE AND REVIEW 

REQUIREMENTS 

■ 12. The authority citation for part 154 

continues to read as follows: 

Authority: Section 2794 of the Public 

Health Service Act (42 U.S.C. 300gg–94). 

■ 13. Section 154.102 is amended by— 

■ a. Revising the definitions of 

‘‘Individual market’’, ‘‘Rate increase’’, 

‘‘Small group market’’, and ‘‘State’’. 

■ b. Adding a definition of ‘‘Plan’’ in 

alphabetical order. 

The revisions and addition read as 

follows: 

§ 154.102 Definitions. 

* * * * * 

Individual market has the meaning 

given the term in § 144.103 of this 

subchapter. 

* * * * * 

Plan has the meaning given the term 

in § 144.103 of this subchapter. 

* * * * * 

Rate increase means, with respect to 

rates filed— 

(1) For coverage effective prior to 

January 1, 2017, any increase of the 

rates for a specific product offered in the 

individual or small group market. 

(2) For coverage effective on or after 

January 1, 2017, any increase of the 

rates for a specific product or plan 

within a product offered in the 

individual or small group market. 

* * * * * 

Small group market has the meaning 

given the term in § 144.103 of this 

subchapter. 

State means each of the 50 States and 

the District of Columbia. 

* * * * * 

■ 14. Section 154.200 is amended by 

revising paragraphs (a) and (c) to read as 

follows: 

§ 154.200 Rate increases subject to 

review. 

(a) A rate increase filed in a State, or 

effective in a State that does not require 

a rate increase to be filed, is subject to 

review if: 

(1) The rate increase is 10 percent or 

more applicable to a 12-month period 


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that begins on January 1, as calculated 

under paragraph (c) of this section; or 

(2) The rate increase meets or exceeds 

a State-specific threshold applicable to 

a 12-month period that begins on 

January 1, as calculated under 

paragraph (c) of this section, determined 

by the Secretary. A State-specific 

threshold shall be based on factors 

impacting rate increases in a State to the 

extent that the data relating to such 

State-specific factors is available by 

August 1. States interested in proposing 

a State-specific threshold for approval 

are required to submit a proposal to the 

Secretary by August 1. 

* * * * * 

(c) A rate increase meets or exceeds 

the applicable threshold set forth in 

paragraph (a) of this section if— 

(1) For rates filed for coverage 

beginning before January 1, 2017, the 

average increase for all enrollees 

weighted by premium volume meets or 

exceeds the applicable threshold. 

(2) For rates filed for coverage 

beginning on or after January 1, 2017, an 

increase in the plan-adjusted index rate 

(as described in § 156.80 of this 

subchapter) for any plan within the 

product meets or exceeds the applicable 

threshold. 

* * * * * 

■ 15. Section 154.215 is amended by 

revising paragraph (a) to read as follows: 

§ 154.215 Submission of rate filing 

justification. 

(a) If any plan within a product is 

subject to a rate increase, a health 

insurance issuer must submit a Rate 

Filing Justification for all products in 

the single risk pool, including new or 

discontinuing products, on a form and 

in a manner prescribed by the Secretary. 

* * * * * 

■ 16. Section 154.220 is revised to read 

as follows: 

§ 154.220 Timing of providing the rate 

filing justification. 

A health insurance issuer must 

submit a Rate Filing Justification for all 

rate increases that are filed in a State, or 

effective in a State that does not require 

the rate increase to be filed, as follows: 

(a) For rate increases for coverage 

effective prior to January 1, 2016: 

(1) If a State requires that a proposed 

rate increase be filed with the State 

prior to the implementation of the rate, 

the health insurance issuer must submit 

to CMS and the applicable State the 

Rate Filing Justification on the date on 

which the health insurance issuer 

submits the proposed rate increase to 

the State. 

(2) For all other States, the health 

insurance issuer must submit to CMS 

and the State the Rate Filing 

Justification prior to the implementation 

of the rate increase. 

(b) For rate increases for coverage 

effective on or after January 1, 2016, the 

health insurance issuer must submit to 

CMS and the applicable State a Rate 

Filing Justification by the earlier of the 

following: 

(1) The date by which the State 

requires that a proposed rate increase be 

filed with the State; or 

(2) The date specified in guidance by 

the Secretary. 

■ 17. Section 154.301 is amended by 

revising paragraph (b) to read as follows: 

§ 154.301 CMS’s determinations of 

Effective Rate Review Programs. 

* * * * * 

(b) Public disclosure and input. (1) In 

addition to satisfying the provisions in 

paragraph (a) of this section, a State 

with an Effective Rate Review Program 

must provide: 

(i) For proposed rate increases subject 

to review, access from its Web site to at 

least the information contained in Parts 

I, II, and III of the Rate Filing 

Justification that CMS makes available 

on its Web site (or provide CMS’s Web 

address for such information), and have 

a mechanism for receiving public 

comments on those proposed rate 

increases, no later than the date 

specified in guidance by the Secretary. 

(ii) Beginning with rates filed for 

coverage effective on or after January 1, 

2016, for all final rate increases 

(including those not subject to review), 

access from its Web site to at least the 

information contained in Parts I, II, and 

III of the Rate Filing Justification (as 

applicable) that CMS makes available on 

its Web site (or provide CMS’s Web 

address for such information), no later 

than the first day of the annual open 

enrollment period in the individual 

market for the applicable calendar year. 

(2) If a State intends to make the 

information in paragraph (b)(1)(i) of this 

section available to the public prior to 

the date specified by the Secretary, or if 

it intends to make the information in 

paragraph (b)(1)(ii) of this section 

available to the public prior to the first 

day of the annual open enrollment 

period in the individual market for the 

applicable calendar year, the State must 

notify CMS in writing, no later than 30 

days prior to the date it intends to make 

the information public, of its intent to 

do so and the date it intends to make the 

information public. 

(3) A State with an Effective Rate 

Review Program must ensure the 

information in paragraphs (b)(1)(i) and 

(ii) of this section is made available to 

the public at a uniform time for all 

proposed and final rate increases, as 

applicable, in the relevant market 

segment and without regard to whether 

coverage is offered through or outside 

an Exchange. 

* * * * * 

PART 155—EXCHANGE 

ESTABLISHMENT STANDARDS AND 

OTHER RELATED STANDARDS 

UNDER THE AFFORDABLE CARE ACT 

■ 18. The authority citation for part 155 

continues to read as follows: 

Authority: Title I of the Affordable Care 

Act, sections 1301, 1302, 1303, 1304, 1311, 

1312, 1313, 1321, 1322, 1331, 1332, 1334, 

1402, 1411, 1412, 1413, Pub. L. 111–148, 124 

Stat. 119 (42 U.S.C. 18021–18024, 18031– 

18033, 18041–18042, 18051, 18054, 18071, 

and 18081–18083). 

■ 19. Section 155.20 is amended by— 

■ a. Revising paragraph (2) of the 

definition of ‘‘Applicant.’’ 

■ b. Revising the definitions of 

‘‘Enrollee’’ and ‘‘Qualified employee.’’ 

The revisions read as follows: 

§ 155.20 Definitions. 

* * * * * 

Applicant * * * 

(2) An employer, employee, or former 

employee seeking eligibility for 

enrollment in a QHP through the SHOP 

for himself or herself, and, if the 

qualified employer offers dependent 

coverage through the SHOP, seeking 

eligibility to enroll his or her 

dependents in a QHP through the 

SHOP. 

* * * * * 

Enrollee means a qualified individual 

or qualified employee enrolled in a 

QHP. Enrollee also means the 

dependent of a qualified employee 

enrolled in a QHP through the SHOP, 

and any other person who is enrolled in 

a QHP through the SHOP, consistent 

with applicable law and the terms of the 

group health plan. Provided that at least 

one employee enrolls in a QHP through 

the SHOP, enrollee also means a 

business owner enrolled in a QHP 

through the SHOP, or the dependent of 

a business owner enrolled in a QHP 

through the SHOP. 

* * * * * 

Qualified employee means any 

employee or former employee of a 

qualified employer who has been 

offered health insurance coverage by 

such qualified employer through the 

SHOP for himself or herself and, if the 

qualified employer offers dependent 

coverage through the SHOP, for his or 

her dependents. 

* * * * * 

■ 20. Section 155.205 is amended by 

revising paragraphs (c)(2)(i) and (iii) and 


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adding paragraph (c)(2)(iv) to read as 

follows: 

§ 155.205 Consumer assistance tools and 

programs of an Exchange. 

* * * * * 

(c) * * * 

(2) * * * 

(i) For all entities subject to this 

standard, oral interpretation. 

(A) For Exchanges and QHP issuers, 

this standard also includes telephonic 

interpreter services in at least 150 

languages. 

(B) For an agent or broker subject to 

§ 155.220(c)(3)(i), beginning November 

1, 2015, or when such entity been 

registered with the Exchange for at least 

1 year, whichever is later, this standard 

also includes telephonic interpreter 

services in at least 150 languages. 

* * * * * 

(iii) For all entities subject to this 

standard, taglines in non-English 

languages indicating the availability of 

language services. 

(A) For Exchanges and QHP issuers, 

beginning no later than the first day of 

the individual market open enrollment 

period for the 2017 benefit year, this 

standard also includes taglines on Web 

site content and any document that is 

critical for obtaining health insurance 

coverage or access to health care 

services through a QHP for qualified 

individuals, applicants, qualified 

employers, qualified employees, or 

enrollees. A document is deemed to be 

critical for obtaining health insurance 

coverage or access to health care 

services through a QHP if it is required 

to be provided by law or regulation to 

a qualified individual, applicant, 

qualified employer, qualified employee, 

or enrollee. Such taglines must indicate 

the availability of language services in at 

least the top 15 languages spoken by the 

limited English proficient population of 

the relevant State, as determined in 

guidance published by the Secretary. 

(B) For an agent or broker subject to 

§ 155.220(c)(3)(i), beginning on the first 

day of the individual market open 

enrollment period for the 2017 benefit 

year, or when such entity has been 

registered with the Exchange for at least 

1 year, whichever is later, this standard 

also includes taglines on Web site 

content and any document that is 

critical for obtaining health insurance 

coverage or access to health care 

services through a QHP for qualified 

individuals, applicants, qualified 

employers, qualified employees, or 

enrollees. A document is deemed to be 

critical for obtaining health insurance 

coverage or access to health care 

services through a QHP if it is required 

to be provided by law or regulation to 

a qualified individual, applicant, 

qualified employer, qualified employee, 

or enrollee. Such taglines must indicate 

the availability of language services in at 

least the top 15 languages spoken by the 

limited English proficient population of 

the relevant State, as determined in 

guidance published by the Secretary. 

(iv) For Exchanges, QHP issuers, and 

an agent or broker subject to 

§ 155.220(c)(3)(i), Web site translations. 

(A) For an Exchange, beginning no 

later than the first day of the individual 

market open enrollment period for the 

2017 benefit year, content that is 

intended for qualified individuals, 

applicants, qualified employers, 

qualified employees, or enrollees on a 

Web site that is maintained by the 

Exchange must be translated into any 

non-English language that is spoken by 

a limited English proficient population 

that reaches 10 percent or more of the 

population of the relevant State, as 

determined in guidance published by 

the Secretary. 

(B) For a QHP issuer, beginning no 

later than the first day of the individual 

market open enrollment period for the 

2017 benefit year, if the content of a 

Web site maintained by the QHP issuer 

is critical for obtaining health insurance 

coverage or access to health care 

services through a QHP, within the 

meaning of § 156.250 of this subchapter, 

it must be translated into any nonEnglish language that is spoken by a 

limited English proficient population 

that reaches 10 percent or more of the 

population of the relevant State, as 

determined in guidance published by 

the Secretary. 

(C) For an agent or broker subject to 

§ 155.220(c)(3)(i), beginning on the first 

day of the individual market open 

enrollment period for the 2017 benefit 

year, or when such entity has been 

registered with the Exchange for at least 

1 year, whichever is later, content that 

is intended for qualified individuals, 

applicants, qualified employers, 

qualified employees, or enrollees on a 

Web site that is maintained by the agent 

or broker must be translated into any 

non-English language that is spoken by 

a limited English proficient population 

that reaches 10 percent or more of the 

population of the relevant State, as 

determined in guidance published by 

the Secretary. 

* * * * * 

■ 21. Section 155.215 is amended by 

revising paragraph (h) to read as 

follows: 

§ 155.215 Standards applicable to 

Navigators and Non-Navigator Assistance 

Personnel carrying out consumer 

assistance functions under §§ 155.205(d) 

and (e) and 155.210 in a Federally-facilitated 

Exchange and to Non-Navigator Assistance 

Personnel funded through an Exchange 

Establishment Grant. 

* * * * * 

(h) Physical presence. All nonNavigator entities carrying out 

consumer assistance functions under 

§ 155.205(d) and (e) in an Exchange 

operated by HHS during the exercise of 

its authority under § 155.105(f) and all 

non-Navigator entities funded through 

an Exchange Establishment Grant under 

section 1311(a) of the Affordable Care 

Act must maintain a physical presence 

in the Exchange service area, so that 

face-to-face assistance can be provided 

to applicants and enrollees. In a 

Federally-facilitated Exchange, no 

individual or entity shall be ineligible to 

operate as a non-Navigator entity or as 

non-Navigator assistance personnel 

solely because its principal place of 

business is outside of the Exchange 

service area. 

* * * * * 

■ 22. Section 155.220 is amended by 

revising paragraph (i) to read as follows: 

§ 155.220 Ability of States to permit agents 

and brokers to assist qualified individuals, 

qualified employers, or qualified employees 

enrolling in QHPs. 

* * * * * 

(i) Use of agents’ and brokers’ Internet 

Web sites for SHOP. For plan years 

beginning on or after January 1, 2015, in 

States that permit this activity under 

State law, a SHOP may permit agents 

and brokers to use an Internet Web site 

to assist qualified employers and 

facilitate enrollment of enrollees in a 

QHP through the Exchange, under 

paragraph (c)(3) of this section. 

■ 23. Section 155.222 is added to read 

as follows: 

§ 155.222 Standards for HHS-approved 

vendors of Federally-facilitated Exchange 

training and information verification for 

agents and brokers. 

(a) Application for approval. (1) A 

vendor must be approved by HHS, in a 

form and manner to be determined by 

HHS, in order to have its training and 

information verification program 

recognized for agents and brokers 

assisting with or facilitating enrollment 

in individual market or SHOP coverage 

through the Exchanges consistent with 

§ 155.220. 

(2) As part of the training program, 

the vendor must require agents and 

brokers to provide identifying 

information and proof of valid State 

licensure, and successfully complete the 


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required curriculum and identity 

proofing. 

(3) HHS will approve vendors on an 

annual basis for a given plan year, and 

each vendor must submit an application 

for each year that approval is sought. 

(b) Standards. To be approved by 

HHS and maintain its status as an 

approved vendor for plan year 2016 and 

future plan years, a vendor must meet 

each of the following standards: 

(1) Submit a complete and accurate 

application by the deadline established 

by HHS, which includes demonstration 

of the following: 

(i) Prior experience with successfully 

conducting online training, verification 

of valid State license, as well as 

providing technical support to a large 

customer base; and 

(ii) The ability to conduct identity 

proofing. 

(2) Adhere to HHS specifications for 

content, format, and delivery of training 

and information verification, which 

include offering continuing education 

units (CEUs) for at least five States in 

which a Federally-facilitated Exchange 

is operating. 

(3) Collect, store, and share with HHS 

all data from agent and broker users of 

the vendor’s training and information 

verification in a manner, format, and 

frequency specified by HHS, and protect 

the data in accordance with applicable 

privacy and security laws and 

regulations. 

(4) Execute an agreement with HHS, 

in a form and manner to be determined 

by HHS, which requires the vendor to 

comply with HHS guidelines for 

interfacing with HHS data systems, the 

implementation of the training and 

information verification processes, and 

the use of all data collected. 

(5) Permit any individual who holds 

a valid State license or equivalent State 

authority to sell health insurance 

products to access the vendor’s training 

and information verification. 

(c) Approved list. A list of approved 

vendors will be published on an HHS 

Web site. 

(d) Monitoring. HHS may periodically 

monitor and audit vendors approved 

under this subpart, and their records 

related to the training and information 

verification functions described in this 

section, to ensure ongoing compliance 

with the standards in paragraph (b) of 

this section. If HHS determines that an 

HHS-approved vendor is not in 

compliance with the standards required 

in paragraph (b) of this section, the 

vendor may be removed from the 

approved list described in paragraph (c) 

of this section and may be required by 

HHS to cease performing the training 

and information verification functions 

described under this subpart. 

(e) Appeals. A vendor that is not 

approved by HHS after submitting the 

application described in paragraph (a) of 

this section, or an approved vendor 

whose agreement is revoked under 

paragraph (d) of this section, may 

appeal HHS’s decision by notifying HHS 

in writing within 15 days from receipt 

of the notification of not being approved 

and submitting additional 

documentation demonstrating how the 

vendor meets the standards in 

paragraph (b) of this section and (if 

applicable) the terms of its agreement 

with HHS. HHS will review the 

submitted documentation and make a 

final approval determination within 30 

days from receipt of the additional 

documentation. 

■ 24. Section 155.400 is amended by 

revising paragraph (e) to read as follows: 

§ 155.400 Enrollment of qualified 

individuals into QHPs. 

* * * * * 

(e) Premium payment. Exchanges 

may, and the Federally-facilitated 

Exchange will, require payment of the 

first month’s premium to effectuate an 

enrollment. Exchanges may, and the 

Federally-facilitated Exchange will, 

establish a standard policy for setting 

premium payment deadlines: 

(1) In a Federally-facilitated 

Exchange, for first month (or binder 

payment) premiums: 

(i) For coverage being effectuated 

under regular coverage effective dates, 

as provided for in §§ 155.410(f) and 

155.420(b)(1), premium payment 

deadlines must be no earlier than the 

coverage effective date, but no later than 

30 calendar days from the coverage 

effective date; and 

(ii) For coverage being effectuated 

under special effective dates, as 

provided in § 155.420(b)(2), premium 

payment deadlines must be 30 calendar 

days from the date the issuer receives 

the enrollment transaction. 

(2) [Reserved] 

* * * * * 

■ 25. Section 155.410 is amended by 

revising paragraphs (e) and (f) to read as 

follows: 

§ 155.410 Initial and annual open 

enrollment periods. 

* * * * * 

(e) Annual open enrollment period. 

(1) For the benefit year beginning on 

January 1, 2015, the annual open 

enrollment period begins on November 

15, 2014, and extends through February 

15, 2015. 

(2) For the benefit year beginning on 

January 1, 2016, the annual open 

enrollment period begins on November 

1, 2015 and extends through January 31, 

2016. 

(f) Effective date. (1) For the benefit 

year beginning on January 1, 2015, the 

Exchange must ensure coverage is 

effective— 

(i) January 1, 2015, for QHP selections 

received by the Exchange on or before 

December 15, 2014. 

(ii) February 1, 2015, for QHP 

selections received by the Exchange 

from December 16, 2014 through 

January 15, 2015. 

(iii) March 1, 2015, for QHP selections 

received by the Exchange from January 

16, 2015 through February 15, 2015. 

(2) For the benefit year beginning on 

January 1, 2016, the Exchange must 

ensure that coverage is effective— 

(i) January 1, 2016, for QHP selections 

received by the Exchange on or before 

December 15, 2015. 

(ii) February 1, 2016, for QHP 

selections received by the Exchange 

from December 16, 2015 through 

January 15, 2016. 

(iii) March 1, 2016, for QHP selections 

received by the Exchange from January 

16, 2016 through January 31, 2016. 

* * * * * 

■ 26. Section 155.420 is amended by— 

■ a. Revising paragraphs (b)(2)(i), 

(b)(2)(iv), (c)(2), (c)(3), (d)(1)(ii), (d)(2), 

and (d)(4). 

■ b. Adding paragraphs (b)(2)(v), 

(b)(2)(vi), and (d)(6)(iv). 

■ c. Removing paragraph (d)(10). 

The revisions and additions read as 

follows: 

§ 155.420 Special enrollment periods. 

* * * * * 

(b) * * * 

(2) * * * 

(i) In the case of birth, adoption, 

placement for adoption, or placement in 

foster care as described in paragraph 

(d)(2)(i) of this section, the Exchange 

must ensure that coverage is effective 

for a qualified individual or enrollee on 

the date of birth, adoption, placement 

for adoption, or placement in foster 

care, or it may permit the qualified 

individual or enrollee to elect a 

coverage effective date of the first of the 

month following the date of birth, 

adoption, placement for adoption, or 

placement in foster care, or in 

accordance with paragraph (b)(1) of this 

section. If the Exchange permits the 

qualified individual or enrollee to elect 

a coverage effective date of either the 

first of the month following the date of 

birth, adoption, placement for adoption 

or placement in foster care or in 

accordance with paragraph (b)(1) of this 

section, the Exchange must ensure 


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coverage is effective on the date duly 

selected by the qualified individual or 

enrollee. 

* * * * * 

(iv) If a consumer loses coverage as 

described in paragraph (d)(1) or 

(d)(6)(iii), or gains access to a new QHP 

as described in paragraph (d)(7) of this 

section, if the plan selection is made on 

or before the day of the triggering event, 

the Exchange must ensure that the 

coverage effective date is on the first day 

of the month following the loss of 

coverage. If the plan selection is made 

after the day of the triggering event, the 

Exchange must ensure that coverage is 

effective in accordance with paragraph 

(b)(1) of this section or on the first day 

of the following month, at the option of 

the Exchange. 

(v) In the case of a court order as 

described in paragraph (d)(2)(i) of this 

section, the Exchange must ensure that 

coverage is effective for a qualified 

individual or enrollee on the date the 

court order is effective, or it may permit 

the qualified individual or enrollee to 

elect a coverage effective date in 

accordance with paragraph (b)(1) of this 

section. If the Exchange permits the 

qualified individual or enrollee to elect 

a coverage effective date in accordance 

with paragraph (b)(1) of this section, the 

Exchange must ensure coverage is 

effective on the date duly selected by 

the qualified individual or enrollee. 

(vi) If an enrollee or his or her 

dependent dies as described in 

paragraph (d)(2)(ii) of this section, the 

Exchange must ensure that coverage is 

effective on the first day of the month 

following the plan selection, or it may 

permit the enrollee or his or her 

dependent to elect a coverage effective 

date in accordance with paragraph (b)(1) 

of this section. If the Exchange permits 

the enrollee or his or her dependent to 

elect a coverage effective date in 

accordance with paragraph (b)(1) of this 

section, the Exchange must ensure 

coverage is effective on the date duly 

selected by the enrollee or his or her 

dependent. 

* * * * * 

(c) * * * 

(2) Advanced availability. A qualified 

individual or his or her dependent who 

is described in paragraph (d)(1) or 

(d)(6)(iii) or, beginning on January 1, 

2017 or earlier at the option of the 

Exchange, paragraph (d)(7) of this 

section, has 60 days before and after the 

triggering event to select a QHP. Prior to 

January 1, 2017, a qualified individual 

or his or her dependent who is 

described in paragraph (d)(7) of this 

section may select a QHP in accordance 

with paragraph (c)(1) of this section. 

(3) Special rule. In the case of a 

qualified individual or enrollee who is 

eligible for a special enrollment period 

as described in paragraphs (d)(4), (5), or 

(9) of this section, the Exchange may 

define the length of the special 

enrollment period as appropriate based 

on the circumstances of the special 

enrollment period, but in no event may 

the length of the special enrollment 

period exceed 60 days. 

(d) * * * 

(1) * * * 

(ii) Is enrolled in any non-calendar 

year group health plan or individual 

health insurance coverage, even if the 

qualified individual or his or her 

dependent has the option to renew such 

coverage. The date of the loss of 

coverage is the last day of the plan or 

policy year; 

* * * * * 

(2)(i) The qualified individual gains a 

dependent or becomes a dependent 

through marriage, birth, adoption, 

placement for adoption, or placement in 

foster care, or through a child support 

order or other court order. 

(ii) At the option of the Exchange, the 

enrollee loses a dependent or is no 

longer considered a dependent through 

divorce or legal separation as defined by 

State law in the State in which the 

divorce or legal separation occurs, or if 

the enrollee, or his or her dependent, 

dies. 

* * * * * 

(4) The qualified individual’s or his or 

her dependent’s, enrollment or nonenrollment in a QHP is unintentional, 

inadvertent, or erroneous and is the 

result of the error, misrepresentation, 

misconduct, or inaction of an officer, 

employee, or agent of the Exchange or 

HHS, its instrumentalities, or a nonExchange entity providing enrollment 

assistance or conducting enrollment 

activities. For purposes of this 

provision, misconduct includes the 

failure to comply with applicable 

standards under this part, part 156 of 

this subchapter, or other applicable 

Federal or State laws as determined by 

the Exchange. 

* * * * * 

(6) * * * 

(iv) A qualified individual in a nonMedicaid expansion State who was 

previously ineligible for advance 

payments of the premium tax credit 

solely because of a household income 

below 100 percent of the FPL, who was 

ineligible for Medicaid during that same 

timeframe, and who has experienced a 

change in household income that makes 

the qualified individual newly eligible 

for advance payments of the premium 

tax credit. 

* * * * * 

■ 27. Section 155.430 is amended by— 

■ a. Revising the section heading. 

■ b. Revising paragraphs (a), (b)(1), 

(b)(2) introductory text, (c), (d) 

paragraph heading, (d)(2) introductory 

text, (d)(2)(iv), (d)(3) through (7), and 

(e)(1) and (2). 

■ c. Adding paragraphs (b)(2)(vi), 

(d)(2)(v), and (d)(8). 

The revisions and additions read as 

follows: 

§ 155.430 Termination of Exchange 

enrollment or coverage. 

(a) General requirements. The 

Exchange must determine the form and 

manner in which enrollment in a QHP 

through the Exchange may be 

terminated. 

(b) * * * 

(1) Enrollee-initiated terminations. (i) 

The Exchange must permit an enrollee 

to terminate his or her coverage or 

enrollment in a QHP through the 

Exchange, including as a result of the 

enrollee obtaining other minimum 

essential coverage. To the extent the 

enrollee has the right to terminate the 

coverage under applicable State laws, 

including ‘‘free look’’ cancellation laws, 

the enrollee may do so, in accordance 

with such laws. 

(ii) The Exchange must provide an 

opportunity at the time of plan selection 

for an enrollee to choose to remain 

enrolled in a QHP if he or she becomes 

eligible for other minimum essential 

coverage and the enrollee does not 

request termination in accordance with 

paragraph (b)(1)(i) of this section. If an 

enrollee does not choose to remain 

enrolled in a QHP in such a situation, 

the Exchange must initiate termination 

of his or her enrollment in the QHP 

upon completion of the redetermination 

process specified in § 155.330. 

(iii) The Exchange must establish a 

process to permit individuals, including 

enrollees’ authorized representatives, to 

report the death of an enrollee for 

purposes of initiating termination of the 

enrollee’s Exchange enrollment. The 

Exchange may require the reporting 

party to submit documentation of the 

death. Any applicable premium refund, 

or premium due, must be processed by 

the deceased enrollee’s QHP in 

accordance with State law. 

(2) Exchange-initiated terminations. 

The Exchange may initiate termination 

of an enrollee’s enrollment in a QHP 

through the Exchange, and must permit 

a QHP issuer to terminate such coverage 

or enrollment, in the following 

circumstances: 

* * * * * 


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(vi) Any other reason for termination 

of coverage described in § 147.106 of 

this subchapter. 

(c) Termination of coverage or 

enrollment tracking and approval. The 

Exchange must— 

(1) Establish mandatory procedures 

for QHP issuers to maintain records of 

termination of enrollment in a QHP 

through the Exchange; 

(2) Send termination information to 

the QHP issuer and HHS, promptly and 

without undue delay in accordance with 

§ 155.400(b). 

(3) Require QHP issuers to make 

reasonable accommodations for all 

individuals with disabilities (as defined 

by the Americans with Disabilities Act) 

before terminating enrollment of such 

individuals through the Exchange; and 

(4) Retain records in order to facilitate 

audit functions. 

(d) Effective dates for termination of 

coverage or enrollment. 

* * * * * 

(2) In the case of a termination in 

accordance with paragraph (b)(1) of this 

section, the last day of enrollment 

through the Exchange is— 

* * * * * 

(iv) If the enrollee is newly eligible for 

Medicaid, CHIP, or the BHP, if a BHP 

is operating in the service area of the 

Exchange, the last day of enrollment in 

a QHP through the Exchange is the day 

before the individual is determined 

eligible for Medicaid, CHIP, or the BHP. 

(v) The retroactive termination date 

requested by the enrollee, if specified by 

applicable State laws. 

(3) In the case of a termination in 

accordance with paragraph (b)(2)(i) of 

this section, the last day of enrollment 

in a QHP through the Exchange is the 

last day of eligibility, as described in 

§ 155.330(f), unless the individual 

requests an earlier termination effective 

date per paragraph (b)(1) of this section. 

(4) In the case of a termination in 

accordance with paragraph (b)(2)(ii)(A) 

of this section, the last day of 

enrollment in a QHP through the 

Exchange will be the last day of the first 

month of the 3-month grace period. 

(5) In the case of a termination in 

accordance with paragraph (b)(2)(ii)(B) 

of this section, the last day of 

enrollment in a QHP through the 

Exchange should be consistent with 

existing State laws regarding grace 

periods. 

(6) In the case of a termination in 

accordance with paragraph (b)(2)(v) of 

this section, the last day of coverage in 

an enrollee’s prior QHP is the day before 

the effective date of coverage in his or 

her new QHP, including any retroactive 

enrollments effectuated under 

§ 155.420(b)(2)(iii). 

(7) In the case of a termination due to 

death, the last day of enrollment in a 

QHP through the Exchange is the date 

of death. 

(8) In cases of retroactive termination 

dates, the Exchange will ensure that 

appropriate actions are taken to make 

necessary adjustments to advance 

payments of the premium tax credit, 

cost-sharing reductions, premiums, 

claims, and user fees. 

(e) * * * 

(1) Termination. A termination is an 

action taken after a coverage effective 

date that ends an enrollee’s enrollment 

through the Exchange for a date after the 

original coverage effective date, 

resulting in a period during which the 

individual was enrolled in coverage 

through the Exchange. 

(2) Cancellation. A cancellation is 

specific type of termination action that 

ends a qualified individual’s enrollment 

through the Exchange on the date such 

enrollment became effective resulting in 

enrollment through the Exchange never 

having been effective. 

* * * * * 

■ 28. Section 155.605 is amended by 

revising paragraphs (g)(3) and (g)(6)(i) 

and adding paragraph (g)(6)(iii) to read 

as follows: 

§ 155.605 Eligibility standards for 

exemptions. 

* * * * * 

(g) * * * 

(3) Filing threshold. The IRS may 

allow an applicant to claim an 

exemption without obtaining an 

exemption certificate number from an 

Exchange for a taxable year if, for such 

year, the applicant could not be claimed 

as a dependent by another taxpayer and 

the applicant’s gross income was less 

than the applicant’s applicable return 

filing threshold described in section 

5000A(e)(2) of the Code; 

* * * * * 

(6) * * * 

(i) The Exchange must determine an 

applicant eligible for an exemption for 

any month if he or she is an Indian 

eligible for services through an Indian 

health care provider, as defined in 42 

CFR 447.51 and not otherwise eligible 

for an exemption under paragraph (f) of 

this section, or an individual eligible for 

services through the Indian Health 

Service in accordance with 25 U.S.C. 

1680c(a), (b), or (d)(3). 

* * * * * 

(iii) The IRS may allow an applicant 

to claim the exemption specified in 

paragraph (g)(6) of this section without 

obtaining an exemption certificate 

number from an Exchange. 

■ 29. Section 155.700(b) is amended by 

removing the definition of ‘‘Group 

participation rule’’ and by adding the 

definition of ‘‘Group participation rate’’ 

in alphabetical order to read as follows: 

§ 155.700 Standards for the establishment 

of a SHOP. 

* * * * * 

(b) * * * 

Group participation rate means the 

minimum percentage of all eligible 

individuals or employees of an 

employer that must be enrolled. 

* * * * * 

■ 30. Section 155.705 is amended by— 

■ a. Revising paragraph (b)(4)(i)(B). 

■ b. Redesignating paragraphs 

(b)(4)(ii)(A) and (B) as paragraphs 

(b)(4)(ii)(B) and (C), respectively. 

■ c. Adding new paragraph (b)(4)(ii)(A). 

■ d. Revising paragraphs (b)(7) and (10). 

The additions and revisions read as 

follows: 

§ 155.705 Functions of a SHOP. 

* * * * * 

(b) * * * 

(4) * * * 

(i) * * * 

(B) Collect from each employer the 

total amount due and make payments to 

QHP issuers in the SHOP for all 

enrollees except as provided for in 

paragraph (b)(4)(ii)(A) of this section; 

and 

* * * * * 

(ii) * * * 

(A) The SHOP may, upon an election 

by a qualified employer, enter into an 

agreement with a qualified employer to 

facilitate the administration of 

continuation coverage by collecting 

premiums for continuation coverage 

enrolled in through the SHOP directly 

from a person enrolled in continuation 

coverage through the SHOP consistent 

with applicable law and the terms of the 

group health plan, and remitting 

premium payments for this coverage to 

QHP issuers. A Federally-facilitated 

SHOP may elect to limit this service to 

the collection of premiums related to 

continuation coverage required under 

29 U.S.C. 1161, et seq. 

* * * * * 

(7) QHP availability in merged 

markets. If a State merges the individual 

market and the small group market risk 

pools in accordance with section 

1312(c)(3) of the Affordable Care Act, 

the SHOP may permit a qualified 

employee to enroll in any QHP meeting 

level of coverage requirements 

described in section 1302(d) of the 

Affordable Care Act. 

* * * * * 

(10) Participation rules. Subject to 

§ 147.104 of this subchapter, the SHOP 


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may authorize a uniform group 

participation rate for the offering of 

health insurance coverage in the SHOP, 

which must be a single, uniform rate 

that applies to all groups and issuers in 

the SHOP. If the SHOP authorizes a 

minimum participation rate, such rate 

must be based on the rate of employee 

participation in the SHOP, not on the 

rate of employee participation in any 

particular QHP or QHPs of any 

particular issuer. 

(i) For plan years beginning before 

January 1, 2016, subject to § 147.104 of 

this subchapter, a Federally-facilitated 

SHOP must use a minimum 

participation rate of 70 percent, 

calculated as the number of qualified 

employees accepting coverage under the 

employer’s group health plan, divided 

by the number of qualified employees 

offered coverage, excluding from the 

calculation any employee who, at the 

time the employer submits the SHOP 

application, is enrolled in coverage 

through another employer’s group 

health plan or through a governmental 

plan such as Medicare, Medicaid, or 

TRICARE. For purposes of this 

calculation, qualified employees who 

are former employees will not be 

counted. 

(ii) For plan years beginning on or 

after January 1, 2016, subject to 

§ 147.104 of this subchapter, a 

Federally-facilitated SHOP must use a 

minimum participation rate of 70 

percent, calculated as the number of 

full-time employees accepting coverage 

offered by a qualified employer plus the 

number of full-time employees who, at 

the time the employer submits the 

SHOP group enrollment, are enrolled in 

coverage through another group health 

plan, governmental coverage (such as 

Medicare, Medicaid, or TRICARE), 

coverage sold through the individual 

market, or in other minimum essential 

coverage, divided by the number of fulltime employees offered coverage. 

(iii) Notwithstanding paragraphs 

(b)(10)(i) and (ii) of this section, a 

Federally-facilitated SHOP may utilize a 

different minimum participation rate in 

a State if there is evidence that a State 

law sets a minimum participation rate 

or that a higher or lower minimum 

participation rate is customarily used by 

the majority of QHP issuers in that State 

for products in the State’s small group 

market outside the SHOP. 

* * * * * 

■ 31. Section 155.710 is amended by 

revising paragraph (e) to read as follows: 

§ 155.710 Eligibility standards for SHOP. 

* * * * * 

(e) Employee eligibility requirements. 

An employee is a qualified employee 

eligible to enroll in coverage through a 

SHOP if such employee receives an offer 

of coverage from a qualified employer. 

A qualified employee is eligible to 

enroll his or her dependents in coverage 

through a SHOP if the offer from the 

qualified employer includes an offer of 

dependent coverage. 

■ 32. Section 155.720 is amended by: 

■ a. Removing ‘‘;’’ from paragraph (b)(5) 

and adding ‘‘; and’’ in its place. 

■ b. Removing ‘‘; and’’ from paragraph 

(b)(6) and adding a period in its place. 

■ c. Removing paragraph (b)(7). 

■ d. Revising paragraph (e). 

The revisions read as follows: 

§ 155.720 Enrollment of employees into 

QHPs under SHOP. 

* * * * * 

(e) Notification of effective date. (1) 

For plan years beginning before January 

1, 2017, the SHOP must ensure that a 

QHP issuer notifies a qualified 

employee enrolled in a QHP through the 

SHOP of the effective date of his or her 

coverage. 

(2) For plan years beginning on or 

after January 1, 2017, the SHOP must 

ensure that a QHP issuer notifies an 

enrollee enrolled in a QHP through the 

SHOP of the effective date of his or her 

coverage. 

(3) When a primary subscriber and his 

or her dependents live at the same 

address, a separate notice of the 

effective date of coverage need not be 

sent to each dependent at that address, 

provided that the notice sent to each 

primary subscriber at that address 

contains all required information about 

the coverage effective date for the 

primary subscriber and his or her 

dependents at that address. 

* * * * * 

■ 33. Section 155.725 is amended by 

revising paragraphs (a), (b), (g), (h), (i), 

and (j)(5) and adding paragraph (k) to 

read as follows: 

§ 155.725 Enrollment periods under SHOP. 

(a) General requirements. The SHOP 

must ensure that enrollment 

transactions are sent to QHP issuers and 

that such issuers adhere to coverage 

effective dates in accordance with this 

section. 

(b) Rolling enrollment in the SHOP. 

The SHOP must permit a qualified 

employer to purchase coverage for its 

small group at any point during the 

year. The employer’s plan year must 

consist of the 12-month period 

beginning with the qualified employer’s 

effective date of coverage, unless the 

plan is issued in a State that has elected 

to merge its individual and small group 

risk pools under section 1312(c)(3) of 

the Affordable Care Act, in which case 

the plan year will end on December 31 

of the calendar year in which coverage 

first became effective. 

* * * * * 

(g) Newly qualified employees. (1) The 

SHOP must provide an employee who 

becomes a qualified employee outside of 

the initial or annual open enrollment 

period an enrollment period beginning 

on the first day of becoming a qualified 

employee. A newly qualified employee 

must have at least 30 days from the 

beginning of his or her enrollment 

period to select a QHP. The enrollment 

period must end no sooner than 15 days 

prior to the date that any applicable 

employee waiting period longer than 45 

days would end if the employee made 

a plan selection on the first day of 

becoming eligible. 

(2) The effective date of coverage for 

a QHP selection received by the SHOP 

from a newly qualified employee must 

always be the first day of a month, and 

must generally be determined in 

accordance with § 155.725(h), unless the 

employee is subject to a waiting period 

consistent with § 147.116 of this 

subchapter, in which case the effective 

date may be on the first day of a later 

month, but in no case may the effective 

date fail to comply with § 147.116 of 

this subchapter. 

(h) Initial and annual open 

enrollment effective dates. (1) The 

SHOP must establish effective dates of 

coverage for qualified employees 

enrolling in coverage for the first time, 

and for qualified employees enrolling 

during the annual open enrollment 

period described in paragraph (e) of this 

section. 

(2) For a QHP selection received by 

the Federally-facilitated SHOP from a 

qualified employee in his or her initial 

or annual open enrollment period: 

(i) Between the first and fifteenth day 

of any month, the Federally-facilitated 

SHOP must ensure a coverage effective 

date of the first day of the following 

month. 

(ii) Between the 16th and last day of 

any month, the Federally-facilitated 

SHOP must ensure a coverage effective 

date of the first day of the second 

following month. 

(i) Renewal of coverage. (1) If a 

qualified employee enrolled in a QHP 

through the SHOP remains eligible for 

coverage, such employee will remain in 

the QHP selected the previous year 

unless— 

(i) The qualified employee terminates 

coverage from such QHP in accordance 

with standards identified in § 155.430; 

(ii) The qualified employee enrolls in 

another QHP if such option exists; or 

(iii) The QHP is no longer available to 

the qualified employee. 


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(2) The SHOP may treat a qualified 

employer offering coverage through the 

SHOP as offering the same coverage 

under § 155.705(b)(3) at the same level 

of contribution under § 155.705(b)(11) 

unless: 

(i) The qualified employer is no 

longer eligible to offer such coverage 

through the SHOP; 

(ii) The qualified employer elects to 

offer different coverage or a different 

contribution through the SHOP; 

(iii) The qualified employer 

withdraws from the SHOP; or 

(iv) In the case of a qualified employer 

offering a single QHP, the single QHP is 

no longer available through the SHOP. 

(j) * * * 

(5) The effective dates of coverage for 

special enrollment periods are 

determined using the provisions of 

§ 155.420(b). 

* * * * * 

(k) Limitation. Qualified employees 

will not be able to enroll unless the 

employer group meets any applicable 

minimum participation rate 

implemented under § 155.705(b)(10). 

■ 34. Section 155.735 is amended by— 

■ a. Revising the section heading. 

■ b. Revising paragraphs (a), (b), 

(c)(2)(ii), (c)(2)(iii), (d)(1) introductory 

text, and (d)(1)(iii), and the headings of 

paragraphs (d) and (e). 

■ c. Adding paragraphs (c)(2)(iv), (c)(3), 

and (g). 

The revisions and additions read as 

follows: 

§ 155.735 Termination of SHOP enrollment 

or coverage. 

(a) General requirements. The SHOP 

must determine the timing, form, and 

manner in which coverage or 

enrollment in a QHP through the SHOP 

may be terminated. 

(b) Termination of employer group 

health coverage or enrollment at the 

request of the employer. (1) The SHOP 

must establish policies for advance 

notice of termination required from the 

employer and effective dates of 

termination. 

(2) In the Federally-facilitated SHOP, 

an employer may terminate coverage or 

enrollment for all enrollees covered by 

the employer group health plan effective 

on the last day of any month, provided 

that the employer has given notice to 

the Federally-facilitated SHOP on or 

before the 15th day of any month. If 

notice is given after the 15th of the 

month, the Federally-facilitated SHOP 

may terminate the coverage or 

enrollment on the last day of the 

following month. 

(c) * * * 

(2) * * * 

(ii) If premium payment is not 

received 31 days from the first of the 

coverage month, the Federallyfacilitated SHOP may terminate the 

qualified employer for lack of payment. 

The termination would take effect on 

the last day of the month for which the 

Federally-facilitated SHOP received full 

payment. 

(iii) If a qualified employer is 

terminated due to lack of premium 

payment, but within 30 days following 

its termination the qualified employer 

requests reinstatement, pays all 

premiums owed including any prior 

premiums owed for coverage during the 

grace period, and pays the premium for 

the next month’s coverage, the 

Federally-facilitated SHOP must 

reinstate the qualified employer in its 

previous coverage. A qualified employer 

may be reinstated in the Federallyfacilitated SHOP only once per calendar 

year. 

(iv) Enrollees enrolled in continuation 

coverage required under 29 U.S.C. 1161, 

et seq. through the Federally-facilitated 

SHOP may not be terminated if timely 

payment is made to the Federallyfacilitated SHOP in an amount that is 

not less than $50 less than the amount 

the plan requires to be paid for a period 

of coverage unless the Federallyfacilitated SHOP notifies the enrollee of 

the amount of the deficiency and the 

enrollee does not pay the deficiency 

within 30 days of such notice, pursuant 

to the notice requirements in § 155.230. 

(3) Payment for COBRA Continuation 

Coverage. Nothing in this section 

modifies existing obligations related to 

the administration of coverage required 

under 29 U.S.C. 1161, et seq., as 

described in 26 CFR part 54. 

(d) Termination of employee or 

dependent coverage or enrollment. (1) 

The SHOP must establish consistent 

policies regarding the process for and 

effective dates of termination of 

employee or dependent coverage or 

enrollment in the following 

circumstances: 

* * * * * 

(iii) The QHP in which the enrollee is 

enrolled terminates, is decertified as 

described in § 155.1080, or its 

certification as a QHP is not renewed; 

* * * * * 

(e) Termination of enrollment or 

coverage tracking and approval. * * * 

* * * * * 

(g) Notice of termination. Beginning 

January 1, 2016: 

(1) Except as provided in paragraph 

(g)(3) of this section, if any enrollee’s 

coverage or enrollment through the 

SHOP is terminated due to non-payment 

of premiums or due to a loss of the 

enrollee’s eligibility to participate in the 

SHOP, including where an enrollee 

loses his or her eligibility because a 

qualified employer has lost its 

eligibility, the SHOP must notify the 

enrollee of the termination. Such notice 

must include the termination effective 

date and reason for termination, and 

must be sent within 3 business days if 

an electronic notice is sent, and within 

5 business days if a mailed hard copy 

notice is sent. 

(2) Except as provided in paragraph 

(g)(3) of this section, if an employer 

group’s coverage or enrollment through 

the SHOP is terminated due to nonpayment of premiums or, where 

applicable, due to a loss of the qualified 

employer’s eligibility to offer coverage 

through the SHOP, the SHOP must 

notify the employer of the termination. 

Such notice must include the 

termination effective date and reason for 

termination, and must be sent within 3 

business days if an electronic notice is 

sent, and within 5 business days if a 

mailed hard copy notice is sent. 

(3) Where State law requires a QHP 

issuer to send the notices described in 

paragraphs (g)(1) and (2) of this section, 

a SHOP is not required to send such 

notices. 

(4) When a primary subscriber and his 

or her dependents live at the same 

address, a separate termination notice 

need not be sent to each dependent at 

that address, provided that the notice 

sent to each primary subscriber at that 

address contains all required 

information about the termination for 

the primary subscriber and his or her 

dependents at that address. 

■ 35. Section 155.1000 is amended by 

adding paragraph (d) to read as follows: 

§ 155.1000 Certification standards for 

QHPs. 

* * * * * 

(d) Special rule for SHOP. Except 

when a QHP is decertified by the 

Exchange pursuant to § 155.1080, in a 

SHOP that certifies QHPs on a calendaryear basis, the certification shall remain 

in effect for the duration of any plan 

year beginning in the calendar year for 

which the QHP was certified, even if the 

plan year ends after the calendar year 

for which the QHP was certified. 

■ 36. Section 155.1075 is amended by 

revising paragraph (b) to read as follows: 

§ 155.1075 Recertification of QHPs. 

* * * * * 

(b) Timing. The Exchange must 

complete the QHP recertification 

process no later than 2 weeks prior to 

the beginning of the open enrollment 

date at § 155.410(e)(2) of the applicable 

calendar year. 


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Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 10871 

PART 156—HEALTH INSURANCE 

ISSUER STANDARDS UNDER THE 

AFFORDABLE CARE ACT, INCLUDING 

STANDARDS RELATED TO 

EXCHANGES 

■ 37. The authority citation for part 156 

continues to read as follows: 

Authority: Title I of the Affordable Care 

Act, sections 1301–1304, 1311–1313, 1321– 

1322, 1324, 1334, 1342–1343, 1401–1402, 

Pub. L. 111–148, 124 Stat. 119 (42 U.S.C. 

18021–18024, 18031–18032, 18041–18042, 

18044, 18054, 18061, 18063, 18071, 18082, 

26 U.S.C. 36B, and 31 U.S.C. 9701). 

■ 38. Section 156.20 is amended by 

adding a definition of ‘‘Plan’’ in 

alphabetical order to read as follows: 

§ 156.20 Definitions. 

* * * * * 

Plan has the meaning given the term 

in § 144.103 of this subchapter. 

* * * * * 

■ 39. Section 156.100 is amended by 

revising paragraph (c) to read as follows: 

§ 156.100 State selection of benchmark. 

* * * * * 

(c) Default base-benchmark plan. If a 

State does not make a selection using 

the process described in this section, the 

default base-benchmark plan will be the 

largest plan by enrollment in the largest 

product by enrollment in the State’s 

small group market. 

■ 40. Section 156.110 is amended by 

revising paragraphs (c)(4) and (5) and 

removing paragraph (c)(6) to read as 

follows: 

§ 156.110 EHB-benchmark plan standards. 

* * * * * 

(c) * * * 

(4) The plan described in paragraph 

(b)(2)(i) of this section for pediatric oral 

care benefits; and 

(5) The plan described in paragraph 

(b)(3)(i) of this section for pediatric 

vision care benefits. 

* * * * * 

■ 41. Section 156.115 is amended by 

revising paragraphs (a)(5)(i) and (ii) and 

adding paragraphs (a)(5)(iii) and (a)(6) to 

read as follows: 

§ 156.115 Provision of EHB. 

(a) * * * 

(5) With respect to habilitative 

services and devices— 

(i) Cover health care services and 

devices that help a person keep, learn, 

or improve skills and functioning for 

daily living (habilitative services). 

Examples include therapy for a child 

who is not walking or talking at the 

expected age. These services may 

include physical and occupational 

therapy, speech-language pathology and 

other services for people with 

disabilities in a variety of inpatient and/ 

or outpatient settings; 

(ii) Do not impose limits on coverage 

of habilitative services and devices that 

are less favorable than any such limits 

imposed on coverage of rehabilitative 

services and devices; and 

(iii) For plan years beginning on or 

after January 1, 2017, do not impose 

combined limits on habilitative and 

rehabilitative services and devices. 

(6) For plan years beginning on or 

after January 1, 2016, for pediatric 

services that are required under 

§ 156.110(a)(10), provide coverage for 

enrollees until at least the end of the 

month in which the enrollee turns 19 

years of age. 

* * * * * 

■ 42. Section 156.120 is added to read 

as follows: 

§ 156.120 Collection of data to define 

essential health benefits. 

(a) Definitions. The following 

definitions apply to this section, unless 

the context indicates otherwise: 

Health benefits means benefits for 

medical care, as defined at § 144.103 of 

this subchapter, which may be delivered 

through the purchase of insurance or 

otherwise. 

Health plan has the meaning given to 

the term ‘‘Portal Plan’’ in § 159.110 of 

this subchapter. 

State has the meaning given to that 

term in § 155.20 of this subchapter. 

Treatment limitations include limits 

on benefits based on the frequency of 

treatment, number of visits, days of 

coverage, or other similar limits on the 

scope or duration of treatment. 

Treatment limitations include only 

quantitative treatment limitations. A 

permanent exclusion of all benefits for 

a particular condition or disorder is not 

a treatment limitation. 

(b) Reporting requirement. A State 

that selects a base-benchmark plan or an 

issuer that offers a default basebenchmark plan in accordance with 

§ 156.100 must submit to HHS the 

following information in a form and 

manner, and by a date, determined by 

HHS: 

(1) Administrative data necessary to 

identify the health plan; 

(2) Data and descriptive information 

for each plan on the following items: 

(i) All health benefits in the plan; 

(ii) Treatment limitations; 

(iii) Drug coverage; and 

(iv) Exclusions. 

■ 43. Section 156.122 is amended by 

revising paragraphs (a)(1), (a)(2), and (c) 

and adding paragraphs (a)(3), (d), and 

(e) to read as follows: 

§ 156.122 Prescription drug benefits. 

(a) * * * 

(1) Subject to the exception in 

paragraph (b) of this section, covers at 

least the greater of: 

(i) One drug in every United States 

Pharmacopeia (USP) category and class; 

or 

(ii) The same number of prescription 

drugs in each category and class as the 

EHB-benchmark plan; 

(2) Submits its formulary drug list to 

the Exchange, the State or OPM; and 

(3) For plans years beginning on or 

after January 1, 2017, uses a pharmacy 

and therapeutics (P&T) committee that 

meets the following standards. 

(i) Membership standards. The P&T 

committee must: 

(A) Have members that represent a 

sufficient number of clinical specialties 

to adequately meet the needs of 

enrollees. 

(B) Consist of a majority of 

individuals who are practicing 

physicians, practicing pharmacists and 

other practicing health care 

professionals who are licensed to 

prescribe drugs. 

(C) Prohibit any member with a 

conflict of interest with respect to the 

issuer or a pharmaceutical manufacturer 

from voting on any matters for which 

the conflict exists. 

(D) Require at least 20 percent of its 

membership to have no conflict of 

interest with respect to the issuer and 

any pharmaceutical manufacturer. 

(ii) Meeting standards. The P&T 

committee must: 

(A) Meet at least quarterly. 

(B) Maintain written documentation 

of the rationale for all decisions 

regarding formulary drug list 

development or revision. 

(iii) Formulary drug list establishment 

and management. The P&T committee 

must: 

(A) Develop and document 

procedures to ensure appropriate drug 

review and inclusion. 

(B) Base clinical decisions on the 

strength of scientific evidence and 

standards of practice, including 

assessing peer-reviewed medical 

literature, pharmacoeconomic studies, 

outcomes research data, and other such 

information as it determines 

appropriate. 

(C) Consider the therapeutic 

advantages of drugs in terms of safety 

and efficacy when selecting formulary 

drugs. 

(D) Review policies that guide 

exceptions and other utilization 

management processes, including drug 

utilization review, quantity limits, and 

therapeutic interchange. 


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10872 Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 

(E) Evaluate and analyze treatment 

protocols and procedures related to the 

plan’s formulary at least annually. 

(F) Review and approve all clinical 

prior authorization criteria, step therapy 

protocols, and quantity limit restrictions 

applied to each covered drug. 

(G) Review new FDA-approved drugs 

and new uses for existing drugs. 

(H) Ensure the issuer’s formulary drug 

list: 

(1) Covers a range of drugs across a 

broad distribution of therapeutic 

categories and classes and 

recommended drug treatment regimens 

that treat all disease states, and does not 

discourage enrollment by any group of 

enrollees; and 

(2) Provides appropriate access to 

drugs that are included in broadly 

accepted treatment guidelines and that 

are indicative of general best practices at 

the time. 

* * * * * 

(c) A health plan providing essential 

health benefits must have the following 

processes in place that allow an 

enrollee, the enrollee’s designee, or the 

enrollee’s prescribing physician (or 

other prescriber, as appropriate) to 

request and gain access to clinically 

appropriate drugs not otherwise covered 

by the health plan (a request for 

exception). In the event that an 

exception request is granted, the plan 

must treat the excepted drug(s) as an 

essential health benefit, including by 

counting any cost-sharing towards the 

plan’s annual limitation on cost-sharing 

under § 156.130 and when calculating 

the plan’s actuarial value under 

§ 156.135. 

(1) Standard exception request. For 

plans years beginning on or after 

January 1, 2016: 

(i) A health plan must have a process 

for an enrollee, the enrollee’s designee, 

or the enrollee’s prescribing physician 

(or other prescriber) to request a 

standard review of a decision that a 

drug is not covered by the plan. 

(ii) A health plan must make its 

determination on a standard exception 

and notify the enrollee or the enrollee’s 

designee and the prescribing physician 

(or other prescriber, as appropriate) of 

its coverage determination no later than 

72 hours following receipt of the 

request. 

(iii) A health plan that grants a 

standard exception request must 

provide coverage of the non-formulary 

drug for the duration of the prescription, 

including refills. 

(2) Expedited exception request. (i) A 

health plan must have a process for an 

enrollee, the enrollee’s designee, or the 

enrollee’s prescribing physician (or 

other prescriber) to request an expedited 

review based on exigent circumstances. 

(ii) Exigent circumstances exist when 

an enrollee is suffering from a health 

condition that may seriously jeopardize 

the enrollee’s life, health, or ability to 

regain maximum function or when an 

enrollee is undergoing a current course 

of treatment using a non-formulary 

drug. 

(iii) A health plan must make its 

coverage determination on an expedited 

review request based on exigent 

circumstances and notify the enrollee or 

the enrollee’s designee and the 

prescribing physician (or other 

prescriber, as appropriate) of its 

coverage determination no later than 24 

hours following receipt of the request. 

(iv) A health plan that grants an 

exception based on exigent 

circumstances must provide coverage of 

the non-formulary drug for the duration 

of the exigency. 

(3) External exception request review. 

For plans years beginning on or after 

January 1, 2016: 

(i) If the health plan denies a request 

for a standard exception under 

paragraph (c)(1) of this section or for an 

expedited exception under paragraph 

(c)(2) of this section, the health plan 

must have a process for the enrollee, the 

enrollee’s designee, or the enrollee’s 

prescribing physician (or other 

prescriber) to request that the original 

exception request and subsequent 

denial of such request be reviewed by 

an independent review organization. 

(ii) A health plan must make its 

determination on the external exception 

request and notify the enrollee or the 

enrollee’s designee and the prescribing 

physician (or other prescriber, as 

appropriate) of its coverage 

determination no later than 72 hours 

following its receipt of the request, if the 

original request was a standard 

exception request under paragraph (c)(1) 

of this section, and no later than 24 

hours following its receipt of the 

request, if the original request was an 

expedited exception request under 

paragraph (c)(2) of this section. 

(iii) If a health plan grants an external 

exception review of a standard 

exception request, the health plan must 

provide coverage of the non-formulary 

drug for the duration of the prescription. 

If a health plan grants an external 

exception review of an expedited 

exception request, the health plan must 

provide coverage of the non-formulary 

drug for the duration of the exigency. 

(d)(1) For plan years beginning on or 

after January 1, 2016, a health plan must 

publish an up-to-date, accurate, and 

complete list of all covered drugs on its 

formulary drug list, including any 

tiering structure that it has adopted and 

any restrictions on the manner in which 

a drug can be obtained, in a manner that 

is easily accessible to plan enrollees, 

prospective enrollees, the State, the 

Exchange, HHS, the U.S. Office of 

Personnel Management, and the general 

public. A formulary drug list is easily 

accessible when: 

(i) It can be viewed on the plan’s 

public Web site through a clearly 

identifiable link or tab without requiring 

an individual to create or access an 

account or enter a policy number; and 

(ii) If an issuer offers more than one 

plan, when an individual can easily 

discern which formulary drug list 

applies to which plan. 

(2) A QHP in the Federally-facilitated 

Exchange must make available the 

information described in paragraph 

(d)(1) of this section on its Web site in 

an HHS-specified format and also 

submit this information to HHS, in a 

format and at times determined by HHS. 

(e) For plan years beginning on or 

after January 1, 2017, a health plan 

providing essential health benefits must 

have the following access procedures: 

(1) A health plan must allow enrollees 

to access prescription drug benefits at 

in-network retail pharmacies, unless: 

(i) The drug is subject to restricted 

distribution by the U.S. Food and Drug 

Administration; or 

(ii) The drug requires special 

handling, provider coordination, or 

patient education that cannot be 

provided by a retail pharmacy. 

(2) A health plan may charge 

enrollees a different cost-sharing 

amount for obtaining a covered drug at 

a retail pharmacy, but all cost sharing 

will count towards the plan’s annual 

limitation on cost sharing under 

§ 156.130 and must be accounted for in 

the plan’s actuarial value calculated 

under § 156.135. 

■ 44. Section 156.130 is amended by 

revising paragraph (c) to read as follows: 

§ 156.130 Cost-sharing requirements. 

* * * * * 

(c) Special rule for network plans. In 

the case of a plan using a network of 

providers, cost sharing paid by, or on 

behalf of, an enrollee for benefits 

provided outside of such network is not 

required to count toward the annual 

limitation on cost sharing (as defined in 

paragraph (a) of this section). 

* * * * * 

■ 45. Section 156.145 is amended by 

revising paragraph (a) introductory text 

to read as follows: 


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§ 156.145 Determination of minimum 

value. 

(a) Acceptable methods for 

determining MV. An employersponsored plan provides minimum 

value (MV) only if the percentage of the 

total allowed costs of benefits provided 

under the plan is greater than or equal 

to 60 percent, and the benefits under the 

plan include substantial coverage of 

inpatient hospital services and 

physician services. An employersponsored plan may use one of the 

following methods to determine 

whether the percentage of the total 

allowed costs of benefits provided 

under the plan is not less than 60 

percent. 

* * * * * 

■ 46. Section 156.200 is amended by 

revising paragraph (b)(7) to read as 

follows: 

§ 156.200 QHP issuer participation 

standards. 

* * * * * 

(b) * * * 

(7) Comply with the standards under 

45 CFR part 153. 

* * * * * 

■ 47. Section 156.230 is amended by 

revising paragraph (a) introductory text 

and paragraph (b) and adding paragraph 

(c) to read as follows: 

§ 156.230 Network adequacy standards. 

(a) General requirement. Each QHP 

issuer that uses a provider network must 

ensure that the provider network 

consisting of in-network providers, as 

available to all enrollees, meets the 

following standards— 

* * * * * 

(b) Access to provider directory. (1) A 

QHP issuer must make its provider 

directory for a QHP available to the 

Exchange for publication online in 

accordance with guidance from HHS 

and to potential enrollees in hard copy 

upon request. In the provider directory, 

a QHP issuer must identify providers 

that are not accepting new patients. 

(2) For plan years beginning on or 

after January 1, 2016, a QHP issuer must 

publish an up-to-date, accurate, and 

complete provider directory, including 

information on which providers are 

accepting new patients, the provider’s 

location, contact information, specialty, 

medical group, and any institutional 

affiliations, in a manner that is easily 

accessible to plan enrollees, prospective 

enrollees, the State, the Exchange, HHS 

and OPM. A provider directory is easily 

accessible when— 

(i) The general public is able to view 

all of the current providers for a plan in 

the provider directory on the issuer’s 

public Web site through a clearly 

identifiable link or tab and without 

creating or accessing an account or 

entering a policy number; and 

(ii) If a health plan issuer maintains 

multiple provider networks, the general 

public is able to easily discern which 

providers participate in which plans 

and which provider networks. 

(c) Increasing consumer transparency. 

A QHP issuer in a Federally-facilitated 

Exchange must make available the 

information described in paragraph (b) 

of this section on its Web site in an HHS 

specified format and also submit this 

information to HHS, in a format and 

manner and at times determined by 

HHS. 

■ 48. Section 156.235 is revised to read 

as follows: 

§ 156.235 Essential community providers. 

(a) General ECP standard. (1) A QHP 

issuer that uses a provider network must 

include in its provider network a 

sufficient number and geographic 

distribution of essential community 

providers (ECPs), where available, to 

ensure reasonable and timely access to 

a broad range of such providers for lowincome individuals or individuals 

residing in Health Professional Shortage 

Areas within the QHP’s service area, in 

accordance with the Exchange’s 

network adequacy standards. 

(2) A plan applying for QHP 

certification to be offered through a 

Federally-facilitated Exchange has a 

sufficient number and geographic 

distribution of ECPs if it demonstrates 

in its QHP application that— 

(i) The network includes as 

participating providers at least a 

minimum percentage, as specified by 

HHS, of available ECPs in each plan’s 

service area with multiple providers at 

a single location counting as a single 

ECP toward both the available ECPs in 

the plan’s service area and the issuer’s 

satisfaction of the ECP participation 

standard; and 

(ii) The issuer of the plan offers 

contracts to— 

(A) All available Indian health care 

providers in the service area, applying 

the special terms and conditions 

required by Federal law and regulations 

as referenced in the recommended 

model QHP addendum for Indian health 

care providers developed by HHS; and 

(B) At least one ECP in each of the 

ECP categories (Federally Qualified 

Health Centers, Ryan White Providers, 

Family Planning Providers, Indian 

Health Care Providers, Hospitals and 

other ECP providers) in each county in 

the service area, where an ECP in that 

category is available and provides 

medical or dental services that are 

covered by the issuer plan type. 

(3) If a plan applying for QHP 

certification to be offered through a 

Federally-facilitated Exchange does not 

satisfy the ECP standard described in 

paragraph (a)(2) of this section, the 

issuer must include as part of its QHP 

application a narrative justification 

describing how the plan’s provider 

network provides an adequate level of 

service for low-income enrollees or 

individuals residing in Health 

Professional Shortage Areas within the 

plan’s service area and how the plan’s 

provider network will be strengthened 

toward satisfaction of the ECP standard 

prior to the start of the benefit year. 

(4) Nothing in paragraphs (a)(1) 

through (3) of this section requires any 

QHP to provide coverage for any 

specific medical procedure. 

(5) A plan that provides a majority of 

covered professional services through 

physicians employed by the issuer or 

through a single contracted medical 

group may instead comply with the 

alternate standard described in 

paragraph (b) of this section. 

(b) Alternate ECP standard. (1) A plan 

described in paragraph (a)(5) of this 

section must have a sufficient number 

and geographic distribution of 

employed providers and hospital 

facilities, or providers of its contracted 

medical group and hospital facilities, to 

ensure reasonable and timely access for 

low-income individuals or individuals 

residing in Health Professional Shortage 

Areas within the plan’s service area, in 

accordance with the Exchange’s 

network adequacy standards. 

(2) A plan described in paragraph 

(a)(5) of this section applying for QHP 

certification to be offered through a 

Federally-facilitated Exchange has a 

sufficient number and geographic 

distribution of employed or contracted 

providers if it demonstrates in its QHP 

application that— 

(i) The number of its providers that 

are located in Health Professional 

Shortage Areas or five-digit zip codes in 

which 30 percent or more of the 

population falls below 200 percent of 

the Federal Poverty Line satisfies a 

minimum percentage, specified by HHS, 

of available ECPs in the plan’s service 

area with multiple providers at a single 

location counting as a single ECP; and 

(ii) The issuer’s integrated delivery 

system provides all of the categories of 

services provided by entities in each of 

the ECP categories in each county in the 

plan’s service area as outlined in the 

general ECP standard, or otherwise 

offers a contract to at least one ECP 

outside of the issuer’s integrated 

delivery system per ECP category in 


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each county in the plan’s service area 

that can provide those services to lowincome, medically underserved 

individuals. 

(3) If a plan does not satisfy the 

alternate ECP standard described in 

paragraph (b)(2) of this section, the 

issuer must include as part of its QHP 

application a narrative justification 

describing how the plan’s provider 

networks provide an adequate level of 

service for low-income enrollees or 

individuals residing in Health 

Professional Shortage Areas within the 

plan’s service area and how the plan’s 

provider network will be strengthened 

toward satisfaction of the ECP standard 

prior to the start of the benefit year. 

(c) Definition. An essential 

community provider is a provider that 

serves predominantly low-income, 

medically underserved individuals, 

including a health care provider defined 

in section 340B(a)(4) of the PHS Act; or 

described in section 1927(c)(1)(D)(i)(IV) 

of the Act as set forth by section 221 of 

Pub. L. 111–8; or a State-owned family 

planning service site, or governmental 

family planning service site, or not-forprofit family planning service site that 

does not receive Federal funding under 

special programs, including under Title 

X of the PHS Act, or an Indian health 

care provider, unless any of the above 

providers has lost its status under either 

of these sections, 340(B) of the PHS Act 

or 1927 of the Act as a result of violating 

Federal law. 

(d) Payment rates. Nothing in 

paragraph (a) of this section may be 

construed to require a QHP issuer to 

contract with an ECP if such provider 

refuses to accept the same rates and 

contract provisions included in 

contracts accepted by similarly situated 

providers. 

(e) Payment of Federally qualified 

health centers. If an item or service 

covered by a QHP is provided by a 

Federally-qualified health center (as 

defined in section 1905(l)(2)(B) of the 

Act) to an enrollee of a QHP, the QHP 

issuer must pay the Federally qualified 

health center for the item or service an 

amount that is not less than the amount 

of payment that would have been paid 

to the center under section 1902(bb) of 

the Act for such item or service. Nothing 

in this paragraph (e) precludes a QHP 

issuer and Federally-qualified health 

center from agreeing upon payment 

rates other than those that would have 

been paid to the center under section 

1902(bb) of the Act, as long as that rate 

is at least equal to the generally 

applicable payment rate of the issuer 

described in paragraph (d) of this 

section. 

■ 49. Section 156.250 is revised to read 

as follows: 

§ 156.250 Meaningful access to qualified 

health plan information. 

A QHP issuer must provide all 

information that is critical for obtaining 

health insurance coverage or access to 

health care services through the QHP, 

including applications, forms, and 

notices, to qualified individuals, 

applicants, qualified employers, 

qualified employees, and enrollees in 

accordance with the standards 

described in § 155.205(c) of this 

subchapter. Information is deemed to be 

critical for obtaining health insurance 

coverage or access to health care 

services if the issuer is required by law 

or regulation to provide the document to 

a qualified individual, applicant, 

qualified employer, qualified employee, 

or enrollee. 

■ 50. Section 156.265 is amended by 

revising paragraph (d) to read as 

follows: 

§ 156.265 Enrollment process for qualified 

individuals. 

* * * * * 

(d) Premium payment. A QHP issuer 

must follow the premium payment 

process established by the Exchange in 

accordance with § 155.240 of this 

subchapter and the payment rules 

established in § 155.400(e) of this 

subchapter. 

* * * * * 

■ 51. Section 156.270 is amended by 

revising the section heading and 

paragraphs (a), (b), (c) introductory text, 

(g), and (i) to read as follows: 

§ 156.270 Termination of coverage or 

enrollment for qualified individuals. 

(a) General requirement. A QHP issuer 

may only terminate enrollment in a 

QHP through the Exchange as permitted 

by the Exchange in accordance with 

§ 155.430(b) of this subchapter. (See also 

§ 147.106 of this subchapter for 

termination of coverage.) 

(b) Termination of coverage or 

enrollment notice requirement. If a QHP 

issuer terminates an enrollee’s coverage 

or enrollment in a QHP through the 

Exchange in accordance with 

§ 155.430(b)(2)(i), (ii), or (iii) of this 

subchapter, the QHP issuer must, 

promptly and without undue delay: 

(1) Provide the enrollee with a notice 

of termination that includes the 

termination effective date and reason for 

termination. 

(2) [Reserved] 

(c) Termination of coverage or 

enrollment due to non-payment of 

premium. A QHP issuer must establish 

a standard policy for the termination of 

enrollment of enrollees through the 

Exchange due to non-payment of 

premium as permitted by the Exchange 

in § 155.430(b)(2)(ii) of this subchapter. 

This policy for the termination of 

enrollment: 

* * * * * 

(g) Exhaustion of grace period. If an 

enrollee receiving advance payments of 

the premium tax credit exhausts the 3- 

month grace period in paragraph (d) of 

this section without paying all 

outstanding premiums, the QHP issuer 

must terminate the enrollee’s 

enrollment through the Exchange on the 

effective date described in 

§ 155.430(d)(4) of this subchapter, 

provided that the QHP issuer meets the 

notice requirement specified in 

paragraph (b) of this section. 

* * * * * 

(i) Effective date of termination of 

coverage or enrollment. QHP issuers 

must abide by the termination of 

coverage or enrollment effective dates 

described in § 155.430(d) of this 

subchapter. 

* * * * * 

■ 52. Section 156.285 is amended by— 

■ a. Revising paragraphs (b)(1), (b)(4), 

(d) introductory text, (d)(1) introductory 

text, (d)(1)(i), and (d)(1)(iii); 

■ b. Redesignating paragraphs (c)(3), (4), 

(5), (6), and (7) as paragraphs (c)(4), (5), 

(6), (7), and (8), respectively. 

■ c. Adding new paragraph (c)(3). 

■ d. Adding and reserving paragraph 

(d)(2). 

The revisions and addition read as 

follows: 

§ 156.285 Additional standards specific to 

SHOP. 

* * * * * 

(b) * * * 

(1) Enroll a qualified employee in 

accordance with the qualified 

employer’s initial and annual employee 

open enrollment periods described in 

§ 155.725 of this subchapter; 

* * * * * 

(4) Adhere to effective dates of 

coverage established in accordance with 

§ 155.725 of this subchapter. 

(c) * * * 

(3) Notify new enrollees of their 

effective date of coverage consistent 

with § 155.720(e) of this subchapter. 

* * * * * 

(d) Termination of coverage or 

enrollment in the SHOP. QHP issuers 

offering a QHP through the SHOP must: 

(1) Comply with the following 

requirements with respect to 

termination of enrollees in the SHOP: 

(i)(A) Effective in plan years 

beginning on or after January 1, 2015, 

requirements regarding termination of 


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coverage or enrollment established in 

§ 155.735 of this subchapter, if 

applicable to the coverage or enrollment 

being terminated; otherwise 

(B) General requirements regarding 

termination of coverage or enrollment 

established in § 156.270(a). 

* * * * * 

(iii)(A) Effective in plan years 

beginning on or after January 1, 2015, 

requirements regarding termination of 

coverage or enrollment effective dates as 

set forth in § 155.735 of this subchapter, 

if applicable to the coverage or 

enrollment being terminated; otherwise 

(B) Requirements regarding 

termination of coverage or enrollment 

effective dates as set forth in 

§ 156.270(i). 

(2) [Reserved] 

* * * * * 

■ 53. Section 156.285 is further 

amended, effective January 1, 2016, by 

revising paragraph (d)(1)(ii) to read as 

follows: 

§ 156.285 Additional standards specific to 

SHOP. 

* * * * * 

(d) * * * 

(1) * * * 

(ii) If a QHP issuer terminates an 

enrollee’s coverage or enrollment 

through the SHOP in accordance with 

§ 155.735(d)(1)(iii) or (v) of this 

subchapter, the QHP issuer must notify 

the qualified employer and the enrollee 

of the termination. Such notice must 

include the termination effective date 

and reason for termination, and must be 

sent within 3 business days if an 

electronic notice is sent, and within 5 

business days if a mailed hard copy 

notice is sent. When a primary 

subscriber and his or her dependents 

live at the same address, a separate 

termination notice need not be sent to 

each dependent at that address, 

provided that the notice sent to each 

primary subscriber at that address 

contains all required information about 

the termination for the primary 

subscriber and his or her dependents at 

that address. 

* * * * * 

■ 54. Section 156.290 is amended by 

revising paragraphs (a)(1), (a)(2), (a)(5), 

and (c) introductory text to read as 

follows: 

§ 156.290 Non-renewal and decertification 

of QHPs. 

(a) * * * 

(1) Notify the Exchange of its decision 

prior to the beginning of the 

recertification process and adhere to the 

procedures adopted by the Exchange in 

accordance with § 155.1075 of this 

subchapter; 

(2) Fulfill its obligation to cover 

benefits for each enrollee through the 

end of the plan or benefit year through 

the Exchange; 

* * * * * 

(5) Terminate the coverage or 

enrollment through the Exchange of 

enrollees in the QHP in accordance with 

§ 156.270, as applicable. 

* * * * * 

(c) Decertification. If a QHP is 

decertified by the Exchange, the QHP 

issuer must terminate the enrollment of 

enrollees through the Exchange only 

after: 

* * * * * 

■ 55. Section 156.410 is amended by 

removing the second paragraph 

designated as paragraph (d)(4)(ii) and 

adding paragraph (d)(4)(iii) to read as 

follows: 

§ 156.410 Cost-sharing reductions for 

enrollees. 

* * * * * 

(d) * * * 

(4) * * * 

(iii) If the excess cost sharing was not 

paid by the provider, then, if the 

enrollee requests a refund, the refund 

must be provided to the enrollee within 

45 calendar days of the date of the 

request. 

■ 56. Section 156.420 is amended by 

adding paragraph (h) to read as follows: 

§ 156.420 Plan variations. 

* * * * * 

(h) Notice. No later than November 1, 

2015, for each plan variation that an 

issuer offers in accordance with the 

rules of this section, an issuer must 

provide a summary of benefits and 

coverage that accurately represents each 

plan variation consistent with the 

requirements set forth in § 147.200 of 

this subchapter. 

■ 57. Section 156.425 is amended by 

adding paragraph (c) to read as follows: 

§ 156.425 Changes in eligibility for costsharing reductions. 

* * * * * 

(c) Notice upon assignment. 

Beginning on January 1, 2016, if an 

individual’s assignment to a standard 

plan or plan variation of the QHP 

changes in accordance with paragraph 

(a) of this section, the issuer must 

provide to that individual a summary of 

benefits and coverage that accurately 

reflects the new plan variation (or 

standard plan variation without costsharing reductions) in a manner 

consistent with § 147.200 of this 

subchapter as soon as practicable 

following receipt of notice from the 

Exchange, but not later than 7 business 

days following receipt of notice. 

■ 58. Section 156.430 is amended by 

adding paragraph (c)(2)(i) and adding 

and reserving paragraph (c)(2)(ii) to read 

as follows: 

§ 156.430 Payment for cost-sharing 

reductions. 

* * * * * 

(c) * * * 

(2) * * * 

(i) For reconciliation of cost-sharing 

reduction amounts advanced for the 

2014 and 2015 benefit years, an issuer 

of a QHP using the standard or 

simplified methodology may calculate 

claims amounts attributable to EHB, 

including cost sharing amounts 

attributable to EHB, by reducing total 

claims amounts by the plan-specific 

percentage estimate of non-essential 

health benefit claims submitted on the 

Uniform Rate Review Template for the 

corresponding benefit year, if the 

following conditions are met: 

(A) The non-essential health benefits 

percentage estimate is less than 2 

percent; and 

(B) Out-of-pocket expenses for nonEHB benefits are included in the 

calculation of amounts subject to a 

deductible or annual limitation on cost 

sharing, but copayments and 

coinsurance rates on non-EHB benefits 

are not reduced under the plan 

variation. 

(ii) [Reserved] 

* * * * * 

■ 59. Section 156.602 is amended by 

revising paragraph (d) to read as 

follows: 

§ 156.602 Other coverage that qualifies as 

minimum essential coverage. 

* * * * * 

(d) State high risk pool coverage. A 

qualified high risk pool as defined by 

section 2744(c)(2) of the Public Health 

Service Act established on or before 

November 26, 2014 in any State. 

* * * * * 

■ 60. Section 156.800 is amended by 

revising paragraph (c) to read as follows: 

§ 156.800 Available remedies; Scope. 

* * * * * 

(c) Compliance standard. For calendar 

years 2014 and 2015, sanctions under 

this subpart will not be imposed if the 

QHP issuer has made good faith efforts 

to comply with applicable requirements. 

* * * * * 

■ 61. Section 156.815 is added to 

subpart I to read as follows: 

§ 156.815 Plan suppression. 

(a) Suppression means temporarily 

making a QHP certified to be offered 

through the Federally-facilitated 


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Exchange unavailable for enrollment 

through the Federally-facilitated 

Exchange. 

(b) Grounds for suppression. A QHP 

may be suppressed as described in 

paragraph (a) of this section on one or 

more of the following grounds: 

(1) The QHP issuer notifies HHS of its 

intent to withdraw the QHP from a 

Federally-facilitated Exchange when 

one of the exceptions to guaranteed 

renewability of coverage related to 

discontinuing a particular product or 

discontinuing all coverage under 

§ 147.106(c) or (d) of this subchapter 

applies; 

(2) Data submitted for the QHP is 

incomplete or inaccurate; 

(3) The QHP is in the process of being 

decertified as described in § 156.810(c) 

or (d), or the QHP issuer is appealing a 

completed decertification as described 

in subpart J of this part; 

(4) The QHP issuer offering the QHP 

is the subject of a pending, ongoing, or 

final State regulatory or enforcement 

action or determination that could affect 

the issuer’s ability to enroll consumers 

or otherwise relates to the issuer 

offering QHPs in the Federallyfacilitated Exchanges; or 

(5) One of the exceptions to 

guaranteed availability of coverage 

related to special rules for network 

plans or financial capacity limits under 

§ 147.104(c) or (d) of this subchapter 

applies. 

(c) A multi-State plan as defined in 

§ 155.1000(a) of this subchapter may be 

suppressed as described in paragraph (a) 

of this section if OPM notifies the 

Exchange that: 

(1) OPM has found a compliance 

violation within the multi-State plan, or 

(2) One of the grounds for suppression 

in paragraph (b) of this section exists for 

the multi-State plan. 

■ 62. Section 156.1130 is added to 

subpart L to read as follows: 

§ 156.1130 Quality improvement strategy. 

(a) General requirement. A QHP issuer 

participating in an Exchange for 2 or 

more consecutive years must implement 

and report on a quality improvement 

strategy including a payment structure 

that provides increased reimbursement 

or other market-based incentives in 

accordance with the health care topic 

areas in section 1311(g)(1) of the 

Affordable Care Act, for each QHP 

offered in an Exchange, consistent with 

the guidelines developed by HHS under 

section 1311(g) of the Affordable Care 

Act. 

(b) Data requirement. A QHP issuer 

must submit data that has been 

validated in a manner and timeframe 

specified by the Exchange to support the 

evaluation of quality improvement 

strategies in accordance with 

§ 155.200(d) of this subchapter. 

(c) Timeline. A QHP issuer must 

submit data annually to evaluate 

compliance with the standards for a 

quality improvement strategy in 

accordance with paragraph (a) of this 

section, in a manner and timeframe 

specified by the Exchange. 

(d) Multi-State plans. Issuers of multiState plans, as defined in § 155.1000(a) 

of this subchapter, must provide the 

data described in paragraph (b) of this 

section to the U.S. Office of Personnel 

Management, in the manner and 

timeframe specified by the U.S. Office of 

Personnel Management. 

■ 63. Section 156.1220 is amended by 

revising paragraph (c) to read as follows: 

§ 156.1220 Administrative appeals. 

* * * * * 

(c) Review by the Administrator of 

CMS. (1) Either the issuer or CMS may 

request review by the Administrator of 

CMS of the CMS hearing officer’s 

decision. A request for review of the 

CMS hearing officer’s decision must be 

submitted to the Administrator of CMS 

within 15 calendar days of the date of 

the CMS hearing officer’s decision, and 

must specify the findings or issues that 

the issuer or CMS challenges. The issuer 

or CMS may submit for review by the 

Administrator of CMS a statement 

supporting the decision of the CMS 

hearing officer. 

(2) After receiving a request for 

review, the Administrator of CMS has 

the discretion to elect to review the 

CMS hearing officer’s decision or to 

decline to review the CMS hearing 

officer’s decision. If the Administrator 

of CMS elects to review the CMS 

hearing officer’s decision, the 

Administrator of CMS will also review 

the statements of the issuer and CMS, 

and any other information included in 

the record of the CMS hearing officer’s 

decision, and will determine whether to 

uphold, reverse, or modify the CMS 

hearing officer’s decision. The issuer or 

CMS must prove its case by clear and 

convincing evidence for issues of fact. 

The Administrator of CMS will send the 

decision and the reasons for the 

decision to the issuer. 

(3) The Administrator of CMS’s 

determination is final and binding. 

PART 158—ISSUER USE OF PREMIUM 

REVENUE: REPORTING AND REBATE 

REQUIREMENTS 

■ 64. The authority citation for part 158 

continues to read as follows: 

Authority: Section 2718 of the Public 

Health Service Act (42 U.S.C. 300gg–18), as 

amended. 

■ 65. Section 158.140 is amended by 

adding paragraph (b)(1)(iii) to read as 

follows: 

§ 158.140 Reimbursement for clinical 

services provided to enrollees. 

* * * * * 

(b) * * * 

(1) * * * 

(iii) Cost-sharing reduction payments 

received by the issuer to the extent not 

reimbursed to the provider furnishing 

the item or service. 

* * * * * 

■ 66. Section 158.162 is amended by 

revising paragraph (a)(2) and adding 

paragraph (b)(2)(iv) to read as follows: 

§ 158.162 Reporting of Federal and State 

taxes. 

(a) * * * 

(2) Federal taxes not excluded from 

premium under subpart B of this part 

which include Federal income taxes on 

investment income and capital gains, as 

well as Federal employment taxes, as 

other non-claims costs. 

(b) * * * 

(2) * * * 

(iv) State employment and similar 

taxes and assessments. 

* * * * * 

■ 67. Section 158.242 is amended by 

■ a. Revising paragraph (b)(1)(iii); 

■ b. Amending paragraph (b)(1)(iv) by 

removing the period and adding ‘‘; and’’ 

in its place; and 

■ c. Adding paragraph (b)(1)(v). 

The revision and addition read as 

follows: 

§ 158.242 Recipients of rebates. 

* * * * * 

(b) * * * 

(1) * * * 

(iii) A cash refund to subscribers of 

the group health plan option for which 

the issuer is providing a rebate, who 

were enrolled in the group health plan 

option either during the MLR reporting 

year that resulted in the issuer 

providing the rebate or at the time the 

rebate is received by the policyholder; 

* * * * * 


tkelley on DSK3SPTVN1PROD with RULES2
Federal Register / Vol. 80, No. 39 / Friday, February 27, 2015 / Rules and Regulations 10877 

(v) All rebate distributions made 

under paragraphs (b)(1)(i), (ii), or (iii) of 

this section must be made within 3 

months of the policyholder’s receipt of 

the rebate. Rebate distributions made 

after 3 months must include late 

payment interest at the current Federal 

Reserve Board lending rate or 10 percent 

annually, whichever is higher, on the 

total amount of the rebate, accruing 

from the date payment was due under 

this section. 

* * * * * 

Dated: February 6, 2015. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Dated: February 17, 2015. 

Sylvia M. Burwell, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2015–03751 Filed 2–20–15; 4:15 pm] 

BILLING CODE 4120–01–P 


tkelley on DSK3SPTVN1PROD with RULES2