[Federal Register Volume 80, Number 36 (Tuesday, February 24, 2015)]
[Rules and Regulations]
[Pages 9636-9648]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-03662]


-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Part 600

[CMS-2391-FN]
RIN 0938-ZB18


Basic Health Program; Federal Funding Methodology for Program 
Year 2016

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

ACTION: Final methodology.

-----------------------------------------------------------------------

SUMMARY: This document provides the methodology and data sources 
necessary to determine federal payment amounts made in program year 
2016 to states that elect to establish a Basic Health Program under the 
Affordable Care Act to offer health benefits coverage to low-income 
individuals otherwise eligible to purchase coverage through Affordable 
Insurance Exchanges.

DATES: These regulations are effective on January 1, 2016.

FOR FURTHER INFORMATION CONTACT: Christopher Truffer, (410) 786-1264; 
Stephanie Kaminsky (410) 786-4653.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. Summary of Proposed Provisions and Analysis of and Responses to 
Public Comments on the Proposed Methodology
    A. Background
    B. Overview of the Funding Methodology and Calculation of the 
Payment Amount
    C. Required Rate Cells
    D. Sources and State Data Considerations
    E. Discussion of Specific Variables Used in Payment Equations
    F. Adjustments for American Indians and Alaska Natives
    G. State Option to Use 2015 QHP Premiums for BHP Payments
    H. State Option To Include Retrospective State-Specific Health 
Risk Adjustment in Certified Methodology
III. Provisions of the Final Methodology
    A. Overview of the Funding Methodology and Calculation of the 
Payment Amount
    B. Federal BHP Payment Rate Cells
    C. Sources and State Data Considerations
    D. Discussion of Specific Variables Used in Payment Equations
    E. Adjustments for American Indians and Alaska Natives
    F. State Option To Use 2015 QHP Premiums for BHP Payments
    G. State Option To Include Retrospective State-Specific Health 
Risk Adjustment in Certified Methodology
IV. Collection of Information Requirements
V. Regulatory Impact Statement
    A. Overall Impact
    B. Unfunded Mandates Reform Act
    C. Regulatory Flexibility Act
    D. Federalism

Acronyms

    To assist the reader, the following acronyms are used in this 
document.
[Delta]AV Change in Actuarial Value
APTC Advance payment of the premium tax credit
ARP Adjusted reference premium
AV Actuarial value
BHP Basic Health Program
CCIIO CMS' Center for Consumer Information and Insurance Oversight
CDC Centers for Disease Control and Prevention
CHIP Children's Health Insurance Program
CPI-U Consumer price index for all urban consumers
CSR Cost-sharing reduction
EHB Essential Health Benefit
FPL Federal poverty line
FRAC Factor for removing administrative costs
IRF Income reconciliation factor
IRS Internal Revenue Service
IUF Induced utilization factor
QHP Qualified health plan
OTA Office of Tax Analysis [of the U.S. Department of Treasury]
PHF Population health factor
PTC Premium tax credit
PTCF Premium tax credit formula
PTF Premium trend factor
RP Reference premium
SBM State Based Marketplace
TRAF Tobacco rating adjustment factor

I. Background

    The Patient Protection and Affordable Care Act (Pub. L. 111-148, 
enacted on March 23, 2010), together with the Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152, enacted on March 30, 2010) 
(collectively referred as the Affordable

[[Page 9637]]

Care Act) provides for the establishment of Affordable Insurance 
Exchanges (Exchanges, also called the Health Insurance Marketplace) 
that provide access to affordable health insurance coverage offered by 
qualified health plans (QHPs). Individuals who enroll, or whose family 
member enrolls, in a QHP cannot be eligible for health coverage under 
other federally supported health benefits programs or through 
affordable employer-sponsored insurance coverage and have incomes above 
100 percent but no more than 400 percent of the federal poverty line 
(FPL), or have income below that level but be lawfully present non-
citizens ineligible for Medicaid because of immigration status. 
Individuals enrolled through Marketplaces in coverage offered by QHPs 
may qualify for the federal premium tax credit (PTC) or federally-
funded cost-sharing reductions (CSRs) based on their household income, 
to make coverage affordable.
    In the states that elect to operate a Basic Health Program (BHP), 
BHP will make affordable health benefits coverage available for 
individuals under age 65 with household incomes between 133 percent and 
200 percent of the FPL who are not otherwise eligible for Medicaid, the 
Children's Health Insurance Program (CHIP), or affordable employer-
sponsored coverage. (For those states that have expanded Medicaid 
coverage under section 1902(a)(10)(A)(i)(VIII) of the Social Security 
Act (the Act), the lower income threshold for BHP eligibility is 
effectively 138 percent due to the application of a required 5 percent 
income disregard in determining the upper limits of Medicaid income 
eligibility (section 1902(e)(14)(I) of the Act).) Federal funding will 
be available for BHP based on the amount of PTC and CSRs that BHP 
enrollees would have received had they been enrolled in QHPs through 
Marketplaces.
    In the March 12, 2014 Federal Register (79 FR 14112), we published 
a final rule entitled the ``Basic Health Program; State Administration 
of Basic Health Programs; Eligibility and Enrollment in Standard Health 
Plans; Essential Health Benefits in Standard Health Plans; Performance 
Standards for Basic Health Programs; Premium and Cost Sharing for Basic 
Health Programs; Federal Funding Process; Trust Fund and Financial 
Integrity'' (hereinafter referred to as the BHP final rule) 
implementing section 1331 of the Affordable Care Act), which directs 
the establishment of BHP. The BHP final rule establishes the standards 
for state and federal administration of BHP, including provisions 
regarding eligibility and enrollment, benefits, cost-sharing 
requirements and oversight activities. While the BHP final rule 
codifies the overall statutory requirements and basic procedural 
framework for the funding methodology, it does not contain the specific 
information necessary to determine federal payments. We anticipated 
that the methodology would be based on data and assumptions that would 
reflect ongoing operations and experience of BHP programs, as well as 
the operation of the Marketplaces. For this reason, the BHP final rule 
indicated that the development and publication of the funding 
methodology, including any data sources, would be addressed in a 
separate annual BHP Payment Notice.
    In the BHP final rule, we specified that the BHP Payment Notice 
process would include the annual publication of both a proposed and 
final BHP Payment Notice. The proposed BHP Payment Notice would be 
published in the Federal Register each October, and would describe the 
proposed methodology for the upcoming BHP program year, including how 
the Secretary considered the factors specified in section 1331(d)(3) of 
the Affordable Care Act, along with the proposed data sources used to 
determine the federal BHP payment rates. The final BHP Payment Notice 
would be published in the Federal Register in February, and would 
include the final BHP funding methodology, as well as the federal BHP 
payment rates for the next BHP program year. For example, payment rates 
published in February 2015 would apply to BHP program year 2016, 
beginning in January 2016. As discussed in section III.C of this 
methodology, state data needed to calculate the federal BHP payment 
rates for the final BHP Payment Notice must be submitted to CMS.
    As described in the BHP final rule, once the final methodology has 
been published, we will only make modifications to the BHP funding 
methodology on a prospective basis with limited exceptions. The BHP 
final rule provided that retrospective adjustments to the state's BHP 
payment amount may occur to the extent that the prevailing BHP funding 
methodology for a given program year permits adjustments to a state's 
federal BHP payment amount due to insufficient data for prospective 
determination of the relevant factors specified in the payment notice. 
Additional adjustments could be made to the payment rates to correct 
errors in applying the methodology (such as mathematical errors).
    Under section 1331(d)(3)(ii) of the Affordable Care Act, the 
funding methodology and payment rates are expressed as an amount per 
BHP enrollee for each month of enrollment. These payment rates may vary 
based on categories or classes of enrollees. Actual payment to a state 
would depend on the actual enrollment in coverage through the state 
BHP. A state that is approved to implement BHP must provide data 
showing quarterly enrollment in the various federal BHP payment rate 
cells. The data submission requirements associated with this will be 
published subsequent to the proposed methodology.

II. Summary of Proposed Provisions and Analysis of and Responses to 
Public Comments on the Proposed Methodology

    The following sections, arranged by subject area, include a summary 
of the public comments that we received, and our responses. For a 
complete and full description of the BHP proposed funding methodology, 
see the ``Basic Health Program; Federal Funding Methodology for Program 
Year 2016'' proposed methodology published in the October 23, 2014 
Federal Register (79 FR 63363).
    We received a total of 3 timely comments from individuals and 
groups advocating on behalf of consumers and health care providers. The 
public comments received ranged from general support or opposition to 
the proposed methodology and BHP to specific comments regarding the 
proposed methodological factors.

A. Background

    In the October 23, 2014 (79 FR 63363) proposed methodology, we 
specified the methodology of how the federal BHP payments would be 
calculated. For specific discussions, please refer to the October 23, 
2014 proposed methodology (79 FR 63363).
    We received the following comments on the background information 
included in the proposed methodology:
    Comment: Some commenters expressed general opposition to BHP and 
the payment methodology.
    Response: The comments were outside the scope of the BHP program 
and payment methodology.
    Final Decision: After careful consideration of the public comments, 
we are finalizing our proposed methodology for how the federal BHP 
payments will be calculated.

[[Page 9638]]

B. Overview of the Funding Methodology and Calculation of the Payment 
Amount

    We proposed in the overview of the funding methodology to calculate 
the PTC and CSR as consistently as possible and in general alignment 
with the methodology used by Marketplaces to calculate the advance 
payments of the PTC and CSR, and by the Internal Revenue Service (IRS) 
to calculate the final PTC. We proposed in this section four equations 
that comprise the overall BHP funding methodology. For specific 
discussions, please refer to the October 23, 2014 proposed methodology 
(79 FR 63363).
    We received no comments regarding the overview of the funding 
methodology and calculation of the payment amount. We are finalizing 
the BHP overview of the funding methodology and the payment amount for 
FY 2016.

C. Required Rate Cells

    In this section, we proposed that a state implementing BHP provide 
us with an estimate of the number of BHP enrollees it will enroll in 
the upcoming BHP program, by applicable rate cell, to determine the 
federal BHP payment amounts. For each state, we proposed using rate 
cells that separate the BHP population into separate cells based on the 
following five factors: age; geographic rating area; coverage status; 
household size; and income. For specific discussions, please refer to 
the October 23, 2014 proposed methodology (79 FR 63363).
    We received the following comment on the proposed rate cells:
    Comment: One commenter expressed concern that defining geographic 
rating areas as counties would not capture potential differences in 
health care costs and qualified health plan premiums in different parts 
of the county, and recommended defining the rating area by zip code 
instead.
    Response: We believe that this is unlikely to have a significant 
impact on the federal BHP payment. In addition, we believe that it 
would make state operation of the program substantially more 
challenging.
    Final Decision: After careful consideration of the comments, we are 
finalizing the criteria and definitions of the rate cells to determine 
the federal BHP payment amounts for FY 2016.

D. Sources and State Data Considerations

    We proposed in this section to use, to the extent possible, data 
submitted to the federal government by QHP issuers seeking to offer 
coverage through a Marketplace to determine the federal BHP payment 
cell rates. However, in states operating a State Based Marketplace 
(SBM), we proposed that such states submit required data for CMS to 
calculate the federal BHP payment rates in those states. For specific 
discussions, please refer to the October 23, 2014 proposed methodology 
(79 FR 63363).
    We did not receive any comments on the ``Sources and State Data 
Considerations'' section and are finalizing the BHP methodology as 
proposed.

E. Discussion of Specific Variables Used in Payment Equations

    In this section, we proposed 11 specific variables to use in the 
payment equations that comprise the overall BHP funding methodology. 
(10 variables are described in section III.D of this document, and the 
premium trend factor is described in section III.F.) For each proposed 
variable, we included a discussion on the assumptions and data sources 
used in developing the variables. For specific discussions, please 
refer to the October 23, 2014 proposed methodology (79 FR 63363).
    We did not receive any comments on the ``Specific Variables Used in 
Payment Equations'' section and are finalizing the BHP methodology as 
proposed.

F. Adjustments for American Indians and Alaska Natives

    We proposed to make several adjustments for American Indians and 
Alaska Natives when calculating the CSR portion of the federal BHP 
payment rate to be consistent with the Marketplace rules. For specific 
discussions, please refer to the October 23, 2014 proposed methodology 
(79 FR 63363).
    We did not receive any comments on the ``Adjustments for American 
Indians and Alaska Natives'' section and are finalizing the BHP 
methodology as proposed.

G. State Option to Use 2015 QHP Premiums for BHP Payments

    In this section, we proposed to provide states implementing BHP 
with the option to use the 2015 QHP premiums multiplied by a premium 
trend factor to calculate the federal BHP payment rates instead of 
using the 2016 QHP premiums. For specific discussions, please refer to 
the October 23, 2014 proposed methodology (79 FR 63363).
    We did not receive any comments on the ``State Option to Use 2015 
QHP Premiums for BHP Payments'' section and are finalizing the BHP 
methodology as proposed.

H. State Option To Include Retrospective State-Specific Health Risk 
Adjustment in Certified Methodology

    In this section, we proposed to provide states implementing BHP the 
option to develop a methodology to account for the impact that 
including the BHP population in the Marketplace would have had on QHP 
premiums based on any differences in health status between the BHP 
population and persons enrolled through the Marketplace. For specific 
discussions, please refer to the October 23, 2014 proposed methodology 
(79 FR 63363).
    We did not receive any comments on the ``State Option to Include 
Retrospective State-specific Health Risk Adjustment in Certified 
Methodology'' section and are finalizing the BHP methodology as 
proposed.

III. Provisions of the Final Methodology

A. Overview of the Funding Methodology and Calculation of the Payment 
Amount

    Section 1331(d)(3) of the Affordable Care Act directs the Secretary 
to consider several factors when determining the federal BHP payment 
amount, which, as specified in the statute, must equal 95 percent of 
the value of the PTC and CSRs that BHP enrollees would have been 
provided had they enrolled in a QHP through a Marketplace. Thus, the 
BHP funding methodology is designed to calculate the PTC and CSRs as 
consistently as possible and in general alignment with the methodology 
used by Marketplaces to calculate the advance payments of the PTC and 
CSRs, and by the IRS to calculate final PTCs. In general, we rely on 
values for factors in the payment methodology specified in statute or 
other regulations as available, and we have developed values for other 
factors not otherwise specified in statute, or previously calculated in 
other regulations, to simulate the values of the PTC and CSRs that BHP 
enrollees would have received if they had enrolled in QHPs offered 
through a Marketplace. In accordance with section 1331(d)(3)(A)(iii) of 
the Affordable Care Act, the final funding methodology must be 
certified by CMS' Chief Actuary, in consultation with the Office of Tax 
Analysis (OTA) of the Department of the Treasury, as having met the 
requirements of section 1331(d)(3)(A)(ii) of the Affordable Care Act.
    Section 1331(d)(3)(A)(ii) of the Affordable Care Act specifies that 
the

[[Page 9639]]

payment determination ``shall take into account all relevant factors 
necessary to determine the value of the premium tax credits and cost-
sharing reductions that would have been provided to eligible 
individuals . . . including the age and income of the enrollee, whether 
the enrollment is for self-only or family coverage, geographic 
differences in average spending for health care across rating areas, 
the health status of the enrollee for purposes of determining risk 
adjustment payments and reinsurance payments that would have been made 
if the enrollee had enrolled in a qualified health plan through a 
Marketplace, and whether any reconciliation of the credit or cost-
sharing reductions would have occurred if the enrollee had been so 
enrolled.'' The payment methodology takes each of these factors into 
account. This methodology is the same as the 2015 payment methodology, 
with updated values but no changes in methods.
    We have developed a methodology that the total federal BHP payment 
amount would be based on multiple ``rate cells'' in each state. Each 
``rate cell'' represents a unique combination of age range, geographic 
area, coverage category (for example, self-only or two-adult coverage 
through BHP), household size, and income range as a percentage of FPL. 
Thus, there are distinct rate cells for individuals in each coverage 
category within a particular age range who reside in a specific 
geographic area and are in households of the same size and income 
range. We note that the development of the BHP payment rates will be 
consistent with each state's rules on age rating. Thus, in the case of 
a state that does not use age as a rating factor on the Marketplace, 
the BHP payment rates would not vary by age.
    The rate for each rate cell will be calculated in two parts. The 
first part (as described in Equation (1)) will equal 95 percent of the 
estimated PTC that would have been paid if a BHP enrollee in that rate 
cell had instead enrolled in a QHP in the Marketplace. The second part 
(as described in Equation (2)) will equal 95 percent of the estimated 
CSR payment that would have been made if a BHP enrollee in that rate 
cell had instead enrolled in a QHP in the Marketplace. These 2 parts 
will be added together and the total rate for that rate cell will be 
equal to the sum of the PTC and CSR rates.
    To calculate the total federal BHP payment, Equation (1) will be 
used to calculate the estimated PTC for individuals in each rate cell 
and Equation (2) will be used to calculate the estimated CSR payments 
for individuals in each rate cell. By applying the equations separately 
to rate cells based on age, income and other factors, we effectively 
take those factors into account in the calculation. In addition, the 
equations take into account additional relevant variables that are 
needed to determine the estimated PTC and CSR payments for individuals 
in each rate cell. Each of the variables in the equations is defined 
below, and further detail is provided later in this section of the 
payment notice.
    In addition, we describe how we will calculate the adjusted 
reference premium (described later in this section of the payment 
methodology) that is used in Equations (1) and (2). This is defined in 
Equation (3a) and Equation (3b).
Equation 1: Estimated PTC by Rate Cell
    The estimated PTC, on a per enrollee basis, will be calculated for 
each rate cell for each state based on age range, geographic area, 
coverage category, household size, and income range. The PTC portion of 
the rate will be calculated in a manner consistent with the methodology 
used to calculate the PTC for persons enrolled in a QHP, with 3 
adjustments. First, the PTC portion of the rate for each rate cell will 
represent the mean, or average, expected PTC that all persons in the 
rate cell would receive, rather than being calculated for each 
individual enrollee. Second, the reference premium used to calculate 
the PTC (described in more detail later in the section) will be 
adjusted for BHP population health status, and in the case of a state 
that elects to use 2015 premiums for the basis of the BHP federal 
payment, for the projected change in the premium from the 2015 to 2016, 
to which the rates announced in the final payment methodology would 
apply. These adjustments are described in Equation (3a) and Equation 
(3b). Third, the PTC will be adjusted prospectively to reflect the 
mean, or average, net expected impact of income reconciliation on the 
combination of all persons enrolled in BHP; this adjustment, as 
described in section III.D.5 of this methodology, will account for the 
impact on the PTC that would have occurred had such reconciliation been 
performed. Finally, the rate is multiplied by 95 percent, consistent 
with section 1331(d)(3)(A)(i) of the Affordable Care Act. We note that 
in the situation where the average income contribution of an enrollee 
would exceed the adjusted reference premium, we will calculate the PTC 
to be equal to 0 and would not allow the value of the PTC to be 
negative.
    Consistent with this description, equation (1) is defined as:
    [GRAPHIC] [TIFF OMITTED] TR24FE15.000
    
PTCa,g,c,h,i = Premium tax credit portion of BHP payment rate
a = Age range
g = Geographic area
c = Coverage status (self-only or applicable category of family 
coverage) obtained through BHP
h = Household size
i = Income range (as percentage of FPL)
ARPa,g,c = Adjusted reference premium
Ih,i,j = Income (in dollars per month) at each 1 percentage-point 
increment of FPL
j = j<SUP>th</SUP> percentage-point increment FPL
n = Number of income increments used to calculate the mean PTC
PTCFh,i,j = Premium Tax Credit Formula percentage
IRF = Income reconciliation factor
Equation 2: Estimated CSR Payment by Rate Cell
    The CSR portion of the rate will be calculated for each rate cell 
for each state based on age range, geographic area, coverage category, 
household size, and income range defined as a percentage of FPL. The 
CSR portion of the rate will be calculated in a manner consistent with 
the methodology used to calculate the CSR advance payments for persons 
enrolled in a QHP, as described in the final rule we published in the 
Federal Register on March 11, 2014 entitled ``HHS Notice of Benefit and 
Payment Parameters for 2015'' final rule (79 FR 13744), with 3 
principal adjustments. (We will make a separate calculation that 
includes different adjustments for American Indian/Alaska Native BHP 
enrollees, as described in section III.D.1 of this methodology.) For 
the first adjustment, the CSR rate, like the PTC rate, will represent 
the mean expected CSR subsidy that would be paid on behalf of all 
persons in the rate cell, rather than being calculated for each 
individual enrollee. Second, this

[[Page 9640]]

calculation will be based on the adjusted reference premium, as 
described in section III.A.3 of this methodology. Third, this equation 
uses an adjusted reference premium that reflects premiums charged to 
non-tobacco users, rather than the actual premium that is charged to 
tobacco users to calculate CSR advance payments for tobacco users 
enrolled in a QHP. Accordingly, the equation includes a tobacco rating 
adjustment factor that would account for BHP enrollees' estimated 
tobacco-related health costs that are outside the premium charged to 
non-tobacco-users. Finally, the rate will be multiplied by 95 percent, 
as provided in section 1331(d)(3)(A)(i) of the Affordable Care Act.
    Consistent with the methodology described above, equation (2) is 
defined as:
[GRAPHIC] [TIFF OMITTED] TR24FE15.001

CSRa,g,c,h,i = Cost-sharing reduction subsidy portion of BHP payment 
rate
a = Age range
g = Geographic area
c = Coverage status (self-only or applicable category of family 
coverage) obtained through BHP
h = Household size
i = Income range (as percentage of FPL)
ARPa,g,c = Adjusted reference premium
TRAF = Tobacco rating adjustment factor
FRAC = Factor removing administrative costs
AV = Actuarial value of plan (as percentage of allowed benefits 
covered by the applicable QHP without a cost-sharing reduction 
subsidy)
IUFh,i = Induced utilization factor
[Delta]AVh,i = Change in actuarial value (as percentage of allowed 
benefits)
Equation 3a and Equation 3b: Adjusted Reference Premium Variable (Used 
in Equations 1 and 2)
    As part of these calculations for both the PTC and CSR components, 
the value of the adjusted reference premium as described below. 
Consistent with the approach last year, we will allow states to choose 
between using the actual 2016 QHP premiums or the 2015 QHP premiums 
multiplied by the premium trend factor (as described in section III.F 
of this methodology). Therefore, we describe below how we would 
calculate the adjusted reference premium under each option.
    In the case of a state that elects to use the reference premium 
based on the 2016 premiums, we will calculate the value of the adjusted 
reference premium as specified in Equation (3a). The adjusted reference 
premium will be equal to the reference premium, which will be based on 
the second lowest cost silver plan premium in 2016, multiplied by the 
BHP population health factor (described in section III.D of this 
methodology), which will reflect the projected impact that enrolling 
BHP-eligible individuals in QHPs on a Marketplace would have had on the 
average QHP premium.
[GRAPHIC] [TIFF OMITTED] TR24FE15.002

ARPa,g,c = Adjusted reference premium
a = Age range
g = Geographic area
c = Coverage status (self-only or applicable category of family 
coverage) obtained through BHP
RPa,g,c = Reference premium
PHF = Population health factor

    In the case of a state that elects to use the reference premium 
based on the 2015 premiums (as described in section III.F of this 
methodology), we will calculate the value of the adjusted reference 
premium as specified in Equation (3b). The adjusted reference premium 
will be equal to the reference premium, which will be based on the 
second lowest cost silver plan premium in 2015, multiplied by the BHP 
population health factor (described in section III.D of this 
methodology), which will reflect the projected impact that enrolling 
BHP-eligible individuals in QHPs on a Marketplace would have had on the 
average QHP premium, and by the premium trend factor, which will 
reflect the projected change in the premium level between 2015 and 2016 
(including the estimated impact of changes resulting from the 
transitional reinsurance program established in section 1341 of the 
Affordable Care Act).
[GRAPHIC] [TIFF OMITTED] TR24FE15.003

ARPa,g,c = Adjusted reference premium
a = Age range
g = Geographic area
c = Coverage status (self-only or applicable category of family 
coverage) obtained through BHP
RPa,g,c = Reference premium
PHF = Population health factor
PTF = Premium trend factor
Equation 4: Determination of Total Monthly Payment for BHP Enrollees in 
Each Rate Cell
    In general, the rate for each rate cell will be multiplied by the 
number of BHP enrollees in that cell (that is, the number of enrollees 
that meet the criteria for each rate cell) to calculate the total 
monthly BHP payment. This calculation is shown in Equation 4 below.
[GRAPHIC] [TIFF OMITTED] TR24FE15.004

PMT = Total monthly BHP payment
PTCa,g,c,h,i = Premium tax credit portion of BHP payment rate
CSRa,g,c,h,i = Cost-sharing reduction subsidy portion of BHP payment 
rate
Ea,g,c,h,i = Number of BHP enrollees
a = Age range
g = Geographic area

[[Page 9641]]

c = Coverage status (self-only or applicable category of family 
coverage) obtained through BHP
h = Household size
i = Income range (as percentage of FPL)

B. Federal BHP Payment Rate Cells

    We will require that a state implementing BHP provide us an 
estimate of the number of BHP enrollees it projects will enroll in the 
upcoming BHP program year, by applicable rate cell, prior to the first 
quarter of program operations. Upon our approval of such estimates as 
reasonable, they will be used to calculate the prospective payment for 
the first and subsequent quarters of program operation until the state 
has provided us actual enrollment data. These data will be required to 
calculate the final BHP payment amount, and make any necessary 
reconciliation adjustments to the prior quarters' prospective payment 
amounts due to differences between projected and actual enrollment. In 
subsequent quarters, quarterly deposits to the state's trust fund will 
be based on the most recent actual enrollment data submitted to us. 
Procedures will ensure that federal payments to a state reflect actual 
BHP enrollment during a year, within each applicable category, and 
prospectively determined federal payment rates for each category of BHP 
enrollment, with such categories defined in terms of age range, 
geographic area, coverage status, household size, and income range, as 
explained above.
    We will require the use of certain rate cells as part of the 
methodology. For each state, we will use rate cells that separate the 
BHP population into separate cells based on the five factors described 
below.
    Factor 1--Age: We will separate enrollees into rate cells by age, 
using the following age ranges that capture the widest variations in 
premiums under HHS's Default Age Curve: \1\
---------------------------------------------------------------------------

    \1\ This curve is used to implement the Affordable Care Act's 
3:1 limit on age-rating in states that do not create an alternative 
rate structure to comply with that limit. The curve applies to all 
individual market plans, both within and outside the Exchange. The 
age bands capture the principal allowed age-based variations in 
premiums as permitted by this curve. More information can be found 
at http://www.cms.gov/CCIIO/Resources/Files/Downloads/market-reforms-guidance-2-25-2013.pdf. Both children and adults under age 
21 are charged the same premium. For adults age 21-64, the age bands 
in this methodology divide the total age-based premium variation 
into the three most equally-sized ranges (defining size by the ratio 
between the highest and lowest premiums within the band) that are 
consistent with the age-bands used for risk-adjustment purposes in 
the HHS-Developed Risk Adjustment Model. For such age bands, see 
Table 5, ``Age-Sex Variables,'' in HHS-Developed Risk Adjustment 
Model Algorithm Software, June 2, 2014, http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/ra-tables-03-27-2014.xlsx.
---------------------------------------------------------------------------

    <bullet> Ages 0-20.
    <bullet> Ages 21-34.
    <bullet> Ages 35-44.
    <bullet> Ages 45-54.
    <bullet> Ages 55-64.
    Factor 2--Geographic area: For each state, we will separate 
enrollees into rate cells by geographic areas within which a single 
reference premium is charged by QHPs offered through the state's 
Marketplace. Multiple, non-contiguous geographic areas will be 
incorporated within a single cell, so long as those areas share a 
common reference premium.\2\
---------------------------------------------------------------------------

    \2\ For example, a cell within a particular state might refer to 
``County Group 1,'' ``County Group 2,'' etc., and a table for the 
state would list all the counties included in each such group. These 
geographic areas are consistent with the geographic areas 
established under the 2014 Market Reform Rules. They also reflect 
the service area requirements applicable to qualified health plans, 
as described in 45 CFR 155.1055, except that service areas smaller 
than counties are addressed as explained below.
---------------------------------------------------------------------------

    Factor 3--Coverage status: We will separate enrollees into rate 
cells by coverage status, reflecting whether an individual is enrolled 
in self-only coverage or persons are enrolled in family coverage 
through BHP, as provided in section 1331(d)(3)(A)(ii) of the Affordable 
Care Act. Among recipients of family coverage through BHP, separate 
rate cells, as explained below, will apply based on whether such 
coverage involves two adults alone or whether it involves children.
    Factor 4--Household size: We will separate enrollees into rate 
cells by household size that states use to determine BHP enrollees' 
income as a percentage of the FPL under 42 CFR 600.320. We will require 
separate rate cells for several specific household sizes. For each 
additional member above the largest specified size, we will publish 
instructions for how we will develop additional rate cells and 
calculate an appropriate payment rate based on data for the rate cell 
with the closest specified household size. We will publish separate 
rate cells for household sizes of 1, 2, 3, 4, and 5, as unpublished 
analyses of American Community Survey data conducted by the Urban 
Institute, which take into account unaccepted offers of employer-
sponsored insurance, as well as income, Medicaid and CHIP eligibility, 
citizenship and immigration status, and current health coverage status, 
find that less than 1 percent of all BHP-eligible persons live in 
households of size 5 or greater.
    Factor 5--Income: For households of each applicable size, we will 
create separate rate cells by income range, as a percentage of FPL. The 
PTC that a person would receive if enrolled in a QHP varies by income, 
both in level and as a ratio to the FPL, and the CSR varies by income 
as a percentage of FPL. Thus, separate rate cells will be used to 
calculate federal BHP payment rates to reflect different bands of 
income measured as a percentage of FPL. We will use the following 
income ranges, measured as a ratio to the FPL:
    <bullet> 0 to 50 percent of the FPL.
    <bullet> 51 to 100 percent of the FPL.
    <bullet> 101 to 138 percent of the FPL.\3\
---------------------------------------------------------------------------

    \3\ The three lowest income ranges would be limited to lawfully 
present immigrants who are ineligible for Medicaid because of 
immigration status.
---------------------------------------------------------------------------

    <bullet> 139 to 150 percent of the FPL.
    <bullet> 151 to 175 percent of the FPL.
    <bullet> 176 to 200 percent of the FPL.
    These rate cells will only be used to calculate the federal BHP 
payment amount. A state implementing BHP will not be required to use 
these rate cells or any of the factors in these rate cells as part of 
the state payment to the standard health plans participating in BHP or 
to help define BHP enrollees' covered benefits, premium costs, or out-
of-pocket cost-sharing levels.
    We will use averages to define federal payment rates, both for 
income ranges and age ranges, rather than varying such rates to 
correspond to each individual BHP enrollee's age and income level. We 
believe that this approach will increase the administrative feasibility 
of making federal BHP payments and reduce the likelihood of 
inadvertently erroneous payments resulting from highly complex 
methodologies. We believe that this approach will not significantly 
change federal payment amounts, since within applicable ranges; the 
BHP-eligible population is distributed relatively evenly.

C. Sources and State Data Considerations

    To the extent possible, we will use data submitted to the federal 
government by QHP issuers seeking to offer coverage through a 
Marketplace to perform the calculations that determine federal BHP 
payment cell rates.
    States operating a State Based Marketplace in the individual 
market, however, must provide certain data, including premiums for 
second lowest cost silver plans, by geographic area, in order for CMS 
to calculate the federal BHP payment rates in those states. We will 
require that a state operating a State Based Marketplace and interested 
in obtaining the applicable federal BHP payment rates for its state 
must submit

[[Page 9642]]

such data accurately, completely, and as specified by CMS, by no later 
than October 15, 2015, for CMS to calculate the applicable rates for 
2016. If additional state data (that is, in addition to the second 
lowest cost silver plan premium data) are needed to determine the 
federal BHP payment rate, such data must be submitted in a timely 
manner, and in a format specified by CMS to support the development and 
timely release of annual BHP payment notices. The specifications for 
data collection to support the development of BHP payment rates for 
2016 were published in CMS guidance and are available at http://www.medicaid.gov/Federal-Policy-Guidance/Federal-Policy-Guidance.html.
    If a state operating a SBM provides the necessary data accurately, 
completely, and as specified by CMS, but after the date specified 
above, we anticipate publishing federal payment rates for such a state 
in a subsequent Payment Notice. As noted in the BHP final rule, a state 
may elect to implement its BHP after a program year has begun. In such 
an instance, we require that the state, if operating a SBM, submit its 
data no later than 30 days after the Blueprint submission for CMS to 
calculate the applicable federal payment rates. We further require that 
the BHP Blueprint itself must be submitted for Secretarial 
certification with an effective date of no sooner than 120 days after 
submission of the BHP Blueprint. In addition, the state must ensure 
that its Blueprint includes a detailed description of how the state 
will coordinate with other insurance affordability programs to 
transition and transfer BHP-eligible individuals out of their existing 
QHP coverage, consistent with the requirements set forth in 42 CFR 
600.330 and 600.425. We believe that this 120-day period is necessary 
to establish the requisite administrative structures and ensure that 
all statutory and regulatory requirements are satisfied.

D. Discussion of Specific Variables Used in Payment Equations

1. Reference Premium (RP)
    To calculate the estimated PTC that would be paid if individuals 
enrolled in QHPs through the Marketplace, we must calculate a reference 
premium (RP) because the PTC is based, in part, on the premiums for the 
applicable second lowest cost silver plan as explained in section 
III.C.4 of this methodology, regarding the Premium Tax Credit Formula 
(PTCF). Accordingly, for the purposes of calculating the BHP payment 
rates, the reference premium, in accordance with 26 U.S.C. 
36B(b)(3)(C), is defined as the adjusted monthly premium for an 
applicable second lowest cost silver plan. The applicable second lowest 
cost silver plan is defined in 26 U.S.C. 36B(b)(3)(B) as the second 
lowest cost silver plan of the individual market in the rating area in 
which the taxpayer resides, which is offered through the same 
Marketplace. We will use the adjusted monthly premium for an applicable 
second lowest cost silver plan in 2016 as the reference premium (except 
in the case of a state that elects to use the 2015 premium as the basis 
for the federal BHP payment, as described in section III.F of this 
methodology).
    The reference premium will be the premium applicable to non-tobacco 
users. This is consistent with the provision in 26 U.S.C. 36B(b)(3)(C) 
that bases the PTC on premiums that are adjusted for age alone, without 
regard to tobacco use, even for states that allow insurers to vary 
premiums based on tobacco use pursuant to 42 U.S.C. 300gg(a)(1)(A)(iv).
    Consistent with the policy set forth in 26 CFR 1.36B-3(f)(6) to 
calculate the PTC for those enrolled in a QHP through a Marketplace, we 
will not update the payment methodology, and subsequently the federal 
BHP payment rates, in the event that the second lowest cost silver plan 
used as the reference premium, or the lowest cost silver plan, changes 
(that is, terminates or closes enrollment during the year).
    The applicable second lowest cost silver plan premium will be 
included in the BHP payment methodology by age range, geographic area, 
and self-only or applicable category of family coverage obtained 
through BHP.
    American Indians and Alaska Natives in households with incomes 
below 300 percent of the FPL are eligible for a full cost sharing 
subsidy regardless of the plan they select (as described in sections 
1402(d) and 2901(a) of the Affordable Care Act). We assume that 
American Indians and Alaska Natives would be more likely to enroll in 
bronze plans as a result; thus, for American Indian/Alaska Native BHP 
enrollees, we will use the lowest cost bronze plan as the basis for the 
reference premium for the purposes of calculating the CSR portion (but 
not the PTC portion) of the federal BHP payment as described further in 
section III.E of this methodology.
    The applicable age bracket will be one dimension of each rate cell. 
We will assume a uniform distribution of ages and estimate the average 
premium amount within each rate cell. We believe that assuming a 
uniform distribution of ages within these ranges is a reasonable 
approach and would produce a reliable determination of the PTC and CSR 
components. We also believe this approach would avoid potential 
inaccuracies that could otherwise occur in relatively small payment 
cells if age distribution were measured by the number of persons 
eligible or enrolled.
    We will use geographic areas based on the rating areas used in the 
Marketplaces. We will define each geographic area so that the reference 
premium is the same throughout the geographic area. When the reference 
premium varies within a rating area, we will define geographic areas as 
aggregations of counties with the same reference premium. Although 
plans are allowed to serve geographic areas smaller than counties after 
obtaining our approval, no geographic area, for purposes of defining 
BHP payment rate cells, will be smaller than a county. We do not 
believe that this assumption will have a significant impact on federal 
payment levels and it would likely simplify both the calculation of BHP 
payment rates and the operation of BHP.
    Finally, in terms of the coverage category, federal payment rates 
will only recognize self-only and two-adult coverage, with exceptions 
that account for children who are potentially eligible for BHP. First, 
in states that set the upper income threshold for children's Medicaid 
and CHIP eligibility below 200 percent of FPL (based on modified 
adjusted gross income), children in households with incomes between 
that threshold and 200 percent of FPL would be potentially eligible for 
BHP. Currently, the only states in this category are Arizona, Idaho, 
and North Dakota.\4\ Second, BHP would include lawfully present 
immigrant children with incomes at or below 200 percent of FPL in 
states that have not exercised the option under the sections 
1903(v)(4)(A)(ii) and 2107(e)(1)(E) of the Act to qualify all otherwise 
eligible, lawfully present immigrant children for Medicaid and CHIP. 
States that fall within these exceptions would be identified based on 
their Medicaid and CHIP State Plans, and the rate cells would include 
appropriate categories of BHP family coverage for children. In other 
states, BHP eligibility will generally be restricted to adults, since 
children who are citizens or lawfully present immigrants and who live 
in households with incomes at or below 200 percent of FPL will qualify 
for Medicaid or CHIP and thus be ineligible

[[Page 9643]]

for BHP under section 1331(e)(1)(C) of the Affordable Care Act, which 
limits BHP to individuals who are ineligible for minimum essential 
coverage (as defined in section 5000A(f) of the Internal Revenue Code 
of 1986).
---------------------------------------------------------------------------

    \4\ CMCS. ``State Medicaid and CHIP Income Eligibility Standards 
Effective January 1, 2014.''
---------------------------------------------------------------------------

2. Population Health Factor (PHF)
    We include the population health factor in the methodology to 
account for the potential differences in the average health status 
between BHP enrollees and persons enrolled in the Marketplace. To the 
extent that BHP enrollees would have been enrolled in the Marketplace 
in the absence of BHP in a state, the inclusion of those BHP enrollees 
in the Marketplace may affect the average health status of the overall 
population and the expected QHP premiums.
    We currently do not believe that there is evidence that the BHP 
population would have better or poorer health status than the 
Marketplace population. At this time, there is a lack of experience 
available in the Marketplace that limits the ability to analyze the 
health differences between these groups of enrollees. In addition, 
differences in population health may vary across states. Thus, at this 
time, we believe that it is not feasible to develop a methodology to 
make a prospective adjustment to the population health factor that is 
reliably accurate.
    Given these analytic challenges and the limited data about 
Marketplace coverage and the characteristics of BHP-eligible consumers 
that will be available by the time we establish federal payment rates 
for 2016, we believe that the most appropriate adjustment for 2016 
would be 1.00.
    In the 2015 payment methodology, we included an option for states 
to include a retrospective population health status adjustment. 
Similarly, we will provide the states with the same option for the 2016 
payment methodology, as described further in section III.G of this 
methodology, to include a retrospective population health status 
adjustment in the certified methodology, which is subject to CMS review 
and approval.
    While the statute requires consideration of risk adjustment 
payments and reinsurance payments insofar as they would have affected 
the PTC and CSRs that would have been provided to BHP-eligible 
individuals had they enrolled in QHPs, we will not require that a BHP 
program's standard health plans receive such payments. As explained in 
the BHP final rule, BHP standard health plans are not included in the 
risk adjustment program operated by HHS on behalf of states. Further, 
standard health plans do not qualify for payments from the transitional 
reinsurance program established under section 1341 of the Affordable 
Care Act.\5\ To the extent that a state operating a BHP determines 
that, because of the distinctive risk profile of BHP-eligible 
consumers, BHP standard health plans should be included in mechanisms 
that share risk with other plans in the state's individual market, the 
state would need to use other methods for achieving this goal.
---------------------------------------------------------------------------

    \5\ See 45 CFR 153.400(a)(2)(iv) (BHP standard health plans are 
not required to submit reinsurance contributions), 153.20 
(definition of ``Reinsurance-eligible plan'' as not including 
``health insurance coverage not required to submit reinsurance 
contributions''), Sec.  153.230(a) (reinsurance payments under the 
national reinsurance parameters are available only for 
``Reinsurance-eligible plans'').
---------------------------------------------------------------------------

3. Income (I)
    Household income is a significant determinant of the amount of the 
PTC and CSRs that are provided for persons enrolled in a QHP through 
the Marketplace. Accordingly, the BHP payment methodology incorporates 
income into the calculations of the payment rates through the use of 
income-based rate cells. We define income in accordance with the 
definition of modified adjusted gross income in 26 U.S.C. 36B(d)(2)(B) 
and consistent with the definition in 45 CFR 155.300. Income would be 
measured relative to the FPL, which is updated periodically in the 
Federal Register by the Secretary under the authority of 42 U.S.C. 
9902(2), based on annual changes in the consumer price index for all 
urban consumers (CPI-U). In this methodology, household size and income 
as a percentage of FPL would be used as factors in developing the rate 
cells. We will use the following income ranges measured as a percentage 
of FPL: \6\
---------------------------------------------------------------------------

    \6\ These income ranges and this analysis of income apply to the 
calculation of the PTC. Many fewer income ranges and a much simpler 
analysis apply in determining the value of CSRs, as specified below.
---------------------------------------------------------------------------

    <bullet> 0-50 percent.
    <bullet> 51-100 percent.
    <bullet> 101-138 percent.
    <bullet> 139-150 percent.
    <bullet> 151-175 percent.
    <bullet> 176-200 percent.
    We will assume a uniform income distribution for each federal BHP 
payment cell. We believe that assuming a uniform income distribution 
for the income ranges would be reasonably accurate for the purposes of 
calculating the PTC and CSR components of the BHP payment and would 
avoid potential errors that could result if other sources of data were 
used to estimate the specific income distribution of persons who are 
eligible for or enrolled in BHP within rate cells that may be 
relatively small. Thus, when calculating the mean, or average, PTC for 
a rate cell, we will calculate the value of the PTC at each one 
percentage point interval of the income range for each federal BHP 
payment cell and then calculate the average of the PTC across all 
intervals. This calculation will rely on the PTC formula described 
below in section III.4 of this methodology.
    As the PTC for persons enrolled in QHPs will be calculated based on 
their income during the open enrollment period, and that income will be 
measured against the FPL at that time, we will adjust the FPL by 
multiplying the FPL by a projected increase in the CPI-U between the 
time that the BHP payment rates are published and the QHP open 
enrollment period, if the FPL is expected to be updated during that 
time. The projected increase in the CPI-U would be based on the 
intermediate inflation forecasts from the most recent OASDI and 
Medicare Trustees Reports.\7\
---------------------------------------------------------------------------

    \7\ See Table IV A1 from the 2014 reports in http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2014.pdf.
---------------------------------------------------------------------------

4. Premium Tax Credit Formula (PTCF)
    The PTC amount for a person enrolled in a QHP through a Marketplace 
is calculated in accordance with the methodology described in 26 U.S.C. 
36B(b)(2). The amount is equal to the lesser of the premium for the 
plan in which the person or household enrolls (the enrollment premiums) 
or adjusted premium for the applicable second lowest cost silver plan 
minus the contribution amount.
    In Equation 1 described in section III.A.1 of this methodology, we 
will use the formula described in 26 U.S.C. 36B(b) to calculate the 
contribution amount, which is needed to estimate the PTC for a person 
enrolled in a QHP on a Marketplace. This formula determines the 
contribution amount as a percentage of household income. The percentage 
is based on the FPL for the household income and family size, and is 
shown in the schedule specified in 26 U.S.C. 36B(b)(3)(A) and shown 
below. The difference between the contribution amount and the adjusted 
monthly premium for the applicable second lowest cost silver plan is 
the estimated amount of the PTC that would be provided for the enrollee 
(assuming that this amount is less than the enrollment premiums).
    The applicable percentage is defined in 26 U.S.C. 36B(b)(3)(A) and 
26 CFR 1.36B-3(g) as the percentage that

[[Page 9644]]

applies to a taxpayer's household income that is within an income tier 
specified in the table, increasing on a sliding scale in a linear 
manner from an initial premium percentage to a final premium percentage 
specified in the table (see Table 1):

                        Table 1--Household Income
                [Expressed as a percent of poverty line]
------------------------------------------------------------------------
  In the case of household income
(expressed as a percent of poverty     The initial     The final premium
 line) within the following income       premium        percentage is--
               tier:                 percentage is--
------------------------------------------------------------------------
Up to 133%........................               2.01               2.01
133% but less than 150%...........               3.02               4.02
150% but less than 200%...........               4.02               6.34
200% but less than 250%...........               6.34               8.10
250% but less than 300%...........               8.10               9.56
300% but not more than 400%.......               9.56               9.56
------------------------------------------------------------------------

    These are the applicable percentages for CY 2015. The applicable 
percentages will be updated in future years in accordance with 26 
U.S.C. 36B(b)(3)(A)(ii).
5. Income Reconciliation Factor (IRF)
    For persons enrolled in a QHP through a Marketplace who receive an 
advance payment of the premium tax credit (APTC), there will be an 
annual reconciliation following the end of the year to compare the 
advance payments to the correct amount of PTC based on household 
circumstances shown on the federal income tax return. Any difference 
between the latter amounts and the advance payments made during the 
year would either be paid to the taxpayer (if too little APTC was paid) 
or charged to the taxpayer as additional tax (if too much APTC was 
made, subject to any limitations in statute or regulation), as provided 
in 26 U.S.C. 36B(f).
    Section 1331(e)(2) of the Affordable Care Act specifies that an 
individual eligible for BHP may not be treated as a qualified 
individual under section 1312 eligible for enrollment in a QHP offered 
through a Marketplace. We are defining ``eligible'' to mean anyone for 
whom the state agency or the Exchange assesses or determines, based on 
the single streamlined application or renewal form, as eligible for 
enrollment in the BHP. Because enrollment in a QHP is a requirement for 
PTC for the enrolled individual's coverage, individuals determined or 
assessed as eligible for a BHP are not eligible to receive APTC 
assistance for coverage in the Marketplace. Because they do not receive 
APTC assistance, BHP enrollees, on whom the 2016 payment methodology is 
based, are not subject to the same income reconciliation as Marketplace 
consumers. Nonetheless, there may still be differences between a BHP 
enrollee's household income reported at the beginning of the year and 
the actual income over the year. These may include small changes 
(reflecting changes in hourly wage rates, hours worked per week, and 
other fluctuations in income during the year) and large changes 
(reflecting significant changes in employment status, hourly wage 
rates, or substantial fluctuations in income). There may also be 
changes in household composition. Thus, we believe that using 
unadjusted income as reported prior to the BHP program year may result 
in calculations of estimated PTC that are inconsistent with the actual 
incomes of BHP enrollees during the year. Even if the BHP program 
adjusts household income determinations and corresponding claims of 
federal payment amounts based on household reports during the year or 
data from third-party sources, such adjustments may not fully capture 
the effects of tax reconciliation that BHP enrollees would have 
experienced had they been enrolled in a QHP through a Marketplace and 
received APTC assistance.
    Therefore, we are including in Equation 1 an income adjustment 
factor that would account for the difference between calculating 
estimated PTC using: (a) Income relative to FPL as determined at 
initial application and potentially revised mid-year, under 600.320, 
for purposes of determining BHP eligibility and claiming federal BHP 
payments; and (b) actual income relative to FPL received during the 
plan year, as it would be reflected on individual federal income tax 
returns. This adjustment will prospectively estimate the average effect 
of income reconciliation aggregated across the BHP population had those 
BHP enrollees been subject to tax reconciliation after receiving APTC 
assistance for coverage provided through QHPs. For 2016, we will 
estimate reconciliation effects based on tax data for 2 years, 
reflecting income and tax unit composition changes over time among BHP-
eligible individuals.
    The OTA maintains a model that combines detailed tax and other 
data, including Marketplace enrollment and PTC claimed, to project 
Marketplace premiums, enrollment, and tax credits. For each enrollee, 
this model compares the APTC based on household income and family size 
estimated at the point of enrollment with the PTC based on household 
income and family size reported at the end of the tax year. The former 
reflects the determination using enrollee information furnished by the 
applicant and tax data furnished by the IRS. The latter would reflect 
the PTC eligibility based on information on the tax return, which would 
have been determined if the individual had not enrolled in BHP. The 
ratio of the reconciled PTC to the initial estimation of PTC will be 
used as the income reconciliation factor in Equation (1) for estimating 
the PTC portion of the BHP payment rate.
    For 2016, OTA has estimated that the income reconciliation factor 
for states that have implemented the Medicaid eligibility expansion to 
cover adults up to 133 percent of the FPL will be 100.25 percent, and 
for states that have not implemented the Medicaid eligibility expansion 
and do not cover adults up to 133 percent of the FPL will be 100.24 
percent. For 2015, we used the average of the factors for the two 
groups of states. For 2016, the values of the factors for the two 
groups of states are within 0.01 percentage point of each other. 
Because the values are within 0.01 percentage point, we will use the 
greater of two factors (100.25 percent) rather than the average.
6. Tobacco Rating Adjustment Factor (TRAF)
    As previously described, the reference premium is estimated, for 
purposes of determining both the PTC and related

[[Page 9645]]

federal BHP payments, based on premiums charged for non-tobacco users, 
including in states that allow premium variations based on tobacco use, 
as provided in 42 U.S.C. 300gg (a)(1)(A)(iv). In contrast, as described 
in 45 CFR 156.430, the CSR advance payments are based on the total 
premium for a policy, including any adjustment for tobacco use. 
Accordingly, we will incorporate a tobacco rating adjustment factor 
into Equation 2 that reflects the average percentage increase in health 
care costs that results from tobacco use among the BHP-eligible 
population and that would not be reflected in the premium charged to 
non-users. This factor will also take into account the estimated 
proportion of tobacco users among BHP-eligible consumers.
    To estimate the average effect of tobacco use on health care costs 
(not reflected in the premium charged to non-users), we will calculate 
the ratio between premiums that silver level QHPs charge for tobacco 
users to the premiums they charge for non-tobacco users at selected 
ages. To calculate estimated proportions of tobacco users, we will use 
data from the Centers for Disease Control and Prevention (CDC) to 
estimate tobacco utilization rates by state and relevant population 
characteristic.\8\ For each state, we will calculate the tobacco usage 
rate based on the percentage of persons by age who use cigarettes and 
the percentage of persons by age that use smokeless tobacco, and 
calculate the utilization rate by adding the two rates together. The 
data is available for 3 age intervals: 18-24; 25-44; and 45-64. For the 
BHP payment rate cell for persons ages 21-34, we will calculate the 
factor as (4/14 * the utilization rate of 18-24 year olds) plus (10/14 
* the utilization rate of 25-44 year olds), which would be the weighted 
average of tobacco usage for persons 21-34 assuming a uniform 
distribution of ages; for all other age ranges used for the rate cells, 
we will use the age range in the CDC data in which the BHP payment rate 
cell age range is contained.
---------------------------------------------------------------------------

    \8\ Centers for Disease Control and Prevention, Tobacco Control 
State Highlights 2012: http://www.cdc.gov/tobacco/data_statistics/state_data/state_highlights/2012/index.htm.
---------------------------------------------------------------------------

    We will provide tobacco rating factors that may vary by age and by 
geographic area within each state. To the extent that the second lowest 
cost silver plans have a different ratio of tobacco user rates to non-
tobacco user rates in different geographic areas, the tobacco rating 
adjustment factor may differ across geographic areas within a state. In 
addition, to the extent that the second lowest cost silver plan has a 
different ratio of tobacco user rates to non-tobacco user rates by age, 
or that there is a different prevalence of tobacco use by age, the 
tobacco rating adjustment factor may differ by age.
7. Factor for Removing Administrative Costs (FRAC)
    The Factor for Removing Administrative Costs represents the average 
proportion of the total premium that covers allowed health benefits, 
and we include this factor in our calculation of estimated CSRs in 
Equation 2. The product of the reference premium and the Factor for 
Removing Administrative Costs would approximate the estimated amount of 
Essential Health Benefit (EHB) claims that would be expected to be paid 
by the plan. This step is needed because the premium also covers such 
costs as taxes, fees, and QHP administrative expenses. We are setting 
this factor equal to 0.80, which is the same percentage for the factor 
to remove administrative costs for calculating CSR advance payments for 
established in the 2015 HHS Notice of Benefit and Payment Parameters.
8. Actuarial Value (AV)
    The actuarial value is defined as the percentage paid by a health 
plan of the total allowed costs of benefits, as defined under 45 CFR 
156.20. (For example, if the average health care costs for enrollees in 
a health insurance plan were $1,000 and that plan has an actuarial 
value of 70 percent, the plan would be expected to pay on average $700 
($1,000 x 0.70) for health care costs per enrollee, on average.) By 
dividing such estimated costs by the actuarial value in the 
methodology, we will calculate the estimated amount of total EHB-
allowed claims, including both the portion of such claims paid by the 
plan and the portion paid by the consumer for in-network care. (To 
continue with that same example, we would divide the plan's expected 
$700 payment of the person's EHB-allowed claims by the plan's 70 
percent actuarial value to ascertain that the total amount of EHB-
allowed claims, including amounts paid by the consumer, is $1,000.)
    For the purposes of calculating the CSR rate in Equation 2, we will 
use the standard actuarial value of the silver level plans in the 
individual market, which is equal to 70 percent.
9. Induced Utilization Factor (IUF)
    The induced utilization factor will be used as a factor in 
calculating estimated CSRs in Equation 2 to account for the increase in 
health care service utilization associated with a reduction in the 
level of cost sharing a QHP enrollee would have to pay, based on the 
cost-sharing reduction subsidies provided to enrollees.
    The 2015 HHS Notice of Benefit and Payment Parameters provided 
induced utilization factors for the purposes of calculating cost-
sharing reduction advance payments for 2015. In that rule, the induced 
utilization factors for silver plan variations ranged from 1.00 to 
1.12, depending on income. Using those utilization factors, the induced 
utilization factor for all persons who would qualify for BHP based on 
their household income as a percentage of FPL is 1.12; this would 
include persons with household income between 100 percent and 200 
percent of FPL, lawfully present non-citizens below 100 percent of FPL 
who are ineligible for Medicaid because of immigration status, and 
persons with household income under 300 percent of FPL, not subject to 
any cost-sharing. Thus, consistent with last year, we will set the 
induced utilization factor equal to 1.12 for the BHP payment 
methodology.
10. Change in Actuarial Value ([Delta]AV)
    The increase in actuarial value would account for the impact of the 
cost-sharing reduction subsidies on the relative amount of EHB claims 
that would be covered for or paid by eligible persons, and we include 
it as a factor in calculating estimated CSRs in Equation 2.
    The actuarial values of QHPs for persons eligible for cost-sharing 
reduction subsidies are defined in 45 CFR 156.420(a), and eligibility 
for such subsidies is defined in 45 CFR 155.305(g)(2)(i) through (iii). 
For QHP enrollees with household incomes between 100 percent and 150 
percent of FPL, and those below 100 percent of FPL who are ineligible 
for Medicaid because of their immigration status, CSRs increase the 
actuarial value of a QHP silver plan from 70 percent to 94 percent. For 
QHP enrollees with household incomes between 150 percent and 200 
percent of FPL, CSRs increase the actuarial value of a QHP silver plan 
from 70 percent to 87 percent.
    We will apply this factor by subtracting the standard AV from the 
higher AV allowed by the applicable cost-sharing reduction. For BHP 
enrollees with household incomes at or below 150 percent of FPL, this 
factor will be 0.24 (94 percent minus 70 percent); for BHP enrollees 
with household incomes more than 150 percent but not more than 200 
percent

[[Page 9646]]

of FPL, this factor will be 0.17 (87 percent minus 70 percent).

E. Adjustments for American Indians and Alaska Natives

    There are several exceptions made for American Indians and Alaska 
Natives enrolled in QHPs through a Marketplace to calculate the PTC and 
CSRs. Thus, we will make adjustments to the payment methodology 
described above to be consistent with the Marketplace rules.
    We will make the following adjustments:
    1. The adjusted reference premium for use in the CSR portion of the 
rate will be the lowest cost bronze plan instead of the second lowest 
cost silver plan, with the same adjustment for the population health 
factor (and in the case of a state that elects to use the 2015 premiums 
as the basis of the federal BHP payment, the same adjustment for the 
premium trend factor). American Indians and Alaska Natives are eligible 
for CSRs with any metal level plan, and thus we believe that eligible 
persons would be more likely to select a bronze level plan instead of a 
silver level plan. (It is important to note that the assumption that 
American Indians and Alaska Natives would enroll in a bronze plan would 
not necessarily change the PTC, as the PTC amount calculated as part of 
the BHP payment methodology is the maximum possible PTC payment, which 
is always based on the applicable second lowest cost silver plan. In 
actuality, the PTC payment that would be made in for an individual 
enrolled in a QHP cannot exceed the total premium. It is possible that 
some bronze plan premiums would be less than the maximum PTC payment, 
but we have not made any adjustment in the methodology for this. We 
believe that this assumption would have a negligible impact on the BHP 
payment.)
    2. The actuarial value for use in the CSR portion of the rate will 
be 0.60 instead of 0.70, which is consistent with the actuarial value 
of a bronze level plan.
    3. The induced utilization factor for use in the CSR portion of the 
rate will be 1.15, which is consistent with the 2015 HHS Notice of 
Benefit and Payment Parameters induced utilization factor for 
calculating advance CSR payments for persons enrolled in bronze level 
plans and eligible for CSRs up to 100 percent of actuarial value.
    4. The change in the actuarial value for use in the CSR portion of 
the rate will be 0.40. This reflects the increase from 60 percent 
actuarial value of the bronze plan to 100 percent actuarial value, as 
American Indians and Alaska Natives are eligible to receive CSRs up to 
100 percent of actuarial value.

F. State Option To Use 2015 QHP Premiums for BHP Payments

    In the interest of allowing states greater certainty in the total 
BHP federal payments for 2016, we will provide states the option to 
have their final 2016 federal BHP payment rates calculated using the 
projected 2016 adjusted reference premium (that is, using 2015 premium 
data multiplied by the premium trend factor defined below), as 
described in Equation (3b).
    For a state that elects to use the 2015 premium as the basis for 
the 2016 BHP federal payment, the state must inform CMS no later than 
May 15, 2015.
    For Equation (3b), we define the premium trend factor as follows:
    Premium Trend Factor (PTF): In Equation (3b), we calculate an 
adjusted reference premium (ARP) based on the application of certain 
relevant variables to the RP, including a PTF. In the case of a state 
that would elect to use the 2015 premiums as the basis for determining 
the BHP payment, it would be appropriate to apply a factor that would 
account for the change in health care costs between the year of the 
premium data and the BHP plan year. We define this as the premium trend 
factor in the BHP payment methodology. This factor will approximate the 
change in health care costs per enrollee, which would include, but not 
be limited to, changes in the price of health care services and changes 
in the utilization of health care services. This provides an estimate 
of the adjusted monthly premium for the applicable second lowest cost 
silver plan that would be more accurate and reflective of health care 
costs in the BHP program year, which will be the year following 
issuance of the final federal payment notice. In addition, we believe 
that it would be appropriate to adjust the trend factor for the 
estimated impact of changes to the transitional reinsurance program on 
the average QHP premium.
    We will use the annual growth rate in private health insurance 
expenditures per enrollee from the National Health Expenditure 
projections, developed by CMS' Office of the Actuary (http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html, 
Table 17--Health Insurance Enrollment and Enrollment Growth Rates). For 
2016, the projected increase in private health insurance premiums per 
enrollee is 3.9 percent.
    The adjustment for changes in the transitional reinsurance program 
is developed from analysis by CMS' Center for Consumer Information and 
Insurance Oversight (CCIIO). In unpublished analysis, CCIIO estimated 
that the transitional reinsurance program would reduce QHP premiums in 
2015 on average by 7.9 percent and in 2016 by 4.4 percent, as the 
amount of funding in the reinsurance program decreases. Based on these 
analyses, we estimate that the changes in the transitional reinsurance 
program would lead to an increase of 3.8 percent in average QHP 
premiums between 2015 and 2016: (1-0.044)/(1-0.079)-1 = 3.8 percent.
    Combining these two factors together, we calculate that the premium 
trend factor for 2016 would be 7.8 percent (1 + 0.039) x (1 + 0.038)-1 
= 7.8 percent.
    States may want to consider that the increase in premiums for QHPs 
from 2015 to 2016 may differ from the premium trend factor developed 
for the BHP funding methodology for several reasons. In particular, 
states may want to consider that the second lowest cost silver plan for 
2015 may not be the same as the second lowest cost silver plan in 2016. 
This may lead to the premium trend factor being greater than or less 
than the actual change in the premium of the second lowest cost silver 
plan in 2015 compared to the premium of the second lowest cost silver 
plan in 2016.

G. State Option To Include Retrospective State-Specific Health Risk 
Adjustment in Certified Methodology

    To determine whether the potential difference in health status 
between BHP enrollees and consumers in the Marketplace would affect the 
PTC, CSRs, risk adjustment and reinsurance payments that would have 
otherwise been made had BHP enrollees been enrolled in coverage on the 
Marketplace, we will provide states implementing the BHP the option to 
propose and to implement, as part of the certified methodology, a 
retrospective adjustment to the federal BHP payments to reflect the 
actual value that would be assigned to the population health factor (or 
risk adjustment) based on data accumulated during program year 2016 for 
each rate cell.
    We acknowledge that there is uncertainty with respect to this 
factor due to the lack of experience of QHPs on the Marketplace and 
other payments related to the Marketplace, which is why, absent a state 
election, we will use a value for the population health factor to 
determine a prospective payment rate which assumes no difference in the 
health status of BHP enrollees and QHP

[[Page 9647]]

enrollees. There is considerable uncertainty regarding whether the BHP 
enrollees will pose a greater risk or a lesser risk compared to the QHP 
enrollees, how to best measure such risk, and the potential effect such 
risk would have had on PTC, CSRs, risk adjustment and reinsurance 
payments that would have otherwise been made had BHP enrollees been 
enrolled in coverage on the Marketplace. To the extent, however, that a 
state would develop an approved protocol to collect data and 
effectively measure the relative risk and the effect on federal 
payments, we will permit a retrospective adjustment that would measure 
the actual difference in risk between the two populations to be 
incorporated into the certified BHP payment methodology and used to 
adjust payments in the previous year.
    For a state electing the option to implement a retrospective 
population health status adjustment, we require that the state submit a 
proposed protocol to CMS, which will be subject to approval by CMS and 
would be required to be certified by CMS' Chief Actuary, in 
consultation with the OTA, as part of the BHP payment methodology. We 
described the protocol for the population health status adjustment in 
guidance in Considerations for Health Risk Adjustment in the Basic 
Health Program in Program Year 2015 (http://www.medicaid.gov/Basic-Health-Program/Downloads/Risk-Adjustment-and-BHP-White-Paper.pdf). We 
require a state to submit its proposed protocol by August 1, 2015 for 
CMS approval. This submission must include descriptions of how the 
state would collect the necessary data to determine the adjustment, 
including any contracting contingences that may be in place with 
participating standard health plan issuers. We will provide technical 
assistance to states as they develop their protocols. In order to 
implement the population health status, we must approve the state's 
protocol no later than December 31, 2015. Finally, the state will be 
required to complete the population health status adjustment at the end 
of 2016 based on the approved protocol. After the end of the 2016 
program year, and once data is made available, we will review the 
state's findings, consistent with the approved protocol, and make any 
necessary adjustments to the state's federal BHP payment amount. If we 
determine that the federal BHP payments were less than they would have 
been using the final adjustment factor, we would apply the difference 
to the state's quarterly BHP trust fund deposit. If we determine that 
the federal BHP payments were more than they would have been using the 
final reconciled factor, we would subtract the difference from the next 
quarterly BHP payment to the state.

IV. Collection of Information Requirements

    The 2016 funding methodology is unchanged from the 2015 final 
methodology that published on March 12, 2014 (79 FR 13887). The 2016 
methodology does not impose any new or revised reporting, 
recordkeeping, or third-party disclosure requirements, and therefore, 
does not require additional OMB review under the authority of the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). The 
methodology's information collection requirements and burden estimates 
are approved by OMB under control number 0938-1218 (CMS-10510).
    Consistent with the Basic Health Program's proposed and final rules 
(September 25, 2013 at 78 FR 59122 and March 12, 2014 at 79 FR 14112, 
respectively) we continue to estimate less than 10 annual respondents 
for completing the Blueprint. Consequently, the Blueprint is exempt 
from formal OMB review and approval under 5 CFR 1320.3(c).
    Finally, this action does not impose any additional reporting, 
recordkeeping, or third-party disclosure requirements on qualified 
health plans or on states operating State Based Marketplaces.

V. Regulatory Impact Statement

A. Overall Impact

    We have examined the impacts of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the 
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, March 22, 1995) 
(UMRA), Executive Order 13132 on Federalism (August 4, 1999) and the 
Congressional Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Section 
3(f) of Executive Order 12866 defines a ``significant regulatory 
action'' as an action that is likely to result in a rule: (1) Having an 
annual effect on the economy of $100 million or more in any 1 year, or 
adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or state, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating a serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with economically significant effects ($100 million or more in any 1 
year). As noted in the BHP final rule, BHP provides states the 
flexibility to establish an alternative coverage program for low-income 
individuals who would otherwise be eligible to purchase coverage 
through the Marketplace. We are uncertain as to whether the effects of 
the final rulemaking, and subsequently, this methodology, will be 
``economically significant'' as measured by the $100 million threshold, 
and hence not a major rule under the Congressional Review Act. The 
impact may depend on several factors, including the number of and which 
particular states choose to implement or continue BHP in 2016, the 
level of QHP premiums in 2015 and 2016, the number of enrollees in BHP, 
and the other coverage options for persons who would be eligible for 
BHP. In particular, while we generally expect that many enrollees would 
have otherwise been enrolled in a QHP through the Marketplace, some 
persons may have been eligible for Medicaid under a waiver or a state 
health coverage program. For those who would have enrolled in a QHP and 
thus would have received PTCs or CSRs, the federal expenditures for BHP 
would be expected to be more than offset by a reduction in federal 
expenditures for PTCs and CSRs. For those who would have been enrolled 
in Medicaid, there would likely be a smaller offset in federal 
expenditures (to account for the federal share of Medicaid 
expenditures), and for those who would have been covered in non-federal 
programs or would have been uninsured, there likely would be an 
increase in federal

[[Page 9648]]

expenditures. In accordance with the provisions of Executive Order 
12866, this methodology was reviewed by the Office of Management and 
Budget.
1. Need for the Methodology
    Section 1331 of the Affordable Care Act (codified at 42 U.S.C. 
18051) requires the Secretary to establish a BHP, and section (d)(1) 
specifically provides that if the Secretary finds that a state ``meets 
the requirements of the program established under section (a) [of 
section 1331 of the Affordable Care Act], the Secretary shall transfer 
to the State'' federal BHP payments described in section (d)(3). This 
methodology provides for the funding methodology to determine the 
federal BHP payment amounts required to implement these provisions in 
program year 2016.
2. Alternative Approaches
    Many of the factors in this methodology are specified in statute; 
therefore, we are limited in the alternative approaches we could 
consider. One area in which we had a choice was in selecting the data 
sources used to determine the factors included in the methodology. 
Except for state-specific reference premiums and enrollment data, we 
are using national rather than state-specific data. This is due to the 
lack of currently available state-specific data needed to develop the 
majority of the factors included in the methodology. We believe the 
national data will produce sufficiently accurate determinations of 
payment rates. In addition, we believe that this approach will be less 
burdensome on states. To reference premiums and enrollment data, we are 
using state-specific data rather than national data as we believe 
state-specific data will produce more accurate determinations than 
national averages.
    In addition, we considered whether or not to provide states the 
option to develop a protocol for a retrospective adjustment to the 
population health factor in 2016 as we did in the 2015 payment 
methodology. We believe that providing this option again in 2016 is 
appropriate and likely to improve the accuracy of the final payments.
    We also considered whether or not to require the use of 2015 or 
2016 QHP premiums to develop the 2016 federal BHP payment rates. We 
believe that the payment rates can still be developed accurately using 
either the 2015 or 2016 QHP premiums and that it is appropriate to 
provide the states the option, given the interests and specific 
considerations each state may have in operating the BHP.
3. Transfers
    The provisions of this methodology are designed to determine the 
amount of funds that will be transferred to states offering coverage 
through a BHP rather than to individuals eligible for premium and cost-
sharing reductions for coverage purchased on the Marketplace. We are 
uncertain what the total federal BHP payment amounts to states will be 
as these amounts will vary from state to state due to the varying 
nature of state composition. For example, total federal BHP payment 
amounts may be greater in more populous states simply by virtue of the 
fact that they have a larger BHP-eligible population and total payment 
amounts are based on actual enrollment. Alternatively, total federal 
BHP payment amounts may be lower in states with a younger BHP-eligible 
population as the reference premium used to calculate the federal BHP 
payment will be lower relative to older BHP enrollees. While state 
composition will cause total federal BHP payment amounts to vary from 
state to state, we believe that the methodology accounts for these 
variations to ensure accurate BHP payment transfers are made to each 
state.

B. Unfunded Mandates Reform Act

    Section 202 of the UMRA requires that agencies assess anticipated 
costs and benefits before issuing any rule whose mandates require 
spending in any 1 year of $100 million in 1995 dollars, updated 
annually for inflation, by state, local, or tribal governments, in the 
aggregate, or by the private sector. In 2014, that threshold is 
approximately $141 million. States have the option, but are not 
required, to establish a BHP. Further, the methodology would establish 
federal payment rates without requiring states to provide the Secretary 
with any data not already required by other provisions of the 
Affordable Care Act or its implementing regulations. Thus, this payment 
methodology does not mandate expenditures by state governments, local 
governments, or tribal governments.

C. 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 Act generally defines a ``small entity'' as (1) a proprietary firm 
meeting the size standards of the Small Business Administration (SBA); 
(2) a not-for-profit organization that is not dominant in its field; or 
(3) a small government jurisdiction with a population of less than 
50,000. Individuals and states are not included in the definition of a 
small entity. Few of the entities that meet the definition of a small 
entity as that term is used in the RFA would be impacted directly by 
this methodology.
    Because this methodology is focused on the funding methodology that 
will be used to determine federal BHP payment rates, it does not 
contain provisions that would have a significant direct impact on 
hospitals, and other health care providers that are designated as small 
entities under the RFA. We cannot determine whether this methodology 
would have a significant economic impact on a substantial number of 
small entities.
    Section 1102(b) of the Act requires us to prepare a regulatory 
impact analysis if a may have a significant economic impact on the 
operations of a substantial number of small rural hospitals. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a metropolitan 
statistical area and has fewer than 100 beds. As indicated in the 
preceding discussion, there may be indirect positive effects from 
reductions in uncompensated care. Again, we cannot determine whether 
this methodology would have a significant economic impact on a 
substantial number of small rural hospitals, and we request public 
comment on this issue.

D. Federalism

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct effects on states, preempts 
state law, or otherwise has federalism implications. The BHP is 
entirely optional for states, and if implemented in a state, provides 
access to a pool of funding that would not otherwise be available to 
the state.

    Dated: February 4, 2015.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: February 13, 2015.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2015-03662 Filed 2-19-15; 11:15 am]
BILLING CODE 4120-01-P