27208 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Parts 144, 147, 153, 155, 156, 

and 158 

[CMS–9911–F] 

RIN 0938–AU65 

Patient Protection and Affordable Care 

Act; HHS Notice of Benefit and 

Payment Parameters for 2023 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule includes 

payment parameters and provisions 

related to the risk adjustment and risk 

adjustment data validation programs, as 

well as 2023 user fee rates for issuers 

offering qualified health plans (QHPs) 

through Federally-facilitated Exchanges 

(FFEs) and State-based Exchanges on 

the Federal platform (SBE–FPs). This 

final rule also includes requirements 

related to guaranteed availability; the 

offering of QHP standardized plan 

options through Exchanges on the 

Federal platform; requirements for 

agents, brokers, and web-brokers; 

verification standards related to 

employer sponsored coverage; Exchange 

eligibility determinations during a 

benefit year; special enrollment period 

verification; cost-sharing requirements; 

Essential Health Benefits (EHBs); 

Actuarial Value (AV); QHP issuer 

quality improvement strategies; 

accounting for quality improvement 

activity (QIA) expenses and provider 

incentives for medical loss ratio (MLR) 

reporting and rebate calculation 

purposes; and re-enrollment. This final 

rule also responds to comments on how 

the Department of Health and Human 

Services (HHS) can advance health 

equity through QHP certification 

standards and otherwise in the 

individual and group health insurance 

markets, and how HHS might address 

plan choice overload in the Exchanges. 

DATES: These regulations are effective 

July 1, 2022. 

FOR FURTHER INFORMATION CONTACT: 

Cam Moultrie Clemmons, (206) 615– 

2338, or Anthony Galace, (301) 492– 

4400, for matters related to past-due 

premiums. 

Allison Yadsko, (410) 786–1740, John 

Barfield, (301) 492–4433, Jacqueline 

Wilson, (301) 492–4286, or Leanne 

Klock, (410) 786–1045, for matters 

related to risk adjustment or risk 

adjustment data validation. 

Aaron Franz, (410) 786–8027, or John 

Barfield, (301) 492–4433, for matters 

related to Federally-facilitated Exchange 

and State-based Exchange on the 

Federal platform user fees. 

Nora Simmons, (410) 786–1981, for 

matters related to advance payment of 

the premium tax credit proration. 

Aaron Franz, (410) 786–8027, or 

Hi’ilei Haru, (301) 492–4363, for matters 

related to cost-sharing reduction 

reconciliation. 

Josh Van Drei, (410) 786–1659, for 

matters related to actuarial value. 

Becca Bucchieri, (301) 492–4341, 

Agata Pelka, (301) 492–4400, or Leigha 

Basini, (301) 492–4380, for matters 

related to nondiscrimination based on 

sexual orientation and gender identity, 

essential health benefit benchmark 

plans, and defrayal of State-required 

benefits. 

Marisa Beatley, (301) 492–4307, for 

matters related to employer sponsored 

coverage verification. 

Susan Kalmus, (301) 492–4275, for 

matters related to agent, broker, and 

web-broker guidelines. 

Dena Nelson, (240) 401–3535, or Carly 

Rhyne, (301) 492–4188, for matters 

related to eligibility standards. 

Katherine Bentley, (301) 492–5209, or 

Ariel Kennedy, (301) 492–4306, for 

matters related to special enrollment 

period verification. 

Christina Whitefield, (301) 492–4172, 

for matters related to the medical loss 

ratio program. 

Nidhi Singh Shah, (301) 492–5110, for 

matters related to quality improvement 

strategy standards for Exchanges. 

Dan Brown, (301) 492–5146 for 

matters related to downstream and 

delegated entities. 

Nikolas Berkobien, (301) 492–4400, or 

Leigha Basini, (301) 492–4380 for 

matters related to standardized plan 

options. 

Erika Melman, (301) 492–4348, 

Deborah Hunter, (443) 386–3651, 

Whitney Allen, (667) 290–8748, or 

Emily Martin, (301) 492–4423, for 

matters related to network adequacy and 

essential community providers. 

Linus Bicker, (803) 931–6185, for 

matters related to State Exchange 

improper payment measurement. 

Phuong Van, (202) 570–5594, for 

matters related to advancing health 

equity through qualified health plans. 

Angelica Torres-Reid, (410) 786–1721, 

and Robert Yates, (301) 492–5151, for 

matters related to State Exchange 

general program integrity and oversight 

requirements. 

Zarah Ghiasuddin, (301) 492–4308, 

for matters related to re-enrollment in 

the Exchanges. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Executive Summary 

II. Background 

A. Legislative and Regulatory Overview 

B. Stakeholder Consultation and Input 

C. Structure of Final Rule 

III. Provisions of the Final HHS Notice of 

Benefit and Payment Parameters for 2023 

A. Part 144—Requirements Relating to 

Health Insurance Coverage 

B. Part 147—Health Insurance Reform 

Requirements for the Group and 

Individual Health Insurance Markets 

C. Part 153—Standards Related to 

Reinsurance, Risk Corridors, and Risk 

Adjustment 

D. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

E. Part 156—Health Insurance Issuer 

Standards Under the Affordable Care 

Act, Including Standards Related to 

Exchanges 

F. Part 158—Issuer Use of Premium 

Revenue: Reporting and Rebate 

Requirements 

G. Solicitation of Comments Regarding 

Health Equity and Qualified Health 

Plans 

IV. Collection of Information Requirements 

A. Wage Estimates 

B. ICRs Regarding State Flexibility for Risk 

Adjustment (§ 153.320) 

C. ICRs Regarding Distributed Data and 

Risk Adjustment Data Submission 

Requirements (§§ 153.610,153.700, and 

153.710) 

D. ICRs Regarding Ability of States To 

Permit Agents and Brokers and WebBrokers To Assist Qualified Individuals, 

Qualified Employers, or Qualified 

Employees Enrolling in QHPs (§ 155.220) 

E. ICRs Regarding Verification of Eligibility 

for Special Enrollment Periods 

(§ 155.420) 

F. ICRs Regarding General Program 

Integrity and Oversight Requirements 

(§ 155.1200) 

G. ICRs Regarding State Exchange 

Improper Payment Measurement 

Program (§§ 155.1500–155.1540) 

H. ICRs Regarding State Selection of EHBBenchmark Plan for Plan Years 

Beginning on or After January (§ 156.111) 

I. ICRs Regarding Differential Display of 

Standardized Plan Options on the 

Websites of Web-Brokers (§ 155.220) and 

QHP Issuers (§ 156.265) 

J. ICRs Regarding Network Adequacy and 

Essential Community Providers 

(§§ 156.230 and 156.235) 

K. ICRs Regarding Payment for CostSharing Reductions (§ 156.430) 

L. ICRs Regarding Quality Improvement 

Strategy (§ 156.1130) 

M. ICRs Regarding Medical Loss Ratio 

(§§ 158.140, 158.150, 158.170) 

N. Summary of Annual Burden Estimate 

for Proposed 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 


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Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 27209 

1See also 85 FR 37160, 37218 through 21 (the 

2020 final rule implementing section 1557 of the 

ACA revised the following CMS regulations: 45 CFR 

147.104, 155.120, 155.220, 156.200, 156.1230). 

2HHS submitted a draft notice of proposed 

rulemaking addressing section 1557 of the Patient 

Protection and Affordable Care Act and its 

implementing regulations to the Office of 

Management and Budget on or around March, 22, 

2022. See https://www.reginfo.gov/public/do/ 

eoDetails?rrid=234566. 

3The Patient Protection and Affordable Care Act 

(Pub. L. 111–148) was enacted on March 23, 2010. 

The Healthcare 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 rulemaking, the two statutes are 

referred to collectively as the ‘‘Patient Protection 

and Affordable Care Act,’’ ‘‘Affordable Care Act’’ or 

‘‘ACA.’’ 

4HHS’ proposals related to sexual orientation and 

gender identity in the 2023 Payment Notice 

proposed rule resulted, in part, from reviews HHS 

conducted as directed in President Biden’s January 

20, 2021, Executive Order 13988 (86 FR 7023), 

which stated the Administration’s policy on 

preventing and combating discrimination on the 

basis of gender identity and sexual orientation and 

the President’s conclusion that ‘‘[u]nder Bostock’s 

reasoning, laws that prohibit sex discrimination 

. . . , along with their respective implementing 

regulations—prohibit discrimination on the basis of 

gender identity or sexual orientation, so long as the 

laws do not contain sufficient indications to the 

contrary.’’ This Executive Order instructed the 

Secretary of Health and Human Services (Secretary 

of HHS, or HHS Secretary) to review all existing 

regulations, guidance documents, and other agency 

actions to determine whether they are consistent 

with the aforementioned policy and construction of 

the laws, and to consider whether to suspend, 

revise, or rescind any agency actions that are 

inconsistent with that policy and construction. 

5See 85 FR 37219 (explaining that section 1557 

governs entities established under Title I of the 

ACA, including Exchanges). 

6See also Hammons v. Univ. of Maryland Med. 

Sys. Corp., No. 20–cv–2009, 2021WL 3190492, at 

*17 (D. Md. July 28, 2021) (stating Bostock ‘‘made 

clear that the position stated in HHS’s [Bostock 

Notice] was already binding law’’). 

7 86 FR 27985. 

H. Congressional Review Act 

Background 

In the proposed rule, ‘‘Patient 

Protection and Affordable Care Act; 

HHS Notice of Benefit and Payment 

Parameters for 2023’’ (87 FR 584), 

published in the January 5, 2022 edition 

of the Federal Register (2023 Payment 

Notice proposed rule), HHS proposed 

amendments to certain regulations 

prohibiting discrimination in health 

insurance coverage, including 

discrimination in the design and 

implementation of health plans, under 

§§ 147.104(e), 155.120(c), 155.220(j), 

156.125(b), 156.200(e), and 156.1230(b) 

under title 45 of the Code of Federal 

Regulations (CFR). HHS proposed to 

amend these regulations to explicitly 

identify and recognize discrimination 

on the basis of sexual orientation and 

gender identity as prohibited forms of 

discrimination based on sex consistent 

with the Supreme Court’s decision in 

Bostock v. Clayton County, 140 S. Ct. 

1731 (2020), and HHS 

nondiscrimination policy that existed 

prior to the 2020 regulatory 

amendments HHS made in conformance 

with the ‘‘Nondiscrimination in Health 

and Health Education Programs or 

Activities, Delegation of Authority’’ 

final rule (85 FR 37160), published in 

the June 19, 2020 edition of the Federal 

Register.1 In connection with 

discriminatory benefit designs 

prohibited under § 156.125, HHS also 

included in the proposed rule an 

example related to gender-affirming care 

that was intended to illustrate a health 

plan design that presumptively 

discriminates against enrollees based on 

gender identity. 

Currently, HHS is developing a 

proposed rule 2 that also will address 

prohibited discrimination based on sex 

in health coverage under section 1557 of 

the Patient Protection and Affordable 

Care Act (ACA) 3 (42 U.S.C. 18116). 

Section 1557 prohibits discrimination 

on the basis of race, color, national 

origin, sex, age, or disability in any 

health program or activity, any part of 

which is receiving Federal financial 

assistance, including credits, subsidies, 

or contracts of insurance, or under any 

program or activity that is administered 

by an Executive Agency or any entity 

established under Title I of the ACA or 

its amendments. Because HHS’ 

proposed rule implementing section 

1557 of the ACA will also address issues 

related to prohibited discrimination 

based on sex, HHS is of the view that 

it would be most prudent to address the 

nondiscrimination proposals related to 

sexual orientation and gender identity 

in the 2023 Payment Notice proposed 

rule at a later time, to ensure that they 

are consistent with the policies and 

requirements that will be included in 

the section 1557 rulemaking. Therefore, 

HHS will not address in this final rule 

the nondiscrimination proposals related 

to sexual orientation and gender 

identity included in the 2023 Payment 

Notice proposed rule or the comments 

submitted in response to those 

proposals. 

HHS is committed to robust civil 

rights protections in health care for all 

consumers, including protections to 

combat discrimination on the basis of 

gender identity or sexual orientation.4

Moreover, to the extent that entities 

subject to the relevant regulations 

prohibiting discrimination in health 

insurance coverage are also covered by 

section 1557, they are already under the 

statutory obligation not to discriminate 

on the basis of sex.5 Consistent with the 

Supreme Court’s decision in Bostock v. 

Clayton County, 140 S. Ct. 1731 (2020), 

and the HHS Notice of Interpretation 

and Enforcement of Section 1557 of the 

Affordable Care Act and Title IX of the 

Education Amendments of 1972 (86 FR 

27984), published in the May 25, 2021 

edition of the Federal Register, HHS 

will continue to interpret and enforce 

section 1557 of the ACA and its 

protections against sex discrimination to 

prohibit discrimination on the basis of 

sexual orientation and gender identity 

in all aspects of health insurance 

coverage governed by section 1557.6

Thus, notwithstanding that the 

Department will address in future 

rulemaking the proposals related to 

sexual orientation and gender identity 

and the example related to genderaffirming care, HHS will continue to 

scrutinize the activities of covered 

health plans to root out practices that 

unlawfully discriminate on the basis of 

sexual orientation or gender identity. 

HHS’ interpretation of section 1557 will 

guide HHS in processing complaints 

and conducting investigations, but does 

not itself determine the outcome in any 

particular case or set of facts. In 

enforcing Section 1557, HHS will 

comply with the Religious Freedom 

Restoration Act, 42 U.S.C. 2000bb et 

seq., and all other legal requirements.7

I. Executive Summary 

American Health Benefit Exchanges, 

or ‘‘Exchanges,’’ are entities established 

under the ACA through which qualified 

individuals and qualified employers can 

purchase health insurance coverage in 

qualified health plans (QHPs). Many 

individuals who enroll in QHPs through 

individual market Exchanges are 

eligible to receive a premium tax credit 

(PTC) to reduce their costs for health 

insurance premiums and to receive 

reductions in required cost-sharing 

payments to reduce out-of-pocket 

expenses for health care services. The 

ACA also established the risk 

adjustment program, which transfers 

funds from issuers that attract lowerthan-average risk populations to issuers 

that attract higher-than-average risk 

populations to reduce incentives for 

issuers to avoid higher-risk enrollees. 

In previous rulemakings, we 

established provisions and parameters 

to implement many ACA requirements 

and programs. In this final rule, we 

amend some of these provisions and 

parameters, with a focus on maintaining 

a stable regulatory environment. These 

changes are intended to provide issuers 

with greater predictability for upcoming 

plan years (PYs), while simultaneously 

enhancing the role of States in these 

programs. They will also provide States 


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27210 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

8HHS-Operated Risk Adjustment Technical 

Paper on Possible Model Changes. (2021, October 

26). CMS. https://www.cms.gov/files/document/ 

2021-ra-technical-paper.pdf. 

9The same concern was not present for the 2016 

or 2017 enrollee-level EDGE data because 

hydroxychloroquine was not included in the 

crosswalk until 2018. 

10As finalized in this rule, beginning with the 

2021 benefit year of HHS–RADV, a Super HCC will 

be defined as the aggregate de-duplicated 

frequencies of EDGE HCCs that share an HCC 

coefficient estimation group determined based on 

the enrollees’ risk adjustment model. 

11Regulations and Guidance. (2022). CMS. 

https://www.cms.gov/CCIIO/Resources/Regulationsand-Guidance. The January 7, 2022 version of the 

DIY software is available at 2021 Benefit Year Risk 

Adjustment Updated HHS-Developed Risk 

Adjustment Model Algorithm ‘‘Do It Yourself (DIY)’’ 

Software. (2022). CMS. 

12Premium Adjustment Percentage. (2021, 

December 28). CMS. https://www.cms.gov/files/ 

document/2023-papi-parameters-guidance-v4-final12-27-21-508.pdf. 

with additional flexibilities, reduce 

unnecessary regulatory burdens on 

stakeholders, empower consumers, 

ensure program integrity, and improve 

affordability. 

Risk adjustment continues to be a core 

program in the individual, small group, 

and merged markets both on and off 

Exchanges. We published a technical 

paper, the 2021 HHS-Operated Risk 

Adjustment Technical Paper on Possible 

Model Changes 8 in October 2021 (2021 

RA Technical Paper), and sought 

comment on three potential updates to 

the risk adjustment models. We are 

finalizing two of the three proposed 

updates to the HHS risk adjustment 

models beginning with the 2023 benefit 

year. Specifically, beginning with the 

2023 benefit year, we are finalizing the 

removal of the current severity illness 

factors from the adult models and the 

addition of an interacted hierarchical 

condition category (HCC) count model 

specification to the adult and child 

models. We also are finalizing the 

replacement of the current enrollment 

duration factors in the adult models 

with HCC-contingent enrollment 

duration factors. We are not finalizing 

the proposed model specification 

change to add a two-stage weighted 

approach to the adult and child models. 

We are finalizing the use of the 2017, 

2018, and 2019 enrollee-level External 

Data Gathering Environment (EDGE) 

data to recalibrate the 2023 benefit year 

risk adjustment models. For 2023, we 

are also finalizing the continued 

application of a market pricing 

adjustment to the plan liability 

associated with Hepatitis C drugs in the 

risk adjustment models, consistent with 

the approach adopted beginning with 

the 2020 models. 

In addition, we are finalizing the 

targeted removal of the mapping of 

hydroxychloroquine sulfate to Immune 

Suppressants and Immunomodulators 

(RXC 09) in the 2018 and 2019 benefit 

year enrollee-level EDGE data used for 

the 2023 benefit year model 

recalibration.9 We are also finalizing, for 

the 2024 benefit year and beyond, the 

proposal to recalibrate the adult models 

using the final, fourth quarter (Q4) RXC 

mapping document that was applicable 

for each benefit year of data that is 

included in the current year’s model 

recalibration. We will begin to use this 

approach for recalibration of the 2023 

adult risk adjustment models, with the 

exception of the 2017 enrollee-level 

EDGE data year, for which we will use 

the most recent RXC mapping document 

that was available when we first 

processed the 2017 enrollee-level EDGE 

data (that is, Q2 2018). 

Additionally, we are finalizing the 

proposal to repeal the ability of States, 

other than prior participants, to request 

a reduction in risk adjustment State 

transfers starting with the 2024 benefit 

year. We are also finalizing the changes 

that limit a prior participant’s ability to 

request a reduction in risk adjustment 

transfers under § 153.320(d) to only 

those that meet the de minimis 

threshold criteria. In future rulemaking, 

HHS intends to propose to eliminate the 

prior participant exception starting with 

the 2025 benefit year. For the 2023 

benefit year, we are announcing 

approval of Alabama’s request to reduce 

risk adjustment State transfers for its 

individual and small group markets, but 

at lower percentages than requested. We 

approve a 25 percent reduction in 

Alabama’s individual market transfers 

(including the catastrophic and noncatastrophic risk pools) and a 10 percent 

reduction in Alabama’s small group 

market transfers for the 2023 benefit 

year. 

We are finalizing the 2023 benefit 

year risk adjustment user fee for States 

where HHS operates the risk adjustment 

program of $0.22 per member per month 

(PMPM). We are also finalizing the 

proposal to collect and extract five new 

data elements as part of the enrolleelevel EDGE data beginning with the 

2023 benefit year. We are also finalizing 

the proposal to extract three data 

elements issuers already report to their 

EDGE servers—plan ID, rating area, and 

subscriber indicator—as part of the 

required risk adjustment data. Plan ID 

and rating area will be extracted 

beginning with the 2021 benefit year, 

and subscriber indicator will be 

extracted beginning with the 2022 

benefit year. 

Finally, we are finalizing that 

whenever HHS recoups high-cost risk 

pool funds as a result of audits of risk 

adjustment covered plans, actionable 

discrepancies, or successful appeals, the 

recouped funds will be used to reduce 

high-cost risk pool charges for that 

national high-cost risk pool for the next 

applicable benefit year for which highcost risk pool payments have not 

already been calculated. 

We are finalizing as proposed the 

refinements to the HHS risk adjustment 

data validation (HHS–RADV) error 

estimation methodology beginning with 

the 2021 benefit year to: (1) Extend the 

application of Super HCCs 10 (which are 

currently based on the coefficient 

estimation groups defined in the 

applicable benefit year’s ‘‘Additional 

Adult Variables’’ Table of the ‘‘Do It 

Yourself (DIY)’’ software (Table 6 in the 

2021 Benefit Year DIY Software), which 

is published on the CCIIO website 11) 

from their current application only in 

the sorting step that assigns HCCs to 

failure rate groups to broader 

application throughout the HHS–RADV 

error rate calculation process; (2) specify 

that Super HCCs will be defined 

separately according to the age group 

model to which an enrollee is subject, 

except when the child and adult 

coefficient estimation groups have 

identical definitions; and (3) constrain 

to zero any failure rate group outlier 

with a negative failure rate, regardless of 

whether the outlier issuer has a negative 

or positive error rate. 

As we do every year in the HHS 

Notice of Benefit and Payment 

Parameters, we are finalizing updated 

parameters for the individual and small 

group markets. For the PY 2023, we are 

maintaining FFE and SBE–FP user fees 

at the current PY 2022 rates, 2.75 and 

2.25 percent of total monthly premiums, 

respectively. On December 28, 2021, we 

released the Premium Adjustment 

Percentage, Maximum Annual 

Limitation on Cost Sharing, Reduced 

Maximum Annual Limitation on Cost 

Sharing, and Required Contribution 

Percentage for the 2023 Benefit Year 

guidance setting forth these parameters 

for PY 2023.12

We are not finalizing the proposal to 

require all Exchanges to prorate 

premiums and advance payments of the 

premium tax credit (APTC). After 

considering the comments received, we 

are finalizing the policy to clarify the 

APTC proration methodology which 

Exchanges on the Federal platform will 

be subject to under HHS’ authority to 

administer APTC, but we are not 

finalizing the requirement for State 

Exchanges to prorate premium or APTC 

amounts as described in the proposed 

rule. Rather, beginning in PY 2024, State 


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Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 27211 

Exchanges must report to HHS through 

existing State Exchange oversight 

mechanisms the methodology the State 

Exchange will use that does not cause 

total monthly APTC amounts to exceed 

an enrollee’s monthly PTC eligibility. 

This will ensure compliance with HHS 

and Internal Revenue Service (IRS) 

regulations particularly when an 

enrollee is enrolled in a policy for less 

than the full coverage month, including 

when the enrollee is enrolled in 

multiple policies within a month, each 

lasting less than the full coverage 

month. 

We are finalizing changes to clarify 

that the cost-sharing reduction (CSR) 

data submission process is mandatory 

only for those issuers that received CSR 

payments from HHS for any part of the 

benefit year and voluntary for other 

issuers that did not. We also finalize a 

technical correction to the definition of 

large group market in § 144.103 to delete 

the concluding phrase ‘‘unless 

otherwise provided under State law.’’ 

We are finalizing new display 

requirements for web-broker nonExchange websites, including 

requirements related to QHP 

comparative information and 

standardized disclaimer language; a 

prohibition on displaying QHP 

advertisements or otherwise providing 

favored or preferred display of QHPs 

based on compensation agents, brokers, 

or web-brokers receive from QHP 

issuers; and a requirement to 

prominently display a clear explanation 

of the rationale for explicit QHP 

recommendations and the methodology 

for the default display of QHPs on webbroker non-Exchange websites to better 

inform and protect consumers using 

such websites. 

We also finalize policies to address 

certain agent, broker, and web-broker 

practices. These policies will be added 

as part of the FFE standards of conduct 

codified at § 155.220(j)(2), improving 

CMS’ ability to enforce existing 

responsibilities and requirements 

applicable to agents, brokers, and webbrokers participating in the FFEs and 

SBE–FPs, while also providing more 

detail about specific business practices 

that are prohibited. 

We are finalizing a revision to our 

interpretation of the guaranteed 

availability requirement to prohibit 

issuers from applying a premium 

payment to an individual’s or 

employer’s past debt owed for coverage 

and refusing to effectuate enrollment in 

new coverage. 

We are finalizing flexibility under 

which Exchanges may conduct riskbased employer sponsored coverage 

verification in connection with 

eligibility determinations for APTC. 

This policy will help States more 

effectively balance the need to prevent 

improper APTC payments with the costs 

of verification. 

We are finalizing amendments to 

implementing regulations to codify 

existing MLR policy that only those 

provider incentives and bonuses that are 

tied to clearly defined, objectively 

measurable, and well-documented 

clinical or quality improvement 

standards that apply to providers may 

be included in incurred claims for MLR 

reporting and rebate calculation 

purposes. We are also updating the MLR 

regulations to specify that only expenses 

directly related to activities that 

improve health care quality may be 

included as QIA expenses for MLR 

reporting and rebate calculation 

purposes. In addition, we are finalizing 

a technical amendment to the MLR 

provisions to remove a reference to a 

provision that was vacated by the 

United States District Court for the 

District of Maryland in City of 

Columbus, et al. v. Cochran, 523 F. 

Supp. 3d 731 (D. Md. 2021), and thus 

rescinded the provision in a final rule 

published in the Federal Register on 

May 5, 2021 (86 FR 24140) (part 2 of the 

2022 Payment Notice final rule). 

With regard to the EHBs, we are 

finalizing a permanent annual deadline 

in early-May for EHB-benchmark plan 

applications by States, as well as the 

repeal of the ability for States to permit 

issuers to substitute benefits between 

EHB categories. In addition, we are 

finalizing changes to the de minimis 

thresholds for the AV for plans subject 

to EHB requirements, as well as 

narrower de minimis thresholds for 

individual market silver QHPs and 

income-based CSR plan variations. We 

also finalize the proposal to remove the 

State annual reporting requirement to 

report State-required benefits in 

addition to the EHB to HHS. 

We are finalizing policies to 

strengthen and clarify our network 

adequacy standards, including 

expanding the provider specialty list for 

time and distance standards and adding 

appointment wait time standards. We 

will begin implementation of 

appointment wait time standards in PY 

2024. We are also finalizing the 

requirement for issuers to submit 

information about whether providers 

offer telehealth services. For plans with 

tiered networks, we are finalizing that, 

to count toward the issuer’s satisfaction 

of the essential community provider 

(ECP) standards, providers must be 

contracted within the network tier that 

results in the lowest cost-sharing 

obligation. This rule finalizes that the 

ECP threshold will increase from 20 

percent to 35 percent. 

We are finalizing the proposed 

amendments to the current HHS 

regulation that establishes standards for 

QHP issuer downstream and delegated 

entities. These changes will hold QHP 

issuers in all models of Exchange 

responsible for their downstream and 

delegated entities’ adherence to 

applicable Federal standards, and make 

their oversight obligations, and the 

obligations of their downstream and 

delegated entities, explicit. 

We solicited comments on 

incorporating the net premium, 

maximum out-of-pocket (MOOP), 

deductible, and annual out-of-pocket 

costs (OOPC) of a plan into the 

Exchange re-enrollment hierarchy, as 

well as additional criteria or 

mechanisms HHS could consider to 

ensure the Exchange hierarchy for reenrollment aligns with plan generosity 

and consumer needs, such as reenrolling a current bronze QHP enrollee 

into an available silver QHP with a 

lower net premium and higher plan 

generosity offered by the same QHP 

issuer. We also finalize the proposal to 

update the quality improvement strategy 

(QIS) standards to require QHP issuers 

to address health and health care 

disparities as a specific topic area 

within their QIS beginning in 2023. 

We also proposed and are finalizing 

policies related to requirements that 

issuers of QHPs in FFEs and SBE–FPs 

offer standardized QHP options through 

the Exchange beginning in PY 2023. 

Finally, we solicited comments 

regarding additional ways HHS could 

incentivize QHP issuers to design plans 

that improve health equity and health 

conditions in enrollees’ environments, 

as well as how QHP issuers could 

address other social determinants of 

health (SDOH) outside of the QHP 

certification process and provide 

responses to the public comments 

received. 

II. Background 

A. Legislative and Regulatory Overview 

Title I of the Health Insurance 

Portability and Accountability Act of 

1996 (HIPAA) added a new title XXVII 

to the Public Health Service Act (PHS 

Act) to establish various reforms to the 

group and individual health insurance 

markets. 

These provisions of the PHS Act were 

later augmented by other laws, 

including the ACA. Subtitles A and C of 

title I of the ACA reorganized, amended, 

and added to the provisions of part A of 

title XXVII of the PHS Act relating to 

group health plans and health insurance 


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13The term ‘‘group health plan’’ is used in title 

XXVII of the PHS Act and is distinct from the term 

‘‘health plan’’ as used in other provisions of title I 

of ACA. The term ‘‘health plan’’ does not include 

self-insured group health plans. 

14The Indian Health Care Improvement Act 

(IHCIA), the cornerstone legal authority for the 

provision of health care to American Indians and 

Alaska Natives, was made permanent when 

President Obama signed the bill on March 23, 2010, 

as part of the Patient Protection and Affordable Care 

Act. 

15Office of Management and Budget. (2004). 

Circular A–25 Revised. https://

www.whitehouse.gov/wp-content/uploads/2017/11/ 

Circular-025.pdf. 

issuers in the group and individual 

markets. The term ‘‘group health plan’’ 

includes both insured and self-insured 

group health plans.13

Section 2702 of the PHS Act, as added 

by the ACA, establishes requirements 

for guaranteed availability of coverage 

in the group and individual markets. 

Section 2718 of the PHS Act, as added 

by the ACA, generally requires health 

insurance issuers to submit an annual 

MLR report to HHS, and provide rebates 

to enrollees if the issuers do not achieve 

specified MLR thresholds. 

Section 2791 of the PHS Act defines 

several terms, including ‘‘large group 

market’’. 

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

directs all issuers of QHPs to cover the 

EHB package described in section 

1302(a) of the ACA, including coverage 

of the services described in section 

1302(b) of the ACA, adherence to the 

cost-sharing limits described in section 

1302(c) of the ACA, and meeting the AV 

levels established in section 1302(d) of 

the ACA. Section 2707(a) of the PHS 

Act, which is effective for plan or policy 

years beginning on or after January 1, 

2014, extends the requirement to cover 

the EHB package to non-grandfathered 

individual and small group health 

insurance 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) of the 

ACA. 

Section 1302 of the ACA provides for 

the establishment of an EHB package 

that includes coverage of EHBs (as 

defined by the Secretary of HHS), costsharing limits, and AV requirements. 

The law directs that EHBs be equal in 

scope to the benefits provided under 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. Section 1302(d) of the ACA 

describes the various levels of coverage 

based on their AV. Consistent with 

section 1302(d)(2)(A) of the ACA, AV is 

calculated based on the provision of 

EHB to a standard population. Section 

1302(d)(3) of the ACA directs the 

Secretary of HHS to develop guidelines 

that allow for de minimis variation in 

AV calculations. Sections 1302(b)(4)(A) 

through (D) of the ACA establishes 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 1311(c) of the ACA provides 

the Secretary the authority to issue 

regulations to establish criteria for the 

certification of QHPs. Section 

1311(c)(1)(B) of the ACA requires among 

the criteria for certification that the 

Secretary must establish by regulation 

that QHPs ensure a sufficient choice of 

providers. Section 1311(e)(1) of the ACA 

grants the Exchange the authority to 

certify a health plan as a QHP if the 

health plan meets the Secretary’s 

requirements for certification issued 

under section 1311(c) of the ACA, and 

the Exchange determines that making 

the plan available through the Exchange 

is in the interests of qualified 

individuals and qualified employers in 

the State. Section 1311(c)(6)(C) of the 

ACA establishes special enrollment 

periods and section 1311(c)(6)(D) of the 

ACA establishes the monthly 

enrollment period for Indians, as 

defined by section 4 of the Indian 

Health Care Improvement Act.14

Section 1311(c)(1)(E) of the ACA 

specifies that to be certified as a QHP, 

each health plan must implement a QIS, 

which is described in section 1311(g)(1) 

of the ACA. Section 1311(g)(1) of the 

ACA describes this strategy as a 

payment structure that provides 

increased reimbursement or other 

incentives to improve health outcomes 

of plan enrollees, to prevent hospital 

readmissions, improve patient safety 

and reduce medical errors, promote 

wellness and health, and reduce health 

and health care disparities. 

Section 1311(d)(3)(B) of the ACA 

permits a State, at its option, to require 

QHPs to cover benefits in addition to 

EHB. This section also requires a State 

to make payments, either to the 

individual enrollee or to the issuer on 

behalf of the enrollee, to defray the cost 

of these additional State-required 

benefits. 

Section 1312(c) of the ACA generally 

requires a health insurance issuer to 

consider all enrollees in all health plans 

(except 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 and small group market risk 

pools under section 1312(c)(3) of the 

ACA. 

Section 1312(e) of the ACA provides 

the Secretary with the authority to 

establish procedures under which a 

State may allow agents or brokers to (1) 

enroll qualified individuals and 

qualified employers in QHPs offered 

through Exchanges and (2) assist 

individuals in applying for PTC and 

CSRs for QHPs sold through an 

Exchange. 

Sections 1313 and 1321 of the ACA 

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 

1313(a)(5)(A) of the ACA provides the 

Secretary with the authority to 

implement any measure or procedure 

that the Secretary determines is 

appropriate to reduce fraud and abuse 

in the administration of the Exchanges. 

Section 1321 of the ACA provides for 

State flexibility in the operation and 

enforcement of Exchanges and related 

requirements. 

Section 1321(a) of the ACA provides 

broad authority for the Secretary to 

establish standards and regulations to 

implement the statutory requirements 

related to Exchanges, QHPs, and other 

components of title I of the ACA, 

including such other requirements as 

the Secretary, determines appropriate. 

When operating an FFE under section 

1321(c)(1) of the ACA, HHS has the 

authority under sections 1321(c)(1) and 

1311(d)(5)(A) of the ACA to collect and 

spend user fees. Office of Management 

and Budget (OMB) Circular A–25 

Revised 15 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 


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16 42 U.S.C. 18116. 

17Public Law 115–97, 131 Stat. 2054 (2017). 

18See 42 U.S.C. 18061, 18062, and 18063. 

beyond those received by the general 

public. 

Section 1321(d) of the ACA provides 

that nothing in title I of the ACA must 

be construed to preempt any State law 

that does not prevent the application of 

title I of the ACA. Section 1311(k) of the 

ACA specifies that Exchanges may not 

establish rules that conflict with or 

prevent the application of regulations 

issued by the Secretary. 

Section 1343 of the ACA establishes 

a permanent risk adjustment program to 

provide payments to health insurance 

issuers that attract higher-than-average 

risk populations, such as those with 

chronic conditions, funded by payments 

from those that attract lower-thanaverage risk populations, thereby 

reducing incentives for issuers to avoid 

higher-risk enrollees. 

Section 1401(a) of the ACA amended 

the Internal Revenue Code (the Code) to 

add section 36B, which, among other 

things, requires that a taxpayer reconcile 

APTC for a year of coverage with the 

amount of the PTC the taxpayer is 

allowed for the year. 

Section 1402 of the ACA provides for, 

among other things, reductions in cost 

sharing for EHB for qualified low- and 

moderate-income enrollees in silver 

level QHPs offered through the 

individual market Exchanges. This 

section also provides for reductions in 

cost sharing for Indians enrolled in 

QHPs at any metal level. 

Section 1411(c) of the ACA requires 

the Secretary to submit certain 

information provided by applicants 

under section 1411(b) of the ACA to 

other Federal officials for verification, 

including income and family size 

information to the Secretary of the 

Treasury. Section 1411(d) of the ACA 

provides that the Secretary must verify 

the accuracy of information provided by 

applicants under section 1411(b) of the 

ACA for which section 1411(c) does not 

prescribe a specific verification 

procedure, in such manner as the 

Secretary determines appropriate. 

Section 1411(f) of the ACA requires 

the Secretary, in consultation with the 

Treasury and Homeland Security 

Department Secretaries and the 

Commissioner of Social Security, to 

establish procedures for hearing and 

making decisions governing appeals of 

Exchange eligibility determinations. 

Section 1411(f)(1)(B) of the ACA 

requires the Secretary to establish 

procedures to redetermine eligibility on 

a periodic basis, in appropriate 

circumstances, including eligibility to 

purchase a QHP through the Exchange 

and for APTC and CSRs. 

Section 1411(g) of the ACA allows the 

use of applicant information only for the 

limited purposes of, and to the extent 

necessary to, ensure the efficient 

operation of the Exchange, including by 

verifying eligibility to enroll through the 

Exchange and for APTC and CSRs, and 

limits the disclosure of such 

information. 

Section 1557 of the ACA applies 

certain long-standing civil rights 

nondiscrimination requirements to ‘‘any 

health program or activity, any part of 

which is receiving Federal financial 

assistance, including credits, subsidies, 

or contracts of insurance, or under any 

program or activity that is administered 

by an Executive agency, or any entity 

established under’’ Title I of the ACA 

(or amendments). It did so by 

referencing statutes that specify 

prohibited grounds of discrimination, 

namely, race, color, national origin, sex, 

age, or disability, in an array of federally 

funded and administered programs or 

activities.16 In addition, HHS has 

previously finalized rules unrelated to 

section 1557 of the ACA to address 

populations that have historically been 

subject to discrimination. 

Section 5000A of the Code, as added 

by section 1501(b) of the ACA, requires 

individuals to have minimum essential 

coverage (MEC) for each month, qualify 

for an exemption, or make an individual 

shared responsibility payment. Under 

the Tax Cuts and Jobs Act, which was 

enacted on December 22, 2017, the 

individual shared responsibility 

payment is reduced to $0, effective for 

months beginning after December 31, 

2018.17 Notwithstanding that reduction, 

certain exemptions are still relevant to 

determine whether individuals age 30 

and above qualify to enroll in 

catastrophic coverage under 

§§ 155.305(h) and 156.155(a)(5). 

1. Premium Stabilization Programs 

The premium stabilization programs 

refer to the risk adjustment, risk 

corridors, and reinsurance programs 

established by the ACA.18 For past 

rulemaking, we refer readers to the 

following rules: 

• In the March 23, 2012 Federal 

Register (77 FR 17219) (Premium 

Stabilization Rule), we implemented the 

premium stabilization programs. 

• In the March 11, 2013 Federal 

Register (78 FR 15409) (2014 Payment 

Notice), we finalized the benefit and 

payment parameters for the 2014 benefit 

year to expand the provisions related to 

the premium stabilization programs and 

set forth payment parameters in those 

programs. 

• In the October 30, 2013 Federal 

Register (78 FR 65046), we finalized the 

modification to the HHS-operated 

methodology related to community 

rating States. 

• In the November 6, 2013 Federal 

Register (78 FR 66653), we published a 

correcting amendment to the 2014 

Payment Notice final rule to address 

how an enrollee’s age for the risk score 

calculation would be determined under 

the HHS-operated risk adjustment 

methodology. 

• In the March 11, 2014 Federal 

Register (79 FR 13743) (2015 Payment 

Notice), we finalized the benefit and 

payment parameters for the 2015 benefit 

year to expand the provisions related to 

the premium stabilization programs, set 

forth certain oversight provisions and 

established payment parameters in 

those programs. 

• In the May 27, 2014 Federal 

Register (79 FR 30240), we announced 

the 2015 fiscal year sequestration rate 

for the risk adjustment program. 

• In the February 27, 2015 Federal 

Register (80 FR 10749) (2016 Payment 

Notice), we finalized the benefit and 

payment parameters for the 2016 benefit 

year to expand the provisions related to 

the premium stabilization programs, set 

forth certain oversight provisions, and 

established the payment parameters in 

those programs. 

• In the March 8, 2016 Federal 

Register (81 FR 12203) (2017 Payment 

Notice), we finalized the benefit and 

payment parameters for the 2017 benefit 

year to expand the provisions related to 

the premium stabilization programs, set 

forth certain oversight provisions and 

established the payment parameters in 

those programs. 

• In the December 22, 2016 Federal 

Register (81 FR 94058) (2018 Payment 

Notice), we finalized the benefit and 

payment parameters for the 2018 benefit 

year, added the high-cost risk pool 

parameters to the HHS risk adjustment 

methodology, incorporated prescription 

drug factors in the adult models, 

established enrollment duration factors 

for the adult models, and finalized 

policies related to the collection and use 

of enrollee-level EDGE data. 

• In the April 17, 2018 Federal 

Register (83 FR 16930) (2019 Payment 

Notice), we finalized the benefit and 

payment parameters for 2019 benefit 

year, created the State flexibility 

framework permitting States to request 

a reduction in risk adjustment State 

transfers calculated by HHS, and 

adopted a new methodology for HHS– 

RADV adjustments to transfers. 

• In the May 11, 2018 Federal 

Register (83 FR 21925), we published a 

correction to the 2019 risk adjustment 


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19Updated 2019 Benefit Year Final HHS Risk 

Adjustment Model Coefficients. (2018, July 27). 

CMS. https://www.cms.gov/CCIIO/Resources/ 

Regulations-and-Guidance/Downloads/2019- 

Updtd-Final-HHS-RA-Model-Coefficients.pdf. 

20Update on the HHS-operated Risk Adjustment 

Program for the 2017 Benefit Year. (2018, July 27). 

https://www.cms.gov/CCIIO/Resources/Regulationsand-Guidance/Downloads/2017-RA-Final-RuleResumption-RAOps.pdf. 

21 Final 2021 Benefit Year Final HHS Risk 

Adjustment Model Coefficients. (2020, May 12). 

CMS. https://www.cms.gov/CCIIO/Resources/ 

Regulations-and-Guidance/Downloads/Final-2021- 

Benefit-Year-Final-HHS-Risk-Adjustment-ModelCoefficients.pdf. 

22Updated 2022 Benefit Year Final HHS Risk 

Adjustment Model Coefficients. (2021, July 19). 

CMS https://www.cms.gov/files/document/updated2022-benefit-year-final-hhs-risk-adjustment-modelcoefficients-clean-version-508.pdf. 

coefficients in the 2019 Payment Notice 

final rule. 

• On July 27, 2018, consistent with 45 

CFR 153.320(b)(1)(i), we updated the 

2019 benefit year final risk adjustment 

model coefficients to reflect an 

additional recalibration related to an 

update to the 2016 enrollee-level EDGE 

dataset.19

• In the July 30, 2018 Federal 

Register (83 FR 36456), we adopted the 

2017 benefit year risk adjustment 

methodology as established in the final 

rules published in the March 23, 2012 

(77 FR 17220 through 17252) and March 

8, 2016 editions of the Federal Register 

(81 FR 12204 through 12352). The final 

rule set forth an additional explanation 

of the rationale supporting the use of 

Statewide average premium in the HHSoperated risk adjustment State payment 

transfer formula for the 2017 benefit 

year, including the reasons why the 

program is operated in a budget-neutral 

manner. The final rule also permitted 

HHS to resume 2017 benefit year risk 

adjustment payments and charges. HHS 

also provided guidance as to the 

operation of the HHS-operated risk 

adjustment program for the 2017 benefit 

year in light of the publication of the 

final rule.20

• In the December 10, 2018 Federal 

Register (83 FR 63419), we adopted the 

2018 benefit year HHS-operated risk 

adjustment methodology as established 

in the final rules published in the March 

23, 2012 (77 FR 17219) and the 

December 22, 2016 (81 FR 94058) 

editions of the Federal Register. In the 

rule, we set forth an additional 

explanation of the rationale supporting 

the use of Statewide average premium 

in the HHS-operated risk adjustment 

State payment transfer formula for the 

2018 benefit year, including the reasons 

why the program is operated in a 

budget-neutral manner. 

• In the April 25, 2019 Federal 

Register (84 FR 17454) (2020 Payment 

Notice), we finalized the benefit and 

payment parameters for 2020 benefit 

year, as well as the policies related to 

making the enrollee-level EDGE data 

available as a limited data set for 

research purposes and expanding the 

HHS uses of the enrollee-level EDGE 

data, approval of the request from 

Alabama to reduce risk adjustment 

transfers by 50 percent in the small 

group market for the 2020 benefit year, 

and updates to HHS–RADV program 

requirements. 

• On May 12, 2020, consistent with 

153.320(b)(1)(i), we released 2021 

Benefit Year Final HHS Risk 

Adjustment Model Coefficients to the 

CCIIO website.21

• In the May 14, 2020 Federal 

Register (85 FR 29164) (2021 Payment 

Notice), we finalized the benefit and 

payment parameters for 2021 benefit 

year, as well as adopted updates to the 

risk adjustment models’ HCCs to 

transition to ICD–10 codes, approved 

the request from Alabama to reduce risk 

adjustment transfers by 50 percent in 

small group market for the 2021 benefit 

year, and modified the outlier 

identification process under the HHS– 

RADV program. 

• In the December 1, 2020 Federal 

Register (85 FR 76979) (Amendments to 

the HHS-Operated Risk Adjustment 

Data Validation Under the Patient 

Protection and Affordable Care Act’s 

HHS-Operated Risk Adjustment 

Program (2020 HHS–RADV 

Amendments Rule)), we adopted the 

creation and application of Super HCCs 

in the sorting step that assigns HCCs to 

failure rate groups, finalized a sliding 

scale adjustment in HHS–RADV error 

rate calculation, and added a constraint 

for negative error rate outliers with a 

negative error rate. We also established 

a transition from the prospective 

application of HHS–RADV adjustments 

to apply HHS–RADV results to risk 

scores from the same benefit year as that 

being audited. 

• In the September 2, 2020 Federal 

Register (85 FR 54820), we issued an 

interim final rule containing certain 

policy and regulatory revisions in 

response to the COVID–19 public health 

emergency (PHE), wherein we set forth 

risk adjustment reporting requirements 

for issuers offering temporary premium 

credits in the 2020 benefit year. 

• In the May 5, 2021 Federal Register 

(86 FR 24140), we issued part 2 of the 

2022 Payment Notice final rule 

containing policy and regulatory 

revisions related to the risk adjustment 

program, including finalization of the 

benefit and payment parameters for the 

2022 benefit year and approval of the 

request from Alabama to reduce risk 

adjustment transfers by 50 percent in 

the individual and small group markets 

for the 2022 benefit year. In addition, 

this final rule established a revised 

schedule of collections for HHS–RADV 

and updated the provisions regulating 

second validation audit (SVA) and 

initial validation audit (IVA) entities. 

• On July 19, 2021, consistent with 

§ 153.320(b)(1)(i), we released Updated 

2022 Benefit Year Final HHS Risk 

Adjustment Model Coefficients on the 

CCIIO website, announcing some minor 

revisions to the 2022 benefit year final 

risk adjustment adult model 

coefficients.22

2. Program Integrity 

We have finalized program integrity 

standards related to the Exchanges and 

premium stabilization programs in two 

rules: The ‘‘first Program Integrity Rule’’ 

published in the August 30, 2013 

Federal Register (78 FR 54069) and the 

‘‘second Program Integrity Rule’’ 

published in the October 30, 2013 

Federal Register (78 FR 65045). We also 

refer readers to the 2019 Patient 

Protection and Affordable Care Act; 

Exchange Program Integrity rule 

published in the December 27, 2019 

Federal Register (84 FR 71674). 

3. Market Rules 

For past rulemaking related to the 

market rules, we refer readers to the 

following rules: 

• In the April 8, 1997 Federal 

Register (62 FR 16894), HHS, with the 

Department of Labor and Department of 

the Treasury, published an interim final 

rule relating to the HIPAA health 

insurance reforms. In the February 27, 

2013 Federal Register (78 FR 13406) 

(2014 Market Rules), we published the 

health insurance market rules. 

• In the May 27, 2014 Federal 

Register (79 FR 30240) (2015 Market 

Standards Rule), we published the 

Exchange and Insurance Market 

Standards for 2015 and Beyond. 

• In the December 22, 2016 Federal 

Register (81 FR 94058), we provided 

additional guidance on guaranteed 

availability and guaranteed 

renewability. 

• In the April 18, 2017 Federal 

Register (82 FR 18346) (Market 

Stabilization final rule), we further 

interpreted the guaranteed availability 

provision. 

• In the in the April 17, 2018 Federal 

Register (83 FR 17058) (2019 Payment 

Notice final rule), we clarified that 

certain exceptions to the special 

enrollment periods only apply to 


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23Essential Health Benefits Bulletin. (2011, 

December 16). CMS. https://www.cms.gov/CCIIO/ 

Resources/Files/Downloads/essential_health_

benefits_bulletin.pdf. 

coverage offered outside of the 

Exchange in the individual market. 

• In the June 19, 2020 Federal 

Register (85 FR 37160) (2020 section 

1557 final rule), in which HHS 

discussed section 1557 of the ACA, HHS 

removed nondiscrimination protections 

based on gender identity and sexual 

orientation from the guaranteed 

availability regulation. 

• In part 2 of the 2022 Payment 

Notice final rule in the May 5, 2021 

Federal Register (86 FR 24140), we 

made additional amendments to the 

guaranteed availability regulation 

regarding special enrollment periods 

and finalized new special enrollment 

periods related to untimely notice of 

triggering events, cessation of employer 

contributions or government subsidies 

to COBRA continuation coverage, and 

loss of APTC eligibility. 

• In the September 27, 2021 Federal 

Register (86 FR 53412) (part 3 of the 

2022 Payment Notice final rule), which 

was published by HHS and the 

Department of the Treasury, we 

finalized additional amendments to the 

guaranteed availability regulations 

regarding special enrollment periods. 

4. 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. In the 

March 27, 2012 Federal Register (77 FR 

18309) (Exchange Establishment Rule), 

we implemented components of the 

Exchanges and set forth standards for 

eligibility for Exchanges, as well as 

network adequacy and ECP certification 

standards. 

In the 2014 Payment Notice and 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), we set forth standards related to 

Exchange user fees. We 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 39869) (Preventive 

Services Rule). 

In the 2016 Payment Notice, we also 

set forth the ECP certification standard 

at § 156.235, with revisions in the 2017 

Payment Notice in the March 8, 2016 

Federal Register (81 FR 12203) and the 

2018 Payment Notice in the December 

22, 2016 Federal Register (81 FR 

94058). 

In an interim final rule, published in 

the May 11, 2016 Federal Register (81 

FR 29146), we made amendments to the 

parameters of certain special enrollment 

periods (2016 Interim Final Rule). We 

finalized these in the 2018 Payment 

Notice final rule, published in the 

December 22, 2016 Federal Register (81 

FR 94058). 

In the April 18, 2017 Market 

Stabilization final rule Federal Register 

(82 FR 18346), we amended standards 

relating to special enrollment periods 

and QHP certification. In the 2019 

Payment Notice final rule, published in 

the April 17, 2018 Federal Register (83 

FR 16930), we modified parameters 

around certain special enrollment 

periods. In the April 25, 2019 Federal 

Register (84 FR 17454), the final 2020 

Payment Notice established a new 

special enrollment period. 

We published the final rule in the 

May 14, 2020 Federal Register (85 FR 

29164) (2021 Payment Notice). 

In the January 19, 2021 Federal 

Register (86 FR 6138), we finalized part 

1 of the 2022 Payment Notice final rule 

that finalized only a subset of the 

proposals in the 2022 Payment Notice 

proposed rule. In the May 5, 2021 

Federal Register (86 FR 24140), we 

published (part 2 of the 2022 Payment 

Notice final rule). In the September 27, 

2021 Federal Register (86 FR 53412) 

(part 3 of the 2022 Payment Notice final 

rule), in conjunction with the 

Department of the Treasury, we 

finalized amendments to certain 

policies in part 1 of the 2022 Payment 

Notice final rule. 

In the January 5, 2022 Federal 

Register (87 FR 584), we published a 

proposed rule that outlined proposals to 

maintain the user fee rate for issuers 

offering plans through the FFEs and 

maintain the user fee rate for issuers 

offering plans through the SBE–FPs. We 

also proposed various policies to 

address certain agent, broker, and web 

broker practices and conduct. We also 

proposed updates to the requirement 

that all Exchanges conduct special 

enrollment period verifications. 

5. Essential Health Benefits 

On December 16, 2011, HHS released 

a bulletin that outlined an intended 

regulatory approach for defining EHB, 

including a benchmark-based 

framework.23 We established 

requirements relating to EHBs in the 

Standards Related to Essential Health 

Benefits, Actuarial Value, and 

Accreditation Final Rule, which was 

published in the February 25, 2013 

Federal Register (78 FR 12833) (EHB 

Rule). In the 2019 Payment Notice, 

published in the April 17, 2018 Federal 

Register (83 FR 16930), we added 

§ 156.111 to provide States with 

additional options from which to select 

an EHB-benchmark plan for PYs 2020 

and beyond. 

6. 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 74863). A final 

rule with a 30-day comment period was 

published in the December 7, 2011 

Federal Register (76 FR 76573). An 

interim final rule with a 60-day 

comment period was published in the 

December 7, 2011 Federal Register (76 

FR 76595). A final rule was published 

in the Federal Register on May 16, 2012 

(77 FR 28790). The MLR program 

requirements were amended in final 

rules published in the March 11, 2014 

Federal Register (79 FR 13743), the May 

27, 2014 Federal Register (79 FR 

30339), the February 27, 2015 Federal 

Register (80 FR 10749), the March 8, 

2016 Federal Register (81 FR 12203), 

the December 22, 2016 Federal Register 

(81 FR 94183), the April 17, 2018 

Federal Register (83 FR 16930), the May 

14, 2020 Federal Register (85 FR 

29164), an interim final rule that was 

published in the September 2, 2020 

Federal Register (85 FR 54820), and the 

May 5, 2021 Federal Register (86 FR 

24140). 

7. Quality Improvement Strategy 

We promulgated regulations in 45 

CFR 155.200(d) to direct Exchanges to 

evaluate quality improvement strategies, 

and 45 CFR 156.200(b) that direct QHP 

issuers to implement and report on a 

quality improvement strategy or 

strategies consistent with section 

1311(g) standards as QHP certification 

criteria for participation in an Exchange. 

In the 2016 Payment Notice, published 

in the February 27, 2015 Federal 

Register (80 FR 10749), we finalized 

regulations at § 156.1130 to establish 

standards and the associated timeframe 

for QHP issuers to submit the necessary 

information to implement QIS standards 

for QHPs offered through an Exchange. 

8. Nondiscrimination 

Section 1302 of the ACA provides for 

the establishment of an EHB package 

that includes coverage of EHB and AV 

requirements. In the February 25, 2013 

Federal Register (78 FR 12834), HHS 

published the ‘‘Patient Protection and 

Affordable Care Act; Standards Related 

to Essential Health Benefits, Actuarial 


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24HHS-Operated Risk Adjustment Technical 

Paper on Possible Model Changes. (2021, October 

26). CMS. https://www.cms.gov/files/document/ 

2021-ra-technical-paper.pdf. 

25HHS-Operated Risk Adjustment Technical 

Paper on Possible Model Changes: Summary 

Results for Transfer Simulations. (2021, December 

28). CMS. https://www.cms.gov/files/document/ 

report-summary-results-transfer-simulations.pdf. 

26The same concern was not present for the 2017 

enrollee-level EDGE data because 

hydroxychloroquine sulfate was not included in the 

RXC crosswalk until 2018. 

Value, and Accreditation’’ final rule, 

which included nondiscrimination 

protections. 

In the 2020 section 1557 final rule on 

section 1557 of the ACA, published in 

the June 19, 2020 Federal Register (85 

FR 37160), HHS removed 

nondiscrimination protections on the 

basis of gender identity and sexual 

orientation from various CMS 

nondiscrimination regulations. In the 

HHS Notice of Interpretation and 

Enforcement of Section 1557 of the 

Affordable Care Act and Title IX of the 

Education Amendments of 1972, 

published in the May 25, 2021 Federal 

Register (86 FR 27984), HHS informed 

the public that HHS will interpret and 

enforce section 1557’s and Title IX’s 

prohibition on discrimination on the 

basis of sex to include discrimination 

based on sexual orientation and gender 

identity. 

B. Stakeholder Consultation and Input 

HHS consulted with stakeholders on 

policies related to the PHS Act and ACA 

Federal market reform requirements, 

including the operation of Exchanges 

and the risk adjustment program 

(including HHS–RADV). For example, 

related to risk adjustment, HHS released 

the 2021 HHS-Operated Risk 

Adjustment Technical Paper on Possible 

Model Changes 24 and the HHSOperated Risk Adjustment Technical 

Paper on Possible Model Changes: 

Summary Results for Transfer 

Simulations.25 We also held a number of 

meetings with consumers, providers, 

employers, health plans, advocacy 

groups, and the actuarial community to 

gather public input. We solicited input 

from State representatives on numerous 

topics, particularly EHBs, State 

mandates, and risk adjustment. We 

consulted with stakeholders through 

regular meetings with the National 

Association of Insurance Commissioners 

(NAIC), regular contact with States 

through the Exchange Blueprint 

approval and general Exchange 

oversight processes, and meetings with 

Tribal leaders and representatives, 

health insurance issuers, trade groups, 

consumer advocates, employers, and 

other interested parties. We considered 

all public input and written comments 

we received in response to the proposed 

rulemaking as we developed the 

policies in this final rule. 

C. Structure of Final Rule 

The regulations outlined in this final 

rule will be codified in 45 CFR parts 

144, 147, 153, 155, 156, and 158. 

The changes to 45 CFR part 144 will 

remove superfluous language from the 

definition of a large group market. 

The changes to 45 CFR part 147 will 

ensure that issuers cannot refuse to 

effectuate new coverage based on the 

failure of an individual or employer to 

pay premiums owed for prior coverage. 

The policies relating to 45 CFR part 

153 involve recalibration of the 2023 

benefit year risk adjustment models 

using the 2017, 2018, and 2019 enrolleelevel EDGE data. We also finalize 

updates to the adult and child risk 

adjustment models for 2023 and beyond 

to better predict plan liability for certain 

subpopulations. Specifically, beginning 

with the 2023 benefit year, we will 

update the adult risk adjustment models 

by removing the current severity illness 

factors and replacing the current 

enrollment duration factors with 

enrollment duration factors contingent 

on the enrollee having at least one HCC. 

In addition, we will add an interacted 

HCC count model specification for 2023 

and beyond to the adult and child 

models. We are not finalizing the 

proposal to add a two-stage weighted 

approach to model recalibrations. 

We are finalizing a market pricing 

adjustment to the plan liability 

associated with Hepatitis C drugs in the 

risk adjustment models, consistent with 

the approach adopted beginning with 

the 2020 models. We are finalizing 

removing the mapping of 

hydroxychloroquine sulfate to RXC 09 

(Immune Suppressants and 

Immunomodulators) in the 2018 and 

2019 benefit year enrollee-level EDGE 

data used for the annual recalibration of 

the HHS risk adjustment models.26 For 

the 2024 benefit year and beyond, we 

will recalibrate the models using the 

final, fourth quarter (Q4) RXC mapping 

document that was applicable for each 

benefit year of data that is included in 

the current year’s model recalibration. 

We are finalizing using this approach 

for recalibration of the 2023 adult risk 

adjustment models with the exception 

of the 2017 enrollee-level EDGE data 

year, for which we will use the most 

recent RXC mapping document that was 

available when we first processed the 

2017 enrollee-level EDGE data (that is, 

Q2 2018). 

We are finalizing the proposal to 

collect and extract five new data 

elements as part of the enrollee-level 

EDGE data. Beginning with the 2023 

benefit year, issuers will be required to 

populate the ZIP Code and subsidy 

indicator fields as part of their EDGE 

data submissions. Issuers will also be 

required to populate the race, ethnicity, 

and Individual Coverage Health 

Reimbursement Arrangement (ICHRA) 

indicator fields. For the 2023 and 2024 

benefit years, we are adopting a 

transitional period for the race, 

ethnicity, and ICHRA indicator fields 

during which time issuers will be 

required to populate these fields using 

available data sources. Then, beginning 

with the 2025 benefit year, issuers that 

do not have an existing source to 

populate these fields for particular 

enrollees will also be required to make 

a good faith effort to collect and submit 

race, ethnicity, and ICHRA indicator 

data elements for these enrollees. We 

are also finalizing the proposal to 

extract three data elements—plan ID, 

rating area, and subscriber indicator— 

issuers already report to their EDGE 

servers as part of the required risk 

adjustment data. We are finalizing the 

extraction of plan ID and rating area 

beginning with the 2021 benefit year, 

and subscriber indicator will be 

extracted beginning with the 2022 

benefit year. Additionally, we finalize 

the proposal to amend § 153.730 to 

address situations when April 30 does 

not fall on a business day and to provide 

that when this occurs, the deadline for 

issuers to submit the required risk 

adjustment data in States where HHS 

operates the program would be the next 

applicable business day. 

In part 153, we are finalizing policies 

related to risk adjustment State 

flexibility requests. We are finalizing the 

repeal of the ability of States to request 

a reduction in risk adjustment State 

transfers starting with the 2024 benefit 

year, with an exception for prior 

participants. We further limit a prior 

participant’s ability to request a 

reduction in risk adjustment transfers 

starting with the 2024 benefit year to 

only those that meet the de minimis 

threshold criteria. In future rulemaking, 

HHS intends to propose to eliminate the 

prior participant exception starting with 

the 2025 benefit year. For the 2023 

benefit year, we approve Alabama’s 

requests to reduce risk adjustment State 

transfers, but at lower percentages, than 

the State requested. We approve for the 

2023 benefit year a 25 percent reduction 

in Alabama’s individual market 

(including the catastrophic and nonVerDate Sep<11>2014 18:46 May 05, 2022 Jkt 256001 PO 00000 Frm 00010 Fmt 4701 Sfmt 4700 E:\FR\FM\06MYR2.SGM 06MYR2

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27City of Columbus, et al. v. Cochran, 523 F. 

Supp. 3d 731 (D. Md. 2021). 

catastrophic risk pools) transfers and a 

10 percent reduction in Alabama’s small 

group market transfers. 

In part 153, we also finalize the risk 

adjustment user fee for the 2023 benefit 

year at $0.22 PMPM. We also finalize 

the proposed update to the HHS–RADV 

error estimation process to extend the 

application of Super HCCs beyond the 

sorting step that assigns HCCs to failure 

rate groups, to also apply throughout the 

HHS–RADV error rate calculation 

processes. We further specify that Super 

HCCs will be defined separately 

according to the model (infant, child, 

adult) to which an enrollee is subject, 

except for where child and adult 

coefficient estimation groups have 

identical definitions. We also finalize 

the proposal to constrain to zero any 

failure rate group outlier negative failure 

rate, regardless of whether the outlier 

issuer has a negative or positive error 

rate. These refinements to the HHS– 

RADV error rate methodology and 

processes will apply beginning with the 

2021 benefit year. Finally, we adopt the 

policy that whenever HHS recoups 

high-cost risk pool funds as a result of 

audits of risk adjustment covered plans, 

an actionable discrepancy, or a 

successful administrative appeal, the 

recouped high-cost risk pool funds will 

be used to reduce high-cost risk pool 

charges for that national high-cost risk 

pool beginning for the next benefit year 

for which a high-cost risk pool payment 

has not already been calculated. 

In addition, we are finalizing the part 

153 proposals related to MLR reporting 

requirements and how issuers should 

report certain ACA program amounts 

that could be subject to reconsideration. 

More specifically, we add references to 

HHS–RADV adjustments to § 153.710(h) 

to make clear that HHS expects issuers 

to report HHS–RADV adjustments as 

part of their MLR reports in the same 

manner as they report risk adjustment 

payment and charge amounts. 

We finalize changes to 45 CFR part 

155 to allow Exchanges to implement a 

verification process for enrollment in or 

eligibility for an eligible employer 

sponsored plan based on the Exchange’s 

assessment of risk for inappropriate 

payments of APTC/CSR. We are 

codifying the proposed APTC proration 

methodology as the methodology 

Exchanges on the Federal platform will 

continue to use, but we are not 

finalizing the requirement for State 

Exchanges to prorate premium or APTC 

amounts using the methodology 

described in the proposed rule. Rather, 

we are finalizing that beginning in PY 

2024, State Exchanges will be required 

to report to HHS their methodology that 

ensures the amount of APTC applied to 

an enrollee’s monthly premium does not 

exceed their total monthly APTC. 

We are also finalizing new 

requirements in part 155 related to the 

QHP comparative information and 

standardized disclaimer required to be 

displayed on web-broker non-Exchange 

websites; a prohibition on displaying 

QHP advertisements or otherwise 

providing favored or preferred 

placement in the display of QHPs on 

web-broker non-Exchange websites 

based on compensation agents, brokers, 

or web-brokers receive from QHP 

issuers; and the prominent display of a 

clear explanation of the rationale for 

explicit QHP recommendations and the 

methodology for the default display of 

QHPs on web-broker non-Exchange 

websites to better inform and protect 

consumers using such websites. After 

consideration and review of the 

comments, we will not finalize 

§ 155.220(j)(2)(ii)(A)(1), which would 

prohibit agents from entering consumer 

email addresses with domains that 

remove email from an inbox after a set 

period of time. We encourage agents, 

brokers, and web-broker entities to 

remain aware of, and avoid using, such 

temporary email accounts when 

assisting consumers in obtaining 

coverage as a best practice and will 

likely issue future guidance on the 

matter. Otherwise, we are generally 

finalizing the changes to the remainder 

of § 155.220(j)(2)(ii) to clarify the FFE 

standards of conduct for agents, brokers, 

and web-brokers, and what it means to 

provide the Exchange with correct 

information under section 1411(b) of the 

ACA. We also finalize the changes to 

§ 155.220(j)(2)(vi) through (viii) to 

expand the FFE standards of conduct 

and codify more detail about specific 

business practices that are prohibited. 

In 45 CFR part 156, we are finalizing 

the user fee rates for the 2023 benefit 

year for all issuers participating on 

Exchanges that use the Federal platform. 

We also finalize technical amendments 

to § 156.50 to conform with the repeal 

of the Exchange Direct Enrollment (DE) 

option finalized in part 3 of the 2022 

Payment Notice (86 FR 53412 at 53424 

through 53429 and 53445). Also, we 

finalize changes to § 156.430 to clarify 

that the CSR data submission process is 

mandatory only for those issuers that 

receive CSR payments from HHS for any 

part of the benefit year as a result of 

HHS possessing an appropriation to 

make CSR payments and voluntary for 

other issuers. 

In part 156, we are also finalizing a 

refinement to the EHB 

nondiscrimination policy to provide 

that a nondiscriminatory health plan 

design that provides EHB is one that is 

clinically based; a permanent annual 

deadline in early May for EHBbenchmark plan applications by States, 

a repeal of States’ ability to permit 

issuers to substitute benefits between 

EHB categories; changes to the de 

minimis thresholds for the AV of plans 

subject to the AV requirements, as well 

as narrower de minimis thresholds for 

individual market silver QHPs and 

income-based CSR plan variations; and 

a repeal of the annual requirement for 

States to report to HHS State-required 

benefits in addition to the EHB. 

In part 156, we are also finalizing a 

requirement that issuers of QHPs in 

FFEs and SBE–FPs offer through the 

Exchange standardized QHP options 

beginning in PY 2023. We are also 

finalizing an update to the QIS 

standards to require QHP issuers to 

address health and health care 

disparities as a specific topic area 

within their QIS beginning in 2023. 

The changes to 45 CFR part 158 

codify that only those provider 

incentives and bonuses that are tied to 

clearly defined, objectively measurable, 

and well-documented clinical or quality 

improvement standards that apply to 

providers may be included in incurred 

claims for MLR reporting and rebate 

calculation purposes. The changes to 

part 158 also specify that only expenses 

directly related to activities that 

improve health care quality may be 

included as QIA expenses for MLR 

reporting and rebate calculation 

purposes. In addition, we finalize a 

technical amendment to § 158.170(b) to 

correct an oversight and remove the 

reference to the percentage of premium 

QIA reporting option described in 

§ 158.221(b)(8), a provision that was 

vacated by the United States District 

Court for the District of Maryland in 

City of Columbus,27 and thus deleted in 

part 2 of the 2022 Payment Notice final 

rule. 

III. Provisions of the Final HHS Notice 

of Benefit and Payment Parameters for 

2023 

A. Part 144—Requirements Relating to 

Health Insurance Coverage 

1. Definitions (§ 144.103) 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 594), we proposed to 

remove the phrase ‘‘unless otherwise 

provided under State law’’ from the 

definition of large group market at 

§ 144.103. As discussed in the proposed 

rule, the phrase has no meaning or 

application and does not appear in the 


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28 62 FR 16894 and 69 FR 78720. 

29 82 FR 18346, 18349 through 18353. 

30Executive Order 14009 on Strengthening 

Medicaid and the Affordable Care Act. (2021, 

February 2). See 86 FR 7793. 

31Executive Order 14070 on Continuing to 

Strengthen Americans’ Access to Affordable, 

Quality Health Coverage, April 5, 2022; see 87 FR 

20689. 

statutory definition of large group 

market in section 2791(e)(3) of the PHS 

Act. That phrase was initially included 

in the PHS Act regulatory definitions of 

large group market, large employer, and 

small employer adopted by HHS under 

HIPAA.28 However, in the final rules 

published on October 30, 2013 (78 FR 

65045), we amended the definitions of 

large employer and small employer to 

make them consistent with section 

2791(e) of the PHS Act, as amended by 

the ACA, and in so doing, removed that 

phrase from the definitions. At that 

time, we inadvertently neglected to 

delete the phrase from the regulatory 

definition of large group market, and we 

proposed to do so in the proposed rule, 

to align these definitions and make the 

regulatory definition for large group 

market consistent with the definition 

under the ACA. 

We sought comment on this proposal. 

After reviewing public comments, we 

are finalizing this provision as 

proposed. The removal of the phrase 

‘‘unless otherwise provided under State 

law,’’ will add clarity to the regulatory 

definition of ‘‘large group market,’’ and 

align with the current definition under 

section 2791(e) of the PHS Act. 

We summarize and respond to public 

comments received on the definition of 

large group market below. 

Comment: We received two comments 

related to the definition of a large group 

market. One commenter did not see any 

adverse consequences to the revision. 

Another expressed concern that State 

law definitions of ‘‘large group’’ would 

be adversely affected by the change in 

Federal law because each State passes 

laws tailored to the market in their 

respective State. 

Response: As discussed in the 

proposed rule, we proposed this change 

to align the regulation with the 

underlying statutory definition of ‘‘large 

group market,’’ which does not include 

the phrase ‘‘unless otherwise provided 

under State law.’’ In addition, removing 

this language will not affect State law 

definitions of large group market to the 

extent that they do not prevent the 

application of Federal law. 

B. Part 147—Health Insurance Reform 

Requirements for the Group and 

Individual Health Insurance Markets 

1. Guaranteed Availability of Coverage 

(§ 147.104) 

a. Past-Due Premiums 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 594 through 595), we 

proposed to re-interpret the guaranteed 

availability requirement at section 2702 

of the PHS Act and its implementing 

regulation at § 147.104 to require issuers 

to accept individuals and employers 

who apply for coverage, even when the 

individual or employer owes past-due 

premiums for coverage from the same 

issuer or another issuer in the same 

controlled group. Under the current 

interpretation of the guaranteed 

availability requirement, to the extent 

permitted by applicable State law, an 

issuer does not violate the guaranteed 

availability requirements under 

§ 147.104 when the issuer attributes a 

premium payment made for new 

coverage to any past-due premiums 

owed for coverage from the same issuer 

or another issuer in the same controlled 

group within the prior 12-month period 

before effectuating enrollment in the 

new coverage.29

On January 28, 2021, President Biden 

issued Executive Order 14009, 

‘‘Strengthening Medicaid and the 

Affordable Care Act’’ (E.O. 14009).30

Section 3 of E.O. 14009 directs HHS, 

and the heads of all other executive 

departments and agencies with 

authorities and responsibilities related 

to Medicaid and the ACA, to review all 

existing regulations, orders, guidance 

documents, policies, and any other 

similar agency actions to determine 

whether they are inconsistent with 

policy priorities described in Section 1 

of E.O. 14009, to include protecting and 

strengthening the ACA and making 

high-quality health care accessible and 

affordable for all individuals. On April 

5, 2022, President Biden issued 

Executive Order 14070, ‘‘Continuing to 

Strengthen Americans’ Access to 

Affordable, Quality Health Coverage’’ 

(E.O. 14070).31 Section 2 of E.O. 14070 

directs agencies with responsibilities 

related to Americans’ access to health 

coverage, in addition to taking the 

actions directed pursuant to E.O. 14009, 

to review agency actions to identify 

ways to continue to expand the 

availability of affordable health 

coverage, to improve the quality of 

coverage, to strengthen benefits, and to 

help more Americans enroll in quality 

health coverage. Consistent with section 

3(iv) of E.O. 14009 and section 2(a) of 

E.O. 14070, the re-interpretation of the 

guaranteed availability requirement is 

intended to remove an unnecessary 

barrier and make it easier for consumers 

to enroll in coverage. 

In the proposed rule (87 FR 594), we 

proposed to re-designate § 147.104(i) as 

§ 147.104(j) and add a new § 147.104(i) 

to specify that a health insurance issuer 

that denies coverage to an individual or 

employer due to the individual’s or 

employer’s failure to pay premium 

owed under a prior policy, certificate, or 

contract of insurance, including by 

attributing payment of premium for a 

new policy, certificate, or contract of 

insurance to the prior policy, certificate, 

or contract of insurance, violates 

§ 147.104(a). Based on our experience, 

we believe that the currently effective 

interpretation of guaranteed availability 

has the unintended consequence of 

creating barriers to health coverage that 

disproportionately affect low-income 

individuals. 

After reviewing the public comments, 

we are finalizing this provision as 

proposed. We summarize and respond 

to public comments received on the 

proposed re-interpretation of guaranteed 

availability requirements for the group 

and individual health insurance markets 

below. 

Comment: Many commenters 

supported the proposal, stating that the 

current interpretation of the guaranteed 

availability requirement is inconsistent 

with the ACA and creates barriers to 

accessing health care that 

disproportionately harm persons with 

low incomes and those experiencing 

economic hardship. Other commenters 

in favor of the proposal stated that the 

current interpretation of the guaranteed 

availability requirement is a barrier to 

enrollment that disproportionately 

impacts people of color, especially 

women of color, persons with 

disabilities, lesbian, gay, bisexual, 

transgender, queer, and intersex 

(LGBTQI+) people, and immigrants. 

Some commenters stated that nonpayment of past-due premiums is 

typically not an intentional decision to 

avoid financial responsibility, and may 

be the result of a mistake or catastrophic 

events such as financial hardship, 

environmental disaster, hospitalization, 

or lack of awareness of past-due 

premium debt. Some commenters 

expressed concern that the current 

interpretation of the guaranteed 

availability requirement permits issuers 

to adopt punitive measures against 

consumers who, without malice, are 

unable to satisfy past-due premium 

debt. 

Some commenters stated that the 

current interpretation of the guaranteed 

availability requirement compounds 

barriers to enrollment by requiring 

consumers with past-due premium debt 


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32Cunningham, P.J., Green, T.L., & Braun, R.T. 

(2018, February 26). Income Disparities in the 

Prevalence, Severity, and Costs of Co-Occurring 

Chronic and Behavioral Health Conditions. Medical 

Care. 33See also 42 U.S.C. 18041(c)(1). 

to pay multiple months of premiums on 

top of a binder payment in order to 

effectuate coverage. A commenter noted 

that there is no evidence that 

individuals are attempting to ‘‘game the 

system’’ by enrolling in coverage and 

paying premiums only when care is 

needed. Other commenters stated that 

the current interpretation poses a steep 

barrier to enrollment for consumers 

responding to catastrophic life events, 

particularly given that the amount of 

past-due premiums owed to payors is 

nominal compared to issuer profits. 

Other commenters opposed the 

proposed policy and stated that more 

research is necessary to determine why 

individuals and employers fail to pay 

past-due premiums and questioned 

whether other coverage options could be 

made more accessible. 

Response: We believe finalizing the 

proposed re-interpretation of the 

guaranteed availability requirement will 

alleviate a barrier to enrollment for 

individuals struggling to access health 

coverage, which disproportionately 

affects historically marginalized 

populations and individuals facing 

financial hardship. The current 

interpretation of this policy 

disincentivizes enrollment by 

conditioning coverage on the repayment 

of the past-due premium debt, which 

may deter individuals who have 

accrued past-due premium debt from 

seeking coverage altogether. Conversely, 

permitting individuals to enroll in 

coverage, regardless of past-due 

premium debt, will help ensure 

continuous access to health care, 

especially for individuals facing dire 

economic circumstances. We agree with 

commenters that enrollees fail to pay 

premiums for numerous, valid reasons 

that have nothing to do with exploiting 

grace periods or special enrollment 

periods to avoid paying for health 

coverage. Additionally, many 

consumers and small businesses face 

financial challenges. As such, we 

believe it is prudent to remove barriers 

to accessing health coverage to ease the 

enrollment process. 

While the exact cause of premium 

non-payment and past-due premium 

accrual may not be clear in all cases, we 

are of the view that this should not be 

a reason to deny individuals coverage. 

We agree with commenters suggesting 

that more research is needed to 

determine why individuals and 

employers fail to pay past-due 

premiums, and believe that such 

research could inform future policies to 

better support consumers in staying 

enrolled in coverage.32

Comment: Some commenters 

recommended limiting the reinterpretation of the guaranteed 

availability requirement to the 

individual market and not making it 

applicable to the group market. One 

commenter stated that the proposed 

change could have significant impacts 

on issuer management of enrollment 

and billing for group market accounts. 

Response: Under section 2702 of the 

PHS Act and § 147.104, the guaranteed 

availability requirement applies to both 

the individual and group markets. We 

believe the same principles underlying 

this policy should apply equally to both 

markets, and therefore, decline to adopt 

this recommendation. 

Comment: Commenters stated that 

this proposal restricts issuers’ ability to 

collect past-due premiums or requires 

them to forgive such debt. Some 

commenters expressed concern that 

finalizing the proposal will remove a 

disincentive that guards against 

enrollees ceasing to pay premiums 

during the last 3 months of the plan 

year, and will leave issuers without 

adequate redress when faced with nonpayment. Some commenters stated that 

permitting individuals with past-due 

premium debt to enroll in coverage 

before repaying past-due premiums will 

ultimately result in fewer choices and 

higher premiums, harming consumers 

with low incomes. One commenter 

requested that HHS specify other 

options for issuers besides collections. 

In contrast, another commenter noted 

that issuers have largely chosen not to 

use the flexibility provided under the 

current interpretation of the guaranteed 

availability requirement because the 

implementation of a policy that 

attributes payments made for new 

coverage to past-due premiums before 

effectuating new enrollment would cost 

more than the past-due premiums the 

issuer would recoup through such a 

policy. Other commenters agreed that 

issuers have other tools for recouping 

unpaid premiums. Some commenters 

suggested that issuers should be 

prohibited from acting to collect pastdue premiums. 

Response: We disagree that this 

proposal restricts issuers from collecting 

past-due premiums. Issuers are 

generally not permitted to forgive the 

past-due premium debt and have 

alternative methods to collect past-due 

premiums (such as pursuing debt 

collection). We believe this mitigates the 

risk that some enrollees may take 

advantage of the guaranteed availability 

rules. We also believe that the low 

adoption among issuers of policies that 

rely on the current interpretation of 

guaranteed availability demonstrates 

that there are sufficient avenues for 

issuers to collect past-due premium debt 

without having to condition enrollment 

into new coverage on the payment of 

past-due premium debt. However, we 

acknowledge that issuers that 

implemented a policy of attributing 

payment made for new coverage to pastdue premiums before effectuating 

enrollment will need to make 

operational changes as a result of this 

re-interpretation of the guaranteed 

availability requirement. Finally, in 

response to the commenter’s suggestion 

that issuers should be prohibited from 

acting to collect on debt for past-due 

premiums, we reiterate that an issuer’s 

forgiveness of premium debt is generally 

not permissible under our rules. 

b. Nondiscrimination Based on Sexual 

Orientation and Gender Identity 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 595 through 597), we 

proposed to amend 45 CFR 147.104(e) to 

explicitly prohibit discrimination based 

on sexual orientation and gender 

identity. As we explain in the 

Supplemental Information section 

earlier in the preamble, HHS will 

address this policy, as well as the public 

comments submitted in response to this 

proposal, in a future rulemaking. 

C. Part 153—Standards Related to 

Reinsurance, Risk Corridors, and Risk 

Adjustment 

In subparts A, D, G, and H of part 153, 

we established standards for the 

administration of the risk adjustment 

program. In accordance with 

§ 153.310(a), 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.33 HHS did not 

receive any requests from States to 

operate risk adjustment for the 2023 

benefit year. Therefore, HHS will 

operate risk adjustment in every State 

and the District of Columbia for the 

2023 benefit year. 

1. Sequestration 

In accordance with the OMB Report to 

Congress on the Joint Committee 

Reductions for Fiscal Year 2022, the 

permanent risk adjustment program is 

subject to the fiscal year 2022 


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34OMB Report to the Congress on the BBEDCA 

251A Sequestration for Fiscal Year 2022. (2021, 

May 28). White House. https://

www.whitehouse.gov/wp-content/uploads/2021/05/ 

BBEDCA_251A_Sequestration_Report_FY2022.pdf. 

35CARES Act, S.3548. (2020). 

36For the 2018 benefit year, there were 12 RXCs, 

but starting with the 2019 benefit year, the two 

severity-only RXCs were removed from the adult 

risk adjustment models. See, for example, 83 FR 

16941. 

37Consistent with the approach finalized in the 

2022 Payment Notice, use of the 3 most recent 

consecutive years of enrollee-level EDGE data 

would result in the use of 2018, 2019, and 2020 

enrollee-level EDGE data for the recalibration of the 

2024 benefit year models; the use of 2019, 2020, 

and 2021 enrollee-level EDGE data for recalibration 

of the 2025 benefit year models; and the use of 

2020, 2021, and 2022 enrollee-level EDGE data for 

recalibration of the 2026 benefit year models. 

sequestration.34 Therefore, the risk 

adjustment program will be sequestered 

at a rate of 5.7 percent for payments 

made from fiscal year 2022 resources 

(that is, funds collected during the 2022 

fiscal year). 

HHS, in coordination with OMB, has 

determined that, under section 256(k)(6) 

of the Balanced Budget and Emergency 

Deficit Control Act of 1985 (Pub. L. 99– 

177, enacted December 12, 1985), as 

amended, and the underlying authority 

for the risk adjustment program, the 

funds that are sequestered in the fiscal 

year 2022 from the risk adjustment 

program will become available for 

payment to issuers in the fiscal year 

2023 without further Congressional 

action. If Congress does not enact deficit 

reduction provisions that replace the 

Joint Committee reductions, the 

program would be sequestered in future 

fiscal years, and any sequestered 

funding would become available in the 

fiscal year following that in which it 

was sequestered. 

Additionally, we note that the 

Coronavirus Aid, Relief, and Economic 

Security (CARES) Act amended section 

251A(6) of the Balanced Budget and 

Emergency Deficit Control Act of 1985 

and extended sequestration for the risk 

adjustment program through the fiscal 

year 2030 at a rate of 5.7 percent per 

fiscal year.35

We received no comments on the 

FY2022 sequestration rate for risk 

adjustment. 

2. HHS Risk Adjustment (§ 153.320) 

The HHS risk adjustment models 

predict plan liability for an average 

enrollee based on that person’s age, sex, 

and diagnoses (also referred to as 

hierarchical condition categories 

(HCCs)), producing a risk score. The 

HHS risk adjustment methodology 

utilizes separate models for adults, 

children, and infants to account for 

clinical and cost differences in each age 

group. In the adult and child models, 

the relative risk assigned to an 

individual’s age, sex, and diagnosis is 

added together to produce an individual 

risk score. Additionally, to calculate 

enrollee risk scores in the adult models, 

we added enrollment duration factors 

beginning with the 2017 benefit year, 

and prescription drug categories (RXCs) 

beginning with the 2018 benefit year.36

Infant risk scores are determined by 

inclusion in one of 25 mutually 

exclusive groups, based on the infant’s 

maturity and the severity of diagnoses. 

If applicable, the risk score for adults, 

children, or infants is multiplied by a 

CSR factor. The enrollment-weighted 

average risk score of all enrollees in a 

particular risk adjustment covered plan 

(also referred to as the plan liability risk 

score or PLRS) within a geographic 

rating area is one of the inputs into the 

risk adjustment State payment transfer 

formula, which determines the State 

transfer payment or charge that an 

issuer will receive or be required to pay 

for that plan for the applicable State 

market risk pool. Thus, the HHS risk 

adjustment models predict average 

group costs to account for risk across 

plans, in keeping with the Actuarial 

Standards Board’s Actuarial Standards 

of Practice for risk classification. 

a. Data for Risk Adjustment Model 

Recalibration for 2023 Benefit Year and 

Beyond 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 598), we proposed to 

recalibrate the 2023 benefit year risk 

adjustment models with 2017, 2018, and 

2019 enrollee-level EDGE data. We 

sought comment on this proposal. 

In the proposed rule, we also sought 

comments on the future use of the 2020 

enrollee-level EDGE data due to the 

COVID–19 PHE. Under current policy, 

2020 enrollee-level EDGE data would be 

used in the recalibration of the HHS risk 

adjustment models for the 2024 benefit 

year, and that data would continue to be 

used for the 2025 and 2026 benefit years 

models.37 Although HHS has not 

analyzed the 2020 enrollee-level EDGE 

data yet, we solicited comment on the 

future use of the 2020 enrollee-level 

EDGE data for the annual recalibration 

of the HHS risk adjustment models. 

After reviewing the public comments, 

we are finalizing, as proposed, the use 

of the 2017, 2018, and 2019 enrolleelevel EDGE data to recalibrate the 2023 

benefit year risk adjustment models. We 

were unable to finalize coefficients in 

time to publish them in this final rule. 

Therefore, consistent with 

§ 153.320(b)(1)(i), we will publish the 

final coefficients for the 2023 benefit 

year in guidance soon after the 

publication of this final rule. 

Additionally, we appreciate 

comments on the future use of the 2020 

enrollee-level EDGE data due to the 

COVID–19 PHE. We continue to 

consider how to handle 2020 enrolleelevel EDGE data for recalibration of the 

2024, 2025, and 2026 benefit year 

models and will work with stakeholders 

as we analyze the data. Changes to the 

established policies for recalibration of 

the risk adjustment models, including 

proposals related to the use of 2020 

enrollee-level EDGE data for such 

purposes, would be pursued through 

notice-and-comment rulemaking. 

We summarize and respond to public 

comments received on data for risk 

adjustment model recalibration for the 

2023 benefit year and beyond below. 

Comment: Many commenters 

supported the use of the 2017, 2018, and 

2019 enrollee-level EDGE data to 

recalibrate the 2023 risk adjustment 

models. One commenter noted that the 

2017, 2018, and 2019 enrollee-level 

EDGE data reflect the most recently 

available health outcomes and recent 

treatment patterns in the enrollee 

population. Another commenter 

supported using the most recent 3 years 

of EDGE data available in time for 

publication of the draft coefficients in 

the proposed rule in order to give the 

industry the earliest opportunity to 

model premium rates for the next 

benefit year. 

Response: We are finalizing the use of 

the 2017, 2018, and 2019 enrollee-level 

EDGE data to recalibrate the 2023 risk 

adjustment models as proposed. The 

2017, 2018, and 2019 enrollee-level 

EDGE data were the 3 most recent 

consecutive years of enrollee-level 

EDGE data that were available at the 

time we incorporated the data in the 

draft recalibrated coefficients published 

in the proposed rule. As discussed in 

the 2022 Payment Notice, the purpose of 

using the 3 most recent consecutive 

years of enrollee-level EDGE data that 

were available at the time we 

incorporated the data in the draft 

recalibrated coefficients published in 

the proposed rule was to respond to 

stakeholders’ request to provide the 

draft coefficients in the proposed rule 

(86 FR 24152). We believe that this 

approach promotes stability and avoids 

the delays in publication of the 

coefficients while continuing to develop 

blended, or averaged, coefficients from 

the 3 years of separately solved models 

for model recalibration. 

Comment: We received several 

comments on the use of 2020 enrolleelevel EDGE data for recalibration of the 


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38 In the 2022 Payment Notice Proposed Rule, we 

proposed three model specification changes, see 85 

FR 78572 at 78583 through 78586. In the 2022 

Payment Notice Final Rule, in response to 

comments, we did not finalize the proposed 

updates and announced that we would publish a 

technical paper on the proposed model changes; see 

86 FR 24140 at 24151 through 24162. See also HHSOperated Risk Adjustment Technical Paper on 

Possible Model Changes. (2021, October 26). CMS. 

https://www.cms.gov/files/document/2021-ratechnical-paper.pdf and HHS-Operated Risk 

Adjustment Technical Paper on Possible Model 

Changes: Summary Results for Transfer 

Simulations. (2021, December 28). CMS. https://

www.cms.gov/files/document/2021-ra-technicalpaper.pdf. 

39When we refer to the enrollees without HCCs, 

we are referring to enrollees without payment 

HCCs. 

2024, 2025, and 2026 benefit years. 

Some of these commenters supported 

the inclusion of 2020 enrollee-level 

EDGE data in these future benefit year 

model recalibrations, stating that 2020 

data would accurately reflect utilization 

patterns that can be expected in 2021 

and beyond and that the inclusion of 3 

years of enrollee-level EDGE data in 

recalibration would dampen the impact 

of 2020 data. Another commenter noted 

that failure to include 2020 data would 

result in an outdated picture of medical 

spending. 

One commenter opposed the 

inclusion of 2020 enrollee-level EDGE 

data in model recalibration altogether. 

Another commenter noted that not 

relying on 2020 experience to develop 

risk adjustment coefficients is consistent 

with industry practice, asserting that the 

majority of Medicare Advantage and 

ACA issuers used 2019 data in lieu of 

2020 data for 2022 pricing. 

Several commenters requested HHS 

develop a technical paper on using 2020 

enrollee-level EDGE data in future 

model recalibrations, with several 

commenters suggesting that HHS do a 

comparison of coefficients with and 

without the 2020 enrollee-level EDGE 

data to review relative changes in 

coefficients, and evaluate changes for 

clinical reasonability and consistency 

with 2018 and 2019 enrollee-level EDGE 

data. One commenter requested that 

HHS release 2020-related statistics and 

solicit further comment on how to best 

proceed with 2020 data, including 

whether to instead use 2017, 2018, and 

2019 EGDE data for the 2024 benefit 

year recalibration of the HHS risk 

adjustment models. 

One commenter recommended either 

assigning 2020 enrollee-level EDGE data 

lower weight if used to recalibrate the 

models in the 2024, 2025, and 2026 

benefit years, or using four years of 

enrollee-level EDGE data in the annual 

model recalibration until 2020 data is 

no longer included in recalibration. 

Another commenter recommended that 

HHS evaluate if it would be better to use 

1 or 2 years of data for recalibration of 

the models in the 2024, 2025, and 2026 

benefit years on a transitional basis until 

only post-2020 data would be used. 

Response: We appreciate comments 

on the future use of the 2020 enrolleelevel EDGE data for risk adjustment 

model recalibration and will consider 

this feedback as we analyze the 2020 

enrollee-level EDGE data and consider 

options for its use for recalibration of 

the risk adjustment models. 

b. Risk Adjustment Model Updates 

In the proposed rule (87 FR 598 

through 605), we proposed three 

modeling updates to the risk adjustment 

models beginning with the 2023 benefit 

year. Consistent with the potential 

model updates discussed in the 2021 

RA Technical Paper, we proposed the 

following model updates, which are the 

same as those proposed but not 

finalized in the 2022 Payment Notice:38

(1) Adding a two-stage weighted model 

specification to the adult and child 

models; (2) removing the severity illness 

factors in the adult models and 

replacing them with new severity and 

transplant indicators interacted with 

HCC count factors in the adult and child 

models; and (3) replacing the current 

enrollment duration factors in the adult 

models with HCC-contingent enrollment 

duration factors in the adult models. 

After a review of public comments, 

we are finalizing two of the three 

proposed model specification updates. 

We are not finalizing the proposed 

addition of a two-stage weighted model 

specification to the adult and child 

models. We are finalizing, as proposed, 

removing the current severity illness 

factors in the adult models and 

replacing them with new severity and 

transplant indicators that interacted 

with HCC count factors in the adult and 

child models. We are also finalizing, as 

proposed, replacing the current 

enrollment duration factors in the adult 

models with HCC-contingent enrollment 

duration factors in the adult models. In 

the following sections, we describe the 

proposed model specification changes, 

as well as summarize and respond to the 

comments received on each of these 

proposals. 

i. Two-Stage Weighted Model 

Specification 

We proposed to use a two-stage 

weighted model specification to 

recalibrate the adult and child risk 

adjustment models starting with the 

2023 benefit year to improve the 

underprediction of plan liability for the 

lowest-risk enrollees (that is, enrollees 

in low-risk deciles and enrollees 

without HCCs 39). For a full description 

of the proposed two-stage weighted 

model specification see the proposed 

rule (87 FR 599 through 601). We sought 

comment on the two-stage weighted 

model specification proposal. 

After reviewing the public comments, 

we are not finalizing the adoption of the 

two-stage weighted model specification. 

We summarize and respond to public 

comments received on the proposed 

two-stage model specification below. 

Comment: Several commenters 

supported the implementation of the 

proposed two-stage weighted model 

specification. Some of these 

commenters generally supported all of 

the proposed model specification 

changes, while others specifically noted 

that the proposed two-stage model 

improved prediction for the lowest-risk 

enrollees. 

Conversely, several other commenters 

opposed the implementation of the 

proposed two-stage weighted model 

specification. Several commenters were 

concerned that the proposed two-stage 

weighted model specification would 

have anti-competitive effects, leading to 

fewer choices for consumers. These 

commenters stated that the two-stage 

weighted model specification would 

increase premiums on more generous 

health insurance coverage, incentivize 

issuers to adopt narrow networks and 

lower-quality plans, encourage issuers 

to avoid enrolling consumers with 

chronic illnesses, and contribute to the 

creation and use of discriminatory 

benefit designs. 

Other commenters did not support a 

model change that improved risk 

predictions for certain subpopulations 

at the expense of the risk adjustment 

program’s ability to mitigate adverse 

selection for high-cost enrollees. Some 

commenters stated that the proposed 

two-stage weighted model specification 

ignores current market dynamics in 

which plans are already incentivized to 

attract the healthiest enrollees. 

Additionally, some commenters 

recommended additional analysis of the 

two-stage weighted model specification, 

specifically geographic and marketspecific considerations, before its 

adoption. One commenter suggested 

that if HHS finalizes the two-stage 

weighted model specification, HHS 

should pilot or phase-in the 

implementation based on an analysis of 

localized market conditions. 

Response: After consideration of the 

comments on this proposal, we are not 

finalizing the proposed two-stage 


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40Section 2. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. 

41Section 2.1. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. 

42Section 2.3. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. See also 87 

FR 600 through 601. 

43Biden-Harris Administration Announces 14.5 

Million Americans Signed Up for Affordable Health 

Care During Historic Open Enrollment Period. 

(2022, January 27). CMS. https://www.hhs.gov/ 

about/news/2022/01/27/biden-harrisadministration-announces-14-5-million-americanssigned-affordable-health-care-during-historic-openenrollment-period.html#:∼:text=Today%2C%20the

%20Biden%2DHarris%20Administration,

people%20who%20have%20newly%20gained. 

44Figures 4.2, 4.3, and 4.4. HHS-Operated Risk 

Adjustment Technical Paper on Possible Model 

Changes. (2021, October 26). CMS. https://

www.cms.gov/files/document/2021-ra-technicalpaper.pdf. 

45 Ibid. 

46Section 4. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. 

47Appendix A. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. 

weighted model specification. We 

pursued the proposed model 

specification updates to improve the 

prediction of certain subpopulations in 

response to feedback from stakeholders 

and internal analysis where we had 

observed underprediction in the current 

models. As we previously reported in 

the 2018 Payment Notice, our initial 

analysis found that, based on the 

commercial MarketScan® data, the HHS 

risk adjustment models slightly 

underpredicted risk for the lowest-risk 

enrollees (81 FR 61472 through 61473 

and 81 FR 94082 through 94083). Our 

subsequent analysis of enrollee-level 

EDGE data confirmed this preliminary 

finding.40 In addition, stakeholders have 

consistently encouraged HHS to adjust 

the models to address this 

underprediction of risk, which affects 

the PLRSs of plans that enroll more 

healthy individuals. HHS has therefore 

been examining these issues, 

considering different options, and 

soliciting comments on ways to modify 

the risk adjustment models to improve 

prediction for certain subpopulations, 

including the lowest-risk enrollees, over 

several years (81 FR 61473 and 85 FR 

7101 through 7104). Throughout this 

process, we consistently emphasized the 

need to carefully evaluate the impact on 

and consider the trade-offs that would 

need to be made in model predictive 

power among subgroups of enrollees. 

The proposed two-stage weighted 

model specification was targeted at 

improving model prediction for lowestrisk enrollees. As previously explained, 

we believed that by addressing the 

underprediction of costs associated with 

lowest-risk enrollees in the adult and 

child models, we could encourage the 

offering and retention of plans that 

enroll a higher proportion of this 

subpopulation of enrollees.41 We also 

recognized that issuers offering these 

types of plans were at greater risk of 

exiting the market if transfers calculated 

under the State payment transfer 

formula under-compensated for the true 

plan liability of the lowest-risk 

enrollees. These concerns, along with 

stakeholder comments on these issues, 

prompted the design of the two-stage 

weighted model specification two years 

ago. However, we acknowledged that 

there are trade-offs associated with the 

adoption of the proposed two-stage 

weighted model, including that while it 

would improve prediction for the 

lowest-risk enrollees it would worsen 

model prediction along other 

dimensions, such as reduced R-squared 

values, less accurate prediction of plan 

liability by age-sex factor (especially for 

younger and older women), as well as 

a less accurate prediction of costs for 

certain HCCs.42 Additionally, since 

developing the proposed two-stage 

weighted model specification, there 

have been key shifts in the individual 

market, including increased enrollment 

and increased availability of 

subsidies,43 that have made the market 

more attractive to issuers. However, 

these market shifts have also shown the 

pressing need to update the adult model 

enrollment duration factors, which we 

are also finalizing as part of this rule. 

While the interacted HCC count 

model specification and the enrollment 

duration factor updates finalized in this 

rule do not improve predictive accuracy 

for the lowest-risk enrollees as much as 

they would have if they were combined 

with the proposed two-stage weighted 

model specification, we believe the 

finalized model specifications will still 

make significant gains in improved 

predictive accuracy for our target 

subpopulations, including the lowestrisk enrollees, highest-risk enrollees, 

and partial-year enrollees.44 As 

demonstrated in Chapter 4 of the 2021 

RA Technical Paper, our analysis found 

the proposed interacted HCC counts 

model specification and the proposed 

HCC-contingent enrollment duration 

factors improved prediction for the 

lowest-risk enrollees, compared with 

the current adult models, even without 

accounting for the proposed two-stage 

weighted model specification.45 Using 

2018 enrollee-level EDGE data, the 

proposed interacted HCC counts model 

specification combined with the 

proposed HCC-contingent enrollment 

duration factors improves the PR for 

adult silver-plan enrollees in risk decile 

1 from 0.52 to 0.81.46 This approach of 

incremental improvements in predictive 

accuracy aligns with our commitment to 

continuously analyze and refine the risk 

adjustment models. After consideration 

of comments and further evaluation of 

the trade-offs, we are finalizing the 

interacted HCC count model 

specification and enrollment duration 

factor updates but are not finalizing the 

proposed two-stage weighted model 

specification. 

Since we are not finalizing the 

proposed two-stage weighted model 

specification, we do not intend to 

pursue or otherwise consider pilot or 

phase-in implementation strategies. 

Similarly, we do not intend to engage in 

additional analysis of alternative 

implementations of the two-stage 

weighted model specification, including 

but not limited to an analysis of 

implementation by geographic or 

market-specific conditions, at this time. 

Comment: One commenter that 

supported the proposed two-stage 

weighted model specification also 

encouraged HHS to recalibrate the State 

payment transfer formula to further 

ensure that plans do not face excessive 

risk adjustment charges when enrolling 

a high proportion of young and healthy 

enrollees. Another commenter 

supported the finalization of the twostage weighted model specification, but 

noted that it is unclear to what extent 

these model changes address situations 

in which risk adjustment charges for 

some issuers exceed the premium 

collected for some lower-risk enrollees. 

Response: We did not propose and are 

not finalizing changes to the State 

payment transfer formula. However, we 

intend to continue analysis of the risk 

adjustment State payment transfer 

formula to consider whether changes are 

needed to it. For example, in Appendix 

A of the 2021 RA Technical Paper, we 

discussed options to potentially update 

the risk adjustment State payment 

transfer formula to improve prediction 

for CSR enrollees’ plan liability. More 

specifically, we identified several 

potential options to update the risk term 

and one option to update the rating term 

to more precisely account for CSR plan 

liability in the State payment transfer 

formula.47 We familiarized stakeholders 

with these options and accepted public 

comments on the considerations in the 

2021 RA Technical Paper. We continue 


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48Summary Report on Permanent Risk 

Adjustment Transfers for the 2020 Benefit Year. 

(2021, June 30). CMS. https://www.cms.gov/CCIIO/ 

Programs-and-Initiatives/Premium-StabilizationPrograms/Downloads/RA-Report-BY2020.pdf. 

49Compare 42 U.S.C. 18063 (establishing the 

permanent risk adjustment program, which 

involves an assessment and comparison of the 

actuarial risk in each issuer’s plans in a State 

market risk pool with the average actuarial risk of 

all plans in the applicable State market risk pool) 

and 42 U.S.C. 18061 (establishing the transitional 

reinsurance program, which involves an assessment 

of actuarial risk of individual enrollees to identify 

those that qualify as ‘‘high risk.’’) 

50Section 2.2. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. See also 85 

FR 78667 and 86 FR 24283. 

51We acknowledge three areas where the twostage weighed model specification worsens fit of the 

risk adjustment models along other dimensions in 

Section 2.3 in the HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. 

52 Kautter, J., Pope, G., Ingber, M. J., Freeman, S. 

E., Patterson, L. J., Cohen, M. A., & Keenan, D. P. 

(2014). The HHS–HCC risk adjustment model for 

individual and small group markets under the 

Affordable Care Act. Medicare & Medicaid Research 

Review, 4(3), E1–E46. doi:10.5600/mmrr.004.03.a03. 

Kautter, J., Pope, G., & Keenan, D. P. (2014). 

Affordable Care Act risk adjustment: Overview, 

context, and challenges. Medicare & Medicaid 

Research Review, 4(3), E1–E11. doi:10.5600/ 

mmrr.004.03.a02. 

53For information on the use of hierarchies and 

constraints, see Sections 2.1, 3.7 and 3.8 of the 

March 2016 Risk Adjustment Methodology White 

Paper. (2016, March 24). https://www.cms.gov/ 

CCIIO/Resources/Forms-Reports-and-OtherResources/Downloads/RA-March-31-White-Paper032416.pdf. See also the June 2019 Potential 

Updates to HHS–HCCs for the HHS-operated Risk 

Adjustment Program Technical Paper (2019, June 

17). CMS. https://www.cms.gov/CCIIO/Resources/ 

Regulations-and-Guidance/Downloads/PotentialUpdates-to-HHS-HCCs-HHS-operated-RiskAdjustment-Program.pdf. 

to conduct analyses of these options and 

will propose any changes in future 

notice-and-comment rulemaking. 

As part of future analyses, we also 

intend to assess the impact of the State 

payment transfer formula on risk 

adjustment covered plans with lowestrisk enrollees to the extent that our data 

allows. However, in response to 

commenters’ concerns that risk 

adjustment charges exceed premiums 

collected for some of the lowest-risk 

enrollees, we do not believe that this 

concern falls within the scope of the 

proposed two-stage weighted model 

specification, and we reiterate that we 

do not believe that adjusting the State 

payment transfer formula to limit 

charges to the level of premiums for 

enrollees is appropriate (86 FR 24140 at 

24186). Also, as previously described, 

we proposed the two-stage weighted 

model specification to address the 

underprediction of the lowest risk 

enrollees, not to address the situation 

described by the commenter in which 

risk adjustment charges may exceed 

premiums collected for some enrollees. 

As described in the most recent 

‘‘Summary Report on Permanent Risk 

Adjustment Transfers for the 2020 

Benefit Year,’’ risk adjustment is 

working as intended to transfer 

payments from plans with lower than 

average actuarial risk to plans with 

higher than average actuarial risk.48

Furthermore, we do not believe that 

limiting risk adjustment charges to the 

level of enrollee premiums is consistent 

with the framework set forth in section 

1343 of the ACA, which requires the 

establishment of a risk adjustment 

program focused on risk differentials at 

the plan level, not the enrollee level.49

Risk adjustment transfers under the 

State payment transfer formula are 

therefore calculated based on the PLRS 

and the Statewide average premium, not 

based on individual enrollees’ 

premiums. 

Comment: Some commenters 

requested that if HHS finalizes the 

proposed two-stage weighted model 

specification, then HHS should reassess 

the 14 percent administrative 

adjustment, which they argue may 

already address some of the 

underprediction seen in predictive 

ratios. 

Response: We did not propose and are 

not finalizing changes to the 14 percent 

administrative cost reduction to the 

Statewide average premium used in the 

State payment transfer formula. While 

HHS is not finalizing the proposed twostage weighted model specification, we 

reiterate that the proposed two-stage 

weighted model specification and 

administrative cost adjustment to 

Statewide average premium address 

separate considerations. Specifically, 

the 14 percent administrative cost 

reduction is used in the State payment 

transfer formula to adjust the Statewide 

average premium and does not address 

the predictive accuracy of the risk 

adjustment models, as described in the 

2021 RA Technical Paper. As detailed in 

the 2018 Payment Notice, the purpose of 

the administrative cost adjustment to 

the Statewide average premium is to 

exclude fixed administrative costs that 

are not dependent on enrollee risk, such 

as taxes (81 FR 61488 through 61489 

and 81 FR 94099 through 94100). In 

contrast, and as previously described 

elsewhere,50 the proposed two-stage 

weighted model specification was a 

targeted refinement aimed at improving 

the current adult and child models’ 

prediction for the lowest-risk enrollees. 

Therefore, we do not agree with 

commenters’ assertions that the 

administrative cost adjustment 

addresses the same issue as the twostage weighted model specification, 

specifically the underprediction of costs 

in the lowest-risk enrollee 

subpopulation. 

Comment: Some commenters that 

opposed the proposed two-stage 

weighted model specification were 

concerned it may be resulting in 

overfitting of the models and may not 

predict future costs accurately. They 

also noted that the two-stage weighted 

model specification is not a standard 

procedure for risk adjustment and 

worsens fit in some areas, such as the 

reduced R-squared values,51 although 

the effect is small. 

Response: As previously described, 

we acknowledged that there are tradeoffs associated with adoption of the 

proposed two-stage weighted model, 

including that it would worsen model 

prediction along some dimensions, such 

as reduced R-squared values. We also 

recognize that the two-stage weighted 

model specification is not a standard 

procedure for risk adjustment. After 

consideration of comments and further 

evaluation of the trade-offs, we are not 

finalizing the proposed two-stage 

weighted model specification update to 

the adult and child models. In response 

to commenters’ concerns about 

overfitting, we note that we do not have 

concerns with respect to overfitting the 

models for a variety of reasons. First, we 

estimate the models using 3 years of 

data and the final model parameters are 

an average of coefficients across the 3 

years. By using 3 years of data, the 

potential for one unusual year to skew 

the coefficients is limited. Second, for 

each model year, the overall sample size 

is quite large in each adult model, 

particularly relative to the number of 

model predictors used in the risk 

adjustment models.52 For example, the 

2019 recalibration sample alone has 

18.7 million adult enrollees whose data 

are used to fit adult models consisting 

of 181 predictors for the 2023 benefit 

year. Additionally, we ensure sample 

sizes for each coefficient are reasonable 

through the application of hierarchies, 

constraints, and similar model design 

choices.53 We also note that although 

the models perfectly predict past 

experience, this does not guarantee the 

models will perfectly predict when 

applied to future payment years, as that 

will depend, in part, on what happens 

between the calibration and payment 

years. However, this does not reflect 

overfitting. To the extent the calibration 

years are representative of future 

payment years, the models are 

positioned to perform well when used 


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54Section 1.4. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. 

55Section 4.1. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. 

56For additional information on how the 

interacted HCC counts model specification works, 

see Section 4.3 of the HHS-Operated Risk 

Adjustment Technical Paper on Possible Model 

Changes. (2021, October 26). CMS. https://

www.cms.gov/files/document/2021-ra-technicalpaper.pdf. See also 87 FR at 601 through 603. 

for payment.54 For all of these reasons, 

we are not concerned about the 

proposed two-stage weighted model 

specification change resulting in 

overfitting of the models; however, as 

previously described, we are not 

finalizing the proposed two-stage 

weighted model specification. 

ii. Interacted HCC Counts Model 

Specification 

In addition to the two-stage weighted 

model specification, we proposed to add 

an interacted HCC counts model 

specification to the adult and child risk 

adjustment models starting with the 

2023 benefit year to address the current 

models’ underprediction of plan 

liability for the very highest-risk 

enrollees (that is, those in the top 0.1 

percentile and those enrollees with the 

most HCCs). While this highest-risk 

subpopulation represents a small 

number of enrollees, it represents a large 

portion of expenditures.55

Therefore, to address the 

underprediction of the highest-risk 

enrollees, we explored the addition of 

severity and transplant factors 

interacted with HCC counts in the adult 

and child models, wherein a factor 

flagging the presence of at least one 

severe or transplant payment HCC is 

interacted with counts of the enrollee’s 

payment HCCs. The purpose of adding 

severity and transplant factors 

interacted with HCC count factors to the 

adult and child models is to address the 

underprediction of the highest-risk 

enrollees by accounting for the fact that 

costs of certain HCCs rise significantly 

when they occur with multiple other 

HCCs. 

In developing this interacted HCC 

counts model specification, we tested 

different types of severity and transplant 

indicators interacted with HCC counts 

with the goal of improving prediction 

for enrollees with the highest costs and 

multiple HCCs to counterbalance the 

reciprocal prediction weights that 

relatively underpredicted costs for these 

enrollees. For this approach, we 

assessed the HCCs for enrollees with 

extremely high costs, and HCCs that 

were being underpredicted in the 

current risk adjustment models. We 

found that many of the HCCs that were 

flagged as being underpredicted were 

those HCCs that indicated severe illness, 

such as the transplant HCCs, and other 

HCCs related to severity of disease; 

therefore, we proposed dropping the 

current severity illness indicators in the 

adult models and replacing them with 

severity and transplant indicators 

interacted with HCC counts factors in 

the adult and child models. 

We proposed the inclusion of the 

factors in Tables 1 and 2 of the proposed 

rule as the severity and transplant 

interaction factors in the adult and child 

models starting with the 2023 benefit 

year. We separated out severity and 

transplant HCCs into two sets of 

interaction factors, as expressed in 

Tables 1 and 2 of the proposed rule, 

because we found that this approach 

improved prediction for the highest-risk 

enrollees better than an approach that 

included a single set of factors. 

If an enrollee has at least one severity 

HCC in Table 3 of the proposed rule 

(shown in Table 1 of this rule as the 

Final HCCs Selected for the HCC 

Interacted Counts), the enrollee will 

receive an interacted HCC count factor 

toward their risk score, and the severity 

HCC count factor selected would be 

based on the enrollee’s total payment 

HCC count.56 If an adult or child 

enrollee has at least one transplant HCC 

in Table 1 of this rule, the enrollee will 

receive an interacted HCC count factor 

for both a severity HCC interacted factor 

and, if the enrollee has four or more 

HCCs, a transplant HCC interacted 

factor towards their risk score, and both 

of those count factors would be based 

on the enrollee’s total payment HCC 

count. 

To further explain, as seen in Table 2 

of this rule, the severity-HCC-countinteraction factors were calculated as 10 

separate factors for the adult models, 

and seven separate factors for the child 

models. In the adult models, the first 

nine factors specified the presence of (1) 

an HCC in the severity list in Table 1 of 

this rule and (2) exactly one payment 

HCC in the enrollee’s data, exactly two, 

exactly three, and so on, up to exactly 

nine payment HCCs. The tenth factor 

specified the presence of (1) an HCC in 

the severity list in Table 1 of this rule 

and (2) 10 or more payment HCCs in the 

enrollee’s data. For the child models, 

the first five factors represent the 

presence of (1) an HCC in the severity 

list in Table 1 of this rule and (2) exactly 

one payment HCC in the enrollee’s data, 

exactly two, exactly three, and so on, 

but the sixth factor represents the 

presence of (1) an HCC in the severity 

list in Table 1 and (2) six to seven 

payment HCCs, and the seventh factor 

represents the presence of (1) an HCC in 

the severity list in Table 1 and (2) eight 

or more payment HCCs in the enrollee’s 

data. 


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57For an illustration of how the proposed 

severity- (or transplant-) HCC-count-interaction 

factors would be assigned to an enrollee, see 87 FR 

601 through 602. 

58Section 4.4. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. 

As seen in Table 3 of this rule, the 

transplant-HCC-count-interaction 

factors are calculated similarly. 

However, the transplant factors are 

calculated using a different range of 

HCC counts. In the adult models, five 

separate transplant interaction factors 

were created, representing the presence 

of (1) an HCC in the transplant list in 

Table 1 and (2) payment HCC counts of 

exactly four, exactly five, exactly six, 

exactly seven, and eight or more 

payment HCCs in the enrollee’s data. 

For the child models, we created only 

one transplant interaction factor 

indicating the presence of (1) an HCC in 

the transplant list in Table 1 of this rule 

and (2) a total of four or more payment 

HCCs in the enrollee’s data. Using only 

one transplant-HCC-count-interaction 

factor stabilized the child model 

estimates by increasing the sample size 

used to estimate the factor 

coefficients.57

To implement the severity- and 

transplant-HCC-count-interaction 

factors in the regression model and 

estimate the value of their factor 

coefficients, we proposed to remove the 

current severity illness factors in the 

adult models and add severity- and 

transplant-HCC-count-interaction 

factors for the adult and child models 

beginning with the 2023 benefit year. 

We sought comment on this proposal. 

We are finalizing the removal of the 

current adult model severity illness 

factors and adding an interacted HCC 

count model specification to the adult 

and child risk adjustment models 

starting with the 2023 benefit year, as 

proposed. 

We summarize and respond to public 

comments received on the interacted 

HCC counts model specification updates 

below. 

Comment: Several commenters 

supported the proposal to add an 

interacted HCC counts model 

specification to the adult and child risk 

adjustment models noting that the 

interacted HCC counts model 

specification will improve model 

prediction and more accurately quantify 

risk. Some commenters expressed 

general agreement with HHS that the 

current models may be underpredicting 

plan liability of the highest-risk 

enrollees, but did not otherwise 

comment on the interacted HCC count 

model specification proposals. One 

commenter suggested that the proposed 

refinement will mitigate issuers’ 

concerns about adverse selection and 

lead to a more competitive market, 

while another agreed that it would 

address the current models’ 

underestimate of plan liability for the 

very highest-risk enrollees. 

However, several other commenters 

opposed the proposed interacted HCC 

counts model policy, stating that this 

change would add undue complexity to 

the models and would increase coding 

and issuer gaming. Some commenters 

requested clarification on how the 

interacted HCC counts variable would 

be accommodated in the HHS–RADV 

process. These commenters requested 

that HHS increase program integrity 

measures and adopt additional 

safeguards against upcoding, such as 

targeted sampling to test for upcoding in 

the HHS–RADV process, as an 

additional measure to protect against 

gaming if this model specification 

change is finalized. One commenter 

generally noted they only supported the 

interacted HCC counts model 

specification if the two-stage weighted 

model specification was also finalized. 

Response: We agree with the 

commenters that the interacted HCC 

counts model specification will improve 

model prediction, more accurately 

quantify risk, and address the 

underprediction of plan liability of the 

highest-risk enrollees that we have 

observed in the current adult and child 

models. The current adult models 

incorporate a severe illness adjustment 

that accounts for combinations of 

selected HCCs. However, the total count 

of an enrollee’s HCCs does not currently 

independently affect the risk score and, 

while the current severity illness 

indicator helps predict costs accurately 

among most adult enrollees with 

qualifying severe illnesses, it does not 

fully address the underprediction for 

the very highest-risk enrollees. The 

current severity of illness indicators also 

do not extend to the child models. The 

proposed interacted HCC counts model 

specification was targeted at addressing 

these concerns and more accurately 

predicting risks and capturing costs for 

the highest-risk enrollees. 

We understand that there are 

concerns about the increased 

complexity that the interacted HCC 

counts model specification may 

introduce. However, we see the 

interacted HCC counts model 

specification as an advancement of our 

current severe illness indicators, which 

have been in place since the beginning 

of the risk adjustment models, so we 

believe the interacted HCC counts 

model specification change only slightly 

increases complexity. As described in 

our analysis of 2018 enrollee-level 

EDGE data in the 2021 RA Technical 

Paper, the interacted HCC counts model 

specification, along with the HCCcontingent enrollment duration factors, 

significantly improved prediction for 

the very highest-risk enrollees, which 

we believe outweighs the disadvantages 

of slightly increasing model 

complexity.58

Additionally, we acknowledge 

concerns over the potential for upcoding 

and issuer gaming and further note that 

incorporating safeguards to protect 

against the potential for gaming was a 

major consideration in our investigation 

of various interacted HCC counts model 

specifications. When developing the 

proposed interacted HCC counts model 

specification we were specifically 

concerned that the presence of counts 

across all HCCs, without requiring a 


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59For information on the principles that guide the 

HHS risk adjustment models’ diagnostic 

classification system, see Section 1.1.2 of the HHSOperated Risk Adjustment Technical Paper on 

Possible Model Changes. (2021, October 26). CMS. 

https://www.cms.gov/files/document/2021-ratechnical-paper.pdf (see, in particular, Principle 6: 

The diagnostic classification should not reward 

coding proliferation.) 

60 March 2016 Risk Adjustment Methodology 

White Paper. (2016, March 24). https://

www.cms.gov/CCIIO/Resources/Forms-Reports-andOther-Resources/Downloads/RA-March-31-WhitePaper-032416.pdf. See also 87 FR 602 through 603. 

61Enrollees with at least one capitated claim in 

EDGE are excluded from recalibration, as the risk 

adjustment models are used to evaluate enrollees’ 

expenditures, and capitated claims do not provide 

meaningful and comparable cost (allowed charges) 

data in comparison to non-capitated claims. We are 

also concerned that methods for computing and 

reporting derived amounts from capitated claims 

could be inconsistent across issuers and would not 

provide reliable or comparable data. 

62The calibration sample is the same sample used 

for the analysis in the 2021 RA Technical Paper, 

which excludes capitated enrollees. 

63Figures 1.2 and 1.3. HHS-Operated Risk 

Adjustment Technical Paper on Possible Model 

Changes. (2021, October 26). CMS. https://

www.cms.gov/files/document/2021-ra-technicalpaper.pdf. 

64 85 FR 78583 through 78586 and 87 FR 598 

through 605. 

65HHS-Operated Risk Adjustment Technical 

Paper on Possible Model Changes. (2021, October 

26). CMS. https://www.cms.gov/files/document/ 

2021-ra-technical-paper.pdf. 

66HHS-Operated Risk Adjustment Technical 

Paper on Possible Model Changes: Summary 

Results for Transfer Simulations. (December 28, 

2021). CMS. https://www.cms.gov/files/document/ 

2021-ra-technical-paper.pdf. 

severe illness or transplant HCC, would 

further incentivize issuers to code for 

more HCCs, thus increasing their 

payment or reducing their charge under 

the State payment transfer formula. This 

would be inconsistent with the risk 

adjustment principle not to encourage 

coding proliferation.59 However, we 

believe that implementing the interacted 

HCC counts model specification 

updates, as proposed, which restricts 

the incremental risk score adjustment to 

enrollees with at least one severe illness 

or transplant HCC, reduces concerns of 

issuers inflating HCC counts to increase 

their transfers under the State payment 

transfer formula. More specifically, our 

analysis of 2016, 2017, and 2018 

enrollee-level EDGE data revealed that 

severe illness HCCs are relatively 

uncommon; less than 2 percent of the 

adult enrollee-level EDGE data 

population across these 3 benefit years 

had at least one severe illness HCC, as 

opposed to about 20 percent of adult 

enrollees with any payment HCC. 

Therefore, opportunities to inflate HCC 

counts would be limited to a small 

fraction of total enrollees. 

Although we believe this approach 

appropriately balances the different 

trade-offs by improving prediction for 

highest-risk enrollees while mitigating 

the potential for gaming or upcoding, 

we generally intend to monitor 

implementation of the model 

specification updates finalized in this 

rule. Specifically, we will look for any 

notable changes in HCC failure rates for 

the interacted severity and transplant 

HCCs in HHS–RADV beginning with the 

2023 benefit year that could be the 

result of implementation of the 

interacted HCC counts model 

specification updates. 

Lastly, we note the interacted HCC 

counts model specification update 

finalized in this rule is effective 

beginning with 2023 risk adjustment. 

The HHS–RADV process for the 2023 

benefit year would not begin until 

spring 2024. Therefore, we intend to 

consider whether changes are needed 

beginning with the 2023 benefit year 

HHS–RADV error estimation 

methodology or processes in recognition 

of the interacted HCC counts model 

specification and would propose any 

such changes in future notice-andcomment rulemaking. HHS will also 

consider whether targeted sampling, or 

other approaches, in HHS–RADV are 

necessary to detect and address 

upcoding or coding proliferation as a 

result of the implementation of the 

interacted HCC counts model 

specification. 

Comment: Some commenters 

questioned whether the exclusion of 

capitated claims biases the analysis of 

the proposed interacted HCC counts 

model specification change. 

Response: As previously explained,60

we have historically excluded enrollees 

with capitated claims from the 

recalibration sample due to concerns 

that methods for computing and 

reporting derived amounts from 

capitated claims would not result in 

reliable data for recalibration or 

analysis.61 However, in response to 

comments submitted to the 2021 RA 

Technical Paper and the proposed rule, 

we conducted additional analyses to 

investigate how enrollees with capitated 

claims could have impacted our 

assessment of the underpredicted 

subpopulations described in the 2021 

RA Technical Paper. This additional 

analysis did not show that the exclusion 

of enrollees with capitated claims 

biased the analysis or results in the 2021 

RA Technical Paper. 

To conduct this additional analysis, 

we compared the recalibration sample, 

which excluded enrollees with any 

capitated claims,62 with the capitation 

sample, which included only enrollees 

with capitated claims. Overall, for the 

2023 risk adjustment models, the 

capitation exclusion resulted in 15–17 

percent of enrollees being dropped from 

the recalibration sample. As described 

in the 2021 RA Technical Paper, where 

we utilized the recalibration sample to 

analyze the proposed model changes, 

we observed underpredicted plan 

liability for the lowest-risk enrollees 

(enrollees in low-risk deciles and 

without HCCs) and underpredicted plan 

liability for the highest-risk enrollees 

(enrollees in the top 0.1 percent decile 

and with many HCCs).63 In our 

additional analysis of the capitation 

sample, we also observed the same 

general trends of underprediction of the 

lowest-risk and highest-risk enrollees. 

Further, we evaluated whether the 

proposed 2023 model specification 

changes produced similar 

improvements in addressing the 

underprediction of these 

subpopulations in the capitation sample 

as the recalibration sample and found 

that the proposed 2023 model 

specification changes resulted in similar 

prediction improvements for both 

samples. Therefore, we do not believe 

that the exclusion of enrollees with 

capitated claims biased the analysis or 

results, and we do not believe that their 

inclusion would have meaningfully 

impacted our findings. 

Comment: Some commenters 

recommended additional information 

and analysis on the proposed interacted 

HCC counts model change specification, 

such as its effect on calculations under 

the State payment transfer formula for 

issuers that tend to attract healthier 

enrollees, whether small sample sizes 

were an issue, and an evaluation of 

whether removing the interacted 

severity HCCs would improve PLRS PRs 

more than attaching counts to those 

HCCs. One of the commenters suggested 

that it is difficult to assess the net effect 

of the interacted HCC count proposals 

on risk adjustment State transfers 

selection incentives. This commenter 

further noted they would oppose the 

proposal if this proposed change 

reduced State transfers paid by issuers 

with lower than average risk scores. 

Response: We provided extensive 

information on the interacted HCC 

counts model specification changes and 

the estimated impact on State transfers 

in rulemakings,64 the 2021 RA 

Technical Paper,65 and the HHSOperated Risk Adjustment Technical 

Paper on Possible Model Changes: 

Summary Results for Transfer 

Simulations.66 In the transfer simulation 

report, we provided summary-level 

information on the estimated combined 


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67Figures 4.2, 4.3, and 4.4 in the HHS-Operated 

Risk Adjustment Technical Paper on Possible 

Model Changes demonstrate the improvements in 

PRs of the interacted HCC counts and HCCcontingent EDFs. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. 

68Section 4.4. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. 

69As explained in the 2021 Payment Notice 

proposed rule, we found that partial-year enrollees 

in the child models did not have the same risk 

differences as partial-year enrollees in the adult 

models, and they tended to have similar risk to fullyear enrollees in the child models. See 85 FR 7103 

through 7104. In the infant models, we found that 

partial-year infants had higher expenditures on 

average compared to their full-year counterparts; 

however, the incorporation of enrollment duration 

factors created interaction issues with the current 

severity and maturity factors and did not have a 

meaningful impact on the general predictive 

accuracy of the infant models. Ibid. Therefore, we 

proposed to continue to apply enrollment duration 

factors to the adult models only. 

70 85 FR 29164 at 29188 through 29190.; 86 FR 

24140 at 24151 through 24162; and the HHSOperated Risk Adjustment Technical Paper on 

Possible Model Changes. (2021, October 26). CMS. 

https://www.cms.gov/files/document/2021-ratechnical-paper.pdf. 

71When we refer to the enrollees with and 

without HCCs, we are referring to enrollees without 

payment HCCs. 

impact of the proposed model 

specification changes on the calculation 

of plan-level risk scores and State 

transfers. Issuers that participated in the 

simulation also received detailed issuerspecific data, including risk score and 

transfer estimates for the simulated 

results. 

While we acknowledge stakeholders’ 

requests for additional analysis, such as 

the effect of the interacted HCC counts 

model specification updates on transfer 

calculations for issuers who tend to 

attract healthier enrollees, operational 

and technological limitations within 

both HHS and the issuer community 

limited capacity to conduct additional 

simulations. Despite these limitations in 

being able to conduct additional 

simulations, we were able to produce 

and share evidence and detailed 

analyses in support of the proposed 

interacted HCC counts model 

specification.67 For example, as 

described in the 2021 RA Technical 

Paper, the interacted HCC counts model 

specification improved prediction for 

the highest-risk enrollees.68

We also acknowledge the request to 

evaluate the impact of removing the 

current severity and transplant 

indicators against the proposed 

interacted HCC counts model 

specification. However, we do not 

believe this approach warrants further 

evaluation because we did not propose 

to entirely remove the indicators 

without replacing them. Additionally, 

the current severity illness indicators 

improve the current adult models’ 

prediction of high-risk enrollees, so we 

do not believe we should consider 

completely removing the severity illness 

terms from the models. We reiterate that 

the proposed interacted HCC counts 

model specification further improves 

the adult and child models’ predictive 

power beyond the adult models’ current 

severity illness indicators. Therefore, we 

do not believe that we should further 

consider removing the severity illness 

indicators and not replacing them. 

We recognized that one potential 

concern with this model specification 

change was that the severity- and 

transplant-HCC-count-interaction factor 

coefficients might be based on small 

sample sizes. Therefore, we considered 

sample sizes of the various interacted 

HCC count factors when developing this 

proposal and the proposed factor 

coefficients. We explored alternative 

methods of interacting HCC counts with 

severity and transplant HCCs, including 

interacting the HCC counts with 

individually selected severity and 

transplant HCCs, but found that 

interacting the HCC counts with a factor 

indicating the presence of at least one of 

the selected HCCs in each group 

produced PR improvements and 

sufficient sample sizes for reasonably 

stable factor coefficient estimates. To 

that end, we analyzed 2016, 2017, and 

2018 enrollee-level EDGE data and 

chose the model specifications that 

grouped the HCC counts interacted with 

individual severity and transplant HCCs 

into two sets of aggregated factors to 

maximize sample size, reduce concerns 

of overfitting the model, and reduce the 

number of factors being added to the 

models. More specifically, in the adult 

models, we found that starting with 4+ 

HCCs for the transplant interacted 

factors improved predictions of 

enrollees at the very high end in terms 

of risk and cost and ending at 8+ HCCs 

for the transplant interacted factors, 

instead of 10+ HCCs, addressed the 

small sample sizes of enrollees with a 

transplant and 9+ HCCs. For the child 

models, we found having one transplant 

interacted factor for 4+ HCCs provided 

more stable estimates given the smaller 

sample sizes for children than those for 

adults. With the proposed structure for 

transplant and severity interacted 

factors in place, the resulting sample 

sizes are comparable to the sample sizes 

used for individual HCCs in the adult 

and child risk adjustment models. 

iii. Changes to the Adult Model 

Enrollment Duration Factors 69

In the proposed rule, we proposed to 

change the enrollment duration factors 

in the adult risk adjustment models to 

improve prediction for partial-year adult 

enrollees with and without HCCs (87 FR 

603 through 604). Although the values 

for the factors change from year to year 

as part of the annual recalibration of the 

adult models, we have not made 

changes to the structure of the 

enrollment duration factors since they 

were first adopted for the 2017 benefit 

year in the 2018 Payment Notice (81 FR 

94071 through 94074). 

As described in prior rules and the 

2021 RA Technical Paper, we found that 

the current adult model enrollment 

duration factors underpredicted plan 

liability for partial-year adult enrollees 

with HCCs and overpredicted plan 

liability for partial-year adult enrollees 

without HCCs.70 71

Therefore, beginning with the 2023 

benefit year, we proposed to eliminate 

the current monthly enrollment 

duration factors of up to 11 months for 

all enrollees in the adult models, and 

replace them with new monthly 

enrollment duration factors of up to 6 

months that would apply only to adult 

enrollees with HCCs. We explained that 

under this proposal there would be no 

enrollment duration factors for adult 

enrollees without HCCs starting with 

the 2023 benefit year, nor would there 

be enrollment duration factors for adult 

enrollees with HCCs and more than 6 

months of enrollment. 

We solicited comments on the 

proposed changes to the enrollment 

duration factors for the adult models. 

After reviewing the public comments, 

we are finalizing the proposal to replace 

the current enrollment duration factors 

in the adult models with HCCcontingent enrollment duration factors 

as proposed. As such, beginning with 

the 2023 benefit year, there will no 

longer be enrollment duration factors for 

adult enrollees without HCCs starting 

with the 2023 benefit year, nor will 

there be enrollment duration factors for 

adult enrollees with HCCs and more 

than 6 months of enrollment. 

We summarize and respond to public 

comments received on proposed 

changes to the adult model enrollment 

duration factors below. 

Comment: Most commenters 

supported the proposed changes to the 

enrollment duration factors for the adult 

models. Many of these commenters 

asserted that the proposed changes 

would improve model prediction. One 

commenter noted that the HCCcontingent enrollment duration factors 

would solve the majority of model 

prediction issues even in the absence of 


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72HHS-Operated Risk Adjustment Technical 

Paper on Possible Model Changes. (2021, October 

26). CMS. https://www.cms.gov/files/document/ 

2021-ra-technical-paper.pdf. 

73See, for example, HHS Announces Marketplace 

Special Enrollment Period for COVID–19 Public 

Health Emergency. (2021, January 28). CMS. https:// 

www.hhs.gov/about/news/2021/01/28/hhsannounces-marketplace-special-enrollment-periodfor-covid-19-public-health-emergency.html. 

74See 45 CFR 153.730. Since April 30, 2022, falls 

on a weekend, CMS will exercise enforcement 

discretion to shift the deadline for submission of 

final 2021 benefit year risk adjustment data to May 

2, 2022. 

75Section 3. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. In the 

enrollee-level EDGE dataset, merged market 

enrollees are assigned to the individual or small 

group market indicator based on their plan. 

76Section 3.3.2. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. See also 86 

FR 24161. 

77 Ibid. 

78Section 3.3.2. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. 

the adoption of the proposed two-stage 

weighted model and interacted HCC 

counts model specification updates. 

Several commenters also stated that the 

proposed HCC-contingent enrollment 

duration factors would reduce issuers’ 

incentives for risk selection. 

Response: We are finalizing the 

replacement of the current monthly 

enrollment duration factors of up to 11 

months for all enrollees in the adult 

models with new monthly enrollment 

duration factors of up to 6 months that 

would apply only to enrollees in the 

adult models with HCCs. As previously 

explained, our analysis of the current 

adult model enrollment duration factors 

found that plan liability was 

underpredicted for partial-year adult 

enrollees with HCCs and overpredicted 

for partial-year adult enrollees without 

HCCs.72 This targeted refinement was 

developed in response to this finding 

and will improve prediction for partialyear adult enrollees with and without 

HCCs. Additionally, HHS agrees that the 

enrollment duration factor changes will 

reduce issuers’ incentives for risk 

selection by improving model 

prediction. 

Comment: Several commenters 

focused on the intersection of special 

enrollment periods (SEP) and these 

proposed changes. Some commenters 

suggested that the proposed enrollment 

duration factor updates would mitigate 

the impact of the recent access to SEPs 

enhanced during the 2020 and 2021 

benefit years due to the COVID–19 PHE 

and ARP,73 which changed the SEP 

enrollee pool and increased 

opportunities for adverse selection. One 

of these commenters noted the 

importance of predictive accuracy for 1 

to 6-month enrollees as Exchanges on 

the Federal platform and State 

Exchanges expand plan selection 

options during SEP enrollments. 

Another commenter noted HHS’ 

analysis of the proposed HCCcontingent duration factors is not 

representative of the current SEP 

landscape and recommended additional 

analysis before the proposed enrollment 

duration factor updates are 

implemented. 

Response: We appreciate the 

comments on the intersection of SEP 

opportunities and the proposed updates 

to the adult model enrollment duration 

factors. We agree with commenters that 

the proposed updates would mitigate 

the impact of the recent SEPs enhanced 

during the 2020 and 2021 benefit years 

due to the COVID–19 PHE and ARP on 

potential opportunities for adverse 

selection, but note that these updates to 

the enrollment duration factors will not 

be implemented until the 2023 benefit 

year. We also agree with the commenter 

on the importance of predictive 

accuracy for partial-year enrollees and 

believe that these changes will improve 

the current models’ predictive accuracy 

for partial-year adult enrollees with and 

without HCCs. 

As noted above, we are finalizing the 

changes to the adult model enrollment 

duration factors as proposed and will 

implement the new factors beginning 

with the 2023 benefit year adult models. 

To develop the 2023 benefit year risk 

adjustment models, we used the 2017, 

2018, and 2019 enrollee-level EDGE 

data, as these datasets were the 3 most 

recent consecutive years of enrolleelevel EDGE data that were available at 

the time we incorporated the data in the 

draft recalibrated coefficients published 

in the proposed rule. Therefore, we 

believe that the data years that we used 

to develop the HCC-contingent 

enrollment duration factors are the most 

appropriate data years available at this 

time for purposes of analyzing the 

proposal to adopt these changes 

beginning with the 2023 benefit year 

and that further analysis is not required 

at this time. As discussed elsewhere in 

this rule, we are still assessing whether 

to use the 2020 enrollee-level EDGE for 

model recalibration in the future, and 

we do not have 2021 benefit year 

enrollee-level EDGE yet.74 As such, we 

have not yet been able to analyze the 

impact of the most recent SEP changes. 

However, HHS remains committed to 

ongoing analysis of these issues and 

intends to study the impact of the new 

factors once implemented. 

Comment: A few commenters 

expressed concerns that the proposed 

HCC-contingent enrollment duration 

factors would negatively impact the 

small group market or that the changes 

would not align with small group 

market enrollment renewal patterns (for 

example, non-calendar year coverage). 

One commenter that opposed the 

adoption of the proposed changes stated 

that eliminating enrollment duration 

factors for non-HCC enrollees would 

disincentivize issuers from taking on 

new small group employers in the 

fourth quarter. Other commenters that 

supported the proposed enrollment 

duration factors changes noted general 

concerns that the proposed updates to 

the enrollment duration factors may 

negatively impact the small group 

market. 

Response: We explored partial-year 

enrollment patterns between the 

individual 75 and small group markets as 

part of the consideration of updates to 

the enrollment duration factors for the 

risk adjustment adult models. In the 

2021 Payment Notice (85 FR 29189), we 

shared our preliminary analysis of the 

2017 enrollee-level EDGE dataset found 

separate enrollment duration factors by 

market in the adult models could be 

warranted; therefore, we continued to 

study these issues as additional 

enrollee-level EDGE data became 

available. Our analysis of partial-year 

enrollment using the 2018 enrollee-level 

EDGE dataset, which occurred alongside 

our development of the proposed HCCcontingent enrollment duration factors 

in the proposed 2022 Payment Notice, 

did not find a meaningful distinction in 

relative costs between markets on 

average once the proposed enrollment 

duration factors of up to 6 months for 

adult enrollees with HCCs were 

implemented.76 Even though reasons for 

and patterns of partial-year enrollment 

differ by market, we concluded that the 

patterns most relevant for predicting 

cost (for example, how enrollment 

duration relates to cost conditional on 

the presence of HCCs) were the same for 

both markets.77 Therefore, we 

determined it would not be necessary to 

introduce market-specific factors if the 

proposed HCC-contingent enrollment 

duration factors were adopted in place 

of the existing enrollment duration 

factors. We also explained that if the 

HCC-contingent factors were to vary by 

market, the factors for both markets 

would generally be very similar, which 

would add little value to the models 

while adding additional complexity.78

Therefore, we proposed the adoption of 


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79Section 3.4. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. 

80 Ibid. 

81Section 3.2. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. 

82Figure 4.2. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. 83 84 FR 17463 through 17466. 

the same HCC-contingent factors for 

both markets. 

In response to comments, we again 

considered whether the HCC-contingent 

enrollment duration factors could have 

negative impacts on small group market 

issuers, such as on those that offer noncalendar year coverage and take on new 

business later in the year. Our 

continued consideration of these issues 

did not find evidence of such negative 

impacts.79 More specifically, while we 

recognize there are likely some cases 

where a partial-year enrollee only 

receives risk adjustment ineligible 

services, our analysis found no evidence 

that it is associated with meaningful 

underpayment in either the individual 

or small group market. In other words, 

on average, costs are sufficiently low for 

partial-year enrollees with no HCCs that 

even a risk score based only on 

demographic factors would generally 

overpredict plan liability.80

Commenters did not provide data or 

other information in support of the 

general assertions or concerns about 

potential impacts on the small group 

market and have not otherwise refuted 

the conclusions drawn from our 

analysis of available enrollee-level 

EDGE data. Therefore, we continue to 

believe it is appropriate to finalize and 

apply the proposed changes to the adult 

model enrollment duration factors to 

both the individual and small group 

(including merged) markets and to not 

pursue factors that vary by market. For 

the reasons outlined above, we also 

believe that the presumed negative 

impact on new business in the small 

group market would be limited, and the 

guaranteed availability provisions, 

which require health insurance issuers 

offering non-grandfathered coverage in 

the individual or small group market to 

accept every individual and employer in 

the State that applies for such coverage 

unless an exception applies, further 

protects against issuers declining to take 

on new small group employers. 

Comment: One commenter stated that 

they were against limiting enrollment 

duration factors to up to 6-month 

enrollees and would support the 

proposed changes if the upper limit for 

the factors was extended to 9 months. 

The commenter noted this change to the 

upper limit would better account for 

renewal patterns in the small group 

market. 

Response: While we considered other 

enrollment duration factor structures, 

we proposed and are finalizing a 6- 

month limit to the enrollment duration 

factors because we found that the 

monthly average cost variation by the 

number of months enrolled is 

meaningfully reduced after 6 months for 

adult enrollees with HCCs, and 

enrollment duration factors beyond 6 

months did not meaningfully improve 

prediction for the adult models.81

Specifically, we found that these 

coefficients would have been close to 0 

(and in some cases negative), which 

means they would not have contributed 

much to the overall risk score for 

enrollees or would have had to be 

constrained to 0 in the risk adjustment 

adult models. Given this analysis and in 

an effort to limit the number of factors 

in the models, we are finalizing the 

HCC-contingent enrollment duration 

factors for up to 6 months as proposed. 

Additionally, as explained above, we 

continue to believe it is appropriate to 

finalize and apply the proposed changes 

to the adult model enrollment duration 

factors to the small group market and to 

not pursue factors that vary by market. 

iv. Combined Impact of the Model 

Changes 

As discussed in detail above, after 

reviewing the public comments on the 

proposed risk adjustment model 

changes, we are finalizing the addition 

of the interacted HCC counts factors in 

the adult and child models, the removal 

of the current adult model severity 

illness factors, and the replacement of 

the existing enrollment duration factors 

with the HCC-contingent enrollment 

duration factors in the adult models, as 

proposed. Our analysis of the proposed 

interacted HCC counts factors combined 

with the proposed HCC-contingent 

enrollment duration factors in the adult 

models significantly improves 

predictions across most deciles and 

HCC counts for the very highest-risk 

enrollees, as well as the lowest-risk 

enrollees without HCCs.82 However, we 

are not finalizing the proposal to add a 

two-stage weighted model specification 

to model recalibrations. 

We summarized and responded to 

public comments received on proposed 

model specifications updates in the 

above sections. 

c. Pricing Adjustment for the Hepatitis 

C Drugs 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 605), for the 2023 

benefit year, we proposed to continue 

applying a market pricing adjustment to 

the plan liability associated with 

Hepatitis C drugs in the risk adjustment 

models.83

We sought comment on this proposal. 

After reviewing the public comments, 

we are finalizing this proposal to 

continue applying a market pricing 

adjustment to the plan liability 

associated with Hepatitis C drugs in the 

risk adjustment models, consistent with 

the approach adopted beginning with 

the 2020 models. 

We summarize and respond to public 

comments received on the pricing 

adjustment for Hepatitis C drugs below. 

Comment: Most commenters 

supported the Hepatitis C pricing 

adjustment. One commenter noted that 

the pricing adjustment ensures HHS is 

applying the most accurate data, while 

protecting against issuers that might 

seek to influence provider prescribing 

patterns to the issuers’ benefit. Another 

commenter noted that without the 

Hepatitis C pricing adjustment, issuers 

would be incentivized to focus on only 

a subset of enrollees needing treatment 

if they can trigger an increase in an 

enrollee’s risk score that is higher than 

the actual plan liability of the drug 

claim. 

Conversely, a few commenters 

expressed concerns about the Hepatitis 

C drugs pricing adjustment. These 

commenters asserted that the 

professional independence and ethical 

standards of providers would prevent 

them from prescribing drugs that they 

did not believe were medically 

necessary and appropriate, reducing the 

potential for issuers to game the model. 

These commenters were concerned 

about undercompensating issuers for 

enrollees with serious chronic 

conditions, which would incentivize 

issuers to avoid these enrollees. They 

encouraged HHS to evaluate the models 

continually to ensure they fully capture 

the cost of the current standard of care 

for conditions in the models. 

Additionally, one commenter cautioned 

against reducing the coefficient more 

than the expected decrease, which the 

commenter explained would incentivize 

issuers to reduce the availability of the 

treatment. This commenter also 

recommended that HHS clarify the data 

source and approach it is using to 

constrain the Hepatitis C RXC 


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84Figure 1.3. HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf. 85The Interacted HCC Counts and HCCcontingent enrollment duration factors also improve 

the models’ predictive accuracy for the lower risk 

deciles. See, for example, Figure 4.2. HHS-Operated 

Risk Adjustment Technical Paper on Possible 

Model Changes. (2021, October 26). CMS. https:// 

www.cms.gov/files/document/2021-ra-technicalpaper.pdf. 

86See, for example, 81 FR 94074 through 94080. 

87See, for example, Creation of the 2018 Benefit 

Year HHS-Operated Risk Adjustment Models Draft 

Prescription Drug (RXCUIs) to HHS Drug Classes 

(RXCs) Crosswalk Memorandum. (2017, September 

18). CMS. https://www.cms.gov/CCIIO/Resources/ 

Regulations-and-Guidance/Downloads/Draft-RxCCrosswalk-Memo-9-18-17.pdf. 

88RXCUIs differ by chemical (drug ingredient), 

strength, and dose form, but not by manufacturer 

or package size. This means that RXCUIs describe 

the same drugs year-over-year, even as the 

underlying NDCs and HCPCs change due to changes 

in labelers, which is why it is possible to apply 

different mappings to different years. For further 

information, see RxNorm Overview. (2022, January 

3). NIH. https://www.nlm.nih.gov/research/umls/ 

rxnorm/overview.html. 

89RXCs were not added to the risk adjustment 

models until 2018 benefit year; therefore, we used 

2018 RXC mappings for both 2016 and 2017 

enrollee-level EDGE data as there were no 2016 and 

2017 RXC mapping documents. Note that, even 

though 2018 RXC mappings were applied to these 

earlier years, they were cross walked to the NDCs 

and HCPCS that describe the applicable drugs 

during those earlier years. 

coefficient. Finally, one commenter 

expressed concern that constraining the 

Hepatitis C RXC coefficient would 

undermine recent progress to treat 

Hepatitis C infections. 

Response: We continue to believe that 

the Hepatitis C pricing adjustment is 

appropriate at this time, will help avoid 

perverse incentives, and will lead to 

Hepatitis C RXC coefficients that better 

reflect anticipated actual 2023 benefit 

year plan liability associated with 

Hepatitis C drugs. Specifically, the 

purpose of the Hepatitis C pricing 

adjustment is to address the significant 

pricing changes associated with the 

introduction of new and generic 

Hepatitis C drugs between the data years 

used for recalibrating the models and 

the applicable recalibration benefit year 

that present a risk of creating perverse 

incentives by overcompensating issuers. 

We reassessed the pricing adjustment 

for the Hepatitis C RXC for the 2023 

benefit year model recalibration and 

found that the data used for the 2023 

benefit year risk adjustment model 

recalibration (that is, 2017, 2018, and 

2019 enrollee-level EDGE data) still 

does not account for the significant 

pricing changes that we have observed 

for the Hepatitis C drugs due to the 

introduction of newer and cheaper 

Hepatitis C drugs. Therefore, the data 

that will be used to recalibrate the 

models needs to be adjusted because it 

does not precisely reflect the average 

cost of Hepatitis C treatments expected 

in the 2023 benefit year. 

In making this determination, we 

consulted our clinical and actuarial 

experts, and analyzed the most recent 

enrollee-level EDGE data available to 

further assess the changing costs 

associated with Hepatitis C enrollees. 

Due to the high cost of these drugs 

reflected in the 2017, 2018, and 2019 

enrollee-level EDGE data, without a 

pricing adjustment to plan liability, 

issuers would be overcompensated for 

the Hepatitis C RXC in the 2023 benefit 

year, and they could be incentivized to 

encourage overprescribing practices and 

game risk adjustment such that the 

issuer’s risk adjustment payment is 

increased or risk adjustment charge is 

decreased. We also recognize concerns 

that applying a pricing adjustment that 

would reduce the coefficient for the 

Hepatitis C RXC by more than the 

expected decrease in costs could 

incentivize issuers to reduce the 

availability of the treatment. However, 

we believe that the Hepatitis C pricing 

adjustment accurately captures the costs 

of Hepatitis C drugs for the applicable 

risk adjustment benefit year using the 

most recently available data, balances 

the need to deter gaming practices with 

the need to ensure that issuers are 

adequately compensated, and does not 

undermine recent progress in the 

treatment of Hepatitis C. 

Additionally, we recognize the 

important role that the ethical standards 

of providers play in preventing 

overprescribing of drugs that they do 

not believe are medically necessary and 

appropriate, but we believe that the 

Hepatitis C pricing adjustment is the 

most effective way to protect against 

perverse incentives that could affect 

prescribing patterns. Furthermore, while 

we appreciate commenters’ concerns 

about undercompensating issuers for 

enrollees with serious chronic 

conditions, HHS is adopting several 

proposals in this rulemaking to address 

the adult and child models’ 

underprediction for enrollees with 

many HCCs.84 Specifically, we finalized 

the interacted HCC counts and HCCcontingent enrollment duration factors 

model specifications to improve model 

prediction for the higher risk enrollees 

and ensure that issuers are being 

accurately compensated for these 

enrollees.85 We intend to continue to 

reassess this pricing adjustment as part 

of future benefit years’ model 

recalibrations using additional years of 

available enrollee-level EDGE data. 

d. Risk Adjustment RXC Mapping for 

Recalibration 

i. Inclusion and Exclusion Criteria for 

Drugs in RXC Mapping and 

Recalibration 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 605), we provided an 

overview of the inclusion and exclusion 

criteria HHS uses to identify drugs for 

mapping to RXCs in the adult risk 

adjustment models, reviewed what 

version of the RXC mapping document 

HHS uses when processing the enrolleelevel EDGE data for a benefit year for 

recalibration of the adult risk 

adjustment models, and outlined the 

criteria that warrant consideration for 

changes to the incorporation (or 

exclusion) of particular drugs from the 

RXC mappings in future benefit year 

recalibrations. We also proposed a 

change to the approach for identifying 

the version of the RXC mapping 

document HHS would use to process a 

given benefit year’s enrollee-level EDGE 

data for recalibration of the adult risk 

adjustment models. 

In accordance with § 153.320, HHS 

develops and publishes the risk 

adjustment methodology applicable in 

States where HHS operates the program, 

including the draft factors to be 

employed in the models for the benefit 

year. This includes information on the 

annual recalibration of the adult risk 

adjustment models’ RXC coefficients 

using data from the applicable prior 

benefit years trended forwarded to 

reflect the applicable benefit year of risk 

adjustment. Drugs that appear on claims 

data, either through National Drug 

Codes (NDCs) or Healthcare Common 

Procedural Coding System (HCPCS), are 

cross walked to RxNorm Concept 

Unique Identifiers (RXCUIs).86 RXCUI 

mappings are always matched to the 

NDCs and HCPCS applicable to the 

particular EDGE data year as the NDC 

and HCPCS reflect the drugs that were 

available in the market during the 

benefit year.87 As explained in the 

proposed rule, we had been using the 

most recent RXC mappings (RXCUIs 

that map to RXCs) that were available 

when we first processed the enrolleelevel EDGE data for a benefit year for 

recalibration of the adult risk 

adjustment models.88 For example, for 

the 2022 benefit year, we recalibrated 

the adult risk adjustment models using 

2016, 2017, and 2018 enrollee-level 

EDGE data, and applied the second 

quarter (Q2) 2018 RXC mapping 

document for both 2016 and 2017 89 and 

the Q2 2019 mapping document for 

2018 for recalibration of the adult risk 

adjustment models’ RXC factors. 

As noted in the 2022 Payment Notice 

(86 FR 26164), we also continuously 


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90See, for example, Creation of the 2018 Benefit 

Year HHS-Operated Risk Adjustment Models Draft 

Prescription Drug (RXCUIs) to HHS Drug Classes 

(RXCs) Crosswalk Memorandum. (2017, September 

18). CMS. https://www.cms.gov/CCIIO/Resources/ 

Regulations-and-Guidance/Downloads/Draft-RxCCrosswalk-Memo-9-18-17.pdf. 

91The January 7, 2022 version of the DIY software 

is available at 2021 Benefit Year Risk Adjustment 

Updated HHS-Developed Risk Adjustment Model 

Algorithm ‘‘Do It Yourself (DIY)’’ Software. (2022). 

CMS. 

92Available at Distributed Data Collection. 

REGTAP. 

93Consistent with the approach finalized in the 

2022 Payment Notice, the 2018 and 2019 enrolleelevel EDGE data would be used for the recalibration 

of the 2024 benefit year models and the 2019 

enrollee-level EDGE data would be used for the 

recalibration of the 2025 benefit year models. 94See 81 FR 94075. 

assess the availability of drugs in the 

market and the associated mapping of 

those drugs to RXCs in the adult risk 

adjustment models. More specifically, 

during a benefit year, HHS conducts 

quarterly reviews of RXCUIs that map to 

RXCs in the adult risk adjustment 

models for that benefit year. During our 

annual review of enrollee-level EDGE 

data for recalibration purposes, and to a 

certain extent during quarterly reviews 

of RXCUIs that map to RXCs in the adult 

risk adjustment models, HHS evaluates 

the inclusion and exclusion of RXCUIs 

based on criteria such as: (1) Whether 

costs for an individual drug are 

comparable to the costs of other drugs 

in the same class, (2) whether a drug is 

a good predictor of the presence of the 

diseases that map to the HCCs that an 

RXC indicates (which can be evaluated 

through clinical expert review in the 

absence of data), (3) whether the 

pharmacological properties and 

prescribing patterns are consistent with 

treatment of a particular condition (also 

evaluated through clinical expert 

review), and (4) stakeholder feedback.90

As a result of this ongoing assessment, 

we make quarterly updates to the RXC 

Crosswalk, which identifies the list of 

NDCs and HCPCS indicating the 

presence of an RXC in the current 

benefit year ‘‘Do It Yourself’’ (DIY) 

software and EDGE reference data, to 

ensure drugs are appropriately mapped 

to RXCs. This can include the addition 

or removal of drugs based on market 

availability and the other criteria 

identified above. As such, the risk 

adjustment mapping of RXCUIs to 

RXCs, along with the list of NDCs and 

HCPCS that crosswalk to each RXCUI, 

may be updated throughout a particular 

benefit year of risk adjustment. HHS 

provides information to issuers on these 

updates through the DIY software, 

which is published on the CCIIO 

website,91 as well as through the EDGE 

global reference updates, which are 

published on the Distributed Data 

Collection program page on the 

Registration for Technical Assistance 

Portal (REGTAP).92

This ongoing updating process occurs 

on a different timeline than the annual 

model recalibration activities for a given 

benefit year. 

In the proposed rule, we proposed to 

change the approach for identifying the 

version of the RXC mapping document 

HHS would use to process a given 

benefit year’s enrollee-level EDGE data 

for the annual recalibration of the adult 

risk adjustment models. More 

specifically, we proposed to recalibrate 

the adult risk adjustment models using 

each final, fourth quarter (Q4) RXC 

mapping document that was applicable 

for each benefit year of data that is 

included in the applicable benefit year’s 

model recalibration, while continuing to 

engage in annual and quarterly review 

processes using the inclusion and 

exclusion criteria described above. For 

example, if we recalibrate the 2024 

benefit year adult risk adjustment 

models using 2018, 2019, and 2020 

benefit year enrollee-level EDGE data, 

we would use the Q4 RXC mapping 

document for each of those benefit years 

(that is, Q4 2018, Q4 2019, and Q4 2020, 

respectively) for recalibration purposes. 

We would also use the criteria described 

above to evaluate the inclusion and 

exclusion of RXCUIs and may make 

other updates to the 2024 benefit year 

RXC Crosswalk to ensure drugs are 

appropriately mapped to RXCs. 

We proposed to begin to use this 

approach for recalibration of the 2023 

adult risk adjustment models with the 

exception of the 2017 enrollee-level 

EDGE data year, for which we proposed 

to use the most recent RXC mapping 

document that was available when we 

first processed the 2017 enrollee-level 

EDGE data (that is, Q2 2018). We 

proposed to use the applicable benefit 

year’s Q4 RXC mapping documents for 

both the 2018 and 2019 benefit years of 

enrollee-level EDGE data for the 

recalibration of the adult risk 

adjustment models for the 2023 benefit 

year. Under this proposal, we would 

generally hold those mappings constant 

when using the 2018 and 2019 enrolleelevel EDGE data years in future benefit 

year model recalibrations (except under 

the extenuating circumstances that are 

described in the next section that can 

result in targeted changes to RXC 

mappings)—meaning that we would use 

the applicable benefit year’s Q4 RXC 

mapping documents when the 2018 or 

2019 benefit year of enrollee-level EDGE 

data is used for future benefit year 

model recalibrations.93 The purpose of 

maintaining a specific version of the 

same RXC mapping document for future 

recalibrations is to limit the volatility of 

some coefficients from year-to-year and 

to ensure that we are capturing the 

utilization and costs observed for the 

underlying drugs in use in that year for 

the condition. Because the final DIY 

software update contains the Q4 list, 

this approach would also have the 

added benefit of providing issuers the 

opportunity to see the mappings/ 

crosswalk that are likely to be applied 

to that data year in the final DIY 

software release before it is used for 

recalibration. 

For purposes of the 2023 benefit year 

recalibration, we proposed an exception 

for the 2017 benefit year enrollee-level 

EDGE data and would instead use the 

most recent RXC mapping document 

that was available when we first 

processed the benefit year’s enrolleelevel EDGE data for recalibration 

purposes (that is, Q2 2018). We 

proposed this approach for the 2017 

benefit year enrollee-level EDGE data 

because the RXCs were still under 

development in 2017, and were not 

included in the adult risk adjustment 

models until 2018; 94 therefore, no RXC 

mappings existed for the 2017 benefit 

year. Thus, we proposed to use the Q2 

2018 RXC mapping document for the 

2017 benefit year enrollee-level EDGE 

data for 2023 model recalibration, 

consistent with the mapping used for 

processing the 2017 data for 

recalibration of the 2021 and 2022 adult 

models. We sought comment on this 

proposal. 

We summarize and respond to public 

comments received on the proposals 

related to the RXC mapping document 

used for the annual recalibration of the 

adult models, along with the comments 

and responses on the other risk 

adjustment RXC mapping proposals. 

ii. Targeted Changes to RXC Mappings 

for Recalibration 

Regardless of the version of the RXC 

mapping document we use during the 

annual adult risk adjustment model 

recalibration, there may be a relatively 

small number of drugs that still require 

additional analysis and consideration 

given the changes that can occur in the 

market between the data year and the 

applicable benefit year of risk 

adjustment. The targeted changes to 

particular drugs’ mappings typically 

occur when performing recalibration for 

future benefit years. Based on our 

experience since the incorporation of 

RXCs into risk adjustment models in the 

2018 benefit year, we do not believe that 

the removal or addition of an RXCUI 


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95For example, in reviewing drugs removed in Q1 

2020, the average effect of the removal of a single 

therapeutic drug ingredient was an approximate 

decrease of 0.14 percent in total pharmacy claims 

spending among RXC drugs. In reviewing drugs 

removed in Q1 2021, the average effect of the 

removal of a single non-hydroxychloroquine 

therapeutic drug ingredient was an approximate 

decrease of 0.68 percent in total pharmacy claims 

spending among RXC drugs. 

96See, for example, 86 FR 24180. 

97Consistent with the approach finalized in the 

2022 Payment Notice, the 2018 and 2019 benefit 

year enrollee-level EDGE datasets would continue 

to be used for recalibration of the 2024 benefit year 

models; and the 2019 benefit year enrollee-level 

EDGE dataset would also be used for recalibration 

of the 2025 benefit year models. See 85 FR 78582 

through 78583. 

from the RXC mappings (and the 

associated removal of the NDCs and 

HCPCS associated with that RXCUI) are 

typically material to recalibration 

because most drug removals are not 

associated with utilization and cost 

levels that would have a meaningful 

impact on model coefficients.95

However, in extenuating circumstances 

where HHS believes there will be a 

significant impact from a change in an 

RXCUI to RXC mapping, such as: (1) 

Evidence of significant off-label 

prescribing (as was the case with 

hydroxychloroquine sulfate 96); (2) 

abnormally large changes in clinical 

indications or practice patterns 

associated with drug usage; or (3) 

certain situations in which the cost of a 

drug (or biosimilars) become much 

higher or lower than the typical cost of 

drugs in the same prescription drug 

category, HHS will consider whether 

changes to the RXCUI to RXC mapping 

from the applicable data year crosswalk 

are needed for future benefit year 

recalibrations. In the proposed rule (87 

FR 608 through 609), we illustrated 

cases where we believe extenuating 

circumstances existed and how we 

evaluated whether to make targeted 

changes to RXC mappings due to those 

extenuating circumstances as part of the 

annual recalibration process for the 

2023 benefit year adult models. In 

particular, we considered the cases of 

RXCUI to RXC mapping of Descovy®

and hydroxychloroquine sulfate. For 

Descovy®, we did not propose to make 

an exception to remove Descovy® from 

mapping to RXC 01 in 2017, 2018 or 

2019 benefit year enrollee-level EDGE 

datasets used for the 2023 benefit year 

recalibration of the adult models. For 

hydroxychloroquine sulfate, we 

proposed that the targeted removal of 

this drug from mapping to RXC 09 was 

again appropriate, but to effectuate the 

targeted removal of this drug for 

purposes of the 2023 benefit year 

recalibration of the adult models, we 

would adopt a different approach than 

the one used for the 2022 benefit year 

risk adjustment model recalibration and 

would instead remove the RXCUI to 

RXC mapping in the 2018 and 2019 

enrollee-level EDGE data for 

hydroxychloroquine sulfate to RXC 09 

(Immune Suppressants and 

Immunomodulators) and the related 

RXC 09 interactions (RXC 09 x HCC056 

or 057 and 048 or 041; RXC 09 x 

HCC056; RXC 09 x HCC 057; RXC 09 x 

HCC048, 041). We explained that we 

would adopt a similar approach for any 

future year that uses the enrollee-level 

EDGE data for the 2018 and 2019 benefit 

years for purposes of the annual model 

recalibration.97 For a full discussion of 

these examples, see the HHS Notice of 

Benefit and Payment Parameters for 

2023 proposed rule (87 FR 608 through 

609). 

After reviewing the public comments 

on the various risk adjustment RXC 

proposals, we are finalizing using the 

Q4 RXC mapping document for each 

benefit year of recalibration data, as 

proposed. Additionally, as proposed, we 

will remove hydroxychloroquine sulfate 

in the 2023 benefit year model 

recalibration and will not remove 

Descovy® from mapping to RXC 01 in 

2017, 2018, and 2019 benefit year 

enrollee-level EDGE datasets used for 

the 2023 benefit year recalibration of the 

adult models. 

We summarize and respond to public 

comments received on all of the risk 

adjustment recalibration RXC mapping 

proposals below. 

Comment: Several commenters 

supported our RXC mapping proposal to 

recalibrate the 2023 benefit year models 

and future model years using the final, 

Q4 RXC Crosswalk associated with the 

applicable EDGE data year, with the 

exception of the 2017 enrollee-level 

EDGE data year, for which we would 

use the most recent RXC mapping 

document that was available when we 

first processed the 2017 enrollee-level 

EDGE data (Q2 2018). Those supporting 

comments noted that the changes 

improve the risk adjustment models and 

will align condition identification 

experienced in the data year with 

concurrent relevance of particular drugs 

for each RXC. These commenters 

appreciated the increased transparency 

into the approach HHS takes to RXC 

mapping noting it would allow 

stakeholders to plan for downstream 

implications of changes to RXC 

mapping. 

A few commenters requested that 

HHS provide a technical paper on the 

impact of the different approaches 

outlined in the RXC mapping proposal. 

One commenter requested that HHS 

provide a technical paper with analysis 

on the impact of the different 

approaches for identifying the RXC 

mapping document to use for the annual 

recalibration of the adult models, but 

stated that in lieu of that analysis, the 

commenter would support the adoption 

of the alternative approach to use the 

latest RXC mapping available at the time 

of recalibration as it would most closely 

aligns costs between recalibration data 

and current benefit year data. 

Response: We appreciate the support 

for the proposal to recalibrate the adult 

risk adjustment model using the final, 

Q4 RXC Crosswalk associated with the 

applicable EDGE data year. 

Recalibrating the adult risk adjustment 

models using the final, Q4 RXC 

mapping document that was applicable 

for each benefit year of data that is 

included in the applicable benefit year’s 

model recalibration will ensure that we 

are capturing the utilization and costs 

observed for the underlying drugs in use 

in that year for the condition. We are 

finalizing, as proposed, implementation 

of this approach beginning with the 

2023 benefit year recalibration of the 

adult models, with an exception for the 

2017 enrollee-level EDGE data year, for 

which we will use the most recent RXC 

mapping document that was available 

when we first processed the 2017 

enrollee-level EDGE data (that is, Q2 

2018). We will generally hold these 

mappings constant when using the 2018 

and 2019 enrollee-level EDGE data years 

in future benefit year model 

recalibrations (except under the 

extenuating circumstances that are 

described previously in this section that 

can result in targeted changes to RXC 

mappings)—meaning that we would use 

the applicable benefit year’s Q4 RXC 

mapping documents when the 2018 or 

2019 benefit year of enrollee-level EDGE 

data is used for future benefit year 

model recalibrations. 

We also agree that this approach will 

improve issuers’ ability to plan for 

downstream implications of changes to 

RXC mapping as it will provide issuers 

the opportunity to see the mappings/ 

crosswalk that will be applied to that 

data year in the final DIY software 

release before it is used for recalibration. 

We believe that the benefits of limiting 

the volatility of some coefficients from 

year-to-year, ensuring that we are 

capturing the utilization and costs 

observed for the underlying drugs in use 

during the data year, and improving 

issuers’ ability to plan for downstream 

implications of changes to RXC 

mapping outweigh the benefits of the 

alternative approach of using the latest 

RXC mapping available at the time of 

recalibration. Based on the detailed 


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98CMS Registration for Technical Assistance 

Portal (REGTAP), available at https://

regtap.cms.gov/index.php. 

99Creation of the 2018 Benefit Year HHSOperated Risk Adjustment Adult Models Draft 

Prescription Drug (RXCUIs) to HHS Drug Classes 

(RXCs) Crosswalk. (2017, September 18). CMS. 

https://www.cms.gov/CCIIO/Resources/Regulationsand-Guidance/Downloads/Draft-RxC-CrosswalkMemo-9-18-17.pdf. 

comments received in response to the 

proposals for identifying the version of 

the RXC mapping document used for 

the annual recalibration of the adult 

models, we do not believe that 

additional analysis or a technical paper 

of the approaches to identifying the RXC 

mapping document for recalibration 

purposes is needed at this time. 

Comment: Several commenters 

inquired about the timing of RXC 

Crosswalk changes that occur outside of 

the model recalibration process. Some 

requested notification of RXC Crosswalk 

changes for drugs that could have large 

impacts on risk adjustment transfers in 

the spring prior to the applicable benefit 

year. Others requested HHS finalize and 

announce the RXC Crosswalk changes 

that occur outside of the model 

recalibration process for an applicable 

benefit year no later than the December 

preceding the applicable benefit year, 

examine opportunities to identify and 

release such changes ahead of 

applicable State Exchange pricing 

deadlines, and communicate the final 

mappings prior to the end of the 

applicable benefit year. For changes to 

the RXC mappings that occur during the 

risk adjustment benefit year, one 

commenter suggested that HHS consider 

the relative benefit of removing an RXC 

at a late stage (that is, the fourth quarter 

of data submission) relative to potential 

impact on market stability and financial 

outcomes for issuers. Another 

commenter asserted that the timely 

inclusion of new drugs in the model 

will help ensure the incentives created 

by risk adjustment do not contribute to 

delays in the coverage of new treatments 

and recommended HHS monitor trends 

in drug coverage on risk adjustment 

plans to ensure that specific RXC 

mapping updates are not negatively 

impacting patient access to needed 

medications. 

Response: We acknowledge 

commenters’ desire to receive RXC 

Crosswalk updates as early as possible 

in order to fit rating timetables and 

reduce uncertainty. We clarify that, as 

part of our regular Crosswalk review 

process, we make regular changes that 

do not typically meaningfully impact 

coefficients and we release this 

information at its earliest availability 

through DIY software updates posted on 

the CCIIO website and EDGE global 

reference updates published through 

REGTAP.98 However, we have found 

that there may be a relatively small 

number of drugs that require additional 

consideration given changes that can 

occur between the data year and the 

applicable benefit year of risk 

adjustment. As such, we continue to 

believe that it is appropriate to update 

the risk adjustment mapping of RXCUIs 

to RXCs, along with the list of NDCs and 

HCPCS that Crosswalk to each RXCUI, 

throughout a benefit year of risk 

adjustment, while also retaining the 

flexibility to make targeted removals of 

drugs from the RXC Crosswalk and 

mapping document during the annual 

recalibration process. 

Based on our experience since the 

incorporation of RXCs into adult risk 

adjustment models in the 2018 benefit 

year, the removal of an RXCUI from the 

RXC mappings (and the associated 

removal of the NDCs and HCPCS 

associated with that RXCUI) has not 

typically been material to recalibration 

because most drug removals are not 

associated with utilization and cost 

levels that would have a meaningful 

impact on model coefficients. However, 

in extenuating circumstances where 

HHS believes there will be a significant 

impact, we will consider whether 

targeted RXC mapping changes for 

recalibration are necessary or 

appropriate, using the criteria outlined 

above. 

As far as our regular crosswalk review 

process, we acknowledge commenter 

concerns over the relative benefit of late 

stage changes to RXC mappings relative 

to potential impact on market stability 

and financial outcomes for issuers, but 

we continue to believe that it is 

appropriate to update the risk 

adjustment mapping of RXCUIs to RXCs 

throughout a benefit year of risk 

adjustment. We also note that we rarely 

remove entire RXC categories from the 

risk adjustment models. Since the RXCs 

were introduced in 2018, only two RXC 

categories have been removed altogether 

and that type of structural change to the 

RXC factors was pursued through 

notice-and-comment rulemaking (83 FR 

16941). 

Comment: Some commenters 

requested clarification on how drugs 

with multiple indications are treated in 

considering changes to RXC mapping 

changes that occur outside the annual 

recalibration process and more clear 

criteria for these types of drug changes. 

Response: We provided an 

explanation of the criteria used to 

develop the RXCUI to RXC Crosswalk in 

the 2017 Creation of the 2018 Benefit 

Year HHS-Operated Risk Adjustment 

Adult Models Draft Prescription Drug 

(RXCUIs) to HHS Drug Classes (RXCs) 

Crosswalk Memorandum.99 In short, 

drugs with multiple indications are 

evaluated by clinical experts to 

determine if they have reliable 

specificity to the RXC-associated 

diagnoses. New drugs with multiple 

indications that are all associated with 

diagnoses in the drug-diagnosis pairs 

that a particular RXC represents are 

included in that RXC. Drugs associated 

with the drug-diagnosis pairs of 

multiple RXCs, or with diagnoses both 

paired and unpaired with an RXC, can 

be evaluated against existing drugs with 

the same active ingredients. 

Alternatively, these drugs need clinical 

evidence that the RXC-associated 

diagnosis is the primary intended 

clinical application. In the absence of 

evidence, such drugs with multiple 

indications would not be mapped to an 

RXC. 

Comment: Some commenters 

requested a separate RXC for preexposure prophylaxis (PrEP). 


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100See 81 FR 94058 at 94075. See also March 31, 

2016, HHS-Operated Risk Adjustment Methodology 

Meeting Questions & Answers. (2016, June 8). CMS. 

https://www.cms.gov/CCIIO/Resources/Fact-Sheetsand-FAQs/Downloads/RA-OnsiteQA-060816.pdf. 

101The same concern was not present for the 

2017 enrollee-level EDGE dataset—the other data 

year that will be used for the 2023 benefit year adult 

model recalibration—because hydroxychloroquine 

sulfate was not included in the RXC Crosswalk 

until 2018. 

102See 45 CFR 153.320(b)(1)(i). 

103See Appendix A. HHS-Operated Risk 

Adjustment Technical Paper on Possible Model 

Changes. (2021, October 26). CMS. https://

www.cms.gov/files/document/2021-ra-technicalpaper.pdf. 

104See 83 FR 16930 at 16953; 84 FR 17454 at 

17478 through 17479; 85 FR 29164 at 29190; and 

86 FR 24140 at 24181. 

105See 81 FR 12203 at 12228. 

Response: We did not propose and are 

not finalizing the addition of PrEP as an 

RXC to the adult risk adjustment 

models. As explained in the 2021 

Payment Notice (85 FR 29187), we 

chose not to propose incorporating PrEP 

as an RXC because, as a general 

principle, RXCs are incorporated into 

the HHS risk adjustment adult models 

to impute a missing diagnosis or 

indicate severity of a diagnosis.100 Since 

the use of PrEP is currently 

recommended as a preventive service 

for persons who are not infected with 

HIV and are at high risk of HIV 

infection, the use of PrEP does not 

adequately represent risk due to an 

active condition, and would be 

inconsistent with this principle to add 

it as an RXC at this time. However, we 

incorporate 100 percent of the PrEP 

costs for enrollees without HIV 

diagnosis or treatment in the simulation 

of plan liability for purposes of 

recalibrating the adult and child 

models. We further note that enrollees 

in risk adjustment covered plans that 

use PrEP drugs in combination with 

another HIV treatment drug that maps to 

RXC 01 will still receive credit for RXC 

01 in the 2023 benefit year of risk 

adjustment. We will continue to explore 

these issues and the potential inclusion 

of PrEP as an RXC in future benefit 

years, as may be appropriate. 

Comment: One commenter supported 

the targeted removal of 

hydroxychloroquine sulfate from the 

data used for recalibration and 

supported our decision not to effectuate 

a targeted removal of Descovy®, one 

commenter supported the removal of 

the mapping of hydroxychloroquine 

sulfate to an RXC, and one commenter 

generally asserted that Descovy® should 

not be mapped to RXC 01. 

Response: We appreciate comments 

on our discussion of the treatment of 

hydroxychloroquine sulfate and 

Descovy®. For the 2023 benefit year, we 

are finalizing, as proposed, the removal 

of the mapping of hydroxychloroquine 

sulfate to RXC 09 (immune 

Suppressants and Immunomodulators) 

in the 2018 and 2019 benefit year 

enrollee-level EDGE data used for 

recalibration of the adult risk 

adjustment models for the 2023 benefit 

year.101 In addition, we included 

Descovy® in the mapping to RXC 01 

(Anti-HIV Agents) for 2023 benefit year 

risk adjustment model recalibration, as 

the benefits of maintaining this mapping 

outweigh the benefits of removing it. 

e. List of Factors to be Employed in the 

Risk Adjustment Models 

Consistent with our approach in 

previous benefit years, we will release 

the final 2023 benefit year coefficients 

in guidance after publication of the final 

rule, as we were unable to finalize them 

in time to publish in this final rule.102

f. Cost-Sharing Reduction Adjustments 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 623), we proposed to 

continue including an adjustment for 

the receipt of CSRs in the risk 

adjustment models in all 50 States and 

the District of Columbia. We explained 

that while we continue to study and 

explore ways to update the CSR 

adjustments to improve prediction for 

CSR enrollees,103 for the 2023 benefit 

year, to maintain stability and certainty 

for issuers, we proposed to maintain the 

CSR adjustment factors finalized in the 

2019, 2020, 2021, and 2022 Payment 

Notices.104 See Table 4. We also 

proposed to continue to use a CSR 

adjustment factor of 1.12 for all 

Massachusetts wrap-around plans in the 

risk adjustment PLRS calculation, as all 

of Massachusetts’ cost-sharing plan 

variations have AVs above 94 

percent.105

We sought comment on these 

proposals. 


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106See Section A.3. HHS-Operated Risk 

Adjustment Technical Paper on Possible Model 

Changes. (2021, October 26). CMS. https://

www.cms.gov/files/document/2021-ra-technicalpaper.pdf. 

107See Hileman, G. & Spenser S. (2016). Accuracy 

of Claims-Based Risk Scoring Models. Society of 

Actuaries. 

108See 86 FR 24183 through 24186. 

109For an illustration and further details on the 

State payment transfer formula, see 86 FR 24183 

through 24186. 

110See 84 FR 17466 through 17468. 

111For the 2020 and 2021 benefit years, the state 

of Alabama submitted a 50 percent risk adjustment 

transfer reduction request for its small group market 

and HHS approved both requests. See 84 FR 17484 

through 17485 and 85 FR 29193 through 29194. For 

the 2022 benefit year, the state of Alabama 

submitted 50 percent risk adjustment transfer 

reduction requests for its individual (including 

catastrophic and non-catastrophic risk pools) and 

small group markets, and HHS approved both 

requests. See 86 FR 24187 through 24189. 

112Alabama’s individual market request is for a 

50 percent reduction to risk adjustment transfers for 

its individual market non-catastrophic and 

catastrophic risk pools. 

After reviewing the public comments, 

we are finalizing the CSR adjustment 

factors as proposed. We summarize and 

respond to public comments received 

on cost-sharing reduction adjustments 

below. 

Comment: One commenter supported 

the use of CSR adjustment factor of 1.12 

for all Massachusetts wrap-around 

plans. Another commenter noted that 

HHS should continue to evaluate the 

purpose and appropriateness of the 

current CSR adjustment factors in light 

of continued non-funding of CSR 

subsidies and the potential 

socioeconomic health equity issues 

associated with the lower-thananticipated induced utilization level 

identified in the 2021 RA Technical 

Paper. Another commenter 

recommended that HHS use a CSRspecific adult model that uses CSR 

enrollees’ paid claims. 

Response: We are finalizing the CSR 

adjustment factors as proposed. For the 

2023 benefit year, we are maintaining 

the CSR adjustment factors finalized in 

the 2019, 2020, 2021, and 2022 Payment 

Notices to maintain stability and 

certainty for issuers. We did not propose 

and are not finalizing the addition of a 

CSR-specific adult model that uses CSR 

enrollees’ paid claims. We agree 

continued study of the current CSR 

adjustment factors is warranted. We 

intend to consider different options for 

potential changes to the CSR factors for 

future benefit years, including those 

outlined in the 2021 RA Technical 

Paper.106 We would pursue any changes 

to the CSR adjustment factors in future 

notice-and-comment rulemaking. 

g. Model Performance Statistics 

Each benefit year, to evaluate risk 

adjustment model performance, we 

examined each model’s R-squared 

statistic and PRs. The R-squared 

statistic, which calculates the 

percentage of individual variation 

explained by a model, measures the 

predictive accuracy of the model 

overall. The PR 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 PR 

represents how well the model does on 

average at predicting plan liability for 

that subpopulation. 

A subpopulation that is predicted 

perfectly would have a PR of 1.0. For 

each of the HHS risk adjustment 

models, the R-squared statistic and the 

PRs are in the range of published 

estimates for concurrent risk adjustment 

models.107 Because we blend the 

coefficients from separately solved 

models based on the 2017, 2018, and 

2019 benefit years’ enrollee-level EDGE 

data, we publish the R-squared statistic 

for each model separately to verify their 

statistical validity. We will publish the 

final 2023 benefit year R-squared 

statistics with the final 2023 benefit year 

risk adjustment coefficients in guidance. 

We did not receive any comments in 

response to the model performance 

statistics discussion. 

3. Overview of the HHS Risk 

Adjustment Methodology (§ 153.320) 

In part 2 of the 2022 Payment Notice 

final rule, we finalized the proposal to 

continue to use the State payment 

transfer formula finalized in the 2021 

Payment Notice for the 2022 benefit 

year and beyond, unless changed 

through notice-and-comment 

rulemaking.108 We explained that under 

this approach, we will no longer 

republish these formulas in future 

annual HHS notices of benefit and 

payment parameters unless changes are 

being proposed. We did not propose any 

changes to the formula in this rule and 

therefore are not republishing the 

formulas in this rule. We will continue 

to apply the formula as finalized in the 

2021 Payment Notice in the States 

where HHS operates the risk adjustment 

program in the 2023 benefit year.109

Additionally, as finalized in the 2020 

Payment Notice, we will maintain the 

high-cost risk pool parameters for the 

2020 benefit year and beyond, unless 

amended through notice-and-comment 

rulemaking.110 We did not propose any 

changes to the high-cost risk pool 

parameters for the 2023 benefit year; 

therefore, we will maintain the $1 

million threshold and 60 percent 

coinsurance rate. 

We did not receive any comments in 

response to the overview of the HHS 

risk adjustment methodology applicable 

to the 2023 benefit year. 

4. Risk Adjustment State Flexibility 

Requests (§ 153.320(d)) 

We proposed to repeal the ability of 

States to request a reduction in risk 

adjustment State transfers under 

§ 153.320(d) starting with the 2024 

benefit year, with an exception for 

States that have requested such 

reductions in prior benefit years.111 We 

also published and sought comments on 

requests from Alabama to reduce risk 

adjustment State transfers for the 2023 

benefit year in the individual (including 

the catastrophic and non-catastrophic 

risk pools) and small group markets. 

a. Requests To Reduce Risk Adjustment 

Transfers for the 2023 Benefit Year 

For the 2023 benefit year, HHS 

received requests from Alabama to 

reduce risk adjustment State transfers 

for its individual and small group 

markets by 50 percent.112 Alabama 

asserts that the State payment transfer 

formula produces imprecise results in 

Alabama because of the extremely 

unbalanced market share in the 

individual and small group markets. 

Specifically, Alabama asserts that the 

presence of a dominant issuer in the 

individual and small group markets 

precludes the HHS-operated risk 

adjustment program from working as 

precisely as it would with a more 

balanced distribution of market share. 

The State asserted that its review of the 

issuers’ financial data suggested that 

any premium increase resulting from a 

reduction to risk adjustment payments 

of 50 percent in the individual market 

for the 2023 benefit year would not 

exceed 1 percent, the de minimis 

premium increase threshold set forth in 

§ 153.320(d)(1)(iii) and (d)(4)(i)(B). 

In the small group market request, 

Alabama states that its review of the 

issuers’ financial data from the 2020 

benefit year suggests that any premium 

increase resulting from a reduction to 

risk adjustment payments of 50 percent 

in the small group market for the 2023 

benefit year would exceed the de 

minimis threshold. However, Alabama 

asserts that HHS should consider data 

for years other than 2020 to analyze its 

small group market request for the 2023 

benefit year because the COVID–19 PHE 

renders an analysis based on 2020 data 

unreliable. Alabama further notes that 

there is no regulatory requirement to 

analyze the request using the most 

recent available year of data. Alabama 


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113BCBSAL Comment Letter. (2022, January 27). 

CMS. https://www.regulations.gov/comment/CMS2021-0196-0195. 

114As detailed further later, we are finalizing, as 

proposed, the removal of the option for the state to 

demonstrate the State-specific factors that warrant 

an adjustment to more precisely account for relative 

risk differences in the State’s individual, small 

group or merged market. We are also finalizing the 

amendments that limit this flexibility to prior 

participants beginning with the 2024 benefit year. 

further states that the de minimis 

regulatory threshold does not work 

when a small issuer receives a risk 

adjustment payment, and that the test 

should instead be based on what 

percentage market share the large issuer 

in Alabama holds compared to the other 

issuers in the market. 

We sought comment on the requests 

to reduce risk adjustment State transfers 

in the Alabama individual and small 

group markets by 50 percent for the 

2023 benefit year. The requests and 

additional documentation submitted by 

Alabama were posted under the ‘‘State 

Flexibility Requests’’ heading at https:// 

www.cms.gov/CCIIO/Programs-andInitiatives/Premium-StabilizationPrograms/index.html. 

After reviewing the public comments 

and Alabama’s supporting 

documentation, we are approving a 25 

percent reduction in Alabama’s 

individual market transfers and a 10 

percent reduction in Alabama’s small 

group market transfers for the 2023 

benefit year. 

We summarize and respond to the 

public comments on Alabama’s requests 

for reduced risk adjustment transfers for 

the 2023 benefit year below. 

Comment: A few commenters 

supported Alabama’s requests to reduce 

risk adjustment transfers in its 

individual and small group markets for 

the 2023 benefit year, stating the State 

is best suited to decide whether an 

adjustment is needed within the market 

to maintain competition and program 

integrity. Some of these commenters 

reiterated the State’s arguments that 

2020 data for the small group market 

may be unreliable due to the COVID–19 

PHE. One commenter recommended 

that HHS not use 2020 data as the sole 

basis for the determination and analysis 

of the State’s individual and small 

group market reduction requests. 

Another commenter suggested that HHS 

should use other metrics besides the de 

minimis threshold, such as the market 

share of issuers, to assess the State 

flexibility requests. 

However, other commenters opposed 

Alabama’s 2023 reduction requests, 

stating that the requested reductions 

would diminish the effectiveness of the 

HHS-operated risk adjustment program. 

One commenter who opposed the 

State’s requests stated that there was no 

mathematical reason why the presence 

of one large issuer would preclude HHSoperated risk adjustment from 

functioning appropriately in Alabama. 

Many commenters opposed to 

Alabama’s requests expressed more 

general concern with the transfer 

reduction request for the individual 

market than the small group market, 

stating that the approval of the request 

in the individual market would result in 

increased adverse selection. 

Some commenters also asserted that 

the State did not meet its burden to 

substantiate the requests under the 

criteria established in § 153.320(d). One 

of these commenters provided detailed 

data suggesting the requested individual 

market transfer reduction would 

increase premiums for one impacted 

Alabama issuer by an amount greater 

than the de minimis threshold for the 

2023 benefit year. This commenter 

noted based on their experience from 

the 2022 benefit year (the first year for 

which the State requested and HHS 

approved a 50 percent reduction in risk 

adjustment transfers in the individual 

market), their analysis showed a 50 

percent reduction in the Alabama 

individual market for the 2023 benefit 

year is likely to lead to an 

approximately 2 percent increase in 

their premiums.113

Response: We continue to believe and 

recognize that risk adjustment is critical 

to the proper functioning of the 

individual and small group (including 

merged) markets, and we acknowledge 

commenters’ concerns that approving 

requested reductions in risk adjustment 

transfers could impact the effectiveness 

of the risk adjustment program. 

Therefore, our assessment of the relative 

benefits of allowing States to request a 

reduction in risk adjustment transfers 

has been and continues to be on-going, 

especially when a State always retains 

the option to operate its own risk 

adjustment program if the State believes 

that the HHS-operated risk adjustment 

program does not capture its State 

specific dynamics. As discussed in 

detail below, we are finalizing 

amendments to § 153.320(d) and the 

framework for State reduction 

requests 114 applicable beginning with 

the 2024 benefit year; that is, beginning 

with the 2024 benefit year, only prior 

participants can make such requests and 

the requests will only be reviewed and 

approved under the de minimis 

threshold framework and criteria. In 

addition, in future rulemaking, we 

intend to propose to eliminate the prior 

participant exception and fully repeal 

the State flexibility framework 

beginning with the 2025 benefit year. 

However, current regulation allows 

States to request to reduce risk 

adjustment State transfers, and if the 

State’s reduction request meets the 

applicable standards under 

§ 153.320(d)(1)(i), HHS will approve the 

requests, subject to § 153.320(d)(4)(ii). 

Therefore, HHS’ review of and the 

approval process for the State flexibility 

requests submitted by Alabama for the 

2023 benefit year are guided by the 

applicable framework and criteria 

established in regulation under 

§ 153.320(d)(4), which provides that 

HHS will approve State reduction 

requests if HHS determines, based on a 

review of the State’s submission, along 

with relevant public comments and 

other relevant factors, including the 

premium impact of the reduction, that 

(A) the State-specific factors warrant an 

adjustment to risk adjustment transfers 

and support the percentage reduction 

requested, or (B) the State-specific 

factors warrant an adjustment to risk 

adjustment transfers and the requested 

reduction would have a de minimis 

impact on transfers for issuers that 

would receive reduced transfer 

payments. Because Alabama’s 

individual and small group market 

reduction requests included analysis of 

the premium impacts of the proposed 

reduction under the de minimis 

framework, HHS’ review falls under the 

criteria established under 

§ 153.320(d)(4)(i)(B); that is, HHS will 

approve the State’s reduction request if 

HHS determines that State-specific rules 

warrant an adjustment to more precisely 

account for relative risk differences in 

the State’s individual catastrophic, 

individual non-catastrophic, small 

group, or merged market risk pool and 

the requested reduction would have de 

minimis impact on the necessary 

premium increase to cover the transfers 

for issuers that would receive reduced 

transfer payments. Therefore, so long as 

this policy remains in place, it would 

not be appropriate to use other metrics 

besides the de minimis threshold, such 

as the market share of issuers, to review 

Alabama’s 2023 benefit year reduction 

requests. Additionally, we do not 

believe that approving Alabama’s 2023 

benefit year requests will undermine the 

efficiency of risk adjustment in the 

State. We believe the minimal impact on 

transfers, which is further mitigated by 

the approval of lower amounts than 

requested, is outweighed by the benefit 

of continuing to support the State’s 

efforts to regulate its market risk pools 


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115As detailed elsewhere in this rule, we are 

finalizing the amendments to the State flexibility to 

request transfer reduction framework, including the 

creation of the prior participant exception, as 

proposed, and intend to propose to fully repeal the 

framework in a future rulemaking. 

116BCBSAL Comment Letter. (2022, January 28). 

CMS. https://www.regulations.gov/comment/CMS2021-0196-0195. 

117As explained in the 2019 Payment Notice, to 

satisfy the de minimis threshold applicable to these 

requests, the State request must demonstrate the 

requested reduction in risk adjustment payments 

would be so small for issuers who would receive 

risk adjustment payments, that the reduction would 

have a de minimis effect on the necessary premium 

increase to cover the affected issuer’s or issuers’ 

reduced payments. See 83 FR 16955 through 16960. 

118See 45 CFR 153.320(d)(4)(ii). 

119Commenter’s analysis available at BCBSAL 

Comment Letter. (2022, January 28). CMS. https:// 

www.regulations.gov/comment/CMS-2021-0196- 

0195. Issuer specific BY 2021 and 2022 EDGE 

enrollment and premium data are not publicly 

available. However, plan-level QHP rates are 

available in the Health Insurance Exchange Public 

Use Files. (2021, 2022). CMS. https://www.cms.gov/ 

CCIIO/Resources/Data-Resources/marketplace-puf. 

120Similar to our approach in considering 

Alabama’s reduction requests in previous years, we 

considered the most recent data available (for 

example, for the 2022 benefit year, we considered 

2019 data as part of the analysis). This included 

consideration of available EDGE premium and 

enrollment plan-level data and risk adjustment 

transfer data. 121Commenter’s analysis available at BCBSAL 

Comment Letter. (2022, January 28). CMS. https:// 

www.regulations.gov/comment/CMS-2021-0196- 

0195. BY 2021 and 2022 open enrollment plan 

selection and premium data are not publicly 

available. However, plan-level QHP rates are 

available in the Health Insurance Exchange Public 

Use Files. (2021, 2022). CMS. https://www.cms.gov/ 

CCIIO/Resources/Data-Resources/marketplace-puf. 

122HHS does not have the same open enrollment 

plan selection and premium data on the small 

group market in Alabama as it does for the 

individual market in Alabama; therefore, EDGE 

premium and enrollment plan-level data was used 

for the small group market assessment. 

and leverage the flexibility currently 

available under § 153.320(d).115

For the individual market, the State 

provided information in support of its 

50 percent reduction request, including 

information on the unique State-specific 

market dynamics that it identified as 

warranting an adjustment to HHS 

calculated transfers and its analysis that 

the reduction requested would have a 

de minimis impact on necessary 

premium increases. HHS also received 

public comments in opposition to 

Alabama’s individual market request for 

the 2023 benefit year. Specifically, an 

issuer in Alabama shared its data 

analysis showing a 50 percent reduction 

would require it to increase its 

premiums by more than 1 percent.116 In 

the comment, the issuer stated that a 50 

percent reduction would lead to an 

approximately 2 percent increase in 

individual market premiums, which 

would fail to meet the de minimis 

threshold established for State requests 

and HHS approval of such requests 

under § 153.320(d)(1)(iii) and 

(d)(4)(i)(B), respectively.117 However, 

consistent with § 153.320(d)(4)(ii), HHS 

may approve a reduction amount that is 

lower than the amount requested in 

circumstances where the supporting 

evidence and analysis do not fully 

support the requested reduction 

amount.118 When exercising this 

flexibility, HHS may assess other 

relevant factors, including the premium 

impact of the transfer reduction for the 

applicable State market risk pool. 

Following our consideration of the 

State’s submission and public 

comments, HHS determined that 

Alabama provided sufficient 

information on the unique State-specific 

market dynamics that it identified as 

warranting an adjustment to the HHS 

calculated transfers for the State’s 

individual market, but the supporting 

evidence and analysis did not fully 

support the requested reduction 

amount. Therefore, HHS assessed other 

relevant factors, including the premium 

impact of the reduction, as well as 

relevant factors (for example, detailed 

stakeholder analysis of the estimated 

impact of the reduction on price 

positions 119). This included 

consideration and comparison of the 

data and supporting information 

submitted by the State and commenters, 

as well as plan selection and premium 

data for Alabama. Based on that 

assessment, HHS has determined that it 

would be appropriate to approve a 

reduction amount that is lower than the 

amount requested, consistent with 

§ 153.320(d)(4)(ii). More specifically, we 

began our review of the State’s 

individual market reduction request 

with consideration of available 2020 

data 120 and the State’s submitted 

analysis. We also considered detailed 

stakeholder comments that provided 

tangible evidence of changing price and 

market share positions, using 2021 and 

2022 data, that raised significant 

questions about the impact a 50 percent 

reduction in individual market transfers 

would have on premiums. These 

comments estimated a 50 percent 

reduction in individual market transfers 

would lead to an approximately 2 

percent premium increase based on the 

stakeholder’s experience and the impact 

of the approval of the State’s request to 

reduce 2022 benefit year individual 

market transfers by 50 percent. Using 

open enrollment plan selection and 

premium data for the individual market 

in Alabama from the same benefit years 

as the commenter (2021 and 2022),121

HHS found the commenter’s 

assumptions regarding the 

approximately 2 percent increase in 

premiums to be reasonable. Specifically, 

HHS’ analysis supports the commenters’ 

assertions that a 50 percent reduction in 

2023 benefit year individual market 

transfers would lead to a greater than de 

minimis increase in necessary 

premiums to cover the reduced 

payments. HHS is therefore exercising 

the flexibility under § 153.320(d)(4)(ii) 

to approve Alabama’s requested 

reduction to individual market transfers, 

but at an amount lower than requested. 

To ensure the transfer reduction meets 

the de minimis threshold and does not 

increase premiums by more than 1 

percent, we are approving a 25 percent 

reduction to 2023 benefit year risk 

adjustment transfers in Alabama’s 

individual market (including the 

catastrophic and non-catastrophic risk 

pools). 

For the small group market, the 

State’s reduction request acknowledges 

that its review of the issuers’ financial 

data from the 2020 benefit year suggests 

that any premium increase resulting 

from a reduction to risk adjustment 

payments of 50 percent in the small 

group market for the 2023 benefit year 

would exceed the de minimis threshold. 

However, Alabama asserts that HHS 

should consider using other prior years 

of data to analyze its small group market 

request for the 2023 benefit year, 

because the COVID–19 PHE renders an 

analysis based on 2020 data unreliable. 

HHS also received comments expressing 

general opposition to the State’s small 

group market request for the 2023 

benefit year. 

Following our consideration of the 

State’s submission and public 

comments, HHS determined that 

Alabama provided sufficient 

information on the unique State-specific 

market dynamics that it identified as 

warranting an adjustment to the HHS 

calculated transfers for the State’s small 

group market, but the supporting 

evidence and analysis did not fully 

support the requested reduction 

amount. Therefore, HHS assessed other 

relevant factors, including the premium 

impact of the transfer reduction for the 

applicable State market risk pool. This 

included comparison of the data and 

supporting information submitted by 

the State and commenters, as well as 

EDGE premium and enrollment planlevel data for Alabama’s small group 

market.122 It also included 

consideration of the acknowledgement 

by Alabama in its request that a 50 

percent reduction in 2023 benefit year 

small group market transfers would 

exceed the applicable de minimis 

threshold. 


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123 Issuer specific BY 2020 risk adjustment 

transfers can be found in Summary Report on 

Permanent Risk Adjustment Transfers for the 2020 

Benefit Year. (2021, June 30). CMS. https://

www.cms.gov/CCIIO/Programs-and-Initiatives/ 

Premium-Stabilization-Programs/Downloads/RAReport-BY2020.pdf. 

124For BY 2020, issuer specific EDGE premium 

data have not been made public. 

125 Issuer specific BY 2020 risk adjustment 

transfers can be found in Summary Report on 

Permanent Risk Adjustment Transfers for the 2020 

Benefit Year. (2021, June 30). CMS. https://

www.cms.gov/CCIIO/Programs-and-Initiatives/ 

Premium-Stabilization-Programs/Downloads/RAReport-BY2020.pdf. For BY 2020, the issuer specific 

EDGE premium and enrollment data used for this 

analysis have not been made public. However, planlevel QHP rates are available in the Health 

Insurance Exchange Public Use Files. (2020). CMS. 

126Alabama’s request acknowledged that 

reducing the risk transfer by 50 percent in the small 

group market will result in a more than de minimis 

impact of approximately 4 percent of premium. 

HHS’ analysis indicated that the impact would be 

approximately 5 percent of premium for the small 

group market risk payment recipient. HHS and 

Alabama’s estimates slightly differ because we used 

different data sources in our analysis. HHS used 

2020 benefit year data, including risk adjustment 

transfers and total premiums, to calculate the 

impact, while Alabama used 2020 benefit year data 

from the NAIC’s Supplemental Health Care Exhibit 

for 2020. HHS believes our EDGE data most 

accurately reflects the risk adjustment transfer and 

premium data necessary to calculate the impact of 

the reduced transfers. Therefore, we based our 

approval of a 10 percent reduction in Alabama’s 

small group risk adjustment State transfers based on 

the analysis showing that a 50 percent reduction 

would have an approximately 5 percent premium 

impact on the small group market payment 

recipient(s). 

127Summary Report on Permanent Risk 

Adjustment Transfers for the 2020 Benefit Year. 

(2021, June 30). CMS. https://www.cms.gov/CCIIO/ 

Programs-and-Initiatives/Premium-StabilizationPrograms/Downloads/RA-Report-BY2020.pdf. 

128The 2022 benefit year was the first year 

Alabama requested, and HHS approved, a reduction 

request for the individual market under the State 

flexibility framework. See, for example, 86 FR 

24187 through 24189. In contrast, Alabama 

requested, and HHS approved, reductions to small 

group market transfers for several years, beginning 

with the 2020 benefit year and continuing through 

the approval, in this rule, of an amount lower than 

requested for the 2023 benefit year. 

129Summary Report on Permanent Risk 

Adjustment Transfers for the 2020 Benefit Year. 

(2021, June 30). CMS. https://www.cms.gov/CCIIO/ 

Programs-and-Initiatives/Premium-StabilizationPrograms/Downloads/RA-Report-BY2020.pdf. 

130 In the small group market, employers select 

the plans offered to their employees and often pay 

a significant portion of employees’ premiums to 

encourage enrollment. Depending on the 

participation rules and market dynamics in a 

particular State, risk selection can be significantly 

less in a State’s small group market compared to the 

individual market. 131E.O. 14009; 86 FR 7793 (2021, February 2). 

Based on our review of the 

unredacted supporting evidence 

submitted by the State, 2020 benefit 

year risk adjustment transfer data,123

and 2020 benefit year EDGE premium 

and enrollment data available to 

HHS,124 we determined it would be 

appropriate to approve a reduction 

amount for the small group market that 

is lower than the amount requested, 

consistent with § 153.320(d)(4)(ii). 

Using the most recent 2020 plan-level 

data available to HHS,125 HHS estimated 

transfer calculations as a percent of 

premiums, which indicated that the risk 

adjustment payment recipient would 

have to increase premiums by 

approximately 5 percent to cover a 50 

percent reduction in transfers.126 Based 

on this calculation, HHS concluded that 

a 10 percent reduction in risk 

adjustment transfers would lead to a de 

minimis (less than 1 percent) premium 

increase in the small group market and 

therefore approves a 10 percent 

reduction in transfers in Alabama’s 

small group market for the 2023 benefit 

year, exercising our flexibility under 

§ 153.320(d)(4)(ii) to approve an amount 

lower than requested. 

HHS disagrees with assertions that we 

should not consider 2020 data when 

considering the 2023 benefit year State 

flexibility reduction requests. As 

described in HHS’ ‘‘Summary Report on 

Permanent Risk Adjustment Transfers 

for the 2020 Benefit Year,’’ risk 

adjustment State transfers as a percent 

of premiums remained relatively steady 

in 2020 compared to the 2019 benefit 

year, and the amount of paid claims 

remained strongly correlated with risk 

adjustment State payments and 

charges.127 Therefore, to assess 

Alabama’s 2023 benefit risk adjustment 

reduction requests, we considered 2020 

data, similar to our approach in 

considering Alabama’s risk adjustment 

reduction requests in previous years in 

which we use the most recent data 

available (for example, for the 2022 

benefit year, we considered 2019 data as 

part of the analysis). Therefore, HHS 

followed the established precedent for 

review of these requests. We also 

considered other data years as part of 

our analysis of the State’s individual 

market request in response to the 

detailed comments and analysis using 

other data years submitted by an 

impacted stakeholder that called into 

question whether the requested transfer 

reduction amount for that market would 

meet the de minimis threshold. Other 

relevant factors HHS considered were 

the limited experience with reduction 

requests in the individual market,128 the 

larger magnitude of risk adjustment 

transfers under the State payment 

transfer formula in the individual 

market compared to the small group 

market,129 as well as the increased 

opportunities for adverse selection in 

the individual market.130 In addition, 

the State’s individual market request 

included an analysis that estimated the 

transfer impact of its requested 

reduction would meet the de minimis 

threshold, while its request for the small 

group market acknowledged the 

requested reduction to transfers would 

exceed the de minimis threshold. 

b. Repeal of Risk Adjustment State 

Flexibility To Request a Reduction in 

Risk Adjustment State Transfers 

(§ 153.320(d)) 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 625), we proposed 

numerous amendments to § 153.320(d) 

to repeal the flexibility for States to 

request reductions of transfers 

calculated by HHS under the State 

payment transfer formula in all State 

market risk pools starting with the 2024 

benefit year, with an exception for 

States that previously requested a 

reduction in risk adjustment State 

transfers under § 153.320(d). 

Following our consideration of the 

State flexibility framework consistent 

with the instructions in E.O. 14009 131

and prior comments we received on this 

policy, as well as the general low level 

of interest States have expressed in the 

policy, we proposed, beginning for the 

2024 benefit year, to repeal the ability 

for States to request a reduction in risk 

adjustment State transfers of up to 50 

percent in any State market risk pool, 

with an exception for States that 

previously requested this flexibility in 

prior benefit years, namely, Alabama. 

For prior participant reduction 

requests for the 2024 benefit year and 

beyond, we also proposed to remove the 

option for the State to demonstrate that 

State-specific factors warrant an 

adjustment to more precisely account 

for relative risk differences in the State’s 

individual catastrophic, individual noncatastrophic, small group, or merged 

market risk pool. Instead, we proposed 

prior participants would be required to 

demonstrate their requests satisfy the de 

minimis impact standard. Under this 

standard, the requesting State is 

required to show that the requested 

transfer reduction would not cause 

premiums in the relevant market risk 

pool to increase by more than 1 percent. 

We proposed conforming amendments 

to the HHS approval framework under 

§ 153.320(d)(4)(i) and clarified that HHS 

would retain the flexibility under 

§ 153.320(d)(4)(ii) to approve a lower 

reduction amount than requested if the 

State’s supporting evidence and analysis 

do not fully support the requested 

amount. We also clarified that this 

proposal to retain this flexibility for 

prior participants is only intended to 

permit such States to continue to 

request risk adjustment State flexibility, 


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132 83 FR 16957. 

133This includes finalizing, as proposed, the 

definition in § 153.320(d)(5) for prior participants. 

134 86 FR 7793 (Feb. 2, 2021). 

not to automatically apply previously 

approved transfer reductions to future 

benefit years. Instead, a prior participant 

would still be required to submit its 

request(s) to reduce risk adjustment 

State transfers each year in the 

timeframe, form, and manner set forth 

in § 153.320(d)(1) and (2), and HHS will 

continue to evaluate risk adjustment 

State flexibility requests for approval as 

set forth in § 153.320(d)(4). 

We sought comment on this proposal. 

After reviewing the public comments, 

we are finalizing as proposed the 

amendments to § 153.320(d) that repeal 

the State flexibility framework for States 

to request reductions in risk adjustment 

State transfer payments for the 2024 

benefit year and beyond, with an 

exception for prior participants. We are 

also finalizing that beginning with the 

2024 benefit year, States submitting 

reduction requests must demonstrate 

that the requested reduction satisfies the 

de minimis standard—that is, the 

premium increase necessary to cover the 

affected issuer’s or issuers’ reduced 

payments does not exceed 1 percent in 

the relevant State market risk pool.132

We are finalizing the conforming 

amendments to the HHS approval 

framework in § 153.320(d)(4)(i) to reflect 

the changes to the applicable criteria 

(that is, only retaining the de minimis 

criterion) beginning with the 2024 

benefit year, as well as the proposed 

definition of ‘‘prior participant’’ in 

§ 153.320(d)(5). In future rulemaking, 

HHS intends to propose to eliminate the 

prior participant exception beginning 

with the 2025 benefit year. 

We summarize and respond to public 

comments received on repeal of risk 

adjustment State flexibility to request a 

reduction in risk adjustment State 

transfers § 153.320(d) below. 

Comment: Several commenters 

supported the proposal to repeal the 

ability for States to request a reduction 

in risk adjustment State transfers in both 

the individual and small group markets 

due to concerns that the reduction in 

transfers would contribute to adverse 

selection, increase premiums, and 

reduce plan options. Commenters stated 

that reducing the risk adjustment State 

transfers incentivizes issuers to avoid 

enrolling chronically ill consumers in 

the individual market and companies 

whose workers have above-average costs 

in the small group market. Commenters 

supporting the repeal also noted that 

States can run their own risk adjustment 

programs if they do not think the HHSoperated risk adjustment program works 

for their State. Many of the commenters 

supporting the repeal also opposed the 

proposal to make an exception for prior 

participating States and requested that 

HHS instead repeal this policy in its 

entirety. 

Conversely, several commenters 

opposed the proposal to repeal the 

ability for States to request a reduction 

in risk adjustment State transfers 

because they support the ability for 

States to make their own decisions 

about how best to address the unique 

circumstances of their insurance 

markets. Some of these commenters also 

noted that HHS has the ability to review 

and reject these requests, indicating that 

there are appropriate guardrails in place 

such that States should continue to be 

offered this flexibility. Additionally, 

some of these commenters generally 

opposed the proposed repeal, and in 

particular opposed limiting the ability 

to request reductions to prior 

participants, noting that other States 

may develop the same market dynamics 

as the one prior participating State and 

should have the same ability to request 

reductions. One of the commenters 

opposed to the repeal noted concerns 

with the ability for States to run their 

own risk adjustment programs, due to 

the costs to implement such a program 

within a State. 

Response: We are finalizing, as 

proposed, the repeal of the ability for 

States to request a reduction in risk 

adjustment State transfers of up to 50 

percent in any State market risk pool, 

with an exception for prior 

participants.133 As detailed in the 

proposed rule, our further consideration 

of prior stakeholder feedback, along 

with consideration of the proposals in 

light of E.O. 14009,134 and the very low 

level of interest from States since the 

policy was adopted, resulted in an 

evaluation of whether the policy should 

be continued and if so, in what manner. 

After reviewing public comments in 

response to the proposed amendments 

to § 153.320(d), including the proposed 

creation of the prior participant 

exception, and further consideration of 

the State flexibility framework under 

E.O. 14009, we are finalizing this policy 

as proposed with the intention to 

propose in future rulemaking to repeal 

the exception for prior participants 

beginning with the 2025 benefit year to 

provide impacted stakeholders 

additional time to prepare for this 

change and the potential elimination of 

this flexibility. 

For the 2024 benefit year and beyond, 

we are also finalizing, as proposed, the 

removal of the option for States to 

demonstrate the State-specific factors 

that warrant an adjustment to more 

precisely account for relative risk 

differences in the State individual 

catastrophic, individual noncatastrophic, small group, or merged 

market risk pool as the justification for 

the State’s request and the criteria for 

HHS approval under § 153.320(d)(4)(i). 

This retains the de minimis standard as 

the only option for prior participants to 

justify the reduction and for HHS to 

approve a request and is designed to 

help ensure that consumers would not 

experience an increase in premiums 

greater than 1 percent as the result of a 

State-requested reduction in transfers, 

which aligns with the priorities under 

E.O. 14009 to ensure that health care 

remains affordable for consumers. 

Therefore, the only State to have 

requested risk adjustment transfer 

reductions from benefit year 2020 to 

benefit year 2023, Alabama, will be the 

only State permitted to request 

reductions in benefit year 2024. 

However, the de minimis standard will 

be the only option for Alabama to justify 

the reduction and for HHS review and 

approval of the requests. We recognize 

other States may develop the same or 

similar market dynamics in future 

benefit years. However, currently, only 

one State has sought to exercise the 

flexibility under § 153.320(d) to tailor 

HHS risk adjustment, which is 

calibrated using a national dataset, 

pointing to these unique market 

dynamics. We therefore believe it is 

appropriate to provide a transition for 

this prior participant State, starting with 

the policies and amendments finalized 

in this rule that apply beginning with 

the 2024 benefit year. However, we are 

concerned about the potential long-term 

impact of allowing reductions to risk 

adjustment transfers in any State market 

risk pool, including the potential 

negative impacts on the program’s 

ability to mitigate adverse selection and 

support stability in the individual and 

small group (including merged) markets. 

We therefore intend to propose a full 

repeal of the State flexibility framework 

(for all States) beginning in the 2025 

benefit year in a future rulemaking. 

We agree with commenters who noted 

that States are best able to make their 

own decisions about how to address the 

unique circumstances of their insurance 

markets and remain the primary 

regulators of their insurance markets. At 

the same time, however, States have had 

a low level of interest in this flexibility. 

Since the 2020 benefit year, all States 

had the opportunity to submit reduction 

requests under § 153.320(d), and yet 

only one State has done so. Similarly, 


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135Plan Year 2022 Qualified Health Plan Choice 

and Premiums in HealthCare.gov States. (2021, 

October 15), CMS. https://www.cms.gov/CCIIO/ 

Resources/Data-Resources/Downloads/ 

2022QHPPremiumsChoiceReport.pdf. 

136ZIP CodeTM is a trademark of the United 

States Postal Service. 

137The subsidy indicator is intended to indicate 

whether a particular enrollee is (or is not) receiving 

APTC. 

138HHS has been operating the risk adjustment 

program in all 50 states and the District of Columbia 

since the 2017 benefit year. 

139For a full discussion of the background of the 

HHS-operated risk adjustment program and the 

required risk adjustment data, as well as the 

proposals, see the proposed rule (87 FR 627 through 

632). 

140HHS Implementation Guidance on Data 

Collection Standards for Race, Ethnicity, Sex, 

Primary Language, and Disability Status. (2011, 

October 30), CMS. https://aspe.hhs.gov/reports/hhsimplementation-guidance-data-collectionstandards-race-ethnicity-sex-primary-languagedisability-0. 

141As detailed later, we recognize issuers may not 

have race or ethnicity data for certain enrollees 

since enrollees are generally not required to provide 

race and ethnicity data, and we intend to include 

an option that could be used by issuers in these 

situations. 

142See 87 FR 628 through 630. 

143 Ibid. 

144HHS Implementation Guidance on Data 

Collection Standards for Race, Ethnicity, Sex, 

Primary Language, and Disability Status. (2011, 

Continued 

since the 2014 benefit year, all States 

have had the opportunity to operate the 

risk adjustment program and, to date, 

only one State has done so— 

Massachusetts operated a State-based 

risk adjustment program from the 2014 

through 2016 benefit years. Despite a 

broad range of market conditions across 

the 50 States and the District of 

Columbia, only two States have 

expressed interest in tailoring risk 

adjustment to address the unique 

circumstances of their insurance 

markets, which suggests that States 

generally do not want to operate their 

own risk adjustment program and 

demonstrates that the HHS-operated risk 

adjustment can work across a broad 

range of market conditions to mitigate 

adverse selection in the individual and 

small group (including merged) markets. 

Additionally, many commenters had 

concerns about the potential negative 

impacts of the transfer reductions on the 

State’s insurance markets. Although, we 

note these outcomes have not entirely 

come to bear in Alabama, as new 

entrants have entered Alabama’s 

individual market and QHP offerings 

have increased per county in benefit 

year 2022 135, other potential negative 

impacts include reduced plan quality 

and increased risk selection in the 

market. We reiterate that a strong risk 

adjustment program is necessary to 

support stability and address adverse 

selection in the individual and small 

group markets, and under E.O. 14009, 

we have concerns that this policy could 

undermine these goals in the long-term 

and therefore intend to propose a full 

repeal of the State flexibility framework 

under § 153.320(d) in a future 

rulemaking. Finally, we appreciate there 

are a number of different factors States 

consider when weighing whether to 

operate a State-based risk adjustment 

program, including but not limited to 

the costs associated with establishing 

and maintaining such a program. HHS 

remains committed to working with 

States and other stakeholders to 

encourage new market participants, 

mitigate adverse selection, and promote 

stable insurance markets through strong 

risk adjustment programs. 

5. Risk Adjustment Issuer Data 

Requirements (§§ 153.610, 153.700, and 

153.710) 

In the proposed rule, we proposed 

that issuers collect and make available 

for HHS’ extraction from issuers’ EDGE 

servers five new data elements—ZIP 

Code,136 race, ethnicity, an ICHRA 

indicator, and a subsidy indicator 137— 

as part of the required risk adjustment 

data that issuers make accessible to HHS 

in States where HHS operates the risk 

adjustment program,138 beginning with 

the 2023 benefit year. We also proposed 

that we would extract these five new 

data elements beginning with the 2023 

benefit year. Additionally, beginning 

with the 2022 benefit year, we proposed 

HHS would extract from issuers’ EDGE 

servers the following three data 

elements that issuers already make 

accessible to HHS as part of the required 

risk adjustment data—plan ID, rating 

area, and subscriber indicator. We 

proposed to exclude plan ID, ZIP Code, 

and rating area from the limited data set 

HHS makes available to requestors for 

research purposes, but include race, 

ethnicity, ICHRA indicator, subsidy 

indicator, and subscriber indicator in 

that limited data set once available. 

Lastly, we proposed to expand and 

clarify the scope of permissible HHS 

uses for the data and the reports 

extracted from issuer EDGE servers 

(including summary reports and ad hoc 

query reports). Related to these 

proposals, we also considered the 

burden associated with the collection 

and extraction of these data elements, 

and solicited comments on whether 

there are any policies that HHS could 

pursue to encourage the consistent use 

and reporting of ICD–10–CM z codes. 

The following subsections provide 

further discussion of these proposals, 

associated burdens, and accompanying 

comment solicitation.139

a. Collection and Extraction of New Data 

Elements and Extraction of Current Data 

Elements 

We proposed, beginning with the 

2023 benefit year, to collect and extract 

five new data elements from issuers’ 

EDGE servers through issuers’ EDGE 

Server Enrollment Submission (ESES) 

files and risk adjustment recalibration 

enrollment files, specifically: (1) ZIP 

Code, (2) race, (3) ethnicity, (4) subsidy 

indicator, and (5) ICHRA indicator. For 

race and ethnicity data, we proposed to 

require issuers to report race and 

ethnicity in accordance with the 

October 30, 2011 HHS Implementation 

Guidance on Data Collection Standards 

for Race, Ethnicity, Sex, Primary 

Language, and Disability Status (2011 

HHS Data Standards),140 which is 

collected at a granular level that would 

allow HHS to analyze more 

subpopulations than our current data 

allows, thereby allowing us to better 

identify and consider policies to address 

discrimination in health care and health 

disparities.141 142 In addition to 

collecting and extracting these new data 

elements, we also proposed, beginning 

with the 2022 benefit year, to extract 

plan ID, rating area, and subscriber 

indicator from issuers’ EDGE servers.143

We sought comments on these 

proposals. 

After reviewing the public comments, 

we are finalizing the proposal to collect 

and extract ZIP Code, race, ethnicity, an 

ICHRA indicator, and a subsidy 

indicator as part of the risk adjustment 

data issuers of risk adjustment covered 

plans are required to make accessible to 

HHS on their EDGE servers in States 

where HHS operates the risk adjustment 

program, beginning with the 2023 

benefit year. Specifically, we are 

finalizing that starting with the 2023 

benefit year, issuers will be required to 

populate the ZIP Code and subsidy 

indicator fields as part of their EDGE 

data submissions. The ZIP Code field 

will be formatted at the five-digit level, 

and the subsidy indicator will indicate 

whether a particular enrollee is (or is 

not) receiving APTC. We are also 

finalizing that starting with the 2023 

benefit year, issuers will be required to 

report race, ethnicity, and ICHRA 

indicator information as part of their 

EDGE data submissions. The ICHRA 

indicator will indicate whether a 

particular enrollee’s health care 

coverage involves (or does not involve) 

an ICHRA. Regarding formatting for race 

and ethnicity data, we are finalizing the 

collection of these data elements to be 

consistent with the 2011 HHS Data 

Standards,144 which are the standards 


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October 30) CMS. https://aspe.hhs.gov/reports/hhsimplementation-guidance-data-collectionstandards-race-ethnicity-sex-primary-languagedisability-0. 

145As detailed later, we recognize issuers may not 

have race and/or ethnicity data for certain enrollees 

since enrollees are generally not required to provide 

race and ethnicity data and intend to include a 

version of ‘‘unknown’’ reporting option that could 

be used by issuers in these situations. 

146 In the proposed rule, we proposed a 

transitional approach whereby the ICHRA indicator 

would be optional for the 2023 and 2024 benefit 

years. See 87 FR at 631. We are finalizing the 

adoption of a transitional approach for the ICHRA 

indicator; however, as detailed further later, after 

consideration of comments, for simplicity and to 

mitigate burdens, we are adopting the same 

approach for assessing compliance during the 

transition for populating the race, ethnicity and 

ICHRA indicator data fields. 

147For a full explanation of the work of the NAIC 

Special (EX) Committee on Race and Insurance, see 

https://content.naic.org/cmte_ex_race_and_

insurance.htm. 

148 If the burden estimate for collection of the 

race, ethnicity, and/or ICHRA indicator data 

elements changes beginning with the 2025 benefit 

year, the information collection under OMB control 

number 0938–1155 would be revised accordingly 

and stakeholders would be provided the 

opportunity to comment through that process. 

149 45 CFR 153.610(a), 153.700(a), and 153.710. 

used by the FFE to collect these data 

through the Exchange application.145

For the 2023 and 2024 benefit years, 

we are adopting a transitional period 

during which issuers are required to 

populate the fields for race and 

ethnicity using only data they already 

collect or have accessible regarding their 

enrollees. For example, for the 2023 and 

2024 benefit years, for race and 

ethnicity data, issuers will be deemed in 

compliance if they submit these data 

elements using data they already have 

or collect through existing means, 

including, for example, through enrollee 

data captured and reported to the issuer 

by the FFE, SBE–FPs, and State 

Exchanges at the time of enrollment. 

Then, beginning with the 2025 benefit 

year, the transitional approach will end, 

and issuers will be required to populate 

the fields using available sources and, in 

the absence of such an existing source 

for particular enrollees, to make a good 

faith effort to ensure collection and 

submission of the race and ethnicity 

data for these enrollees. 

We are also finalizing, with slight 

modification to the transitional 

approach, collection of the ICHRA 

indicator. For the 2023 and 2024 benefit 

year, similar to the transitional 

approach for race and ethnicity data, 

issuers are required to populate the field 

for the ICHRA indicator using only data 

they already collect or have accessible 

regarding their enrollees.146 Then, 

beginning with the 2025 benefit year, 

the transitional approach will end, and 

issuers will be required to populate the 

field using available sources (for 

example, information from Exchanges 

and small employers, and requesting 

information directly from enrollees) 

and, in the absence of an existing source 

for particular enrollees, to make a good 

faith effort to ensure collection and 

submission of the ICHRA indicator for 

these enrollees. 

HHS will provide additional details 

on what constitutes a good faith effort 

to ensure collection and submission of 

the race, ethnicity, and ICHRA indicator 

data elements in the future. For 

example, HHS intends to monitor and 

leverage ongoing work to outline 

industry-wide standards for collecting 

health plan demographic data, such as 

the work by the NAIC’s Special 

Committee on Race & Insurance. As part 

of this NAIC Committee’s efforts to 

examine and determine which practices 

or barriers exist in the insurance sector 

that potentially disadvantage people of 

color or historically underrepresented 

groups, it will consider enhanced data 

reporting and record keeping 

requirements across product lines to 

identify race and other 

sociodemographic factors of insureds, 

including consideration of legal and 

privacy concerns.147 We also intend to 

seek input from issuers and other 

stakeholders as we develop this good 

faith standard and determine the most 

feasible methods for issuers to ensure 

collection and submission of these data 

elements.148

Beginning with the 2023 benefit year, 

HHS will provide additional operational 

and technical guidance on how issuers 

should submit these new data elements 

to HHS through issuer EDGE servers via 

the applicable benefit year’s EDGE 

Server Business Rules and the EDGE 

Server Interface Control Document, as 

may be necessary.149 For example, even 

though the submission of race and 

ethnicity data to issuer EDGE servers 

must conform to the 2011 HHS Data 

Standards, we intend to provide further 

instruction to issuers on how to 

appropriately map information issuers 

collect to the race and ethnicity EDGE 

data fields. In addition, we recognize 

that enrollees are not required to submit 

race and ethnicity information to the 

FFE through the eligibility application 

process, and that SBE–FPs and State 

Exchanges similarly permit enrollees to 

decline to provide this information. We 

anticipate similar practices and 

flexibility for enrollees to decline to 

provide this information also currently 

exists for enrollees seeking coverage offExchanges, and that such flexibility will 

continue to exist in the future for 

consumers enrolling in coverage on and 

off-Exchange. As such, we intend to 

include an option that will allow issuers 

to indicate that race or ethnicity 

information is not known in these 

situations. 

Additionally, we are finalizing, as 

proposed, that any changes to our 

policies that result from analysis of 

these data, such as using the data to 

modify the State payment transfer 

formula, would generally be subject to 

notice and comment rulemaking. 

Furthermore, we would not use the 

additional data elements or any analysis 

of them to pursue changes to our 

policies until we conduct data quality 

checks and ensure the response rate is 

adequate to support any analytical 

conclusions. These data quality and 

reliability checks would generally be 

consistent with other data standard 

checks that HHS performs related to 

data collected through issuers’ EDGE 

servers. 

We are also finalizing the proposals to 

extract the three data elements issuers 

already report to their EDGE servers— 

plan ID, rating area, and subscriber 

indicator—with a modification to the 

applicability date for extraction of two 

of these data elements. As detailed 

further later, we will begin extraction of 

plan ID and rating area as part of the 

enrollee-level EDGE data and reports 

extracted from issuers’ EDGE servers 

beginning with the 2021 benefit year 

and will begin extraction of subscriber 

indicator beginning with the 2022 

benefit year. Table 5 provides a 

summary of the EDGE data collection 

requirements being finalized in this 

rule. 


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150Since the 2014 benefit year, issuers have been 

required to submit plan ID, rating area, and 

subscriber indicator to their EDGE servers to 

support HHS’ calculation of risk adjustment 

transfers (81 FR 94101). 

151See 87 FR 630. See also 84 FR 17487. 

152See 87 FR 630. 153See 87 FR 630 through 631. 154See, for example, 2 U.S.C. 601(d). 

We summarize and respond to public 

comments received on the proposed 

collection and extraction of five new 

data elements and the extraction of 

three current data elements, along with 

the other risk adjustment issuer data 

requirements proposals, in the risk 

adjustment issuer data requirement 

proposals comments and responses 

section of this rule. 

b. Limited Data Set 

In conjunction with the collection and 

extraction of the new and current data 

element proposals, we proposed to 

exclude plan ID, ZIP Code, and rating 

area from the limited data set containing 

enrollee-level EDGE data that HHS 

makes available to qualified 

researchers.151 However, we proposed 

to include race, ethnicity, ICHRA 

indicator, subsidy indicator, and 

subscriber indicator in the limited data 

set once they are available.152

We sought comments on this 

proposal. 

After reviewing the public comments, 

we are finalizing the proposal to 

exclude plan ID, ZIP Code, and rating 

area from the limited data set containing 

enrollee-level EDGE data that HHS 

makes available to qualified researchers, 

and to include race, ethnicity, ICHRA 

indicator, subsidy indicator, and 

subscriber indicator in the limited data 

set once they become available. As 

explained earlier in this rule, race, 

ethnicity, ICHRA indicator, and subsidy 

indicator will become available 

beginning with the 2023 benefit year, 

and subscriber indicator will become 

available beginning with the 2022 

benefit year. 

We summarize and respond to public 

comments received on the enrollee-level 

EDGE limited data set proposals, along 

with the other risk adjustment issuer 

data requirements proposals, below. 

c. Expansion of Permissible Uses of 

EDGE Data 

We also proposed to expand the 

permitted uses of the data and reports 

(including data reports and ad hoc 

query reports) extracted from issuers’ 

EDGE servers to include other HHS 

Federal health-related programs outside 

of the commercial individual and small 

group (including merged) markets.153

This proposed expansion would apply 

to data that HHS already collects and 

extracts, as well as the collection and 

extraction of ZIP Code, race, ethnicity, 

subsidy indicator, ICHRA indicator, 

plan ID, rating area, and subscriber 

indicator as outlined in this rule. The 

proposed expansion to the permitted 

uses of the EDGE data and reports 

would apply as of the effective date of 

this final rule. Specifically, HHS 

proposed to expand the uses of the data 

and reports HHS extracts from issuers’ 

EDGE servers to include not only the 

specific uses for purposes we identified 

in the 2020 Payment Notice (84 FR 

17488)—that is, to calibrate and 

operationalize our individual and small 

group (including merged) market 

programs (including assessing risk in 

the market for risk adjustment purposes 

and informing updates to the AV 

Calculator), and to conduct policy 

analysis for the individual and small 

group (including merged) markets—but 

also for the purposes of informing 

policy analyses and improving the 

integrity of other HHS Federal healthrelated programs, to the extent such use 

of the data is otherwise authorized by, 

required under, or not inconsistent with 

applicable Federal law. We also noted 

that the enrollee-level EDGE data, 

including the data elements proposed 

for collection and extraction, may be 

subject to disclosure as otherwise 

required by law.154

We sought comment on the proposed 

expansion of the permissible uses of the 

data and reports HHS extracts from 

issuers’ EDGE servers. 

After reviewing the public comments, 

we are finalizing, as proposed, the 

expansion of the permitted uses of the 

data and reports HHS extracts from 

issuers’ EDGE servers. 

We summarize and respond to public 

comments received on the proposed 

expansion of the permissible uses of 

EDGE data, along with the other risk 

adjustment issuer data requirement 

proposals, below. 

d. Burden for Collecting and Extracting 

Additional Data Elements 

As stated above, we included 

information in the proposed rule (87 FR 

631 through 632) on the burdens related 


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155See Using Z Codes: The Social Determinants 

of Health; Data Journey to Better Outcomes. (2021). 

CMS. https://www.cms.gov/files/document/zcodesinfographic.pdf. See also Utilization of Z Codes for 

Social Determinants of Health Among Medicare 

Fee-for-Service Beneficiaries. (2019). CMS. https:// 

www.cms.gov/files/document/z-codes-datahighlight.pdf. 

156Non-federal governmental plans are subject to 

many PHS Act federal market reform requirements. 

See, for example, 42 U.S.C. 300gg–21(a)(1)(A). See 

also 42 U.S.C. 300bb–1, et seq. HHS is generally 

responsible for enforcement of provisions of the 

PHS Act that apply to non-federal governmental 

plans. See, for example, 42 U.S.C. 300gg–22(b)(1)(B) 

and 45 CFR 150.301, et seq. 

157As detailed later, we are finalizing the 

proposed expansion of permitted uses of the 

enrollee-level EDGE data to include other HHS 

Federal health-related programs outside of the 

commercial individual and small group (including 

merged) markets, as well as coverage offered by 

non-Federal governmental plans. 

to the proposals to collect and extract 

additional data elements. 

We summarize and respond to public 

comments received on the burden for 

collecting and extracting additional data 

elements, along with the other risk 

adjustment issuer data requirement 

proposal below. 

e. Encouraging the Use of Z Codes 

In the proposed rule (87 FR 631), we 

sought comment on the collection and 

extraction of z codes (particularly Z55– 

Z65), a subset of ICD–10–CM encounter 

reason codes used to identify, analyze, 

and document SDOH.155 We solicited 

comment on whether there are policies 

that HHS should pursue that could 

encourage consistent use of z codes by 

providers to support collection and use 

of the data for the HHS-operated risk 

adjustment program. In light of E.O. 

13985 and E.O. 14009, HHS is interested 

in analyzing z code data to learn about 

the relationship between risk and the 

SDOH. 

We summarize and respond to the 

public comments related to encouraging 

the use of z codes or additional data 

elements to support the operation of the 

HHS-operated risk adjustment program 

below. 

f. Risk Adjustment Issuer Data 

Requirement Proposals Comments and 

Responses 

After reviewing the public comments 

submitted, we are finalizing, with slight 

modification, the collection and 

extraction of the five new data elements 

(ZIP Code, race, ethnicity, ICHRA 

indicator, and subsidy indicator) 

beginning with the 2023 benefit year. 

Additionally, we are finalizing the 

extraction of plan ID and rating area 

beginning with the 2021 benefit year, 

and the extraction of the subscriber 

indicator beginning with the 2022 

benefit year. We are also finalizing, as 

proposed, the expansion of the 

permitted uses of the data and reports 

(including data reports and ad hoc 

query reports) extracted from issuers’ 

EDGE servers to include other HHS 

Federal health-related programs outside 

of the commercial individual and small 

group (including merged) markets, as 

well as coverage offered by non-Federal 

governmental plans.156 Lastly, we are 

finalizing the proposal to exclude plan 

ID, ZIP Code, and rating area from the 

limited data set HHS makes available to 

requestors for research purposes, but to 

include race, ethnicity, ICHRA 

indicator, subsidy indicator, and 

subscriber indicator in that limited data 

set once available. 

We summarize and respond to public 

comments received on all of the risk 

adjustment issuer data requirement 

proposals (§§ 153.610, 153.700, and 

153.710) below. 

Comment: Many commenters 

supported the proposal to collect and 

extract the five new data elements—ZIP 

Code, race, ethnicity, an ICHRA 

indicator, and a subsidy indicator. Many 

of these commenters stated that they 

believe collecting ZIP Code, race, 

ethnicity, an ICHRA indicator, and a 

subsidy indicator would assist in 

identifying health equity issues by 

allowing for improved tracking of the 

SDOH and discrimination in health 

care. 

However, several commenters 

opposed the proposal to collect and 

extract the five new data elements due 

to general concerns related to release of 

information that issuers consider 

proprietary and enrollees’ personally 

identifiable information (PII). Some of 

these commenters stated that collecting 

and extracting these additional data 

elements would increase the potential 

risk of a data security breach. Most of 

these commenters expressed concerns 

that the extraction of plan ID and rating 

area, and the collection and extraction 

of ZIP Code, may enable outside entities 

to identify issuers and individual 

members based on identifiers such as 

State and rating area, particularly when 

there is a small number of issuers in a 

State. Some of these commenters 

expressed concern about the security of 

enrollees’ PII, explaining that the EDGE 

servers were initially designed so that 

HHS would receive only aggregate, 

summary-level data to address privacy 

concerns regarding transmitting and 

storing enrollees’ personal information, 

and that in subsequent rulemaking HHS 

established the policy to receive 

enrollee-level data, which raised 

privacy concerns; therefore, collecting 

and extracting the proposed additional 

data elements also raises privacy 

concerns. One commenter 

recommended that HHS maintain the 

existing risk adjustment data collection 

approach and not collect and extract 

additional EDGE data elements, stating 

that the existing distributed data 

approach is implemented in a manner 

that alleviates privacy concerns by 

allowing health plans to control their 

data assets, which allows private health 

information to be retained by issuers 

without additional risk of transmitting 

and storing large amounts of sensitive 

data in a central database. This 

commenter also noted that the existing 

distributed data approach minimizes the 

risk of data security breaches. 

Response: We are finalizing, with 

slight modification, the collection and 

extraction of ZIP Code, race, ethnicity, 

an ICHRA indicator, and a subsidy 

indicator beginning with the 2023 

benefit year. We believe that the 

collection and extraction of these five 

new data elements will allow HHS to 

better analyze and assess risk patterns in 

the individual, small group, and merged 

markets in relation to geographic details 

(including ZIP Code) and demographic 

data (including ZIP Code, race, 

ethnicity, subsidy indicator, and ICHRA 

indicator). Specifically, collection and 

extraction of these data elements will 

allow HHS to analyze data at a more 

granular level than our current data 

allow and assess risk patterns and the 

impact of risk adjustment policies based 

on geographic, income, and other 

demographic differences. HHS will also 

be able to consider whether there are 

cost differentials for certain conditions 

based on demographic factors like race, 

ethnicity, or subsidy indicator. 

We also agree with commenters that 

these new data elements will allow HHS 

to better identify and analyze health 

equity issues within the individual, 

small group, and merged market 

programs. As explained in the proposed 

rule, HHS’ ongoing efforts to 

continuously improve HHS programs 

include considering ways to improve 

our analytical capacity to assess equity 

impacts of these programs. This 

includes improving our ability to 

identify potential refinements to the 

HHS risk adjustment methodology and 

consider demographic and geographic 

data when considering policy and 

operational changes to improve other 

HHS individual, small group, and 

merged market programs.157 For 

example, we believe that collecting and 

extracting these data elements may help 

HHS assess the costs and use of benefits 

by various subpopulations related to our 

individual, small group, and merged 


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158 77 FR 73162, 73182 through 73183. This 

policy was finalized in the 2014 Payment Notice 

final rule. See 78 FR 15497 through 15500. 159See 78 FR 15500. We explained that data are 

particularly vulnerable during transmission, and 

that the distributed data collection model 

eliminates this risk. 160 77 FR 73162. 161 81 FR 94101. 162 78 FR 15497. 163See 45 CFR 153.610(a). See also 45 CFR 

153.700, et. seq. 164See, for example, 78 FR 15497 through 15498. 

165See 42 U.S.C. 18063 and 18041(c). 

166See 45 CFR 153.720. See also 78 FR 15509 and 

81 FR 94101. 

167See 45 CFR 153.720(b). 

168 In addition to use of masked enrollee IDs and 

masked claims IDs, another existing protection for 

enrollee PII is the exclusion of enrollee date of birth 

from the data issuers must make accessible to HHS 

on their EDGE servers. 

169See Data Use Agreement. CMS. https://

www.cms.gov/Medicare/CMS-Forms/CMS-Forms/ 

Downloads/CMS-R-0235L.pdf. See also 84 FR 17486 

through 17490. 

170 Data Use Agreement. CMS. https://

www.cms.gov/Medicare/CMS-Forms/CMS-Forms/ 

Downloads/CMS-R-0235L.pdf. 

171 Ibid. at paragraphs 3, 7. 

172Further details on limited data set files 

available at Limited Data Set (LDS) Files. (2021, 

December 1). CMS. https://www.cms.gov/ResearchStatistics-Data-and-Systems/Files-for-Order/DataDisclosures-Data-Agreements/DUA_-_NewLDS. 

market programs, and may allow HHS to 

better determine whether new policies, 

regulations, or guidance may be 

necessary or appropriate to advance 

equity within these programs. We note 

that any changes to the risk adjustment 

methodology or other policies based on 

HHS’ analysis of these data elements 

would generally be set forth through 

notice-and-comment rulemaking. 

In response to commenters’ concerns 

that collecting and extracting additional 

data elements would mean transmitting 

and storing enrollees’ PII and that there 

would be increased risk of data security 

breaches, we note that we did not 

propose and are not finalizing any 

changes to the existing distributed data 

collection model applicable to the HHSoperated risk adjustment program. As 

noted by some commenters, HHS set up 

the distributed data environment to 

address privacy and security concerns 

regarding transmitting and storing 

enrollees’ PII. In the proposed 2014 

Payment Notice (77 FR 73118), we 

explained that using a distributed data 

collection model means that HHS does 

not directly collect data from issuers,158

which limits transmission of data 

containing PII.159 Instead, HHS accesses 

enrollment, claims, and encounter data 

on issuers’ secure distributed data 

environments,160 called EDGE 

servers.161 Under this model, each 

issuer submits to its EDGE server the 

required data in HHS-specified 

electronic formats and must make these 

data accessible to HHS for use in the 

HHS-operated risk adjustment 

program.162 This general framework 

remains unchanged. As is current 

procedure, issuers of risk adjustment 

covered plans will continue to provide 

HHS access to the applicable required 

risk adjustment data elements through 

the distributed data environment (that 

is, the issuer’s EDGE server) in the HHSspecified electronic formats by the 

applicable deadline.163 This includes 

providing HHS access to install, update, 

and operate common software and 

specific reference tables,164 and 

executing commands provided by HHS 

to generate the EDGE reports within the 

designated timeframes. In addition, 

issuers will continue to retain control 

over their data assets subject to the 

requirements of the risk adjustment 

program operated under sections 1343 

and 1321(c) of the ACA.165

Furthermore, HHS remains committed 

to protecting the privacy and security of 

enrollee health information and will 

continue to require issuers to use 

masked enrollee identification 

numbers.166 Specifically, consistent 

with the requirement first established in 

the 2014 Payment Notice, issuers must 

establish a unique masked enrollee 

identification number for each enrollee 

that cannot include PII. As we 

explained in the 2018 Payment Notice 

(78 FR 15500), use of masked enrolleelevel data safeguards enrollee privacy 

and security because masked enrolleelevel data does not include PII.167 The 

policies finalized in this rule also do not 

alter this approach or the existing 

privacy protections for enrollee PII or 

individual claim-level information, such 

as masked enrollee IDs and masked 

claims IDs.168 We also note that the final 

policy adopted in this rule to exclude 

plan ID, rating area, and ZIP Code from 

the limited data set is part of our 

commitment to protect enrollee PII and 

strategy to mitigate the risk that entities 

that receive the limited data set could 

identify individual members, 

particularly in areas with a small 

number of issuers. Therefore, we 

generally disagree that the collection 

and extraction of these new data 

elements will increase risk of disclosure 

of enrollee PII. 

We also appreciate the sensitivities 

related to protecting issuers’ proprietary 

information and note that HHS has also 

taken several steps to protect 

information that issuers may consider to 

be proprietary. First, as noted above, the 

adoption and continued use of the 

distributed data collection model 

ensures each issuer retains control of 

their respective data. Second, only a 

limited data set of certain masked 

enrollee-level EDGE data elements is 

made available and this limited data set 

is available only to qualified researchers 

if they meet the requirements for access 

to such file(s), including entering into a 

data use agreement that establishes the 

permitted uses or disclosures of the 

information and prohibits the recipient 

from identifying the information.169 170

Among other requirements, the data use 

agreement requires qualified researchers 

to explain the specific research purpose 

for which the data will be used and 

generally prohibits disclosure of the 

data.171 We also strictly adhere to all 

requirements and CMS guidelines 

related to providing the limited data set 

to qualified researchers.172 Third, the 

policy adopted in this final rule that 

excludes plan ID, rating area, and ZIP 

Code from the limited data set further 

mitigates the risk of disclosure of 

information that issuers may consider to 

be proprietary. These are the data 

elements that could present an 

increased risk that entities that receive 

the limited data set file could identify 

issuers based on identifiers such as 

State and rating area, particularly in 

areas with a small number of issuers. 

For these reasons, we believe the 

policies finalized in this rule 

appropriately balance the different 

competing interests. More specifically, 

there are sufficient mitigation strategies 

in place such that the collection and 

extraction of these additional data 

elements presents no significant 

additional risk of disclosure of 

information that issuers may consider to 

be proprietary and it will improve HHS’ 

ability to assess health equity impacts of 

HHS commercial individual and small 

group (including merged) market 

programs, including the HHS-operated 

risk adjustment program, as well as 

other HHS Federal health-related 

programs outside these commercial 

markets and coverage offered by nonFederal Governmental plans. 

Comment: Several commenters noted 

the limitation of ZIP Code as a 

geographic identifier, asserting that ZIP 

Codes are not able to specifically 

identify a county or a State in certain 

situations. They also noted that ZIP 

Codes can change from year-to-year 

because ZIP Codes are established by 

the United States Postal Service to 

address mail delivery needs, not 

geographic boundaries. One commenter 

explained that census tract data would 

be a more accurate data element for 

geographic analysis than use of ZIP 

Codes because it can be used with the 


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173HHS Implementation Guidance on Data 

Collection Standards for Race, Ethnicity, Sex, 

Primary Language, and Disability Status. (2011, 

October 30). HHS. https://aspe.hhs.gov/reports/hhsimplementation-guidance-data-collectionstandards-race-ethnicity-sex-primary-languagedisability-0. 

174The full list of required data elements can be 

found in Appendix A of OMB control number 

0938–1155 (Standards Related to Reinsurance, Risk 

Corridors, and Risk Adjustment (CMS–10401)), 

which is currently being updated. The current 

Appendix A is available at Supporting Statement 

For Paperwork Reduction Act Submissions. OMB. 

https://omb.report/icr/201712-0938-015/doc/ 

79644301.pdf. The previous version is available at 

Standards Related to Reinsurance, Risk Corridors, 

and Risk Adjustment (CMS–10401). HHS. https://

www.reginfo.gov/public/do/PRAViewICR?ref_

nbr=201712-0938-01. 

Social Vulnerability Index (SVI) to 

obtain measures for SDOH, race, and 

ethnicity at the population level. This 

commenter also noted, however, that 

census tract data is not currently used 

by issuers and thus may not be readily 

available. In contrast, some commenters 

agreed it would be relatively easy for 

issuers to submit ZIP Code, as issuers 

readily have access to this data element. 

Response: We are finalizing, as 

proposed, the collection and extraction 

of ZIP Code for several reasons. First, 

ZIP Code is a widely understood unit of 

geography. Second, while we recognize 

there are some advantages for using 

census tract data to conduct certain 

assessments and analysis of risk 

patterns based on geographic 

differences, we are concerned that 

issuers do not currently collect census 

tract data and we believe it would be 

more burdensome for issuers to collect 

and extract this data element than ZIP 

Code. In contrast, we believe that 

issuers already have access to enrollees’ 

ZIP Code information. Third, while ZIP 

Codes can change over time, the 

majority of changes to ZIP Code occur 

at the level of the nine-digit ZIP+4 Code, 

while five-digit area codes generally 

remain stable from year to year. 

Therefore, to balance the desire to 

collect more granular geographic data 

with easing the burdens on issuers 

associated with collection of new data 

elements, we are finalizing the 

collection and extraction of the fivedigit ZIP Code beginning with the 2023 

benefit year. 

Comment: Some commenters 

requested that HHS clarify which ZIP 

Code issuers would be required to 

report to their EDGE servers, for 

example, whether issuers should collect 

the ZIP Code associated with an 

enrollee’s mailing address or rating area. 

Response: Issuers will be required to 

report the enrollee’s mailing address ZIP 

Code as reported by the enrollee. This 

means that small group market issuers 

will be required to report the employee 

ZIP Code and not employer ZIP Code. 

Consistent with prior practice, 

additional technical instructions related 

to how issuers must submit these new 

data elements, including ZIP Code, will 

be made available to issuers through the 

applicable benefit year’s EDGE Server 

Business Rules and the EDGE Server 

Interface Control Document. 

Comment: Some commenters 

expressed concern that there is no 

industry standard for collecting the race 

and ethnicity data elements and 

recommended that these data elements 

not be collected until such a standard is 

established. These commenters also 

explained that this lack of an industry 

standard means that the race and 

ethnicity data elements collected may 

not be accurate, and that there is no way 

to ensure that these data elements are 

accurate. Some of these commenters 

also noted that some state laws limit the 

manner by which issuers or SBE–FPs 

and State Exchanges can collect the race 

and ethnicity data elements, which may 

prevent issuers from collecting and 

submitting these data to HHS, but they 

did not offer citations or otherwise 

identify specific State laws. 

Response: We are finalizing the 

proposal to collect and extract race and 

ethnicity data beginning with the 2023 

benefit year and are also finalizing the 

accompanying proposal to require 

issuers to report race and ethnicity data 

in accordance with the 2011 HHS Data 

Standards beginning with the 2023 

benefit year. While not an industry 

standard, the 2011 HHS Data Standards 

were developed under section 4302 of 

the ACA, which requires the Secretary 

of HHS to establish data collection 

standards for race, ethnicity, sex, 

primary language, and disability status. 

The 2011 HHS Data Standards 173 were 

promulgated to create a set of uniform 

data collection standards for inclusion 

in surveys conducted or sponsored by 

HHS. They are also the standards used 

by HHS, as the FFE administrator, to 

collect these data through the Exchange 

application. Therefore, we believe that 

the 2011 HHS Data Standards are an 

appropriate standard to guide the 

collection of race and ethnicity data by 

issuers of risk adjustment covered plans. 

We also believe that by using the 2011 

HHS Data Standards, we will be 

supporting the creation of a uniform 

industry standard that can help improve 

the accuracy and consistency of the data 

over time. As explained earlier, we are 

finalizing the proposal to structure the 

race and ethnicity data elements similar 

to current collections, where possible. 

Since the 2011 HHS Data Standards are 

consistent with how these data elements 

are captured in the current FFE online 

eligibility application, we believe that it 

is most appropriate to require data 

submission that conforms with the 2011 

HHS Data Standards. However, we 

recognize that issuers may currently 

collect or have race and ethnicity data 

that does not conform to the 2011 HHS 

Data Standards. To address these 

situations, we intend to provide further 

instruction to issuers in guidance on 

how to appropriately map information 

they may currently collect or have to the 

race and ethnicity data fields for EDGE 

data submission. 

We are also finalizing, as proposed, 

that we will provide a value for the race 

or ethnicity data elements that allows 

issuers to indicate that race or ethnicity 

are not known for a specific enrollee. 

This option will be available to issuers 

during the transitional approach. After 

the transitional approach ends 

(beginning in the 2025 benefit year), this 

option will similarly be available to 

issuers who comply with the good faith 

standard but are unable to populate the 

race or ethnicity EDGE data field for one 

or more enrollees. 

We also note that although there may 

be State laws that limit the reporting 

and collecting of race and ethnicity data 

elements, the risk adjustment issuer 

data requirements, including but not 

limited to the proposals finalized in this 

rule related to collection and extraction 

of race and ethnicity data, are rooted in 

section 1343 of the ACA. Consistent 

with section 1321(c)(1) of the ACA, the 

Secretary is responsible for operating 

the risk adjustment program in any State 

that fails to do so. Since the 2017 benefit 

year, HHS has operated risk adjustment 

in all 50 States and the District of 

Columbia. 45 CFR 153.610(a) requires 

issuers of risk adjustment covered plans 

to submit and make accessible all 

required risk adjustment data in 

accordance with the data collection 

approach established by HHS in States 

where the Department operates the 

program. Specifically, HHS requires 

issuers of risk adjustment covered plans 

to submit specified data elements to 

their EDGE servers to support the 

calculation of risk adjustment 

transfers.174 We also previously 

finalized policies related to the 

extraction and use of enrollee-level 

EDGE data (81 FR 94101 and 84 FR 

17488). This rulemaking expands on 

those requirements and policies, 

including by expanding the list of data 

fields issuers must submit to their EDGE 

servers as part of the required risk 

adjustment data beginning in the 2023 

benefit year. 


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175 45 CFR 164.103 (definition of ‘‘Protected 

health information’’). 

176 45 CFR 164.512(a). 

177 45 CFR 164.512(a), 164.103 (definition of 

‘‘Required by law’’). See 65 FR 82462, 82485 

(December 28, 2000) for a discussion of 45 CFR 

164.512(a) in the context of other mandatory 

Federal or state laws. 

178For information on the challenges associated 

with linking the extracted enrollee-level EDGE data 

to other sources, see 87 FR 631 through 632. 179After consideration of comments, for 

simplicity and to minimize burden, we are adopting 

the same transitional approach for the ICHRA 

indicator for the 2023 and 2024 benefit years. For 

the 2023 and 2024 benefit year, issuers are required 

to populate the field for the ICHRA indicator using 

only data they already collect or have accessible 

regarding their enrollees. Then, beginning with the 

2025 benefit year, the transitional approach will 

end, and issuers will be required to populate the 

field using available sources and, in the absence of 

an existing source for particular enrollees, to make 

a good faith effort to ensure collection and 

submission of the ICHRA indicator for these 

enrollees. The transition provides issuers with 

additional time to develop processes for collection, 

validation, and submission of these data elements. 

180 If the burden estimate for collection of the 

race, ethnicity, and/or ICHRA indicator data 

elements changes beginning with the 2025 benefit 

year, the information collection under OMB control 

number 0938–1155 would be revised accordingly 

and stakeholders would be provided the 

opportunity to comment through that process. 

As detailed in the proposed rule (87 

FR 628 through 629), we believe that 

collecting and extracting these new data 

elements serves a compelling 

government interest of promoting equity 

in health coverage and care, as well as 

the ACA’s goal of making high-quality 

health care accessible and accordable 

for all individuals. Collecting and 

extracting race and ethnicity data will 

allow HHS to further assess and analyze 

actuarial risk, and risk patterns in the 

individual, small group and merged 

markets more than current data allows. 

HHS will also be able to analyze more 

subpopulations than our current data 

allows, thereby allowing consideration 

of more areas of health equity, as well 

as to better address discrimination in 

health care and health disparities, 

through pursuit of new risk adjustment 

policies. This policy is also narrowly 

tailored and represents the minimum 

data anticipated at this time to allow 

HHS to engage in this additional, more 

granular analysis. We also reiterate that 

HHS will conduct quality checks of the 

newly collected data elements and 

ensure that the response rate is adequate 

to support any analytical conclusions 

that could inform policy decisions. 

Further, to the extent that race and 

ethnicity data could be considered 

protected health information (PHI),175

the HIPAA Privacy Rule 176 generally 

permits health plans and covered health 

care providers to disclose PHI without 

obtaining authorization from the 

individual where such disclosures are 

required by law, such as when Federal 

or State statutes or regulations require 

the disclosure.177 Additionally, as 

industry standards and State laws 

applicable to the collection and use of 

race and ethnicity data elements evolve, 

HHS will consider whether any changes 

to the risk adjustment program’s 

approach for collection of these data 

elements would be appropriate. 

Comment: Some commenters 

questioned the need for HHS to collect 

and extract race and ethnicity data as 

part of the risk adjustment data 

submissions when the FFE already 

collects these data. 

Response: We acknowledged in the 

proposed rule (87 FR 631) that these 

data elements may also be collected by 

HHS from FFE or SBE–FP enrollees 

through the eligibility application 

process and by some State Exchanges 

from State Exchange enrollees. We 

further explained how this new risk 

adjustment data collection requirement 

would provide HHS with more uniform 

and comprehensive information. More 

specifically, the race and ethnicity data 

collected would represent all enrollees 

in risk adjustment covered plans in 

States where HHS operates the risk 

adjustment program, including coverage 

offered inside and outside of 

Exchanges—rather than just reflecting 

enrollees in coverage offered through 

Exchanges. Additionally, this new data 

collection provides HHS the ability to 

extract and aggregate race and ethnicity 

data elements with other claims and 

enrollment data accessible through 

issuer EDGE servers, which would not 

be possible with the data collected from 

consumers through other processes.178

Comment: Some commenters inquired 

whether issuers would be penalized if 

enrollees decline to provide race and 

ethnicity information, pointing to the 

fact that Exchange enrollees can decline 

to share these details on their 

application. One commenter requested 

that HHS consider approaching 

collection of race and ethnicity the same 

way HHS proposed collection of the 

ICHRA indicator, with an optional data 

field for the 2023 and 2024 benefit 

years, so that issuers can develop 

processes for collection, validation, and 

submission of these data elements. 

Response: We are finalizing the 

proposal to collect and extract race and 

ethnicity data beginning with the 2023 

benefit year. More specifically, issuers 

will be required to use the information 

they already have or ensure collection of 

race and ethnicity information to submit 

to their EDGE servers consistent with 

the 2011 HHS Data Standards. 

Similar to how we have approached 

other new data collection requirements 

in the past, we agree with the 

commenter and are adopting a 

transitional approach for the 2023 and 

2024 benefit years for the race and 

ethnicity data fields.179 During this 

time, issuers are required to populate 

race and ethnicity data using data the 

issuers already have or collect. As such, 

an issuer will be required to report the 

race and ethnicity data in situations 

where a particular enrollee has provided 

these data to the issuer or if the issuer 

otherwise has these data for that 

particular enrollee. For example, QHP 

issuers may already receive race and 

ethnicity data elements from the 

applicable FFE, SBE–FP, or State 

Exchange at the time of enrollment, and 

reporting these data as collected through 

that process would be compliant with 

standards applicable during the 2023 

and 2024 benefit years. We intend to 

provide further instruction to issuers in 

guidance on how to appropriately map 

information issuers have or collect to 

the race and ethnicity data fields for 

EDGE data submission. 

Beginning with the 2025 benefit year, 

issuers will be required to populate the 

field using available sources and, in the 

absence of an existing source to 

populate these data elements for 

particular enrollees, they will be 

required to make a good faith effort to 

ensure collection of race and ethnicity 

data. HHS will provide additional 

details on what constitutes a good faith 

effort to ensure collection of the race 

and ethnicity data elements in the 

future. We intend to seek input from 

issuers and other stakeholders as we 

develop this good faith standard and 

determine the most feasible methods for 

issuers to ensure collection and 

submission of these data elements.180

Finally, we recognize that enrollees 

are not required to submit race and 

ethnicity information to the FFE 

through the eligibility application 

process, and that SBE–FPs and State 

Exchanges, and off-Exchange issuers, 

may similarly permit enrollees to 

decline to provide this information. As 

such, we will include an option for 

issuers to indicate that race or ethnicity 

are not known for a specific enrollee 

when submitting data to their EDGE 

servers. For example, an issuer that 

meets the good faith standard and 

reports this option in its 2025 benefit 

year EDGE data for a particular enrollee 

in these situations will be compliant 

with the applicable standard, and we 

would not penalize an issuer in such 

situations, as enrollees may decline to 

provide this information. 


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181 Issuers that elect a risk adjustment default 

charge are not required to submit EDGE data. See 

45 CFR 153.740(b) and 81 FR at 12237 –12238. See 

also, for example, Summary Report on Permanent 

Risk Adjustment Transfers for the 2020 Benefit Year 

at 36 (2021, June 30). CMS. https://www.cms.gov/ 

CCIIO/Programs-and-Initiatives/PremiumStabilization-Programs/Downloads/RA-ReportBY2020.pdf. 

182The estimated burden associated with 

collection of the race, ethnicity, ZIP Code, and the 

subsidy indicator data is the additional effort and 

expense for issuers to compile and submit these 

additional data elements to their EDGE servers and 

to retain them as part of their risk adjustment 

records. If the burden estimate for collection of the 

race, ethnicity, or ICHRA indicator data elements 

changes beginning with the 2025 benefit year (after 

the transitional approach ends), the information 

collection under OMB control number 0938–1155 

would be revised accordingly and stakeholders 

would be provided the opportunity to comment 

through that process. 

183 In the proposed rule, we proposed a 

transitional approach whereby the ICHRA indicator 

would be optional for the 2023 and 2024 benefit 

years. See 87 FR at 631. After consideration of 

comments, for simplicity and to mitigate burdens, 

we are adopting the same approach for assessing 

compliance during the transition for populating the 

race, ethnicity and ICHRA indicator data fields. 

Comment: Several commenters 

expressed concern that collecting and 

extracting the race, ethnicity, or ICHRA 

data elements would impose additional 

administrative burden, require costly IT 

system builds, and mandate other 

operational updates to develop and test 

the submission of these data elements to 

issuer EDGE servers. 

Response: We acknowledge concerns 

that the new data collection, 

particularly the data on race, ethnicity, 

and ICHRA indicator, could impose 

additional administrative burden and 

may require operational changes to 

develop, test, and validate submission 

of these data elements. As further 

detailed in the Information Collection 

section of this rule, we are updating our 

estimates of the burden and costs 

associated with this new data collection. 

Currently, all issuers that submit data to 

their EDGE servers 181 have automated 

the creation of data files that are 

submitted to their EDGE servers for the 

existing required data elements, and 

each issuer will need to update their file 

creation process to include the five new 

data elements, which will require a onetime administrative cost. In addition to 

adding this one-time cost, we also 

update the estimate to reflect that 

collection and submission of all five of 

the new data elements will require 5 

hours of work by a management analyst 

(one hour of work per new data element 

collected) on an annual basis. We also 

will revise the information collection 

under OMB control number 0938–1155 

to reflect these additional costs. 

This estimate recognizes that 

information to populate the ICHRA 

indicator data field is not routinely 

collected by all issuers at this time, 

though most issuers currently collect 

race, ethnicity, ZIP Code, and a subsidy 

indicator information in some 

manner.182 Because we are adopting a 

transitional approach under which 

issuers will be required to populate the 

race, ethnicity, and ICHRA indicator 

data fields using data they already have 

or collect for the 2023 and 2024 benefit 

years, issuers are not required to make 

any changes to the manner in which 

they currently collect the race, ethnicity, 

and ICHRA data elements for the 2023 

and 2024 benefit year submissions. This 

transition period allows additional time 

for issuers to develop processes for 

collection and validation of the data 

required for the new data fields. After 

consideration of comments, including 

those related to the burden estimates, 

we are finalizing the collection and 

extraction of the five new data elements, 

with the modifications discussed in this 

section. We continue to believe that the 

benefits of collecting and extracting 

these data elements, including race, 

ethnicity, and the ICHRA indicator, 

outweigh the burdens and costs 

associated with the new requirement. 

Comment: Several commenters 

expressed support for the collection and 

extraction of the ICHRA indicator. One 

of these commenters explained that 

collecting and extracting ICHRA 

indicator would allow HHS to better 

understand the types of employers 

offering ICHRAs and the characteristics 

of the employees enrolling in coverage 

using ICHRAs. 

Conversely, several commenters 

stated that the ICHRA indicator was not 

readily available to issuers, and thus 

issuers would be unable to collect and 

submit information to populate the 

ICHRA indicator data field. Specifically, 

these commenters stated that requiring 

collection of information to populate the 

ICHRA indicator data field would 

require issuers to collect this data 

element directly from employers, as the 

FFE, SBE–FPs, and State Exchanges do 

not currently collect this data outside of 

SEP enrollments. These commenters 

also noted that collecting this data 

element from employers would be 

administratively burdensome. One 

commenter requested further guidance 

on how issuers would be expected to 

collect and report this data element. 

Response: We agree that collecting 

and extracting ICHRA indicator data 

will allow HHS to better understand the 

characteristics of the employees 

enrolling in coverage using ICHRAs and 

will allow HHS to conduct analyses to 

examine whether there are any unique 

actuarial characteristics of the ICHRA 

population, (such as the health status of 

enrollees with ICHRAs), and to 

investigate what impact (if any) ICHRA 

enrollment is having on State individual 

(or merged) market risk pools. After 

considering public comments, we are 

finalizing this policy with slight 

modification to the transitional 

approach. 

In the proposed rule (87 FR 631), we 

acknowledged that the ICHRA indicator 

may be collected by HHS from FFE or 

SBE–FP enrollees through the eligibility 

application process and that our 

intention would be to structure these 

data elements for EDGE data 

submissions similar to current 

collections, where possible. As noted 

above, the ICHRA indicator data 

element is intended to indicate whether 

a particular enrollee’s health care 

coverage involves (or does not involve) 

an ICHRA. Issuers will be permitted to 

populate the ICHRA indicator with 

information from FFE or SBE–FP 

enrollees or enrollees through State 

Exchanges, or from other sources for 

collecting this information from these 

enrollees. 

Currently, the FFE collects 

information about ICHRA availability 

from all applicants to determine 

whether they are eligible for a SEP, as 

individuals and their dependents who 

become newly eligible for an ICHRA 

may be eligible for a SEP. The FFE will 

also collect information about ICHRA 

affordability from applicants seeking 

financial assistance who attest to having 

ICHRA offers, as the details of the offer 

impact APTC eligibility. However, 

recognizing that issuers may not 

currently routinely collect or otherwise 

have access to the information for all of 

their enrollees needed to populate the 

ICHRA indicator, we are finalizing the 

adoption of a transitional approach for 

the 2023 and 2024 benefit years.183

Under this transitional approach, 

similar to the race and ethnicity data 

fields, issuers will be required to 

populate the ICHRA indicator using 

information the issuer currently has 

access to or otherwise collects that 

could be used to populate the ICHRA 

indicator. For example, where an FFE 

enrollee is using a SEP, information 

about ICHRA availability is collected by 

the FFE, and the FFE may make these 

data available to issuers. In addition, an 

issuer may currently have or collect 

information that could be used to 

populate the ICHRA indicator in 

situations where the issuer is being paid 

directly by the employer through the 

ICHRA for the individual market 


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184Employers have flexibility to reimburse 

employees enrolled in ICHRAs for covered medical 

expenses they incur (including premiums for 

individual health insurance coverage) or to make 

the payment on behalf of the enrollee (including 

premiums for individual health insurance 

coverage). 

185 If the burden estimate for collection of ICHRA 

indicator changes beginning with the 2025 benefit 

year (after the transitional approach sends), the 

information collection under OMB control number 

0938–1155 would be revised accordingly and 

stakeholders would be provided the opportunity to 

comment through that process. 

186 45 CFR 153.610(a), 153.700(a), and 153.710. 

187 If the burden estimate for collection of ICHRA 

indicator changes beginning with the 2025 benefit 

year (after the transitional approach ends), the 

information collection under OMB control number 

0938–1155 would be revised accordingly and 

stakeholders would be provided the opportunity to 

comment through the information collection 

process. 

coverage.184 Then, beginning with the 

2025 benefit year, the transition period 

will end, and issuers will be required to 

populate the ICHRA indicator data field 

using available sources (for example, 

with information from Exchanges, small 

employers, or by requesting information 

directly from enrollees) and, in the 

absence of such an existing source for 

particular enrollees, to make a good 

faith effort to ensure collection and 

submission of the ICHRA indicator for 

these enrollees. HHS will provide 

additional details on what constitutes a 

good faith effort to ensure collection of 

this data element in the future.185

As we typically do with other EDGE 

data elements, we will provide technical 

guidance to instruct issuers on the 

format and manner for submission of 

this data element via the applicable 

benefit year’s EDGE Server Business 

Rules and the EDGE Server Interface 

Control Document.186 We believe that 

providing a transitional period for the 

2023 and 2024 benefit years balances 

the need to provide additional time for 

issuers to develop and test available 

options for collection, validation, and 

population and submission of the 

ICHRA indicator, with HHS’ efforts to 

better analyze the ICHRA population, 

the employers that offer ICHRAs, as well 

as to investigate the impact of ICHRAs 

on the individual (and merged) market 

single risk pools and the HHS-operated 

risk adjustment program. HHS intends 

to seek input from issuers and other 

stakeholders to inform development of 

the good faith standard and determine 

the most feasible method for issuers to 

collect the information used to populate 

this data field.187

Comment: Many commenters 

supported the proposal to extract the 

three data elements issuers already 

submit to their EDGE servers—plan ID, 

rating area, and subscriber indicator— 

noting that extraction of these data 

elements would further HHS’ ability to 

analyze and consider policy changes to 

the risk adjustment methodology. Two 

commenters supported the proposal 

because they believe extracting these 

data elements would allow HHS to 

assess and consider a plan-based 

approach to risk adjustment. One 

commenter suggested that HHS consider 

extracting plan ID and rating area 

earlier, beginning with the 2020 or 2021 

benefit year enrollee-level EDGE data 

extractions and reports. This commenter 

noted that issuers already collect these 

data elements, and that waiting until the 

2022 benefit year to extract these data 

and then using these data to further 

analyze risk patterns would delay any 

future modifications to improve the risk 

adjustment methodology until the 2026 

benefit year at the earliest. 

However, several commenters 

expressed concern that the extraction of 

plan ID, rating area, and subscriber 

indicator data would pose a risk to 

information that issuers consider 

proprietary and enrollee privacy, and 

that plan ID and rating area data are 

unnecessary for risk adjustment 

purposes since the risk adjustment 

program analyzes risk at the enrolleelevel. 

Response: We are finalizing the 

extraction of plan ID, rating area, and 

subscriber indicator with slight 

modification to the applicability date for 

extraction of two of these data elements. 

We will extract plan ID and rating area 

beginning with the 2021 benefit year, 

and will extract subscriber indicator 

beginning with the 2022 benefit year. 

HHS is committed to continuously 

considering ways to improve HHS 

programs, including ways to better 

assess risk patterns in the individual or 

small group (including merged) market 

programs, and believes that extracting 

plan ID and rating area as soon as 

feasible will improve HHS’ ability to 

assess risk patterns and the impact of 

risk adjustment policies at a plan level. 

We are finalizing an earlier applicability 

date for extraction of plan ID and rating 

area because we share the commenter’s 

concern that waiting until the 2022 

benefit year could result in a significant 

delay in the pursuit of future 

modifications to improve the risk 

adjustment methodology and program 

requirements. Additionally, taking into 

consideration that issuers already 

submit plan ID and rating area data 

elements to their EDGE servers, 

extracting these data sooner would 

result in little to no additional issuer 

burden. Extracting plan ID and rating 

area will also improve HHS’ ability to 

estimate the transfers impact of 

potential future policies using the 

enrollee-level EDGE data while 

minimizing additional burden to issuers 

with respect to analysis of such 

potential future policies. 

While we acknowledge commenters’ 

concerns that the extraction of plan ID, 

rating area, and subscriber indicator 

could pose a risk to information that 

issuers may consider to be proprietary 

and enrollee privacy, we believe that 

there are sufficient mitigation strategies 

in place such that the collection and 

extraction of these additional data 

elements presents no significant 

additional risk of disclosure of 

information that issuers consider to be 

proprietary or to enrollee privacy. For 

example, as discussed above in response 

to comments regarding privacy and 

security concerns related to the 

collection of new data elements, the 

adoption and continued use of the 

distributed data collection model 

ensures that each issuer retains control 

of their respective data. Additionally, 

HHS releases only a limited data set of 

select masked enrollee-level EDGE data 

elements only to qualified researchers 

and only if they meet the requirements 

for access to such file, including 

entering into a data use agreement that 

establishes the permitted uses or 

disclosures of the information and 

prohibits the recipient from identifying 

the information. Finally, the policy 

adopted in this final rule that excludes 

plan ID, rating area, and ZIP Code from 

the limited data set further mitigates the 

risk of disclosure of information that 

issuers may consider to be proprietary 

and enrollee PII. 

In response to commenters’ assertion 

that plan ID and rating area are 

unnecessary for risk adjustment 

purposes since the risk adjustment 

program analyzes risk at the enrolleelevel, we note that, since the 2014 

benefit year, issuers have been required 

to submit plan ID, rating area, and 

subscriber indicator to their EDGE 

servers to support HHS’ calculation of 

risk adjustment transfers (81 FR 94101). 

Furthermore, while the risk adjustment 

models are recalibrated on enrolleelevel EDGE data, HHS uses available 

plan-level data, summary reports, and 

enrollee-level EDGE data to evaluate 

and analyze the performance of the risk 

adjustment program and inform future 

policy changes for the program. As 

explained in the proposed rule (87 FR 

628), we will use rating area and plan 

ID to further assess risk patterns and the 

impact of risk adjustment policies. For 

example, the extraction of rating area 

will provide HHS more granular data to 

assess risk patterns and impact based on 

geographic differences. We therefore 

disagree that plan ID and rating area are 


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27250 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

188See, for example, 2010 Standards for 

Delineating Metropolitan and Micropolitan 

Statistical Areas, 75 FR 37246 at 37246 (2010 June 

28). 

189See, for example, Defining Rural Population. 

(2020, June 25). HHS. https://www.hhs.gov/ 

guidance/document/defining-rural-population. The 

two main definitions for ‘‘rural’’ used across the 

Federal government are developed by the U.S. 

Census Bureau and OMB. In addition, the Federal 

Office of Rural Health and Policy takes components 

from both of these main definitions when 

determining how to classify a geographic region. 

190The subscriber indicator data field will be 

included in the limited data set beginning with the 

2022 benefit year because it will be extracted 

beginning with the 2022 benefit year. The race, 

ethnicity, ICHRA indicator, and subsidy indicator 

data fields will be included in the limited data set 

beginning with the 2023 benefit year because they 

will be extracted beginning with the 2023 benefit 

year. 

191See Data Use Agreement. CMS. https://

www.cms.gov/Medicare/CMS-Forms/CMS-Forms/ 

Downloads/CMS-R-0235L.pdf. Further details on 

LDS files available at Limited Data Set (LDS) Files. 

(2021, December 1). CMS. https://www.cms.gov/ 

Research-Statistics-Data-and-Systems/Files-forOrder/Data-Disclosures-Data-Agreements/DUA_-_

NewLDS. 

unnecessary for risk adjustment 

purposes. 

Comment: Several commenters 

supported the proposed exclusion of 

plan ID, ZIP Code, and rating area from 

the limited data set. These commenters 

explained that excluding these data 

elements from the limited data set 

would mitigate concerns related to 

increased exposure of enrollees’ PII, 

data security, and release of information 

issuers consider proprietary. One 

commenter also recommended that HHS 

consider excluding subscriber indicator 

from the limited data set, also noting 

concerns surrounding exposure of 

enrollees’ PII. 

Other commenters opposed the 

proposed exclusion of plan ID, ZIP 

Code, and rating area from the limited 

data set because exclusion of these data 

elements would limit qualified 

researchers’ abilities to gain insight that 

could better inform policy and would 

also significantly restrict the actuarial 

use of the limited data set. One 

commenter recommended including a 

geographic variable in the limited data 

set in lieu of ZIP Code, plan ID, and 

rating area that would indicate 

placement on the urban-rural 

continuum. Another commenter 

recommended that HHS adopt a data 

use standard that would, for example, 

only include geographical data (such as 

plan ID, ZIP Code, and rating area) 

when there is more than one issuer with 

at least 5 percent of the enrollment in 

the rating area to mitigate the concerns 

with release of information issuers 

consider proprietary. Another 

commenter suggested that HHS evaluate 

whether there is a way to include ZIP 

Code in the limited data set, as this data 

element is particularly useful in 

community-based health equity 

research. 

Response: We recognize and agree 

with commenters’ that including plan 

ID, ZIP Code, and rating area would 

enhance the usefulness of the limited 

data set. However, we are finalizing the 

exclusion of these data elements from 

the limited data set to address 

stakeholder concerns related to 

providing geographic information, 

which they believe could result in the 

identification of certain issuers and the 

release of data these issuers perceive as 

competitive and proprietary. 

Specifically, we also recognize and 

agree with the concerns that including 

plan-level data, like plan ID (which 

represents the HIOS ID, State, product 

ID, standard component ID, and variant 

ID) and rating area in the limited data 

set could increase the risk of disclosure 

of information that issuers may consider 

to be proprietary and the risk that 

outside entities that receive the data for 

research may be able to identify issuers 

using State and rating area, particularly 

when there is a small number of issuers 

in a State. 

We considered whether we could 

implement a formal data use standard 

that would only include geographical 

data based on the number of issuers in 

a rating area and on a threshold 

percentage of enrollment in that rating 

area. However, in considering this 

option, we recognize that the 

appropriate threshold percentage may 

vary based on market conditions, which 

could make it difficult to establish and 

maintain a non-arbitrary threshold. In 

addition, we would want to solicit 

comments on the establishment of any 

such threshold. Therefore, since we did 

not propose any such threshold, we are 

not finalizing one at this time. However, 

we will continue to consider if we can 

develop a standard for including 

geographical data in the limited data set 

based on certain characteristics in a 

rating area (for example, number of 

issuers) and would outline such a 

proposed threshold in future noticeand-comment rulemaking. 

We similarly considered whether we 

could include a geographic variable to 

indicate placement on the rural-urban 

continuum. However, in collecting and 

extracting plan ID, rating area, and ZIP 

Code, we recognize that we may not 

have the appropriate data elements to 

accurately determine where on the 

rural-urban continuum an enrollee 

should be placed because areas are often 

defined as rural or urban based on 

county data, which we believe we may 

not be able to accurately identify using 

only plan ID, ZIP Code, and rating 

area.188 In addition, ‘‘rural’’ and 

‘‘urban’’ are not defined consistently. 

For example, the Federal government 

uses two main definitions for ‘‘rural,’’ 

and generally determines which 

geographic regions are considered urban 

based on the regions that meet the rural 

classification.189 For these reasons, if we 

were to consider including any such 

geographic variable in the limited data 

set based on collection and extraction of 

plan ID, ZIP Code, and rating area, we 

would want to solicit comments before 

implementing such an approach. Since 

we did not propose including any such 

variable, we are not finalizing one at 

this time. However, we will continue to 

consider if we would be able to develop 

a geographic variable to indicate 

enrollee placement on the rural-urban 

continuum and would propose any such 

policy in future notice-and-comment 

rulemaking. 

Although one commenter noted that 

inclusion of ZIP Code in the limited 

data set would be particularly useful for 

community-based health equity 

research, we believe that including ZIP 

Code, similar to plan ID and rating area, 

presents the risk that outside entities 

that receive the data for research may be 

able to identify issuers when there is a 

small number of issuers in a State. At 

this time, we believe that the risk of 

potential release of information that 

issuers may consider to be proprietary 

and the risk of identification of 

individual issuers by outside entities 

outweighs the additional benefits 

qualified researchers would gain from 

access to the ZIP Code data, as well as 

plan ID and rating area data. As such, 

we believe excluding ZIP Code, plan ID, 

and rating area from the limited data set 

but including race, ethnicity, ICHRA 

indicator, subsidy indicator, and 

subscriber indicator as they become 

available 190 represents the appropriate 

balance between these concerns and 

providing a limited data set that is 

useful to qualified researchers. 

As detailed above, we also note that 

HHS has taken several steps to protect 

information that issuers may consider to 

be proprietary. With respect to the 

limited data set, we strictly adhere to all 

the requirements and CMS guidelines 

related to providing the limited data set 

to qualified researchers. This includes a 

requirement that, prior to receiving the 

limited data set file, qualified 

researchers must enter into a data use 

agreement that establishes the permitted 

uses or disclosures of the information 

and prohibits the recipient from 

identifying the information.191 The data 

use agreement also requires qualified 


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192See 45 CFR 164.514(e)(1) and (2). 

193For the complete list of direct identifiers that 

are excluded from the limited data set, see 45 CFR 

164.514(e)(2)(i)–(xvi). 

194See, for example, Creation of the 2019 Benefit 

Year Enrollee-Level EDGE Limited Data Sets: 

Methods, Decisions and Notes on Data Use. (2021, 

August 25). CMS. https://www.cms.gov/files/ 

document/2019-data-use-guide.pdf. 195 78 FR 15500. 

196 81 FR 94101. 

197 Ibid. 

researchers to explain the specific 

research purpose for which the data will 

be used and generally prohibits 

disclosure of the data. 

We also note that the limited data set 

includes masked enrollee-level data, 

and that inclusion of subscriber 

indicator in the limited data set would 

not create risk to enrollee privacy or 

security because it is intended to 

identify only whether a masked enrollee 

is the subscriber or dependent on a 

plan. Further, the limited data set file is 

subject to Federal laws and regulations 

in addition to CMS guidelines, and does 

not contain specific direct identifiers as 

set forth in the HIPAA Privacy Rule.192

Specifically, a limited data set must 

exclude certain direct identifiers of the 

individual or relatives, employers, or 

household members of the individual, 

including, but not limited to, names, 

telephone numbers, social security 

numbers, medical record numbers, 

account numbers, health plan 

beneficiary numbers, biometric 

identifiers like finger and voice prints, 

and postal address information (not 

including town or city, State, and ZIP 

Code).193 We note that race, ethnicity, 

ICHRA indicator, subsidy indicator, and 

subscriber indicator are not direct 

identifiers that must be excluded from 

a limited data set and would not add to 

the risk of enrollees being identified. In 

addition, consistent with how we 

created the limited data set in prior 

years, HHS will continue to exclude 

data from the limited data set that could 

lead to identification of certain 

enrollees.194

Comment: Several commenters 

supported expanding the permissible 

uses of the enrollee-level EDGE data as 

it would help inform HHS policy 

analysis and assessment of equity in 

health coverage and care, identify and 

address health disparities, and allow 

HHS to better understand the full 

impact of its policies, including changes 

to risk adjustment methodologies. 

However, several commenters 

opposed the proposed expansion of the 

permissible uses of enrollee-level EDGE 

data beyond the uses established in the 

2020 Payment Notice. Some of these 

commenters expressed concern that 

issuers submit data to their EDGE 

servers with the belief that the data’s 

primary purpose would be for risk 

adjustment purposes or for development 

of the AV Calculator. These commenters 

noted that because of this belief, data 

collected through the EDGE servers may 

not be appropriate, reliable, or 

sufficiently quality checked for the 

proposed expanded uses. 

Some of these commenters stated 

specific concerns with data quality and 

reliability of the race, ethnicity, and 

ICHRA indicator data. These 

commenters also explained that they 

believed race, ethnicity, and ICHRA 

indicator data were out of scope and not 

necessary for the purposes of operating 

the risk adjustment program. Several 

commenters noted that the proposal to 

expand the permissible uses of EDGE 

data would be inconsistent with the 

intended use of the distributed data 

environment to administer the HHSoperated risk adjustment program. One 

commenter requested that HHS adopt a 

requirement prohibiting use of EDGE 

data for purposes other than for 

recalibration of the risk adjustment 

model and development of the AV 

Calculator. 

Response: In the 2014 Payment Notice 

(78 FR 15497 through 15500), we 

established the distributed data 

collection approach and other 

requirements related to data collection 

and reporting for purposes of the HHSoperated risk adjustment program. We 

also explained that we intended for 

issuers to provide HHS only those data 

that we believed were reasonably 

necessary for the risk adjustment 

program.195 We disagree that expanding 

the permissible uses of data collected 

through the EDGE servers is 

inconsistent with the intent to establish 

the distributed data collection approach 

for collecting risk adjustment data. We 

also do not agree that the collection of 

the race, ethnicity, and ICHRA indicator 

data elements are out of scope; instead, 

we believe they are reasonably 

necessary for risk adjustment purposes. 

As explained in the proposed rule, the 

collection and extraction of these data 

elements, in combination with the other 

extracted data elements, will further 

HHS’ ability to consider more areas of 

health equity when assessing risk 

patterns, better address discrimination 

in health care and health disparities, 

and identify ways to address health 

equity issues with regard to the HHSoperated risk adjustment program. More 

specifically, the additional data 

elements will allow HHS to conduct 

analysis at a more granular level than 

our current data allow, further assess 

risk patterns and the impact of the risk 

adjustment policies based on 

geographic, income, or other 

demographic differences, and 

investigate, by sub-population, whether 

there are cost differentials for certain 

conditions based on demographic 

differences (such as race, ethnicity, or 

subsidy indicator). For example, HHS 

believes that analysis of the race and 

ethnicity data elements will help HHS 

better monitor trends in the health 

insurance markets and identify potential 

refinements to the HHS risk adjustment 

methodology, including ways to address 

health equity issues and ensure that risk 

adjustment is not designed in a manner 

that furthers health inequities. 

Collection of the ICHRA indicator will 

allow HHS to investigate whether there 

are any unique characteristics of the 

ICHRA population and if ICHRA 

enrollment is impacting State individual 

(or merged) market risk pools. This 

analysis will help inform potential 

refinements to the risk adjustment 

methodology and policies for future 

benefit years. Therefore, the primary 

purpose and use for the data remains 

the risk adjustment program. We further 

note that HHS continuously evaluates 

the risk adjustment program and the 

data elements that we believe are 

reasonably necessary for risk adjustment 

purposes. For example, we have 

previously updated EDGE server data 

collection requirements to include two 

new data elements: (1) Regarding 

pharmacy claims, the number of days’ 

supply for prescription drugs, and (2) an 

in/out-of-network claims indicator.196

The proposal to collect and extract the 

race, ethnicity, and ICHRA indicator 

data elements followed a similar 

process. 

After consideration of public 

comments, we are finalizing, as 

proposed, the expansion of the 

permitted uses of enrollee-level data to 

allow for more comprehensive study 

and analysis of potential changes of 

other HHS Federal health-related 

programs alongside HHS commercial 

market programs. In the 2018 Payment 

Notice (81 FR 94101), we noted that 

data collected through the EDGE servers 

will be most useful for risk adjustment 

purposes. However, we explained that 

we believed these data would also 

provide valuable information to validate 

the AV Calculator and to calibrate other 

HHS programs in the individual and 

small group (including merged) markets 

and finalized our policy to use the data 

provided to HHS through the EDGE 

servers for these additional purposes.197

Similarly, we believe these data will be 

valuable in assessing policy and 


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198See, for example, 42 U.S.C. 300gg—300gg–28. 

199Non-Federal governmental plans are subject to 

many PHS Act Federal market reform requirements. 

See, for example, 42 U.S.C. 300gg–21(a)(1)(A). See 

also 42 U.S.C. 300bb–1, et. seq. HHS is generally 

responsible for enforcement of PHS Act provisions 

applicable to non-Federal governmental plans. See, 

for example, 42 U.S.C. 300gg–22(b)(1)(B) and 45 

CFR 150.301, et. seq. 

200The Consolidated Appropriations Act, 2021 

(CAA) was enacted on December 27, 2020 and 

includes Title I (No Surprises Act) in Division BB. 

201There are also less severe manifestations of 

alcohol use disorder and nutritional deficiencies, 

but it was determined they did not meet the criteria 

for inclusion in the HHS risk adjustment models. 

202For the 2023 benefit year, HHS will be 

operating the risk adjustment program in every state 

and the District of Columbia. 

203 78 FR 15409 at 15416 through 15417. 

operational issues that are not in 

connection with programs centered 

around the individual or small group 

(including merged) commercial health 

insurance markets. For example, these 

data will allow HHS to assess the 

impact of potential policy changes to 

PHS Act requirements enforced by HHS 

that are applicable market-wide 198 and 

those that are applicable to non-Federal 

governmental plans.199 In addition, 

many PHS Act provisions added by the 

No Surprises Act 200 apply to group 

health plans and health insurance 

issuers offering group or individual 

health insurance coverage, as well as to 

providers and facilities, rather than 

being centered around only nongrandfathered individual and small 

group health insurance coverage. As we 

consider policy changes related to 

implementing the new PHS Act 

requirements added by the No Surprises 

Act, we will be able to consult the 

enrollee-level EDGE data. 

We also acknowledge stakeholders’ 

concerns about the reliability and 

quality of these newly collected data 

elements. As detailed elsewhere in this 

rule, we will ensure that data quality 

and reliability checks are consistent 

with other data standard checks that 

HHS performs. Additionally, we will 

ensure that the response rate with 

respect to the submission of race, 

ethnicity, and ICHRA indicator data is 

adequate to support any analytical 

conclusions that could inform policy 

decisions. 

Comment: Most commenters generally 

supported HHS pursuing efforts to 

improve more consistent collection and 

use of z codes by providers, with several 

of these commenters stating that using 

z codes in the HHS-operated risk 

adjustment program may incentivize 

more consistent use of z codes by 

providers. Some commenters also 

provided specific policies for HHS to 

consider to encourage increased and 

consistent use of z codes, including 

focusing on increased outreach to 

providers to improve provider 

awareness of coding guidelines for z 

codes, working to develop a uniform 

data collection approach and 

standardized definitions to support 

consistent z code use, developing 

electronic health records certification 

standards for capturing z codes, and 

incorporating reporting metrics for z 

codes into value-based programs. 

Some commenters explained that 

because z codes are immature as a 

clinical tool and can be subjective in 

nature, HHS should first focus on steps 

to ensure z codes accurately reflect 

SDOH before pursuing other policies. 

One commenter stated that using z 

codes in the HHS-operated risk 

adjustment program without substantial 

preparation could widen existing gaps 

in recognized coding standards, and 

HHS should instead focus on promoting 

consistent and comprehensive 

diagnostic reporting using these 

recognized coding standards. Similarly, 

one commenter recommended that HHS 

increase awareness to encourage more 

consistent use of z codes by providers 

and revise z codes to ensure proper 

documentation of significant 

socioeconomic barriers to health before 

considering incorporating z codes into 

the risk adjustment program. Other 

commenters explained that requiring 

providers to use z codes would create 

additional administrative burden and 

thus providers should not be penalized 

for not using z codes. 

Response: Given that we only 

solicited comments on how to 

encourage the use of z codes and did not 

propose specific policies in this area, we 

are not finalizing any specific policies 

related to the collection and extraction 

of z codes at this time. We appreciate 

the feedback and will continue to 

review and consider the public 

comments related to the collection and 

extraction of z codes to support the 

operation of the HHS-operated risk 

adjustment program. 

Comment: Several commenters 

suggested that HHS consider collecting 

and extracting sexual orientation, 

gender identity, and additional 

diagnosis codes related to obesity to 

support the operation of the HHSoperated risk adjustment program. One 

of these commenters also suggested 

HHS collect and extract data related to 

nutritional deficiencies and excess 

alcohol use. Another commenter 

suggested HHS collect and extract 

disability and veteran status, as selfreported by enrollees. 

Response: We appreciate these 

comments but did not propose and are 

not finalizing the collection or 

extraction of the additional data 

elements suggested by these 

commenters at this time. We may 

consider the additional data elements 

presented by these commenters for 

future benefit years and generally note 

that we would want to research whether 

there are existing data sources for the 

information as part of the consideration 

of whether to propose changes the risk 

adjustment data collection requirements 

as suggested. We also note that the more 

severe manifestations of nutritional 

deficiencies (for example, HCC 023 

Protein-Calorie Malnutrition) and excess 

alcohol use (HCC 083 Alcohol Use with 

Psychotic Complications and HCC 084 

Alcohol Use Disorder, Moderate/Severe, 

or Alcohol Use with Specified NonPsychotic Complications) are among the 

current payment HCCs in the risk 

adjustment models.201

6. Risk Adjustment User Fee for 2023 

Benefit Year (§ 153.610(f)) 

HHS proposed a risk adjustment user 

fee for the 2023 benefit year of $0.22 

PMPM. Under § 153.310, if a State is not 

approved to operate, or chooses to forgo 

operating, its own risk adjustment 

program, HHS will operate risk 

adjustment on its behalf.202 As 

described in the 2014 Payment Notice, 

HHS’ operation of risk adjustment on 

behalf of States is funded through a risk 

adjustment user fee.203 Section 

153.610(f)(2) provides that, where HHS 

operates a risk adjustment program on 

behalf of a State, an issuer of a risk 

adjustment covered plan must remit a 

user fee to HHS equal to the product of 

its monthly billable member enrollment 

in the plan and the PMPM risk 

adjustment user fee specified in the 

annual HHS notice of benefit and 

payment parameters for the applicable 

benefit year. 

OMB Circular No. A–25 established 

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 

HHS-operated risk adjustment program 

provides special benefits as defined in 

section 6(a)(1)(B) of Circular No. A–25 

to issuers of risk adjustment covered 

plans because it mitigates the financial 

instability associated with potential 

adverse risk selection. 

For the 2023 benefit year, HHS 

proposed to use the same methodology 

to estimate our administrative expenses 

to operate the risk adjustment program 

as used for the 2022 benefit year. To 

calculate the user fee, we divided HHS’ 

projected total costs for administering 


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204The high-cost risk pool calculations under the 

HHS risk adjustment methodology involve two 

national risk pools—one for the individual market 

(including catastrophic and non-catastrophic plans, 

and merged market plans), and another for the 

small group market. See, for example, 81 FR 94080 

through 94082. 

205See 81 FR 94058, 94081. See also 84 FR 17454, 

17467 (We are finalizing the $1 million threshold 

and 60 percent coinsurance rate for 2020 benefit 

year and beyond without requiring notice and 

comment on the high-cost risk pool thresholds each 

year.). We did not propose changes to the high-cost 

risk pool parameters for the 2023 benefit year and 

therefore will maintain the $1 million threshold 

and 60 percent coinsurance rate. 

206For a visual illustration of the high-cost risk 

pool terms and factors, see 86 FR 24184 through 

24185. 

207HHS has operated the risk adjustment program 

in all 50 states and the District of Columbia since 

the 2017 benefit year. 

the risk adjustment program on behalf of 

States by the expected number of 

billable member months in risk 

adjustment covered plans in States 

where the HHS-operated risk 

adjustment program will apply in the 

2023 benefit year. 

We estimated that the total cost for 

HHS to operate the risk adjustment 

program on behalf of States for the 2023 

benefit year will be approximately $60 

million. We projected a small increase 

in billable member months in the 

individual and small group (including 

merged) markets overall in the 2023 

benefit year based on the enrollment 

increases observed between the 2019 

and 2020 benefit years (prior to 

implementation of the ARP in 2021). As 

such, we proposed the 2023 benefit year 

risk adjustment user fee rate as $0.22 

PMPM. We sought comment on the 

proposed risk adjustment user fee for 

the 2023 benefit year. 

After consideration of comments, we 

are finalizing the 2023 benefit year risk 

adjustment user fee as proposed. 

We summarize and respond to public 

comments received on the 2023 risk 

adjustment user fee below. 

Comment: We received several 

comments in support of the 2023 risk 

adjustment user fee rate. 

Response: We appreciate the support 

and are finalizing, as proposed, a risk 

adjustment user fee rate for the 2023 

benefit year of $0.22 PMPM. 

7. Compliance With Risk Adjustment 

Standards; High-Cost Risk Pool Funds— 

Audits of Issuers of Risk Adjustment 

Covered Plans (§ 153.620(c)) 

In the proposed rule (87 FR 633), HHS 

proposed that whenever HHS recoups 

high-cost risk pool funds as a result of 

audits of risk adjustment covered plans 

under § 153.620(c)(5)(ii), the high-cost 

risk pool funds recouped from an issuer 

in an applicable national high-cost risk 

pool 204 would be used to reduce highcost risk pool charges for that national 

high-cost risk pool beginning for the 

current benefit year, if high-cost risk 

pool payments have not already been 

calculated for that benefit year. If highcost risk pool payments have already 

been calculated for the current benefit 

year, we proposed to use the recouped 

high-cost risk pool funds to reduce the 

next applicable benefit year’s high-cost 

risk pool charges for all issuers owing 

high-cost risk pool charges for that 

national high-cost risk pool. 

Notwithstanding any reduction to a 

national high-cost risk pool’s charges for 

a given benefit year, this policy would 

not impact the amount of high-cost risk 

pool payments made to eligible issuers, 

because the reduction in charges is due 

to the recoupment of funds as the result 

of an audit of a prior benefit year rather 

than a change in payments for the given 

benefit year. In addition, the high-cost 

risk pool charges and payments would 

continue to be calculated in accordance 

with the established policies, terms and 

factors.205 206

We also clarified that when HHS 

recoups high-cost risk pool funds as a 

result of an audit, the issuer subject to 

the audit would then be responsible for 

reporting that adjustment to its highcost risk pool payments or charges in 

the next MLR reporting cycle consistent 

with the applicable instructions in 

§ 153.710(h). Additionally, for any 

benefit year in which high-cost risk pool 

charges are reduced as a result of 

recouped audit funds, issuers whose 

charge amounts are reduced would 

report the high-cost risk pool charges 

paid for that benefit year net of 

recouped audit funds in the next MLR 

reporting cycle consistent with 

§ 153.710(h). 

We also proposed that any high-cost 

risk pool funds recouped as a result of 

an actionable discrepancy or successful 

administrative appeal filed pursuant to 

§§ 153.710(d) and 156.1220, 

respectively, would be treated the same 

way, that is, any high-cost risk pool 

funds recouped based on an actionable 

discrepancy or successful appeal would 

be used to reduce high-cost risk pool 

charges for that national high-cost risk 

pool for the next benefit year for which 

high-cost risk pool payments have not 

already been calculated. Additionally, 

issuers would similarly be responsible 

for reporting any high-cost risk pool 

related adjustments that result from the 

recoupment of funds due to an 

actionable discrepancy or successful 

administrative appeal in the next MLR 

reporting cycle consistent with 

§ 153.710(h). 

We sought comment on these 

proposals. 

After review of the comments 

received, we are finalizing these policies 

as proposed. 

We summarize and respond to public 

comments received on these proposals 

below. 

Comment: Commenters expressed 

general support for these proposals. 

Response: After consideration of the 

relevant comments, we are finalizing, as 

proposed, the policies related to 

disbursement of high-cost risk pool 

funds recouped as a result of audits of 

risk adjustment covered plans under 

§ 153.620(c), actionable high-cost risk 

pool-related discrepancies filed 

pursuant to § 153.710(d), and successful 

high-cost risk pool administrative 

appeals filed pursuant to § 156.1220. 

8. Risk Adjustment Data Validation 

Requirements When HHS Operates Risk 

Adjustment (HHS–RADV) (§§ 153.350 

and 153.630) 

To ensure the integrity of the HHSoperated risk adjustment program, HHS 

conducts risk adjustment data 

validation (HHS–RADV) under 

§§ 153.350 and 153.630 in any State 

where HHS is operating risk adjustment 

on a State’s behalf.207

In the proposed rule, we proposed 

refinements to the HHS–RADV error 

rate calculation methodology beginning 

with the 2021 benefit year and beyond 

to: (1) Extend the application of Super 

HCCs to also apply to coefficient 

estimation groups throughout the HHS– 

RADV error rate calculation processes; 

(2) specify that the Super HCC will be 

defined separately according to the age 

group model to which an enrollee is 

subject; and (3) constrain to zero any 

outlier negative failure rate in a failure 

rate group, regardless of whether the 

outlier issuer has a negative or positive 

error rate (87 FR 634 through 639). 

We continue to believe these 

proposals will better align the 

calculation and application of error 

rates with the intent of the HHS–RADV 

program, thereby enhancing the 

integrity of HHS–RADV and the HHSoperated risk adjustment program. 

We received some comments on 

HHS–RADV generally that were 

unrelated to any proposal in the 

proposed rule. As these comments are 

outside of the scope of this rulemaking, 

we will not address them at this time. 

We further describe the proposed 

refinements, as well as summarize and 

respond to comments on the proposals, 

in the sections that follow. 


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208 It is rare for an enrollee to have two HCCs in 

the same coefficient estimation group that are not 

also in a hierarchical relationship. This situation 

occurred in no more than 0.1 percent of enrollees 

sampled for 2017 and 2018 HHS–RADV. 

209Under the outlier identification policy 

finalized in the 2021 Payment Notice, data from an 

issuer who has fewer than 30 HCCs in a failure rate 

group is included in the calculation of national 

metrics for that failure rate group, including the 

national mean failure rate, standard deviation, and 

upper and lower confidence interval bounds. 

However, the issuer does not have its risk score 

adjusted for that group, even if the magnitude of its 

failure rate appeared to otherwise be very large 

relative to other issuers. In addition, we clarified 

that this issuer may be considered an outlier in 

other failure rate groups in which it has 30 or more 

HCCs. 

a. Coefficient Estimation Groups in 

Error Estimation 

First, we proposed to modify our 

process for grouping coefficient 

estimation groups in error estimation. In 

the 2020 HHS–RADV Amendments Rule 

(85 FR 76984 through 76989), we 

finalized a policy to ensure that HCCs 

that share a coefficient estimation group 

used in the risk adjustment models are 

sorted into the same failure rate groups 

by first aggregating any HCCs that share 

a coefficient estimation group into 

Super HCCs before applying the HHS– 

RADV failure rate group sorting 

algorithm. Since implementing the 

Super HCC policy, we found there are 

rare occasions where there is a minor 

misalignment between the calculation of 

risk adjustment PLRS values and HHS– 

RADV error estimation. To address 

these rare situations,208 we proposed to 

extend the Super HCC policy finalized 

in the 2020 HHS–RADV Amendments 

Rule, such that HHS will apply the 

coefficient estimation group logic as 

expressed in the applicable benefit 

year’s DIY software throughout HHS– 

RADV error estimation, rather than just 

at the sorting step that assigns HCCs to 

failure rate groups, beginning with the 

2021 benefit year of HHS–RADV. This 

change would mean that an issuer 

would only need to validate one HCC in 

a coefficient estimation group to avoid 

further impacting an adjustment to an 

enrollee’s risk score in HHS–RADV, 

aligning with how an enrollee’s risk 

score would be calculated under the 

State payment transfer formula. 

We also explained in the proposed 

rule that this update to the Super HCC 

policy would necessitate a change to the 

policy finalized in the 2021 Payment 

Notice (85 FR 29196 through 29198), 

which amended the outlier 

identification process to not consider an 

issuer as an outlier in any failure rate 

group in which that issuer has fewer 

than 30 HCCs.209

The 2021 Payment Notice policy was 

developed when individual HCCs were 

the unit of analysis for calculating 

failure rates. However, the proposed 

policy in this rule to de-duplicate 

coefficient estimation groups in HHS– 

RADV would alter the unit of analysis 

of failure rates to be de-duplicated 

Super HCCs, rather than individual 

HCCs. Although the unit of analysis 

would have changed, the underlying 

issue with sample size in the outlier 

identification process would remain the 

same. As such, we proposed to generally 

maintain the outlier identification 

approach adopted in the 2021 Payment 

Notice and proposed to not consider an 

issuer as an outlier in any failure rate 

group in which that issuer has fewer 

than 30 de-duplicated EDGE Super 

HCCs (which would include, as 

proposed below, maturity-severity 

factors for infant enrollees) beginning 

with 2021 benefit year HHS–RADV. 

Consistent with the policies adopted in 

the 2021 Payment Notice (85 FR 29196 

through 29198), we also proposed to 

continue to include data from an issuer 

who has fewer than 30 de-duplicated 

EDGE Super HCCs in a failure rate 

group in the calculation of national 

metrics for that failure rate group, 

including the national mean failure rate, 

standard deviation, and upper and 

lower confidence interval bounds. 

However, the issuer would not have its 

risk score adjusted for that group, even 

if the magnitude of its failure rate 

appeared to otherwise be very large 

relative to other issuers. In addition, we 

clarified that under this proposal this 

issuer may be considered an outlier in 

other failure rate groups in which it has 

30 or more de-duplicated EDGE Super 

HCCs. 

We sought comment on these 

proposals and whether HCCs in 

coefficient estimation groups should be 

de-duplicated before they are sorted into 

failure rate groups and in all subsequent 

stages of HHS–RADV error estimation. 

After reviewing the public comments, 

we are finalizing the proposal to extend 

the application of Super HCCs to apply 

coefficient estimation groups 

throughout the HHS–RADV error rate 

calculation methodology as proposed. 

Additionally, as proposed, we are 

finalizing the policy to not consider an 

issuer as an outlier in any failure rate 

group in which that issuer has fewer 

than 30 de-duplicated EDGE Super 

HCCs. However, we will continue to 

include data from an issuer who has 

fewer than 30 de-duplicated EDGE 

Super HCCs in a failure rate group in 

the calculation of national metrics for 

that failure rate group. Issuers with 

fewer than 30 de-duplicated EDGE 

Super HCCs in a failure rate group may 

still be considered an outlier in other 

failure rate groups in which they have 

30 or more de-duplicated EDGE Super 

HCCs. 

We summarize and respond to public 

comments received on the coefficient 

estimation groups in error estimation 

proposal below. 

Comment: Several commenters 

supported the proposal to extend the 

application of Super HCCs to apply 

coefficient estimation groups 

throughout the error rate calculation 

process. A few of these commenters 

asserted that this change better aligns 

the error rate calculation with the intent 

of the HHS–RADV program and will 

enhance the integrity of HHS–RADV. 

Another commenter asserted this 

change will contribute to market 

stability and improve predictability. 

Response: We are finalizing this 

methodological change and the 

accompanying policies as proposed. 

HHS agrees that these changes will 

contribute to market stability and 

improve issuers’ ability to predict HHS– 

RADV adjustments. More specifically, 

extending the application of Super 

HCCs to apply coefficient estimation 

groups through the error rate calculation 

process better ensures that an issuer 

only needs to validate one HCC in a 

coefficient estimation group to avoid 

further impacting an adjustment to an 

enrollee’s risk score in HHS–RADV and 

aligns the HHS–RADV methodology 

with the enrollee risk score calculation 

under the State payment transfer 

formula. 

Comment: One commenter requested 

more information about the prevalence 

of enrollees that have multiple 

diagnoses in a Super HCC Group. 

Response: As described in the 

proposed rule, the majority of HCCs in 

a Super HCC are in the same hierarchy, 

but in rare instances an individual 

enrollee may be recorded as having 

multiple conditions in a coefficient 

estimation group for HHS–RADV. 

Specifically, only 0.07 percent of 

enrollees sampled for HHS–RADV in 

2018 had multiple HCCs recorded on 

EDGE that shared a coefficient 

estimation group but did not share an 

HCC hierarchy. 

b. Defining Super HCCs Separately for 

Adults, Children, and Infants 

In conjunction with the proposal to 

modify the application of coefficient 

estimation groups in section III.C.8.a. of 

this final rule, we also proposed to 

modify the Super HCC policy to apply 

coefficient estimation groups to 

enrollees according to the risk 

adjustment model to which they are 

subject. Under the current Super HCC 

policy finalized in the 2020 HHS–RADV 


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210The January 7, 2022 version of the DIY 

software is available at 2021 Benefit Year Risk 

Adjustment Updated HHS-Developed Risk 

Adjustment Model Algorithm ‘‘Do It Yourself (DIY)’’ 

Software. (2022). CMS. 

Amendments Rule (85 FR 76987), 

coefficient estimation group logic from 

the adult models is applied to all 

enrollees, including those subject to the 

child and infant models. For a full 

description of the current and proposed 

Super HCC policies see the proposed 

rule (87 FR 635 through 639). In the 

proposed rule, we proposed to define 

Super HCCs based on each age group’s 

model factor definitions separately, 

except for where child and adult 

coefficient estimation groups have 

identical definitions. These definitions 

are described in the relevant rows in the 

applicable benefit year’s DIY software 

adult variable logic, child variable logic 

and infant variable logic. For example, 

for 2021 HHS–RADV, in the 2021 

Benefit Year DIY Software,210 the adult 

coefficient group definitions are in the 

‘‘HCC group’’ rows in Table 6: 

Additional Adult Variables, the child 

coefficient group definitions are in the 

‘‘HCC group’’ rows in Table 7: 

Additional Child Variables, and the 

infant coefficient group definitions are 

in the ‘‘Severity level’’, ‘‘Maturity 

level’’, ‘‘Assign as IHCC AGE1 if 

needed’’, ‘‘Impose hierarchy’’, and 

‘‘Maturity x severity level interactions’’ 

rows in Table 8: Additional Infant 

Variables. 

These relevant rows of the applicable 

benefit year’s DIY software tables would 

be applied such that each instance of a 

Super HCC is only counted once per 

enrollee, even if that enrollee has 

multiple HCCs in that Super HCC. 

Furthermore, any payment HCCs that 

are not modified by the DIY software 

table logic rows referenced above would 

be treated as individual Super HCCs, 

such that all Super HCCs are aligned 

with how their component HCCs are 

treated in the risk adjustment models for 

the applicable benefit year. We 

proposed to apply this change beginning 

with the 2021 benefit year of HHS– 

RADV. 

We sought comment on these 

proposals and whether Super HCCs 

should continue to be defined for all 

enrollees based on only the adult 

models, should be defined for adult 

enrollees based on the adult models and 

for child and infant enrollees based on 

the child models, or should be defined 

for each age group according to the age 

group risk adjustment model to which 

they are subject, as proposed. 

After reviewing the public comments, 

we are finalizing the proposal to define 

Super HCCs based on each age group’s 

model factor definitions separately, 

except for where child and adult 

coefficient estimation groups have 

identical definitions, as proposed. 

We summarize and respond to public 

comments received on defining Super 

HCCs separately for adults, children, 

and infants below. 

Comment: Several commenters 

supported the proposal to define Super 

HCCs for each age group according to 

the age group risk adjustment model to 

which they are subject as this change 

better aligns the error rate calculation 

with the intent of the HHS–RADV 

program and will enhance the integrity 

of HHS–RADV. A few commenters 

opposed defining Super HCCs 

separately for adults, children and 

infants and expressed concerns with the 

volatility of the HHS–RADV 

methodology. One of these commenters 

stated that this change would add more 

complexity to predicting failure rate 

groups without providing significant 

benefit. Another commenter opposed to 

this proposal stated that an increase in 

the number of factors used in sorting, 

compounded by relatively small sample 

sizes, would lead to greater volatility 

and higher premiums and that 

separating child conditions from adult 

conditions when defining Super HCCs 

would create more volatility for 

conditions that are potentially more 

similar to each other than conditions 

that are grouped together in other Super 

HCCs. 

Response: We appreciate the support 

for these proposals and are finalizing 

the changes to define Super HCCs for 

each age group according to the age 

group risk adjustment model to which 

they are subject beginning with the 2021 

benefit year of HHS–RADV, as 

proposed. When we established the 

current Super HCC grouping policy, we 

acknowledged the possibility of 

defining Super HCCs based on each 

model separately; however, we 

proposed and finalized Super HCCs 

based on only the adult models for a 

number of different reasons. These 

included concerns that using the child 

and infant models separately could lead 

to less stable failure rate group 

assignments year-over-year due to some 

infant model Super HCCs with very 

small sample sizes and recognition of 

the fact that the adult models’ HCC 

coefficient estimation groups would be 

applicable to the vast majority of 

enrollees (including most children, 

considering the strong overlap between 

the structure of the adult and child 

models). We also believed that the use 

of the HCC coefficient estimation groups 

present in the adult models sufficiently 

balanced the representativeness and 

accuracy of HCC failure rate estimates 

across the entire population in 

aggregate. 

However, in recognition of the 

differences in each age group model’s 

definitions and due to the updates to 

HCC hierarchies used in the risk 

adjustment models beginning with the 

2021 benefit year, we continued to 

consider these issues as we gained more 

experience with operating HHS–RADV 

and had access to additional years of 

HHS–RADV data to analyze. Based on 

the results of the further analysis, we do 

not believe that defining Super HCCs 

separately for adults, children and 

infants, except for where child and 

adult coefficient estimation groups have 

identical definitions, will increase 

volatility. Rather, as described in the 

proposed rule, our simulated analysis 

found evidence that this methodological 

change would increase model stability. 

The analysis found that 93.2 percent of 

factors would remain in the same failure 

rate group across subsequent benefit 

years, which contrasts with the 91.4 

percent of factors that we would expect 

to remain stable between subsequent 

years if Super HCCs were only based on 

the definitions in the adult models. This 

minor improvement to stability in 

failure rate groupings may reduce 

uncertainties issuers face when 

modeling pricing, and thus is unlikely 

to have a negative impact on premiums, 

contrary to the concerns voiced by the 

commenter that the proposed 

refinement to the definition of Super 

HCCs will lead to greater volatility and 

higher premiums increase. Moreover, 

under the policy we are finalizing in 

this rule, beginning with the 2021 

benefit year of HHS–RADV, Super HCCs 

will only be defined separately in cases 

where the child and adult coefficient 

estimation groups do not have identical 

definitions. This limits the number of 

cases in which the child and adult 

models diverge, thereby further limiting 

the volatility in the HHS–RADV 

methodology. Therefore, we generally 

disagree that the adoption of this 

methodological update and 

accompanying policies would add more 

complexity without providing 

significant benefit. Instead, we believe 

this is an appropriate refinement to the 

HHS–RADV methodology and error 

estimation process based on our 

experience operating the program and 

analysis of additional years of available 

data. 

c. Negative Failure Rate Constraint 

In the 2020 HHS–RADV Amendments 

Rule (85 FR 76994 through 76998), we 

finalized a policy to constrain outlier 

issuers’ error rate calculations to zero in 


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cases when an issuer is a negative error 

rate outlier and its failure rate is 

negative, beginning with 2019 benefit 

year HHS–RADV. We finalized this 

policy to distinguish between low 

failure rates due to accurate data 

submission and failure rates that have 

been depressed through the presence of 

HCCs in the audit data that were not 

present in the EDGE data. If a negative 

failure rate is due to a large number of 

found HCCs, it does not reflect accurate 

reporting through the EDGE server for 

risk adjustment. 

In the proposed rule, we proposed 

modifying the application of that policy 

beginning with the 2021 benefit year of 

HHS–RADV to constrain to zero the 

failure rate of any issuer who is a 

negative failure rate outlier in a failure 

rate group, regardless of whether the 

outlier issuer has a negative or positive 

error rate. To address cases where a 

positive error rate outlier issuer has a 

negative failure rate in one failure rate 

group and a positive failure rate in 

another failure rate group, we proposed 

to amend the application of the negative 

failure rate constraint policy such that, 

for the purposes of calculating the group 

adjustment factor (GAF), we would 

constrain to zero the failure rate of any 

failure rate group in which an issuer is 

a negative failure rate outlier, regardless 

of whether the outlier issuer has an 

overall negative or positive error rate. 

We proposed to adopt this policy 

beginning with the 2021 benefit year 

HHS–RADV. 

We sought comment on this proposal. 

After reviewing the public comments, 

we are finalizing the negative failure 

rate constraint policy, as proposed. 

We summarize and respond to public 

comments received on the negative 

failure rate constraint policy below. 

Comment: All commenters supported 

this proposal to constrain to zero the 

failure rate of any issuer who is a 

negative failure rate outlier in a failure 

rate group, regardless of whether the 

outlier issuer has a negative or positive 

error rate. Some of these commenters 

asserted that this modification of the 

negative failure rate constraint better 

aligns the error rate calculation with the 

intent of the HHS–RADV program and 

will enhance the integrity of HHS– 

RADV. 

Response: We appreciate these 

comments and are finalizing the 

negative failure rate constraint policy as 

proposed and will apply it beginning 

with the 2021 benefit year of HHS– 

RADV. Although our experience to date 

leads us to believe that this scenario is 

unlikely to occur often, we agree this 

refinement is consistent with the intent 

of the HHS–RADV program and will 

enhance the integrity of HHS–RADV by 

further reducing potential incentives for 

issuers to use HHS–RADV to identify 

more HCCs than were reported to their 

EDGE servers for an applicable benefit 

year. 

Comment: One commenter who 

supported the proposed policy stated 

that this change will address instability 

caused by negative error rates. This 

commenter also suggested it would help 

issuers understand the implications of 

the policy if HHS provided data to 

demonstrate the impact of extending the 

negative failure rate constraint from 

negative error rate outlier issuers to all 

outlier issuers, regardless of whether the 

outlier issuer has a negative or positive 

error rate. 

Response: As explained in the 

proposed rule (87 FR 638), we believe 

this is an appropriate modification of 

the policy adopted in the 2020 HHS– 

RADV Amendments Rule to distinguish 

between low failure rates due to 

accurate data submission and failure 

rates that have been depressed through 

the presence of HCCs in the audit data 

that were not present in the EDGE data. 

If a negative failure rate is due to a large 

number of found HCCs, it does not 

reflect accurate reporting through the 

EDGE server for risk adjustment. It is 

rare, but possible, for a positive error 

rate outlier to have a negative failure 

rate in one failure rate group and a 

positive failure rate in another failure 

rate group. Specifically, across 2017, 

2018 and 2019 HHS–RADV, there was 

only one instance in which an issuer 

had a negative failure rate in a failure 

rate group for which that issuer was an 

outlier, but had a total error rate that 

was positive. Despite the relative rarity 

of these cases, we continue to believe 

that this is an appropriate modification 

of the policy adopted in the 2020 HHS– 

RADV Amendments Rule. Therefore, to 

address these types of cases in future 

years of HHS–RADV, we are finalizing, 

as proposed, the amendment to the 

application of the negative failure rate 

constraint policy. Beginning with the 

2021 benefit year of HHS–RADV, for the 

purposes of calculating the GAF, we 

will constrain to zero the failure rate of 

any failure rate group in which an issuer 

is a negative failure rate outlier, 

regardless of whether the outlier issuer 

has an overall negative or positive error 

rate. 

9. Disbursement of Recouped High-Cost 

Risk Pool Funds—Discrepancies of 

Issuers of Risk Adjustment Covered 

Plans (§ 153.710(d)) 

HHS proposed that any funds 

recouped as a result of an actionable 

high-cost risk pool-related discrepancy 

under § 153.710(d) would be used to 

reduce high cost-risk pool charges for 

that national high-cost risk pool for the 

current benefit year if high-cost risk 

pool payments have not already been 

calculated for that benefit year. If highcost risk pool payments have already 

been calculated for that benefit year, we 

proposed to use the high-cost risk pool 

funds recouped based on an actionable 

discrepancy to reduce the next 

applicable benefit year’s high-cost risk 

pool charges for all issuers owing highcost risk pool charges for that national 

high-cost risk pool. As elsewhere 

discussed in this preamble, we also 

proposed similar disbursement policies 

for high-cost risk pool funds HHS 

recoups as a result of audits of risk 

adjustment covered plans under 

§ 153.620(c)(5)(ii) and successful 

administrative appeals under 

§ 156.1220(a)(1)(ii). We also clarified 

that when HHS recoups high-cost risk 

pool funds as a result of an actionable 

discrepancy, the issuer that filed the 

discrepancy would then be responsible 

for reporting that adjustment to its highcost risk pool payments or charges in 

the next MLR reporting cycle consistent 

with the applicable instructions in 

§ 153.710(h). Additionally, for any 

benefit year in which high-cost risk pool 

charges are reduced as a result of highcost risk pool funds recouped as a result 

of an actionable discrepancy, issuers 

whose charge amounts are reduced 

would be required to report the highcost risk pool charges paid for that 

benefit year net of recouped funds as a 

result of an actionable discrepancy in 

the next MLR reporting cycle consistent 

with § 153.710(h). We sought comment 

on these proposals. 

After consideration of the relevant 

comments, we are finalizing these 

policies as proposed. 

We summarize and respond to public 

comments received on these proposals 

below. 

Comment: We received several 

comments expressing general support 

for these proposals. 

Response: We are finalizing, as 

proposed, the policies related to 

disbursement of high-cost risk pool 

funds recouped as a result of audits of 

risk adjustment covered plans under 

§ 153.620(c), actionable high-cost risk 

pool-related discrepancies filed 

pursuant to § 153.710(d), and successful 

high-cost risk pool administrative 

appeals filed pursuant to § 156.1220. 

10. Medical Loss Ratio Reporting 

Requirements (§ 153.710(h)) 

In the proposed rule (87 FR 639), we 

explained that HHS established a 

framework in prior rulemakings to guide 


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211See 45 CFR 153.710(h). 

212These instructions were previously codified in 

45 CFR 153.710(g) and recently redesignated to 45 

CFR 153.710(h). See 79 FR 13789 through 13790 

and 86 FR 24194 through 24195. 

213For example, the 2022 benefit year HHS– 

RADV Summary Report for non-exiting issuers will 

be published in summer of 2024 and those issuers 

would be expected to report those amounts in their 

2023 MLR Reports (filed by July 31, 2024). 

214See, for example, Treatment of Risk Corridors 

Recovery Payments in the Medical Loss Ratio and 

Rebate Calculations. (2020, December 30). CMS. 

https://www.cms.gov/files/document/mlr-guidancerc-recoveries-and-mlr-final.pdf. 

215This editorial revision in no way changes or 

otherwise affects the requirements under the 

proposed text and more clearly and consistently 

captures that HHS expects issuers to report HHS– 

RADV adjustments as part of their MLR reports in 

the same manner as they report risk adjustment 

payment and charge amounts. 

issuer treatment of certain payments 

and charges that could be subject to 

reconsideration for purposes of risk 

corridors and MLR reporting.211 For 

example, because risk adjustment 

transfer amounts are factors in an 

issuer’s MLR calculations, a delay in 

final risk adjustment payments and 

charges, including HHS–RADV 

adjustments to transfers, could make it 

difficult for issuers to comply with 

reporting requirements under the MLR 

program. A delay in final risk 

adjustment transfer amounts could 

occur due to audits, actionable 

discrepancies, or successful appeals. 

Therefore, we clarified in 

§ 153.710(h) 212 how issuers should 

report certain ACA program amounts 

that could be subject to reconsideration 

for risk corridors and MLR reporting 

purposes. 

In the proposed rule, we proposed to 

amend the introductory sentence in 

§ 153.710(h)(1) and to add a proposed 

new paragraph (h)(1)(v) to separately 

address and explicitly capture a 

reference to HHS–RADV adjustments to 

make clear that HHS expects issuers to 

report HHS–RADV adjustments as part 

of their MLR reports in the same manner 

as they report risk adjustment payment 

and charge amounts (including highcost risk pool payments and charges). 

That is, notwithstanding any HHS– 

RADV discrepancy filed under 

§ 153.630(d)(2), or any HHS–RADV 

request for reconsideration under 

§ 156.1220(a)(1)(vii) and (viii), unless 

the dispute has been resolved, issuers 

must report, as applicable, the HHS– 

RADV adjustment to a risk adjustment 

payment or charge as calculated by HHS 

in the applicable benefit year’s 

Summary Report of Benefit Year Risk 

Adjustment Data Validation 

Adjustments to Risk Adjustment 

Transfers.213 We also proposed to add a 

reference to HHS–RADV discrepancies 

under § 153.630(d)(2) to the 

introductory sentence in § 153.710(h)(1). 

We also proposed conforming 

amendments to paragraph (h)(2) to add 

a reference to HHS–RADV adjustments 

to address situations where there could 

be subsequent changes to HHS–RADV 

adjustments calculated by HHS in the 

applicable benefit year’s HHS–RADV 

Summary Report of Benefit Year Risk 

Adjustment Data Validation 

Adjustments to Risk Adjustment 

Transfers, such as modifications 

resulting from an actionable 

discrepancy or successful appeal. In 

these situations, an issuer would be 

required to report during the current 

MLR reporting year any adjustment to 

an HHS–RADV adjustment made or 

approved by HHS before August 15, or 

the next applicable business day, of the 

current reporting year unless otherwise 

instructed by HHS. Issuers would be 

required to report any adjustment to an 

HHS–RADV adjustment made or 

approved by HHS where such 

adjustment has not been accounted for 

in a prior MLR Reporting Form, in the 

following reporting year. 

Recognizing that flexibility is often 

needed in reporting these amounts on 

MLR forms, consistent with existing 

framework in § 153.710(h)(3), HHS 

would have the ability to modify these 

instructions in guidance in cases where 

HHS reasonably determines that these 

reporting instructions would lead to 

unfair or misleading financial reporting. 

Our intent in issuing any such guidance 

would be to avoid having the 

application of the instructions in 

exceptional circumstances lead to unfair 

or misleading financial reporting.214

Finally, we proposed a technical 

amendment to § 153.710(h)(3) to replace 

the current cross-reference to paragraph 

(g)(1) and (2) of this section with a 

reference to paragraph (h)(1) and (2) of 

this section to point to the correct 

sections that contain the relevant 

reporting instructions. We inadvertently 

omitted this update as part of the 

amendments in the 2022 Payment 

Notice (85 FR 786 through 78605 and 86 

FR 24194 through 24195) to incorporate 

an EDGE materiality threshold as part of 

§ 153.710 that redesignated the risk 

corridors and MLR reporting 

instructions provisions from paragraph 

(g) to paragraph (h). 

We sought comments on these 

proposals. 

After reviewing the public comments, 

we are finalizing the proposed 

amendments to § 153.710(h) to make 

clear that HHS expects issuers to report 

HHS–RADV adjustments as part of their 

MLR reports in the same manner as they 

report risk adjustment payment and 

charge amounts (including high-cost 

risk pool payments and charges). For 

greater clarity, the regulation text we 

adopt in this final rule at § 153.710(h)(2) 

contains a non-substantive change to 

also include a reference to HHS–RADV 

adjustments in the second sentence to 

align with the addition of the same 

reference in the first sentence.215 We are 

also finalizing the technical correction 

to § 153.710(h)(3) to point to the correct 

sections that contain the relevant 

reporting instructions. 

We summarize and respond to public 

comments received on proposed 

medical loss ratio (MLR) reporting 

requirements (§ 153.710(h)) and policies 

below. 

Comment: One commenter supported 

the proposal to amend § 153.710(h) to 

make clear that HHS expects issuers to 

report HHS–RADV adjustments as part 

of their MLR reports in the same manner 

as they report risk adjustment payment 

and charge amounts (including highcost risk pool payments and charges). 

We received two comments on the MLR 

reporting cycle and its interaction with 

the risk adjustment payment and charge 

timing, including a suggestion that HHS 

consider changing the deadline for 

reporting during the current MLR 

reporting year any adjustment 

(including HHS–RADV adjustments) 

made or approved by HHS before 

August 15, or the next applicable 

business day, to June 30 to avoid 

creating the need for issuers to refile 

MLR reports after the July 31 deadline 

to account for these adjustments. 

Response: We appreciate these 

comments and are finalizing the 

amendments, as proposed, to address 

and explicitly capture a reference to 

HHS–RADV adjustments. The changes 

to the regulation make clear and codify 

HHS’ expectation that issuers report 

HHS–RADV adjustments as part of their 

MLR reports in the same manner as they 

report and with the same deadlines 

associated with the risk adjustment 

payment and charge amounts (including 

high-cost risk pool payments and 

charges) that were established in the 

2017 Payment Notice (81 FR 12236). 

As for the MLR reporting cycle, we 

continue to believe that the August 15 

date provides the necessary flexibility to 

account for adjustments to issuers’ MLR 

reports as a result of risk adjustment 

payment and charge amounts, including 

HHS–RADV adjustments. Therefore, we 

did not propose, and are not finalizing, 

changes to the existing reporting 

deadlines in § 153.710(h) as applied to 

HHS–RADV adjustments or other 

payments and charges that could be 


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27258 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

216See 45 CFR 153.610 and 153.710. Since the 

2017 benefit year, HHS has operated the risk 

adjustment program in all 50 states and the District 

of Columbia. 

217 Issuers of reinsurance-eligible plans in states 

where HHS-operated the reinsurance program were 

similarly required to submit the data necessary for 

HHS to calculate reinsurance payments. See, for 

example, 45 CFR 153.420 and 153.710. The 

reinsurance program under section 1341 of the ACA 

was a temporary program that applied to the 2014— 

2016 benefit years. The risk adjustment program 

under section 1343 of the ACA is a permanent 

program and therefore is the primary focus of this 

discussion. 

218See 81 FR 12204 at 12234 n.20; see also 

Evaluation of EDGE Data Submissions for 2016 

Benefit Year. (2016, December 23). CMS. https://

www.cms.gov/CCIIO/Resources/Regulations-andGuidance/Downloads/EDGE-2016-Q_Q-Guidance_

20161222v1.pdf. 

219Sec. 701 of the Bipartisan Budget Act of 2015, 

Public Law 114–74, which amended the Federal 

Civil Penalties Inflation Adjustment Act of 1990, 

Public Law 101–410, 104 Stat. 890 (1990) (codified 

as amended at 28 U.S.C.A. § 2461 note 2(a)). 

220See Department of Health and Human 

Services; Adjustment of Civil Monetary Penalties 

for Inflation; Interim Final Rule, 81 FR 61538 (2016, 

September 6). 

221See, for example, the Department of Health 

and Human Services; Annual Civil Monetary 

Penalties Inflation Adjustment; Final Rule, 85 FR 

2869 (2020, January 17). See also Department of 

Health and Human Services; Adjustment of Civil 

Monetary Penalties for Inflation and the Annual 

Civil Monetary Penalties Inflation Adjustment for 

2021, 86 FR 62928 (2021, November 15). 

222See the Department of Health and Human 

Services; Annual Civil Monetary Penalties Inflation 

Adjustment, 87 FR 15100 (2022, March 17). 

223While the citation in the preamble in the 

proposed rule referred to amendments to add new 

§ 155.220(c)(3)(i)(A)(1) through (c)(3)(i)(A)(5), the 

discussion of the proposal and the proposed 

regulations made clear that the proposal would add 

new § 155.220(c)(3)(i)(A)(1) through (c)(3)(i)(A)(6). 

See, for example, 87 FR 641– 642 and 721–722. 

subject to reconsideration for purposes 

of risk corridors and MLR reporting. 

11. Deadline for Submission of Data 

(§ 153.730) 

A risk adjustment covered plan must 

submit data that is necessary for HHS to 

calculate risk adjustment payments and 

charges to HHS in States where HHS is 

operating the risk adjustment 

program.216 217 In the 2014 Payment 

Notice (78 FR 15434), HHS established 

that the deadline for issuers to submit 

the required risk adjustment data is 

April 30 of the year following the 

applicable benefit year. 

In the proposed rule (87 FR 639 

through 640), we did not propose to 

change this deadline but proposed to 

amend § 153.730 to address situations 

when April 30 does not fall on a 

business day. Currently, when April 30 

falls on a non-business day, HHS 

exercises enforcement discretion to 

extend the deadline to the next 

applicable business day.218 Recognizing 

there will be future benefit years when 

April 30 does not fall on a business day, 

HHS proposed to amend § 153.730 to 

provide that when April 30 of the year 

following the applicable benefit year 

falls on a non-business day, the 

deadline for issuers to submit the 

required risk adjustment data would be 

the next applicable business day. We 

sought comments on this proposal. 

After consideration of the comment 

received, we are finalizing the 

amendment to § 153.730 as proposed. 

Comment: One commenter supported 

this proposal because this amendment 

would clarify expectations for when 

reporting must be completed. 

Response: We are finalizing the 

amendment to § 153.730 to clarify that 

when the April 30 following the 

applicable benefit year deadline for 

issuers to submit the required risk 

adjustment data falls on a non-business 

day, the deadline for issuers to submit 

the required risk adjustment. 

D. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

1. Non-Interference With Federal Law 

And Non-Discrimination Standards 

(§ 155.120(c)) 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 640), we proposed to 

amend 45 CFR 155.120(c) such that its 

nondiscrimination protections would 

explicitly prohibit discrimination based 

on sexual orientation and gender 

identity. As explained in the 

Supplementary Information section 

earlier in the preamble, HHS will 

address this policy, as well as the public 

comments submitted in response to this 

proposal, in future rulemaking. 

2. Civil Money Penalties for Violations 

of Applicable Exchange Standards by 

Consumer Assistance Entities in 

Federally-Facilitated Exchanges 

(§ 155.206) 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 640 through 641), we 

proposed to make a technical correction 

to 45 CFR 155.206(i) to add language 

that would cross-reference the authority 

to implement annual inflation-related 

increases to civil money penalties 

(CMPs) pursuant to the Federal Civil 

Penalties Inflation Adjustment Act 

Improvements Act of 2015 (2015 

Act).219 Because of an oversight, this 

language was not added to § 155.206(i) 

as part of prior efforts and rulemaking 

to implement the 2015 Act.220

Additionally, a reference to § 155.206 

and any accompanying adjusted CMP 

amounts have not been included in 

HHS’ annual inflation update 

rulemakings.221 Therefore, we proposed 

to amend § 155.206(i) to add the phrase 

‘‘as adjusted annually under 45 CFR 

part 102’’ after the phrase ‘‘$100 for 

each day’’ to correct this oversight. The 

associated CMP table in 45 CFR 102.3 is 

updated annually, and § 155.206(i) was 

added in the recent annual update.222

To date, no CMPs have been imposed 

under this authority, but any that are 

imposed will reflect the current 

inflationary adjusted amount as 

required by the 2015 Act and will be 

calculated in accordance with 

applicable OMB guidance to all 

Executive Departments on the 

implementation of the 2015 Act. 

We did not receive any comments in 

response to the proposed amendments 

to § 155.206(i) or the accompanying 

policies detailed in the related preamble 

discussion. For the reasons stated in the 

proposed rule, we are finalizing the 

proposed amendments to § 155.206(i). 

3. Ability of States To Permit Agents 

and Brokers and Web-Brokers To Assist 

Qualified Individuals, Qualified 

Employers, or Qualified Employees 

Enrolling in QHPs (§ 155.220) 

a. Required QHP Comparative 

Information on Web-Broker Websites 

and Related Disclaimer 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 641 through 643), we 

proposed to amend § 155.220(c)(3)(i)(A) 

to include, at proposed new 

§§ 155.220(c)(3)(i)(A)(1) through 

(c)(3)(i)(A)(6),223 a list of the QHP 

comparative information web-broker 

non-Exchange websites are required to 

display consistent with § 155.205(b)(1). 

We also proposed to revise the 

disclaimer requirement in 

§ 155.220(c)(3)(i)(A) so that web-broker 

non-Exchange websites would be 

required to prominently display a 

standardized disclaimer provided by 

HHS stating that enrollment support is 

available on the Exchange website and 

provide a web link to the Exchange 

website where enrollment support for a 

QHP is not available using the webbroker’s non-Exchange website. 

We proposed to codify new 

§§ 155.220(c)(3)(i)(A)(1) through (6) to 

require web-broker websites to display 

premium and cost-sharing information, 

the summary of benefits and coverage 

established under section 2715 of the 

PHS Act; identification of the metal 

level of the QHP as defined by section 

1302(d) of the ACA or whether it is a 

catastrophic plan as defined by section 

1302(e) of the ACA; the results of the 


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Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 27259 

224The current plan detail disclaimer states: 

‘‘[Name of Company] isn’t able to display all 

required plan information about this Qualified 

Health Plan at this time. To get more information 

about this Qualified Health Plan, visit the Health 

Insurance Marketplace® website at 

HealthCare.gov.’’ See Section 5.3.2. FederallyFacilitated Exchanges (FFEs) and FederallyFacilitated Small Business Health Options Program 

(FF–SHOP) Enrollment Manual (pp.53). (2021, 

August 18). https://www.cms.gov/files/document/ 

ffeffshop-enrollment-manual-2021.pdf. 

225The term ‘‘compensation’’ includes 

commissions, fees or other incentives as established 

in the relevant contract between an issuer and the 

web-broker. 

226See 45 CFR 155.220(c)(3)(i)(L). See also 84 FR 

17515 through 17521 and 17552 through 17553. 

227As detailed in this rule, we are also finalizing 

the proposals to further expand upon and clarify 

the prohibition on web-broker non-Exchange 

websites from displaying QHP recommendations 

based on compensation received from QHP issuers 

in 45 CFR 155.220(c)(3)(i)(L). 

228Web-broker website Display Bulletin. (2021, 

August 17). CMS. https://www.cms.gov/files/ 

document/web-broker-website-displaybulletinfinal08172021.pdf. 

enrollee satisfaction survey as described 

in section 1311(c)(4) of the ACA; quality 

ratings assigned in accordance with 

section 1311(c)(3) of the ACA; and the 

provider directory made available to the 

Exchange in accordance with § 156.230 

as the minimum QHP comparative 

information web-broker non-Exchange 

websites must display for all available 

QHPs. 

In addition, we proposed to modify 

the language in § 155.220(c)(3)(i)(A) that 

served as the basis for the current plan 

detail disclaimer requirement 224 to 

instead require web-broker nonExchange websites that do not support 

enrollment in all available QHPs to 

provide notice to consumers of that fact, 

and direct consumers to the Exchange 

website where they may obtain 

enrollment support. We proposed to 

revise § 155.220(c)(3)(i)(A) to state that 

web-broker websites must disclose and 

display the QHP information provided 

by the Exchange or directly by QHP 

issuers consistent with the requirements 

of § 155.205(c); and to the extent that 

enrollment support for a QHP is not 

available using the web-broker’s 

website, prominently display a 

standardized disclaimer provided by 

HHS. This disclaimer would state that 

enrollment support for the QHP is 

available on the Exchange website, and 

provide a web link to the Exchange 

website. This proposal to modify the 

disclaimer requirement in 

§ 155.220(c)(3)(i)(A) would ensure that 

consumers still receive information on 

those QHPs for which a web-broker 

website does not provide enrollment 

support and directions to where they 

can obtain enrollment support. 

We sought comments on these 

proposals. After reviewing the public 

comments, and for the reasons 

discussed in this final rule and the 

proposed rule, we are finalizing these 

requirements as proposed. 

We summarize and respond to public 

comments received on the proposals 

related to required QHP comparative 

information on web-broker websites and 

the associated disclaimer. 

Comment: Most commenters 

supported the proposals to require webbroker websites to display QHP 

comparative information and the 

associated disclaimer. Numerous 

commenters stated the proposals would 

ensure that consumers who use webbroker websites have access to 

standardized comparative information 

on QHPs so they can review, 

understand, and compare all available 

options and select the one that best fits 

their needs. Some commenters 

indicated these proposals would 

increase transparency on web-broker 

websites and reduce the risk that 

consumers are influenced based on the 

financial interests of web-brokers or by 

providing a favorable display of QHP 

information for QHPs for which the 

web-broker receives compensation for 

enrollments. 

Response: We appreciate the support 

for the proposals related to required 

QHP comparative information on webbroker websites and the associated 

disclaimer. We agree that these 

proposals will increase transparency 

and better enable consumers using webbroker websites to compare and 

understand the QHP options available to 

them. 

Comment: Some commenters stated 

that the proposals were a positive step, 

but that HHS should do more to support 

consumers’ ability to compare plans, 

such as requiring web-broker websites 

to display all plans neutrally and refrain 

from segregating some QHPs at the 

bottom of their website pages. 

Response: HHS is committed to 

continuing to consider ways to expand 

support for consumers using nonExchange websites. However, we did 

not propose a requirement for the 

neutral display of plans in the proposed 

rule and note that a neutral display 

requirement generally is inconsistent 

with HHS’ proposal under 

§ 155.205(b)(1) to require web-broker 

websites to differentially display HHSdesigned standardized plan options 

beginning with the PY 2023 open 

enrollment period in a manner 

consistent with how standardized plan 

options are displayed on 

HealthCare.gov, unless HHS approves a 

deviation. 

We also recognize that some webbroker websites historically have 

displayed limited comparative 

information for some QHPs at the end 

of a list or the bottom of a website page. 

HHS disagrees, however, that 

requirements stricter than those we 

finalize in this rule are necessary to 

address these practices. Current HHS 

rules prohibit web-broker websites from 

displaying QHP recommendations based 

on compensation 225 an agent, broker, or 

web-broker receives from QHP 

issuers.226 227 Additionally, in the 

August 17, 2021 Web-broker website 

Display Bulletin,228 we reminded webbrokers that, consistent with the 

prohibition in § 155.220(c)(3)(i)(L), their 

websites must refrain from filtering the 

display of QHPs in a manner that favors 

QHPs for which the web-broker receives 

compensation from issuers for 

enrollments. Based on our observations 

and experience, web-brokers that in past 

years displayed limited comparative 

information on certain QHPs at the 

bottom of their website pages did so 

because the web-broker did not have an 

appointment or other financial 

relationship with the QHPs’ issuers. 

With the adoption of the amendments 

and policies in this rule, which we 

believe will further limit the behavior 

and practices identified by the 

commenter, we are of the view that 

adopting more stringent or different 

guidelines is not necessary at this time. 

Rather, the combination of the existing 

requirements and the changes finalized 

in this rule, place sufficient limitations 

to prevent web-broker websites from 

inappropriately segregating some QHPs 

at the bottom of their non-Exchange 

website pages. 

Comment: Two commenters requested 

that we provide flexibility in terms of 

how the new standardized disclaimer 

under § 155.220(c)(3)(i)(A) must be 

displayed. Specifically, they expressed a 

preference for web-brokers to be 

permitted to display the disclaimer in a 

manner that would not require the 

disclaimer to be repeated next to each 

QHP for which it applied, so long as the 

website design otherwise clearly 

indicated to consumers for which QHPs 

the disclaimer applied (for example, by 

displaying a visual cue beside each QHP 

for which the disclaimer applied that 

references the text of the disclaimer in 

a single location elsewhere on the 

website page). 

Response: We are finalizing as 

proposed the amendments to 

§ 155.220(c)(3)(i)(A), to require a webbroker’s non-Exchange website, to the 

extent that enrollment support for a 

QHP is not available using its nonVerDate Sep<11>2014 18:46 May 05, 2022 Jkt 256001 PO 00000 Frm 00053 Fmt 4701 Sfmt 4700 E:\FR\FM\06MYR2.SGM 06MYR2

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27260 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

229Federally-Facilitated Exchange (FFE) and 

Federally-Facilitated Small Business Health 

Options Program (FF–SHOP) Enrollment Manual 

(pp. 53–54). (2021, August 18). https://

www.regtap.info/uploads/library/ENR_

FFEFFSHOPEnrollmentManual2021_5CR_

090921.pdf. 

230 Ibid. Also see Guidance for Web-brokers on 

Displaying Mandatory Standardized Disclaimers. 

(2015, April 24). CMS. https://www.cms.gov/cciio/ 

Programs-and-Initiatives/Health-InsuranceMarketplaces/Downloads/Guidance-web-brokersdisplaying-disclaimers.pdf. 

231Health Insurance Exchange Public Use Files 

(Exchange PUFs) General Information. (2022). CMS. 

https://www.cms.gov/files/document/exchangepufs-geninfofacts-py22.pdf. 

232This requirement was previously codified at 

§ 155.220(c)(3)(ii) and first established in 

regulations that were effective in 2012. See 77 FR 

18309 at 18334 through 18336 and 18449. It is 

designed to ensure that web-broker websites 

provide consumers with access to the same 

information they would have if they used the 

Exchange website. See 77 FR 18335–18336. 

Exchange website, prominently display 

a standardized disclaimer provided by 

HHS stating that enrollment support for 

the QHP is available on the Exchange 

website, and provide a link to the 

Exchange website. Historically, one of 

the criteria to satisfy the prominent 

display requirement for the plan detail 

disclaimer required that it be provided 

separately for each QHP where plan 

information is not displayed, and the 

text we provided informed consumers 

that the web-broker’s website is not able 

to display all required plan information 

about the specific QHP(s) where the 

disclaimer appeared.229 However, we 

recognize that our historical approach 

governing the prominent display of the 

plan detail disclaimer and the 

accompanying text does not translate 

well to the new disclaimer requirement 

in § 155.220(c)(3)(i)(A) finalized in this 

rule that shifts the focus to informing 

consumers about any limitations on 

enrollment support. Therefore, we 

generally agree with these commenters 

and intend to provide some flexibility in 

terms of how we will interpret and 

apply the requirement to prominently 

display the new standardized 

enrollment support disclaimer under 

§ 155.220(c)(3)(i)(A). Our goal in 

implementing and enforcing this new 

requirement will be to ensure 

consumers are clearly informed about 

any enrollment limitations on a webbroker’s non-Exchange website and 

similarly have clear instructions for 

accessing HealthCare.gov if they wish to 

enroll in those QHPs. We note our 

intent to generally apply the standards 

for prominent display of this new 

standardized disclaimer as have been 

described and applied previously in 

relation to the prominent display of 

other required disclaimers on webbroker websites.230 For example, we 

will consider this new disclaimer to be 

prominently displayed if it is displayed 

in close proximity to where QHP plan 

information appears, so that it is 

noticeable to the consumer. As such, the 

new enrollment support disclaimer 

must be written in a font size no smaller 

than the majority of text on the website 

page, be noticeable in the context of the 

website by (for example) using a font 

color that contrasts with the background 

of the website page, using the exact 

language provided by HHS, and 

including a functioning link to 

HealthCare.gov. We also clarify that we 

will consider the display of the new 

enrollment support standardized 

disclaimer where the enrollment button 

(or other similar mechanisms) would 

otherwise appear for a particular QHP 

on the web-broker’s non-Exchange 

website to comply with the criterion 

that the disclaimer is noticeable to 

consumers. We further clarify that we 

would similarly consider a web-broker 

website in compliance with this 

criterion if a visual cue is displayed 

where the enrollment button (or another 

similar mechanism) would otherwise 

appear for a particular QHP that clearly 

directs the consumer to the required 

standardized disclaimer on the same 

website page or otherwise displays the 

required standardized disclaimer (for 

example, in a pop-up bubble that 

appears while hovering over the visual 

cue on the website). In both 

circumstances, to be considered fully 

compliant with the prominent display 

framework, the enrollment support 

disclaimer must also be noticeable using 

a font color with appropriate contrasts 

in the context of the website page or 

pop-up bubble, be written in a font size 

that is no smaller than the majority of 

the surrounding text, use the exact 

language provided by HHS, and include 

a functioning link to HealthCare.gov. 

We will provide additional operational 

and technical guidance on the display of 

the enrollment support disclaimer in 

advance of the start of the plan year 

2023 open enrollment period to allow 

time for implementation. We will also 

take appropriate steps to similarly 

finalize the exact language for the new 

disclaimer so it can be implemented in 

advance of the start of the next open 

enrollment period. 

Comment: One commenter suggested 

we establish a safe harbor such that 

web-brokers are not held responsible for 

the accuracy of QHP comparative 

information obtained from Exchange 

public use files or the Marketplace API 

and displayed on their websites. 

Response: Although we recognize that 

the Exchange public use files and 

Marketplace API data may contain 

errors, we did not propose and decline 

to adopt the suggested safe harbor at this 

time. First, we note that typically when 

we have discovered incorrect QHP 

comparative information on web-broker 

websites, it has not been due to 

incorrect Exchange data. Instead, in 

these circumstances, the errors have 

been attributable to faulty processes 

adopted by web-brokers to ingest and 

display QHP comparative information, 

whether the data is sourced from the 

Exchange or directly from QHP issuers. 

Second, HHS has processes in place for 

addressing Exchange data corrections, 

which includes making necessary 

updates to the Exchange public use files 

to reflect the corrections.231 Webbrokers are expected to update the QHP 

comparative information on their 

websites when such Exchange data 

errors are corrected, which in cases 

when web-brokers are using the 

Marketplace API will occur 

automatically. We also notify webbrokers when updates are made to the 

Exchange public use files so webbrokers that do not use the API may 

make updates to their systems as 

needed. However, we also clarify that 

we would not otherwise hold webbrokers responsible in circumstances 

where the incorrect QHP comparative 

information is the result of data errors 

in the Marketplace public use files or 

Marketplace API. Consistent with the 

standard in § 155.220(j)(3), HHS would 

consider the circumstances for why a 

web-broker website fails to provide 

correct information if the web-broker 

otherwise acted in good faith. 

Comment: One commenter requested 

clarification that requiring web-broker 

websites to display all available QHPs 

does not constitute a web-broker 

endorsing QHP issuers with which it is 

not appointed. 

Response: The amendments to 

§ 155.220(c)(3)(i)(A) that we are 

finalizing in this rule do not modify or 

otherwise change the long-standing 

requirement in § 155.220(c)(3)(i)(B) for 

web-broker non-Exchange websites to 

provide consumers the ability to view 

all QHPs offered through the 

Exchange.232 Instead, the revisions to 

§ 155.220(c)(3)(i)(A) that we finalize in 

this rule identify the required minimum 

QHP comparative information that must 

be displayed on web-broker nonExchange websites for all available 

QHPs in the applicable consumer’s area. 

In response to the comment, we further 

acknowledge that requiring web-broker 

websites to display all available QHPs 

regardless of appointment status with 

QHP issuers should not be perceived as 


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233See, for example, CMS Releases Final 

Snapshot for the 2021 Federal Exchange Open 

Enrollment Period. (2021, January 12). CMS.https:// 

www.cms.gov/newsroom/press-releases/cmsreleases-final-snapshot-2021-federal-exchangeopen-enrollment-period. 

234We note at the time this regulatory provision 

was codified at § 155.220(c)(3)(i). See 78 FR 54134 

and 54135. 

235The term ‘‘compensation’’ includes 

commissions, fees or other incentives as established 

in the relevant contract between an issuer and the 

web-broker. See 84 FR 17515. 

an endorsement of QHP issuers with 

which the web-broker is not appointed. 

Comment: One commenter requested 

that we clarify whether 

§ 155.220(c)(3)(i)(A)(6) requires webbroker websites to host static files or 

whether they are permitted to provide 

links to issuers’ websites in instances 

where information is subject to change 

and may be best presented dynamically 

(for example, in the case of provider 

directories). 

Response: We clarify that, as 

finalized, § 155.220(c)(3)(i)(A)(6) 

requires web-broker non-Exchange 

websites that assist consumers with 

Exchange enrollments to include the 

provider directory made available to the 

Exchange under § 156.230 as part of the 

required minimum QHP comparative 

information. We further clarify that 

web-broker websites that provide a link 

to the appropriate provider directory 

web pages on the applicable QHP 

issuer’s website would satisfy this 

requirement. The provider directory 

field in the Exchange public use files 

consists of links to the applicable QHP 

issuers’ provider directory website 

pages. Finally, we remind web-brokers 

and other stakeholders, that web-broker 

websites may obtain the required QHP 

comparative information from the 

Exchange (that is, from the Exchange 

public use files or Marketplace API) or 

directly from QHP issuers, as reflected 

in the introductory clause at 

§ 155.220(c)(3)(i)(A). 

Comment: Two commenters opposed 

these proposals. One commenter stated 

that these proposals will add little value 

for consumers; harm the consumer 

experience when using web-broker 

websites; and make it more difficult for 

web-brokers to serve their consumers. 

This commenter suggested that the goal 

of these changes may be to drive 

consumers to use HealthCare.gov. 

Another commenter expressed concern 

that these proposals encroach on State 

authority to regulate the business of 

insurance and mentioned a possible, 

unspecified conflict with existing State 

regulations. 

Response: We respectfully disagree 

that these changes will harm consumers. 

We believe that these changes will 

instead make it easier for consumers to 

compare QHPs when using web-broker 

websites and identify the best option for 

their unique circumstances. For 

example, if web-broker websites are not 

required to provide basic QHP 

comparative information for all 

available QHPs, such as premium and 

cost-sharing information, there is no 

reasonable way for consumers using 

those websites to compare all available 

options other than navigating to 

multiple websites. Therefore, we also 

believe these changes will make it 

easier, rather than more difficult, for 

web-brokers to assist their customers. 

This also is not an attempt to drive 

consumers away from non-Exchange 

websites. The existing web-broker plan 

detail disclaimer requirement mandates 

that consumers are provided a 

functional link to HealthCare.gov. The 

maintenance of such a requirement for 

the new disclaimer that must appear 

when the web-broker website does not 

support enrollment in a QHP is an 

appropriate and necessary exercise of 

HHS’ authority to establish 

requirements governing web-broker 

participation in FFEs and SBE–FPs. We 

remain committed to the FFE direct 

enrollment program and believe 

consumers should have access to 

multiple options to enroll in coverage. 

In addition, we emphasize that these 

changes largely codify existing policies 

for the interim approach in place 

beginning with the PY 2022 open 

enrollment period pending future 

rulemaking on these issues. They also 

represent an appropriate evolution of 

our enforcement approach regarding the 

required display of QHP comparative 

information on web-broker websites 

under § 155.220(c)(3)(i)(A). While we 

released more limited QHP details in 

the early years of Exchanges, that is no 

longer the case. QHP plan information 

has been more readily accessible for 

some time, both through public use files 

and the Marketplace API. In addition, 

enrollment through direct enrollment 

channels (including web-broker 

websites) has continued to grow year 

after year.233 Therefore, we continued to 

consider these issues over the years and 

continue to believe the approach 

finalized in this rule is in the best 

interests of Exchange consumers using 

web-broker websites because it will aid 

them in comparing QHP options 

without having to navigate to multiple 

websites. 

With respect to the commenter that 

expressed concern about encroachment 

on State regulatory authority or alleged 

conflict with State regulations, we note 

that the requirement to display QHP 

comparative plan information and use 

an appropriate disclaimer has been part 

of the framework governing the use of 

web-broker websites since the inception 

of the Exchanges.234 We are not aware 

of any potential conflicts with existing 

State regulations and generally welcome 

information from State regulators or 

other stakeholders about any specific 

suspected conflicts. We also remain 

committed to working collaboratively 

with States with respect to issues 

related to agent and broker participation 

in the FFEs and SBE–FPs, including 

with respect to any issues that may 

cause confusion for web-brokers as to 

what is expected of them with respect 

to website display requirements 

applicable in FFE and SBE–FP States. 

b. Prohibition of QHP Advertising on 

Web-Broker websites 

Section 155.220(c)(3)(i)(L) currently 

prohibits web-broker non-Exchange 

websites from displaying QHP 

recommendations based on 

compensation 235 an agent, broker, or 

web-broker receives from QHP issuers. 

In the proposed rule (87 FR 643), we 

proposed to amend § 155.220(c)(3)(i)(L) 

to provide that web-broker nonExchange websites are also prohibited 

from displaying QHP advertisements, or 

otherwise providing favored or 

preferred placement in the display of 

QHPs, based on compensation agents, 

brokers, or web-brokers receive from 

QHP issuers. 

We are finalizing the proposal to 

amend § 155.220(c)(3)(i)(L) to ensure 

that QHP advertisements are not 

mistakenly understood as QHP 

recommendations that the web broker 

deems to be in the best interest of the 

consumer. As we discuss in greater 

detail in the responses to the comments 

in this section, the intent of this 

amendment is to ensure that consumers 

are able to make informed decisions 

about the best option for their specific 

circumstances, and are not influenced 

by favorable placement based on 

advertising or compensation from 

issuers to agents, brokers, or webbrokers. However, this amendment is 

not intended to stifle innovative 

developments, such as filtering, that can 

help inform customers of the options 

that best fit their needs. 

We sought comment on the proposed 

amendments to § 155.220(c)(3)(i)(L) and 

the prohibition on QHP advertising on 

web-broker websites, which we 

summarize and respond to below. 

Comment: Most commenters 

supported the proposals related to 


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27262 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

236Web-broker website Display Bulletin. (2021, 

August 17). CMS. https://www.cms.gov/files/ 

document/webbroker-website-displaybulletinfinal08172021.pdf. 

§ 155.220(c)(3)(i)(L) and the prohibition 

on QHP advertising on web-broker 

websites, or otherwise providing 

favored or preferred placement in the 

display of QHPs based on compensation 

agents, brokers, or web-brokers receive 

from QHP issuers. One commenter 

asserted that the display of QHPs on 

web-broker websites should be based on 

factors that will help consumers choose 

the best option for their needs and 

allowing preferred placement of QHPs 

based on compensation from issuers 

does not place consumer interests first. 

Another commenter noted that agents, 

brokers, and web-brokers have not been 

required to provide unbiased 

information to consumers, and this 

proposal would help improve 

transparency for consumers. One 

commenter stated that this proposal will 

improve the shopping experience on 

web-broker websites by increasing the 

likelihood that consumers select plans 

that are the best fit for them based on 

costs, benefits, provider networks, and 

drug formularies instead of advertising 

paid for by issuers. Another commenter 

stated web-broker websites should not 

direct a consumer toward a plan unless 

the direction is based on that 

consumer’s needs. One commenter 

indicated they were supportive of the 

proposals to ensure consumers using 

web-broker websites are not provided 

biased information in a way that 

benefits the advertiser rather than the 

consumer. Many other commenters 

shared similar sentiments as those 

described above. 

Response: We appreciate comments in 

support of the proposed amendments to 

§ 155.220(c)(3)(i)(L) and the prohibition 

on QHP advertising on web-broker 

websites. We agree that the display of 

QHPs on web-broker websites should be 

based on factors that assist consumers in 

making informed decisions about the 

best option for their specific 

circumstances, and should not be 

influenced by favorable placement 

based on advertising or compensation 

from issuers to agents, brokers, or webbrokers. After consideration of 

comments, we are finalizing as 

proposed the amendments to 

§ 155.220(c)(3)(i)(L) and the prohibition 

on QHP advertising on web-broker 

websites. 

At the same time, we remain 

committed to the development and use 

of innovative consumer-assistance tools 

by web-brokers to help consumers select 

QHPs that best fit their needs. As such, 

we also clarify that web-brokers will 

continue to be able to offer filtering 

capabilities or decision support tools 

that the consumer can use to navigate or 

refine the display of QHPs consistent 

with existing CMS guidelines.236 For 

example, a web-broker can offer 

consumers additional sort functionality 

to alter the order of the QHPs listed, as 

long as the web-broker website still 

provides consumers the ability to view 

all QHPs offered through the Exchange 

regardless of how the consumer chooses 

to sort the QHPs (for example, from 

lowest to highest premium or 

deductible). A web-broker may also 

allow the consumer to apply filters (for 

example, metal level, provider network 

type, issuer) to the full list of available 

QHPs to refine the consumer’s search. If 

a consumer selects a certain filter (for 

example, bronze metal level), the webbroker website must display all QHPs 

offered through the relevant Exchange 

that satisfy that filter’s description. The 

use of any filters or tools must comply 

with other applicable requirements; for 

example, the use of filters or other tools 

to refine the display of QHPs cannot 

result in the favorable placement of 

those QHPs for which a web-broker 

receives compensation for enrollments 

in relation to all other available QHPs 

consistent with § 155.220(c)(3)(i)(L) and 

applicable guidance on permissible 

filtering of QHPs on web-broker 

websites. We believe that the framework 

for the display of QHP information 

captured in § 155.220(c)(3)(i), as 

amended by this rule, coupled with the 

flexibility to develop innovative 

consumer assistance tools to filter or 

refine the list of available QHPs strikes 

the right balance to protect and support 

consumers enrolling in Exchange 

coverage through web-broker websites. 

In response to commenters stating 

web-broker websites have not been 

required to provide unbiased 

information, we note a variety of 

requirements have been in place for 

some time that require web-broker 

websites to provide consumers 

information about QHPs in an unbiased 

fashion. For example, 

§ 155.220(c)(3)(i)(B) requires web-broker 

websites to provide consumers the 

ability to view all QHPs offered through 

the Exchange without respect to 

compensation arrangements webbrokers have with QHP issuers. 

Similarly, § 155.220(c)(3)(i)(A) has 

required web-broker websites to provide 

certain QHP comparative information 

for all available QHPs or a standardized 

disclaimer with a link directing 

consumers to the Exchange in cases 

when the comparative information is 

not provided; we note that we are also 

taking additional steps in this rule to 

ensure consumers using web-broker 

websites have access to the same 

information for all available QHPs as 

they would if they used the Exchange 

website. In addition, 

§ 155.220(c)(3)(i)(L) already prohibited 

web-broker websites from displaying 

QHP recommendations based on 

compensation agents, brokers, or webbrokers receive from QHP issuers and 

will be further enhanced by the changes 

to § 155.220(c)(3)(i)(L) finalized in this 

rule that will further protect consumers 

by prohibiting QHP advertising and 

preferred placement of QHPs on webbroker websites based on compensation 

from QHP issuers. 

Comment: One commenter did not 

oppose the proposal if it is limited to 

advertising or preferred placement 

based on compensation from issuers on 

web-broker website pages for enrollment 

through the Exchange (that is, if the 

prohibition does not apply to webbroker website pages marketing nonQHPs and QHPs for enrollment outside 

the Exchange). Another commenter 

requested clarification that the proposal 

was not intended to prohibit advertising 

on website pages marketing other nonQHP product types, and that the 

proposal was instead intended only to 

apply the prohibition to web-broker 

website pages supporting enrollment in 

QHPs through the Exchange. 

Response: We clarify the amendment 

to § 155.220(c)(3)(i)(L) and the 

prohibition on QHP advertising only 

applies to web-broker website pages 

displaying or marketing QHPs for 

enrollment through the Exchange. In 

other words, this framework would 

extend to web-broker websites and 

pages for which enrollment would occur 

through a direct enrollment pathway 

(including both the Classic and 

Enhanced direct enrollment pathways). 

It would not, however, extend to other 

web-broker website pages, such as those 

marketing products—whether QHPs or 

non-QHPs—for enrollment outside the 

Exchange. We did not propose to extend 

it in this manner because the framework 

in § 155.220 is part of the procedures 

the Secretary established under section 

1312(e) of the ACA under which agents 

and brokers (including web-brokers) can 

enroll consumers in QHPs offered 

through Exchanges. 

Comment: One commenter 

recommended that the proposed 

prohibition on QHP advertising and 

preferred placement on web-broker 

websites not be interpreted to prohibit 

the display of additional QHP 

information beyond the required QHP 

comparative information for a subset of 

QHPs. The commenter explained that 


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237 Ibid. 

238Consumer-facing web-broker websites are 

those used independently by consumers without 

the assistance of an agent or broker. Agent/brokerfacing web-broker websites are used by agents or 

brokers assisting consumers; in this case, the 

consumers agents or brokers are assisting may never 

view the web-broker websites that are being used 

by the agents or brokers assisting them. Generally, 

Exchange rules governing web-broker websites do 

not distinguish between consumer-facing and 

agent/broker-facing web-broker websites. However, 

this commenter requested that we create such a 

distinction. 

239Web-brokers may function as QHP issuer 

direct enrollment technology providers. See 

§ 155.20. 

240 In this case, we believe the commenter is 

intending to convey that a QHP issuer relying on 

a web-broker as a QHP issuer direct enrollment 

technology provider would be less likely to engage 

the web-broker to provide these additional features 

(whether only on its issuer-specific direct 

enrollment website or through the web-broker’s 

own website) if it could not also pay the web-broker 

to advertise the availability of its QHPs and these 

additional features to agents and brokers using its 

web-broker website. 

241Here, and elsewhere, when we refer to a webbroker’s website without indicating it is an issuerspecific website hosted by a web-broker acting as 

a QHP issuer direct enrollment technology 

provider, we are referring to the web-broker’s own 

non-Exchange website subject to the requirements 

of § 155.220(c) and other applicable rules governing 

such web-brokers and their non-Exchange websites 

subject to the requirements of § 155.220(c). 

242As described earlier in this rule, web-broker 

websites may not support enrollment in all 

available QHPs. Web-broker websites may provide 

additional comparative information about some 

QHPs that they have obtained directly from QHP 

issuers (for example, comparative information not 

available in the Exchange public use files or 

Marketplace API). Similarly, web-broker websites 

may provide additional features that may only be 

available for particular issuers’ QHPs, such as 

enhanced payment integration or the ability to 

enroll in an issuer’s plans outside the Exchange. 

some web-brokers have arrangements 

with issuers to display information 

about plan designs or features that 

include the display of information not 

available in Exchange public use files or 

the Marketplace API, and that the 

display of this additional information 

can highlight distinctions between plans 

and help consumers select plans that 

best meet their needs. 

Response: We did not propose and are 

not finalizing a general prohibition on 

web-broker websites displaying QHP 

information beyond what is provided by 

the Exchange (for example, made 

available in the Exchange public use 

files or through the Marketplace API) or 

directly from QHP issuers. Similarly, we 

confirm that the requirement to display 

minimum required QHP comparative 

information captured in 

§ 155.220(c)(3)(i)(A)(1) through (6) as 

finalized in this rule does not prohibit 

the display of additional QHP 

information the web-broker obtains 

directly from QHP issuers. We further 

note and confirm that the regulatory text 

at § 155.220(c)(3)(i)(A) envisions that 

QHP information would be provided to 

web-brokers by Exchanges and QHP 

issuers. At the same time, however, 

web-brokers that elect to display such 

additional information must ensure 

compliance with other applicable 

requirements. For example, the display 

of additional information received from 

an issuer for its QHPs cannot result in 

the favorable placement of those QHPs 

in relation to all other available QHPs 

consistent with § 155.220(c)(3)(i)(L) and 

applicable guidance on permissible 

filtering of QHPs on web-broker 

websites.237 Similarly, any payments 

received from QHP issuers to display 

additional information on web-broker 

websites cannot result in favored or 

preferred placement in the display of 

QHPs on the web-broker’s website. 

Comment: One commenter supported 

the proposal only in the context of 

consumer-facing web-broker websites, 

and requested different treatment of 

agent/broker-facing web-broker 

websites.238 The commenter expressed 

concern that if the proposal applied to 

agent/broker-facing web-broker 

websites, it could inadvertently 

jeopardize innovation by web-brokers 

related to educating agents and brokers 

about a large number of QHP offerings, 

in particular those offered by new 

market entrants, and differences in the 

design of those QHPs’ benefits, 

networks, and other plan features. 

Similarly, the commenter further 

explained that web-brokers often host 

issuer direct enrollment websites 239

based on compensation from issuers and 

in doing so often provide additional 

features or integrations associated with 

those issuer partnerships that are 

available to agents and brokers using 

their web-broker websites (for example, 

better premium payment integration, the 

ability to enroll in the issuers’ plans 

outside the Exchange), and was 

concerned the proposed amendments to 

§ 155.220(c)(3)(i)(L) would 

disincentivize the development of these 

additional features.240 Lastly, the 

commenter requested clarification that 

visual cues associated with the display 

of particular issuers’ QHPs on a webbroker’s website (for example, to 

indicate the availability of additional 

functionality such as payment 

integration) are not prohibited by this 

proposal. 

Response: We appreciate that some 

web-brokers may wish to have 

additional flexibility and provide 

additional resources to their agent and 

broker partners. The amendments to 

§ 155.220(c)(3)(i)(L) and the prohibition 

of QHP advertising on web-broker 

websites, which we are finalizing as 

proposed, apply to web-broker websites 

used to enroll consumers in Exchange 

coverage whether or not the web-broker 

websites are consumer-facing (that is, 

intended to be used by consumers 

independently) or agent/broker-facing 

(that is, intended to be used by agents 

or brokers assisting consumers). They 

are intended to prohibit these activities 

to the extent they constitute advertising, 

preferred placement, favorable display, 

or other types of promotion of particular 

QHPs based on payment from the 

issuers offering those QHPs. These 

changes build on the existing 

prohibition on the display of QHP 

recommendations based on the 

compensation received by the agent, 

broker, or web-broker from QHP issuers. 

As finalized, § 155.220(c)(3)(i)(L) does 

not prohibit web-brokers from educating 

agents and brokers generally about the 

availability and nature of new plan 

designs or plan features, or the existence 

of QHPs offered by issuers that have 

newly entered a market. Web-brokers 

may educate agents and brokers by 

offering filtering capabilities that enable 

agents and brokers to quickly identify 

particular QHPs with certain 

characteristics and corresponding 

training on the existence and purpose of 

those filtering capabilities. Similarly, 

§ 155.220(c)(3)(i)(L) does not apply to 

additional features web-brokers may 

make available to QHP issuers that 

engage them to develop or maintain an 

issuer-specific direct enrollment website 

through which individual consumers— 

or persons assisting consumers such as 

agents and brokers—may view 

information on and complete 

enrollment in the issuers’ QHPs,241 so 

long as the means through which webbrokers inform agents and brokers of 

such features do not constitute 

advertising, preferred placement, 

favorable display, or other types of 

promotion of particular QHPs based on 

compensation from the issuers offering 

those QHPs. For example, 

§ 155.220(c)(3)(i)(L) is not intended to 

prohibit a web-broker from informing its 

agent or broker clients of the availability 

of particular features on its web-broker 

website that may only be available for 

particular issuers’ QHPs,242 such as 

enhanced payment integration or the 

ability to enroll in an issuer’s plans 

outside the Exchange, because it is 

possible to provide that information 

without it being presented as 

advertising, preferred placement, 

favorable display, or other types or 

means of promotion of particular QHPs. 

Lastly, in response to comments, we 

clarify that visual cues (such as an icon) 


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27264 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

243Web-broker Website Display Bulletin. (2021, 

August 17). CMS. https://www.cms.gov/files/ 

document/webbroker-website-displaybulletinfinal08172021.pdf. 

244See the previous preamble regarding the new 

standardized disclaimer under § 155.220(c)(3)(i)(A), 

as amended, for details on how information about 

which QHPs the web-broker website does not 

support enrollment in should be shared with 

consumers. Not having an appointment with a 

particular issuer is the primary reason why webbroker websites would not support enrollment in 

particular QHPs. 

associated with the display of particular 

issuers’ QHPs (for example, to indicate 

the availability of additional 

functionality such as payment 

integration) are also not prohibited. 

However, we reiterate that any related 

compensation or payment received by 

such web-brokers from QHP issuers to 

display additional information must not 

result in the favorable placement of 

those QHPs in relation to all other 

available QHPs consistent with 

§ 155.220(c)(3)(i)(L) and our guidance 

on permissible filtering of QHPs on 

web-broker websites. 

Comment: One commenter expressed 

concern that the proposal could limit 

the ability of web-broker websites to 

offer tools, such as filtering capabilities, 

that enhance the user experience. The 

commenter requested we clarify that 

functionality that allows plan filtering 

based on user preferences (presumably 

consumer or agent/broker users) is not 

prohibited, even if the result of a 

particular user’s filtering choices is to 

favor the display of plans for which the 

web-broker receives compensation for 

enrollments. 

Response: We agree that it is 

important that web-brokers continue to 

have the flexibility to offer certain 

permissible filtering tools to assist 

Exchange consumers shopping for QHPs 

on web-broker non-Exchange websites. 

As noted earlier, we remain committed 

to supporting the development and use 

of innovative consumer-assistance tools 

by web-brokers to help consumers select 

QHPs that best fit their needs, but 

reiterate that such tools must comply 

with other applicable requirements. 

This includes, but is not limited to, the 

existing prohibition on the display of 

QHPs based on the compensation 

received by the agent, broker, or webbroker, as well as the amendment to 

§ 155.220(c)(3)(i)(L) and the prohibition 

of QHP advertising on web-broker 

websites we are finalizing in this rule. 

When used in this context, 

‘‘advertisements’’ include any form of 

marketing or promotion of QHPs based 

on payment from QHP issuers. 

Consistent with existing CMS guidance 

on permissible filters,243 this would not 

prohibit a web-broker non-Exchange 

website from offering consumers 

filtering capabilities that, when applied 

neutrally, happen to result in the 

favorable display of QHPs offered by 

issuers from whom the web-broker 

receives compensation for enrollment in 

those QHPs. For example, HHS would 

not deem a web-broker website out of 

compliance with applicable 

requirements, as finalized in this rule, if 

a neutral filter selected by the consumer 

orders all available QHPs from lowest to 

highest premium and the lowest 

premium QHPs happen to be ones for 

which the web-broker received 

compensation or payment from QHP 

issuers. In such circumstances, the webbroker website would need to include 

the required minimum QHP 

comparative information (including 

premium) for all available QHPs and the 

default listing of QHPs on the webbroker website would need to provide 

that information for all QHPs offered on 

the Exchange by all QHP issuers, unless 

the consumer or agent/broker using the 

web-broker’s non-Exchange website 

actively removes that default filter. 

Similarly, if an otherwise neutral filter 

is available for a consumer that, if 

selected, produces a list favoring a 

particular issuer’s QHPs (for example, a 

filter that limits the display of QHPs to 

those offered by specific issuers actively 

selected by the consumer), making that 

filter available is not prohibited so long 

as the web-broker website complies 

with other applicable requirements. 

This would include the use of a default 

listing of QHPs that includes the 

required minimum QHP comparative 

information for all QHPs offered on the 

Exchange unless the consumer actively 

removes the default filter. 

Comment: One commenter expressed 

concern that the proposal would 

prohibit web-brokers from listing QHPs 

offered by issuers with which it is 

appointed and from whom it receives 

compensation for enrollments favorably 

as compared to those offered by issuers 

with which it is not appointed (that is, 

listing all of the former before all of the 

latter). 

Response: In the 2020 Payment Notice 

(84 FR 17454), we codified the existing 

prohibition on the display of QHP 

recommendations based on 

compensation the agent, broker, or webbroker receives from QHP issuers. In 

addition, as explained above, we have 

transitioned from the use of 

enforcement discretion that permitted 

web-brokers to only display issuer 

marketing name, plan marketing name, 

product network type, and metal level 

for some QHPs, beginning with the PY 

2022 open enrollment period. As part of 

this transition, we also previously 

clarified that with web-broker websites 

displaying standardized QHP 

comparative information for all 

available QHPs beginning with the PY 

2022 open enrollment period, to comply 

with the current standard in 

§ 155.220(c)(3)(i)(L) that prohibits the 

display of QHP recommendations based 

on compensation an agent, broker, or 

web-broker receives from QHP issuers, 

web-broker websites must refrain from 

filtering the display of QHPs in a 

manner that favors QHPs for which the 

web-broker receives compensation from 

issuers for enrollments. In other words, 

consistent with currently applicable 

requirements, web-brokers must not 

display some QHPs at the bottom of 

their website pages simply because they 

are not appointed with the issuers that 

offer those QHPs. We did not propose to 

change the prohibition on the display of 

QHPs based on the compensation 

received by an agent, broker, or webbroker from QHP issuers for enrollment 

in QHPs. Instead, we proposed and are 

finalizing the extension of the 

prohibition under § 155.220(c)(3)(i)(L) to 

also prohibit advertising of QHPs on 

web-broker websites. As outlined above, 

to comply with the new framework and 

applicable requirements, web-broker 

websites cannot more favorably display 

QHPs for which the agent, broker, or 

web-broker receives compensation from 

issuers for enrollment in QHPs and also 

cannot more favorably display QHPs for 

which the agent, broker, or web-broker 

receives payment for advertising 

purposes. This includes a prohibition 

on the favorable display based on which 

QHPs are offered by issuers with whom 

the agent, broker, or web-broker has an 

appointment.244

Comment: Two commenters were 

opposed to this proposal. One 

commenter asserted that prohibiting 

QHP advertising on web-broker websites 

lessens the incentive for web-brokers to 

become direct enrollment entities and 

continue to innovate. Instead, the 

commenter suggested we allow QHP 

advertising, but require that 

advertisements be identified as such. 

Another commenter conveyed concern 

about this proposal encroaching on 

State authority to regulate the business 

of insurance and mentioned a 

nonspecific possible conflict with 

existing State regulations. 

Response: We appreciate the concern 

that prohibiting QHP advertising on 

web-broker websites may reduce 

incentives to become a direct 

enrollment entity, but do not believe 

that risk outweighs the benefit to 

consumers of the prohibition. We 


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245See 84 FR 17563. 

246See, for example, Federally-Facilitated 

Exchange (FFE) and Federally-Facilitated Small 

Business Health Options Program (FF–SHOP) 

Enrollment Manual (pp. 53–54). (2021, August 18). 

https://www.regtap.info/uploads/library/ENR_

FFEFFSHOPEnrollmentManual2021_5CR_

090921.pdf. Also see Guidance for Web-brokers on 

Displaying Mandatory Standardized Disclaimers. 

(2015, April 24). CMS. https://www.cms.gov/cciio/ 

Programs-and-Initiatives/Health-InsuranceMarketplaces/Downloads/Guidance-web-brokersdisplaying-disclaimers.pdf. 

considered the option of allowing some 

form of QHP advertising so long as the 

advertisements were clearly identified 

as advertisements. However, as 

described in the proposed rule (87 FR 

643), even if QHP advertisements are 

clearly identified, we believe it is not in 

the interest of consumers to allow them 

on web-broker websites that facilitate 

enrollment in Exchange coverage. 

With respect to commenters that 

expressed concern with encroachment 

on State regulatory authority or alleged 

conflict with State regulations, we note 

that the requirement at 

§ 155.220(c)(3)(i)(L) prohibiting webbroker websites from displaying QHP 

recommendations based on 

compensation an agent, broker, or webbroker receives from QHP issuers is not 

new.245 For additional information in 

response to this comment, please see the 

response to the same comment on the 

prior proposal in III.D.3.(a). 

c. Explanation of Rationale for QHP 

Recommendations on Web-Broker 

Websites 

In the proposed rule (87 FR 643), we 

proposed to amend § 155.220 to add a 

new paragraph (c)(3)(i)(M) that would 

require web-broker websites to 

prominently display a clear explanation 

of the rationale for explicit QHP 

recommendations and the methodology 

for the default display of QHPs on their 

websites (for example, alphabetically 

based on a plan name, from lowest to 

highest premium, etc.). 

We are finalizing this requirement 

because we believe it will provide 

consumers with a better understanding 

of the information being presented to 

them on web-broker websites and 

enable them to make better informed 

decisions and select QHPs that best fit 

their needs. We believe that a clear 

explanation for the bases of the 

recommendations displayed to them on 

web-broker websites (whether explicit 

or implicit), will help consumers assess 

the value of the recommendations (for 

example, whether a recommendation is 

based on the factors most important to 

them). 

We sought comment on this proposal, 

which we summarize and respond to 

below. 

Comment: Most commenters 

supported this proposal and the 

addition of § 155.220(c)(3)(i)(M). Several 

commenters stated that requiring webbroker websites to disclose the basis for 

their plan recommendations and display 

of plans increases transparency. 

Numerous other commenters who 

supported these changes stated these 

changes would help consumers be better 

informed. One commenter indicated 

this would enhance decision support 

tools for consumers and increase the 

chance they find the plan that best 

meets their needs. 

Response: We agree that this proposal 

and the addition of § 155.220(c)(3)(i)(M) 

will increase transparency and ensure 

consumers are better informed and more 

likely to choose the plan that is best for 

them. 

Comment: Several commenters 

requested web-broker websites be 

afforded flexibility in terms of the 

content and placement of the required 

explanations. In particular, some 

commenters requested that the required 

explanations not be so detailed that they 

are difficult for consumers to 

understand and may dissuade some 

consumers from completing the 

enrollment process. 

Response: We appreciate the desire 

for flexibility and do not intend to be 

prescriptive in terms of the content or 

placement of the required explanations 

of the rationale for QHP 

recommendations or the methodology 

for the default display of QHPs. We 

understand there are currently many 

variations in the design and content of 

web-broker websites and it would be 

difficult to develop a one-size-fits all 

standardized approach with respect to 

the content or placement of the 

explanations. In addition, there will 

necessarily be variations in the 

rationales for the plan recommendations 

and methodologies for the default 

display of plans used by different webbroker websites and they may also 

frequently change. For those reasons, we 

intend to allow web-broker websites 

significant flexibility in terms of the 

content and placement of the required 

explanations as long as the explanations 

are prominently displayed, clearly 

articulated, and provide consumers 

reasonable insight into the rationale for 

the QHP recommendations and the 

methodology for the default display of 

QHPs. We expect explanations to be 

short and easy for consumers to 

understand. Generally, we believe that a 

single phrase or a few sentences will 

suffice (for example, ‘‘we recommend 

this plan because it has the lowest 

monthly premium and includes your 

preferred providers in-network’’; ‘‘plans 

are displayed alphabetically’’; ‘‘plans 

are displayed from lowest to highest 

premium’’). To be considered 

prominently displayed, web-broker 

websites must adhere to the same 

general requirements that apply to 

disclaimers that must be prominently 

displayed on web-broker websites.246

For example, the explanations must be 

written in a font size no smaller than the 

majority of text on the website page and 

be noticeable in the context of the 

website by (for example) using a font 

color that contrasts with the background 

of the website page. 

Comment: Several commenters 

expressed concerns that the complex 

algorithms web-broker websites may 

have developed to produce their plan 

recommendations or default plan 

displays are likely too complicated to 

explain in a consumer-friendly manner. 

Some other commenters worried that 

requiring these explanations may 

require the disclosure of closely-held 

proprietary information. 

Response: As explained previously, 

the intent of § 155.220(c)(3)(i)(M) is not 

to require lengthy or complicated 

explanations, but to provide consumers 

basic insight into the key factors 

underlying the information web-broker 

websites are presenting to consumers (or 

agents/brokers assisting consumers). We 

understand that in some cases webbroker websites may have adopted very 

complex algorithms for plan 

recommendations or default display of 

plans, and we do not intend that the 

intricate details underlying those 

proprietary models be described or 

disclosed. However, we expect in all 

cases there are core principles or criteria 

that form the foundation for QHP 

recommendations or default display 

methodologies and we do expect those 

to be disclosed to assist the consumer 

with making informed choices. We 

continuously review web-broker 

websites and will consider future 

updates and clarifications to this policy 

based on lessons learned and our 

experience implementing this new 

standard for web-broker websites. 

d. Federally-Facilitated Exchange 

Standards of Conduct (§ 155.220(j)) 

In the proposed rule (87 FR 644), we 

proposed to amend § 155.220(j)(2)(i) 

such that its nondiscrimination 

protections would explicitly prohibit 

discrimination based on sexual 

orientation and gender identity. As we 

explain in the SUPPLEMENTARY

INFORMATION section earlier in the 


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27266 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

247 Gibbs, M. (2006) Disposable email addresses 

foil marketing plan, Real but temporary email 

addresses to get you through the verification 

process. NetworkWorld. https://

www.networkworld.com/article/2301492/ 

disposable-email-addresses-foil-marketingplans.html. 

248We also removed the reference to this standard 

(that is, the phrase ‘‘that is secure, not disposable’’ 

was removed) in the introductory language in 

§ 155.220(j)(2)(ii)(A). In addition, we are capturing 

the email address guidelines proposed to be added 

at new § 155.220(j)(2)(ii)(A)(2) and (3) in new 

§ 155.220(j)(2)(ii)(A)(1) through (2) instead. We also 

make a non-substantive change to eliminate 

duplicate references to information ‘‘on an 

Exchange application’’ in § 155.220(j)(2)(ii)(A) 

through (D). 

preamble, HHS will address this policy, 

as well as the public comments 

submitted in response to this proposal, 

in future rulemaking. 

i. Providing Correct Information to the 

FFEs 

In the proposed rule (87 FR 644), we 

proposed to add new 

§ 155.220(j)(2)(ii)(A) through (D) to 

codify additional details regarding the 

requirement that agents, brokers, and 

web-brokers provide correct information 

to FFEs and SBE–FPs. More specifically, 

we proposed to capture specific 

examples of what it means to provide 

correct information to the FFEs and 

SBE–FPs for the consumer’s email 

address, mailing address, telephone 

number, and household income 

projection based on our experience 

operating the FFEs and the Federal 

platform on which certain State 

Exchanges rely. We also proposed to 

amend § 155.220(j)(2)(ii) to make clear 

that the proposed standards of conduct 

related to agents, brokers, and webbrokers providing the FFEs and SBE– 

FPs with correct information listed in 

new § 155.220(j)(2)(ii)(A) through (D) 

are not exhaustive, but are simply 

illustrative of areas where HHS has 

identified a need for more direct and 

clear guidance. We refer readers to the 

proposed rule (87 FR 644 through 647) 

for additional information and 

background on these proposals. 

We are generally finalizing as 

proposed § 155.220(j)(2)(ii)(A) through 

(D), except that we are not finalizing the 

proposal to add § 155.220(j)(2)(ii)(A)(1) 

that would have prohibited agents, 

brokers, and web-brokers from entering 

consumer email addresses with 

‘disposable’ domains that expire after a 

set period of time.247 248 We considered 

that agents, brokers, and web-brokers do 

not control the type of email domains 

consumers choose to use, own, or have 

access to. We also considered that there 

are available alternatives that HHS 

could use to systematically block the 

entry of disposable email addresses that 

expire after a set period of time. 

We are finalizing the other provisions 

we proposed to under new 

§ 155.220(j)(2)(ii)(A), which provide that 

an agent, broker, or web-broker may 

only enter an email address on an 

application for Exchange coverage or for 

APTC and CSRs for QHPs sold through 

an FFE or SBE–FP that belongs to the 

consumer or the consumer’s authorized 

representative. The regulation text also 

clarifies that email addresses may only 

be entered on applications submitted to 

an Exchange with the consent of the 

consumer or the consumer’s authorized 

representative, and that properly 

entered email addresses are required to 

adhere to certain guidelines. The 

guidelines we are finalizing in this rule, 

which were proposed to be added at 

new § 155.220(j)(2)(ii)(A)(2) and (3), will 

be captured in new 

§ 155.220(j)(2)(ii)(A)(1) through (2), 

which are renumbered consistent with 

our decision to not finalize 

§ 155.220(j)(2)(ii)(A)(1). We are 

otherwise finalizing these two 

guidelines for email addresses as 

proposed. 

We are also finalizing the proposal to 

add new § 155.220(j)(2)(ii)(B), which 

provides that an agent, broker, or webbroker may only enter a telephone 

number on an application for Exchange 

coverage or an application for APTC and 

CSRs for QHPs that belongs to the 

consumer or their authorized 

representative designated in compliance 

with § 155.227. We reiterate that a 

telephone number belongs to the 

consumer if they, or their authorized 

representative, are accessible at the 

number and have access to the number. 

We are also finalizing the addition of 

text to § 155.220(j)(2)(ii)(B) to provide 

that telephone numbers entered on 

applications submitted to an Exchange 

may not be the personal number or 

business number of the agent, broker, or 

web-broker assisting with or facilitating 

enrollment through an FFE or assisting 

the consumer in applying for APTC and 

CSRs for QHPs, or their business or 

agency, unless the telephone number is 

actually that of the consumer or their 

authorized representative. 

We are finalizing the proposal to add 

new § 155.220(j)(2)(ii)(C), which 

requires that an agent, broker, or webbroker may only enter a mailing address 

on an application for Exchange coverage 

or application for APTC and CSRs for 

QHPs that belongs to, or is primarily 

accessible by, the consumer or their 

authorized representative designated in 

compliance with § 155.227. We reiterate 

that consumer mailing addresses 

entered on applications submitted to an 

Exchange must not be for the exclusive 

or convenient use of the agent, broker, 

or web-broker, and must be an actual 

residence or a secure location where the 

consumer or their authorized 

representative may receive 

correspondence, such as a P.O. Box or 

homeless shelter. We are also finalizing 

that mailing addresses entered on 

applications submitted to an Exchange 

may not be that of the agent, broker, or 

web-broker, or their business or agency, 

unless it is the rare situation where that 

address is the actual residence of the 

consumer or their authorized 

representative. 

Fourth, to minimize consumer harm 

stemming from the APTC reconciliation 

process on the tax return, as well as to 

protect Exchange operations from 

inaccurate APTC and CSR 

determinations, we are finalizing 

§ 155.220(j)(2)(ii)(D), which requires 

that, when submitting household 

income projections used by the 

Exchange to determine a tax filer’s 

eligibility for APTC in accordance with 

§ 155.305(f) or CSRs in accordance with 

§ 155.305(g), an agent, broker, or webbroker may only enter a household 

income projection for a consumer that 

the consumer (or the consumer’s 

authorized representative designated in 

compliance with § 155.227) has 

authorized and confirmed is an accurate 

estimate of their household income. 

Failure to provide correct information 

on household income can harm 

consumers by creating liability during 

the APTC reconciliation process on the 

tax return or delaying the issuance of a 

tax refund, as well as preventing the 

efficient operation of the Exchange. 

CSRs are similarly tied to a consumer’s 

household income reducing the amount 

that certain eligible individuals have to 

pay for deductibles, copayments, and 

coinsurance. Incorrect projections of a 

consumer’s household income would 

also lead to incorrect CSR 

determinations, which would harm 

QHP issuers and prevent the efficient 

operation of the Exchange. We reiterate 

that good-faith income projections, 

versus an income projection designed to 

achieve the lowest monthly rate, would 

better protect the consumer from the 

unexpected cost and burden of repaying 

large amounts of APTC. 

Finally, for greater clarity, the 

regulation text we adopt in this final 

rule at § 155.220(j)(2)(ii)(A) through (D) 

contains a non-substantive change to 

each proposed paragraph (A) through 

(D) to eliminate duplicate references to 

information ‘‘on an Exchange 

application’’ or ‘‘entered on an 

Exchange application.’’ These editorial 

revisions in no way change or otherwise 


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249Consistent with the decision to not finalize 

§ 155.220(j)(2)(ii)(A)(1), the phrase ‘‘that is secure, 

not disposable’’ was removed from the introductory 

language in § 155.220(j)(2)(ii)(A). In addition, the 

email address guidelines proposed to be added at 

new § 155.220(j)(2)(ii)(A)(2) and (3) will instead be 

captured in new § 155.220(j)(2)(ii)(A)(1) through (2). 

These guidelines are otherwise being finalized as 

proposed. 

250See 45 CFR 155.220(l). 

251See 45 CFR 155.220(c)(1) and (c)(3)(ii)(B). 

252See Returning Agents’ and Brokers’ Guide to 

Plan Year 2022 Marketplace Registration and 

Training. (2021). CMS. https://www.cms.gov/files/ 

document/plan-year-2022returning-agents-andbrokers-guide-marketplace-registration-andtraining.pdf and New Agents’ Guide to Training. 

(2021). CMS. https://www.cms.gov/files/document/ 

plan-year-2022new-agents-and-brokers-guidemarketplace-registration-and-training.pdf. 

253Consistent with the decision to not finalize 

§ 155.220(j)(2)(ii)(A)(1), the phrase ‘‘that is secure, 

not disposable’’ was removed from the introductory 

language in § 155.220(j)(2)(ii)(A). In addition, the 

email address guidelines proposed to be added at 

new § 155.220(j)(2)(ii)(A)(2) and (3) will instead be 

captured in new § 155.220(j)(2)(ii)(A)(1) through (2). 

We also make a non-substantive change to eliminate 

duplicate references to information ‘‘on an 

Exchange application’’ in § 155.220(j)(2)(ii)(A) 

through (D). These guidelines are otherwise being 

finalized as proposed. 

affect the requirements under the 

proposed versions of the text and more 

clearly and consistently indicate that 

the applications that are the subject of 

these provisions are applications 

submitted to Exchanges for coverage 

under a QHP, with or without APTC 

and CSR. 

We sought comment on these 

proposals. After reviewing the public 

comments, and as stated above, we will 

not finalize § 155.220(j)(2)(ii)(A)(1) 

concerning disallowing agents, brokers, 

and web-brokers entry of temporary 

email addresses on consumers’ behalf 

because agents, brokers, and webbrokers do not control the type of email 

domains consumers choose to use, own, 

or have access to. However, we are 

finalizing the other sections as 

proposed.249 While we are not finalizing 

§ 155.220(j)(2)(ii)(A)(1), we strongly 

encourage agents, brokers, and webbrokers to avoid using such temporary 

email addresses in applications as a best 

practice. 

We summarize and respond to public 

comments received on the proposals 

related to the standard in 

§ 155.220(j)(2)(ii) that agents, brokers, 

and web-brokers provide correct 

consumer information to the FFEs 

below. 

Comment: A number of commenters 

supportive of the proposal generally 

requested that HHS dedicate funds to 

compliance, monitoring, and 

enforcement efforts in order to address 

agent, broker, and web-broker 

compliance with relevant Exchange 

standards of conduct. While the 

majority of comments pertaining to 

monitoring and enforcement were 

general in nature, several commenters 

indicated they supported continuing to 

clarify standards of agent, broker, and 

web-broker conduct. One commenter 

also recommended that Exchange user 

fees could be used to fund future 

oversight initiatives. 

Response: We are finalizing, as 

proposed, the amendments to 

§ 155.220(j)(2)(ii) and the accompanying 

policies related to the provision of 

correct consumer information by agents, 

brokers, and web-brokers to the FFEs. 

These finalized amendments and 

policies also apply to agents, brokers, 

and web-brokers assisting with 

enrollments in SBE–FPs.250 The 

amendments to § 155.220(j)(2)(ii) 

provide clear, concise, and direct 

guidance to agents, brokers, and webbrokers assisting consumers with 

enrollment in QHPs sold on the FFEs 

and SBE–FPs about the standards of 

conduct and behavior expected of them. 

We also generally note that we intend to 

include these new, clarifying standards 

as part of existing monitoring and 

oversight of agents, brokers, and webbrokers assisting consumers with 

enrollments through FFEs and SBE–FPs. 

We appreciate the recommendations 

provided. They will be taken into 

consideration for future rulemaking and 

policy development. However, we are 

not finalizing the amendment to 

§ 155.220(j)(2)(ii)(A)(1) because agents, 

brokers, and web-brokers do not control 

the type of email domains consumers 

choose to use, own, or access. 

Comment: Many commenters 

supportive of the proposal requested 

that HHS add regulatory text to require 

agents, brokers, and web-brokers to 

check consumers’ eligibility for 

Medicare and Medicaid in addition to 

their eligibility for private insurance 

through the FFEs. 

Response: We agree with the 

commenters that consumers eligible for 

Medicare and Medicaid should be 

informed about those options. Indeed, 

in order to enroll a consumer in QHP 

coverage on the Exchange, agents, 

brokers, and web-brokers must use the 

Exchange’s Single Streamlined 

Application, which first verifies 

Medicare and Medicaid eligibility, 

where applicable. If a web-broker’s 

website is used to complete the 

application, the application and website 

must, among other requirements, 

request the minimum amount of 

information to verify eligibility for the 

programs and benefits included in the 

Single Streamlined Application as 

enumerated in § 155.405(a), which, 

again, would include a requirement to 

collect information necessary to verify 

Medicare and Medicaid eligibility, as 

applicable.251 HHS also provides 

training to agents, brokers, and webbroker entities participating in the FFEs 

and SBE–FPs on how to help connect 

Medicare-eligible consumers to 

Medicare and potentially Medicaideligible consumers with Medicaid 

enrollment resources.252 HHS is 

finalizing the amendment to 

§ 155.220(j)(2)(ii)(D) to require agents, 

brokers, and web-brokers only to enter 

a household income projection for a 

consumer that the consumer, or the 

consumer’s authorized representative, 

has authorized and confirmed as an 

accurate estimate. However, we did not 

propose and are not finalizing 

regulatory text to mandate agents, 

brokers, and web-brokers assisting with 

enrollments in FFEs and SBE–FPs to 

check a consumer’s eligibility for 

Medicare and Medicaid. 

Comment: Some commenters who 

were neutral on the proposal stated that 

HHS already has the established 

infrastructure which allows for agents, 

brokers, and web-brokers to be 

penalized for their misconduct, and 

additional standards of conduct, 

including submitting an attestation to 

the accuracy of the information, relying 

on consumers to provide accurate 

household income projections, and 

clarifying parameters around consumer 

contact information, create an extra 

burden on compliant agents, brokers, 

and web-brokers. 

Response: With the exception of 

§ 155.220(j)(2)(ii)(A)(1), we are generally 

finalizing, as proposed,253 the 

amendments to § 155.220(j)(2)(ii) and 

the accompanying policies related to the 

FFE standard of conduct that agents, 

brokers, and web-brokers provide 

correct consumer information to the 

FFEs. HHS does not agree that these 

revisions will create an extra burden on 

compliant agents, brokers, and webbrokers because the revisions only 

further elucidate what was already 

required under HHS’ rules. The 

proposals we finalize do not create new 

obligations or standards of conduct, and 

should not cause an appreciable 

increase in the burden on agents, 

brokers, and web-brokers that already 

comply with the FFE standards of 

conduct. Rather, they provide clarity 

and additional examples consistent with 

existing guidance on how to provide 

correct consumer information on 

applications submitted to the FFEs or 

SBE–FPs. As detailed in the proposed 

rule, these amendments and 


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254 45 CFR 155.220(d). 

255Agent Broker General Agreement for 

Individual Market Federally-Facilitated Exchanges 

and State-Based Exchanges on the Federal 

Platform. (2019). HHS. https://www.hhs.gov/ 

guidance/sites/default/files/hhs-guidancedocuments/ab_py2020_im_general_agreement_

final_1.pdf. 

256 Identity proofing is required when a consumer 

creates an account on HealthCare.gov via an EDE 

site, and when a consumer works with an agent or 

broker in person. Under the existing process, when 

a consumer creates an account on HealthCare.gov 

or an EDE site, they go through a remote identity 

proofing (RIDP) process. The RIDP process is an 

Experian service that takes basic demographic 

information regarding the consumer and requires 

the consumer to answer multiple choice questions 

correctly to proceed. This is done to ensure the 

consumer is a real person, to protect the consumer’s 

personal information, and to prevent someone else 

from creating an Exchange account and applying for 

Exchange coverage in another’s name without their 

knowledge or consent. 

clarifications were developed in 

response to common errors HHS 

identified on applications submitted by 

agents, brokers, and web-brokers to the 

FFE, and will help supplement existing 

guidance to facilitate the submission of 

accurate information to the FFEs. The 

supplementary guidance clarifies how 

to come into compliance with the 

existing requirements in 

§ 155.220(j)(2)(ii), which HHS believes 

will make the process of enrolling 

consumers more straightforward, due to 

clearer expectations concerning existing 

standards from the agency and a 

reduction in errors filling out the 

application. Moreover, it protects 

consumers and enhances the efficient 

operation of the Exchange. 

ii. Prohibited Business Practices 

In the proposed rule (87 FR 647), we 

proposed to amend § 155.220(j)(2) to 

add several standards of conduct for 

agents, brokers, and web-brokers that 

assist consumers with applying for and 

enrolling in coverage through an FFE or 

SBE–FP, with or without APTC and 

CSRs. Similar to the standards first 

established in the 2017 Payment Notice 

(81 FR 12203), these additional 

standards are also intended to protect 

against agent, broker, and web-broker 

conduct that is harmful to consumers or 

frustrates the efficient operation of the 

Exchange. Specifically, we proposed to 

codify standards related to the use of 

scripting and other automation 

interactions with our Systems or the DE 

Pathways (including both Classic DE 

and EDE), identity proofing consumer 

accounts on HealthCare.gov, and 

providing assistance with SEP 

enrollments. HHS proposed these new 

FFE standards of conduct for agents, 

brokers, and web-brokers assisting 

consumers in FFEs and SBE–FPs 

because it has observed practices in 

these areas that have caused or can 

cause harm to consumers, as well as 

impede the efficient operation of the 

Exchange. We described these 

proposals, as well as summarize and 

respond to the comments on each, in the 

sections that follow. 

iii. Prohibited Automated Interactions 

With CMS Systems 

To enroll qualified individuals in a 

QHP in a manner that constitutes 

enrollment through the Exchange and 

assist individuals in applying for APTC 

and CSRs for QHPs, agents, brokers, and 

web-brokers must comply with the 

regulatory requirements contained in 

§ 155.220, including the requirement 

that such agents, brokers, and webbrokers comply with the terms of 

applicable agreements between the 

agent, broker, or web-broker and the 

Exchange.254 One such agreement, the 

‘‘Agent Broker General Agreement for 

Individual Market Federally-Facilitated 

Exchanges and State-Based Exchanges 

on the Federal platform (IM General 

Agreement),’’ 255 sets forth requirements 

related to automation. Specifically, 

section IV(c)(i)(4) of the IM General 

Agreement provides that scripting and 

other automation of interactions with 

CMS Systems or the DE Pathways are 

strictly prohibited, unless approved in 

advance by CMS. While these 

requirements are addressed in the IM 

General Agreement, they are not 

currently explicitly set forth in the 

regulation. Therefore, we proposed to 

amend § 155.220(j)(2) to add the 

proposed new § 155.220(j)(2)(vi) to 

codify requirements and limitations on 

the use of automation and align the 

regulation with the IM General 

Agreement (87 FR 647). The codification 

of the requirements and limitations in 

the proposed § 155.220(j)(2)(vi) would 

provide that an agent, broker, or webbroker that assists with or facilitates 

enrollment of qualified individuals, 

qualified employers, or qualified 

employees, in coverage in a manner that 

constitutes enrollment through an FFE 

or SBE–FP, or assists individuals in 

applying for APTC and CSRs for QHPs 

sold through an FFE, or SBE–FP must 

not engage in scripting and other 

automation of interactions with CMS 

Systems or DE Pathways, unless 

approved in advance in writing by CMS. 

CMS Systems to which CMS-registered 

agents, brokers, and web-broker may 

have access include HealthCare.gov, 

and the CMS Enterprise Portal. 

HHS proposed this standard of 

conduct because it has observed 

instances where unauthorized 

automated browser-based interactions 

with Exchange systems have led to 

unauthorized enrollments or 

unauthorized application changes. The 

risk of harm to consumers and the 

efficient operation of the Exchange is 

heightened when automated 

interactions occur because more 

consumer information can be 

downloaded using automation than 

through a manual process. Allowing 

automation would also create significant 

traffic in the system, which could result 

in an increased risk of system speed 

slowdowns and stability issues, as these 

automated interactions would cause a 

lot more system activity per user than 

anticipated and planned. We sought 

comments on these concerns and this 

proposal. 

We also sought comments on the 

appropriate uses of automation that may 

contribute to the efficient operation of 

the FFEs and SBE–FPs, and the DE 

Pathways. 

We received one comment generally 

supportive of the proposal because it 

would codify HHS’ enforcement 

authority and align the regulation with 

requirements applicable to agents, 

brokers, and web-brokers in agreements 

with the FFE and SBE–FPs. 

After considering the responsive 

comments, we are finalizing the 

addition of the new § 155.220(j)(2)(vi) as 

proposed. 

iv. Identity Proofing 

HealthCare.gov utilizes identity 

proofing to verify the identity of a 

consumer when a new Exchange 

account is created. We proposed to 

amend § 155.220(j)(2) to add the 

proposed new § 155.220(j)(2)(vii), which 

would provide that when identity 

proofing accounts on HealthCare.gov, 

agents, brokers, or web-brokers must 

only use an identity that belongs to the 

consumer (87 FR 648 through 649). 

We are finalizing this amendment to 

§ 155.220(j)(2) because we have 

observed situations, despite the current 

identity proofing process,256 in which 

agents have used the same identity 

information to complete the identity 

proofing process for multiple consumer 

Exchange accounts, which can harm 

consumers and prevent the efficient 

operation of the Exchange. Such 

behavior also undermines the purpose 

of identity proofing consumers and is 

often associated with unauthorized 

enrollments, identity theft, and fraud. 

We sought comment on this proposal. 

We received one comment responsive 

to and supportive of the proposed 

amendment to add new 

§ 155.220(j)(2)(vii) clarifying that agents, 

brokers, and web-brokers must use a 

consumer’s correct information for RIDP 


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process and only for the RIDP process 

for that consumer. 

After considering the responsive 

comment, we are finalizing the addition 

of a new § 155.220(j)(2)(vii) as proposed. 

v. Providing Information to FederallyFacilitated Exchanges in Connection 

With Special Enrollment Periods 

Section 155.420(a)(1) provides that 

the Exchange must provide SEPs during 

which qualified individuals may enroll 

in QHPs and enrollees may change 

QHPs. We proposed to amend 

§ 155.220(j)(2) to add the proposed new 

§ 155.220(j)(2)(viii), which would state 

that when providing information to 

FFEs that may result in a determination 

of eligibility for an SEP under § 155.420, 

agents, brokers, and web-brokers must 

obtain authorization from the consumer 

to submit the request for a 

determination of eligibility for a SEP 

(although this authorization does not 

need to be in writing) and make the 

consumer aware of the specific 

triggering event and SEP for which the 

agent, broker, or web-broker will be 

submitting an eligibility determination 

request on the consumer’s behalf (87 FR 

648). Under this proposed standard of 

conduct, agents, brokers, and webbrokers providing assistance with SEP 

enrollments would be required to make 

reasonable, good faith efforts to 

ascertain the consumer’s eligibility for 

the SEP, consistent with the existing 

standard under § 155.220(j)(3). We 

proposed this requirement to address 

circumstances HHS has observed during 

which consumers who apply for QHP 

enrollment through an SEP with the 

assistance of an agent, broker, or web 

broker are not made aware of the basis 

upon which their QHP application 

claims entitlement to an SEP, or who 

otherwise did not authorize an agent, 

broker, or web-broker to enroll them in 

a QHP or make a change to their current 

QHP enrollment. 

The purpose of SEPs is to promote 

access to health insurance coverage and 

continuous coverage by allowing 

individuals to enroll outside of the open 

enrollment period only if they 

experience certain SEP triggering 

events; this helps to avoid and control 

against adverse selection that would 

destabilize the Exchanges. The purpose 

of proposing to codify this requirement 

in the proposed new § 155.220(j)(2)(viii) 

is to ensure the validity and integrity of 

the SEP process, avoid Exchange 

destabilization, and create clear, 

enforceable standards to help mitigate 

consumer harm by establishing that 

agents, brokers, and web-brokers are 

responsible for providing information to 

the FFE that is accurate to the best of 

their knowledge, and to which the 

consumer has attested. 

We sought comment on these 

proposals. 

We received one comment responsive 

to and generally supportive of the 

proposal that when providing 

information to the Exchange related to 

an SEP enrollment, agents, brokers, and 

web-brokers must obtain authorization 

from the consumer to submit the request 

for an eligibility determination, make 

the consumer aware of the specific 

triggering event, and of the specific SEP 

for which the agent, broker, or webbroker is submitting the eligibility 

determination request on the 

consumer’s behalf. 

After considering the responsive 

comment, we are finalizing the addition 

of a new § 155.220(j)(2)(viii) as 

proposed. 

4. Premium Calculation (§ 155.240(e)) 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 648), we proposed to 

add language at § 155.240(e)(2) to apply 

the premium calculation methodology 

currently applicable in the FFEs and 

SBE–FPs to all Exchanges, beginning 

with PY 2024. We further discuss these 

proposed changes in the Administration 

of Advance Payments of the Premium 

Tax Credit and Cost-Sharing Reductions 

(§ 155.340) section of this final rule 

where we proposed to require all 

Exchanges to prorate premium and 

APTC amounts in cases where an 

enrollee is enrolled in a particular 

policy for less than the full coverage 

month. We sought comment on these 

proposals. 

We received public comments on the 

proposed amendments to the premium 

calculation at § 155.240(e). After 

considering of the comments received, 

we are not finalizing any amendments 

to § 155.240. 

Comments related to the proposed 

amendments at § 155.240(e) are 

addressed in section III.D.9 of the 

preamble, regarding the Administration 

of Advance Payments of the Premium 

Tax Credit and Cost Sharing (§ 155.340), 

where we present a unified summary of 

comments on the proposal to clarify that 

an Exchange is required to prorate the 

calculation of premiums for individual 

market policies and the calculation of 

APTC. We are codifying the proposed 

APTC proration methodology as the 

methodology Exchanges on the Federal 

platform (FFE and SBE–FP) will 

continue to use, but we are not 

finalizing the requirement for State 

Exchanges to use the FFE’s methodology 

to prorate premium or APTC amounts. 

Additional information on the policy we 

are finalizing is also provided in section 

III.D.9. of the preamble of this final rule. 

5. Eligibility Standards (§ 155.305) 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 648), we proposed a 

technical amendment to 

§ 155.305(f)(1)(i) to clarify that the 

income eligibility standards used by the 

Exchange for determining whether an 

individual is an applicable taxpayer for 

purposes of APTC eligibility are the 

same as the income thresholds at IRS 

regulation 26 CFR 1.36B–2(b). Whereas 

the current regulation states that 

expected household income must be 

‘‘greater than or equal to 100 percent but 

not more than 400 percent of the FPL for 

the benefit year for which coverage is 

requested,’’ the proposed amendment 

specifies the individual must have an 

expected household income which will 

qualify the tax filer as an applicable 

taxpayer according to 26 CFR 1.36B– 

2(b). In turn, 26 CFR 1.36B–2(b) outlines 

the FPL percentage thresholds that are 

used for determining PTC eligibility. In 

practice, the Federal and State 

Exchanges have always relied on 

thresholds outlined in 26 CFR 1.36B– 

2(b) to determine APTC eligibility, but 

we noted that this proposed change 

allows for greater regulatory consistency 

and minimizes the need to update 

§ 155.305(f)(1)(i) in response to 

legislative changes that may alter FPL 

percentage thresholds, as occurred for 

certain years under the ARP. 

We are finalizing the proposal as 

proposed. 

Comment: Two commenters provided 

general support for this technical 

amendment and no commenters 

opposed it. 

Response: We thank the comments for 

their general support of this technical 

amendment and believe this change 

aligns with current practice and will 

ensure greater consistency going 

forward. 

6. Eligibility for Advance Payments of 

the Premium Tax Credit (§ 155.305(f)(5)) 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 648), we proposed to 

amend § 155.305(f)(5) to require that 

Exchanges must calculate APTC in 

accordance with 26 CFR 1.36B–3, which 

defines the calculation of the PTC 

amount, and subject to the prorating 

methodology at proposed § 155.340(i). 

We further discussed these proposals in 

the Administration of Advance 

Payments of the Premium Tax Credit 

and Cost-Sharing Reductions (§ 155.340) 

section of the proposed rule. We sought 

comment on this proposal. 


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257 In the proposed rule, we neglected to delete 

a reference to § 155.320(d)(4)(ii) in the regulation 

text. We are deleting that reference in the regulation 

text in this final rule, consistent with the proposal. 

We received public comments on the 

proposed amendments to 

§ 155.305(f)(5). In the following 

comments and responses, we discuss 

comments specific to the proposal for 

this section. We are codifying the 

proposed APTC proration methodology 

as the methodology Exchanges on the 

Federal platform (FFE and SBE–FP) will 

continue to use, but we are not 

finalizing the requirement for State 

Exchanges to use the FFE’s methodology 

to prorate premium or APTC amounts. 

For a unified summary of all comments 

on the proposal (to clarify that an 

Exchange is required to prorate the 

calculation of premiums for individual 

market policies and the calculation of 

APTC and for more information on the 

policy we are finalizing), we refer 

readers to the section III.D.9 of the 

preamble on Administration of Advance 

Payments of the Premium Tax Credit 

and Cost Sharing (§ 155.340). 

Comment: A few commenters noted 

that the proposed regulatory 

amendment to part § 155.305(f)(5) did 

not appear in the corresponding section 

of the Regulatory Text section of the 

proposed rule. 

Response: HHS appreciates the 

comments identifying this technical 

error. The proposed regulatory 

amendment at § 155.305(f)(5) was 

inadvertently omitted from the 

published proposed regulation text. 

HHS is correcting this technical error by 

including amendments to § 155.305(f)(5) 

in the Regulatory Text section of this 

final rule as described in the preamble 

to the proposed rule, and consistent 

with the policy adopted in this final 

rule, as described in the section III.D.9 

of the preamble on Administration of 

Advance Payments of the Premium Tax 

Credit and Cost Sharing (§ 155.340). 

7. Verification Process Related to 

Eligibility for Insurance Affordability 

Programs—Employer Sponsored Plan 

Verification (§ 155.320) 

Strengthening program integrity with 

respect to subsidy payments in the 

individual market continues to be a top 

HHS priority. Accordingly, in the 

proposed rule (87 FR 649 through 651), 

we proposed to revise § 155.320(d)(4) to 

provide each Exchange with the 

flexibility to tailor its employer 

sponsored plan verification process 

based on its assessment of the risk of 

inappropriate payments of APTC and 

CSRs as a result of associated risk and 

composition of their enrolled 

population. 

Specifically, we proposed to allow 

Exchanges to implement a verification 

method that utilizes an approach based 

on a risk assessment identified through 

analysis of an Exchange’s experience in 

relation to APTC/CSRs payments. We 

refer to the proposed rule (87 FR 649), 

where we provided additional 

background and rationale for the 

proposals. 

First, we proposed to revise 

§ 155.320(d)(4) by removing the 

requirement that the Exchange select a 

random sample of applicants for whom 

the Exchange does not have data as 

specified in § 155.320(d)(2)(i) through 

(iii) effective upon the finalization of the 

final rule and adding new language at 

§ 155.320(d)(4) under which an 

Exchange would be permitted to design 

its verification process for enrollment in 

or eligibility for qualifying coverage in 

an eligible employer sponsored plan 

based on the Exchange’s assessment of 

risk for inappropriate payment of APTC/ 

CSRs or eligibility for CSRs, as 

appropriate. The proposed language at 

§ 155.320(d)(4) would provide all 

Exchanges with the flexibility to 

determine the best means to design and 

implement a process to verify an 

applicant’s enrollment in or eligibility 

for employer sponsored coverage, 

through analyses of relevant Exchange 

data, research, studies, and other means 

appropriate and necessary to identify 

risk factors for inappropriate payment of 

APTC or eligibility for CSRs. As 

previously discussed earlier in this rule, 

Exchanges must continue to use the 

procedures set forth in § 155.320(d)(4)(i) 

until a new alternate procedure becomes 

effective. We also proposed to retain the 

current requirement at 

§ 155.320(d)(4)(i)(A) that the Exchange 

provide notice to the applicant, but 

amend it such that it is contingent on 

whether the Exchange will be contacting 

the employer of an applicant to verify 

whether an applicant is enrolled in an 

eligible employer sponsored plan or is 

eligible for qualifying coverage in an 

eligible employer sponsored plan for the 

benefit year for which coverage is 

requested. 

Second, to provide more flexibility for 

Exchanges, we proposed no longer 

applying the requirement at 

§ 155.320(d)(4)(i)(D), which requires the 

Exchange to make reasonable attempts 

to contact an employer listed on an 

applicant’s Exchange application to 

verify whether an applicant is enrolled 

in an employer sponsored plan or is 

eligible for qualifying coverage in an 

eligible employer sponsored plan. 

Third, we proposed to remove the 

requirement at § 155.320(d)(4)(i)(F), 

which states that after 90 days from the 

date on which the Exchange first 

provides notice to an applicant as 

described in § 155.320(d)(4)(i)(A), the 

Exchange must redetermine eligibility 

for APTC and CSRs if the Exchange is 

unable to obtain the necessary 

information from an applicant’s 

employer regarding enrollment in or 

eligibility for qualifying coverage in an 

employer sponsored plan. We continue 

to believe that these proposed changes 

provide Exchanges with the flexibility 

to implement a verification process for 

enrollment in or eligibility for an 

employer sponsored plan that is tailored 

to risks observed in their respective 

populations. As previously discussed 

earlier in the preamble, Exchanges must 

continue to use the procedures set forth 

in § 155.320(d)(4)(i) until a new 

alternate procedure becomes effective. 

Finally, we proposed to remove the 

option for Exchanges to follow the 

procedures outlined in 

§ 155.320(d)(4)(ii) to develop an 

alternative verification process that is 

approved by HHS.257 The revisions to 

§ 155.320(d)(4)(i) provide enough 

flexibility for Exchanges to develop a 

risk-based verification process for 

eligibility for or enrollment in employer 

sponsored coverage. Therefore, 

extending § 155.320(d)(4)(ii) indefinitely 

would prove to be redundant in light of 

the proposed changes discussed earlier 

in the preamble. 

We are finalizing these proposals as 

proposed. Specifically, we require that 

any risk-based verification process be 

reasonably designed to ensure the 

accuracy of the data and be based on the 

activities or methods used by an 

Exchange such as studies, research, and 

analysis of an Exchange’s enrollment 

data. We expect that this risk 

assessment would be informed by and 

identified through research and analysis 

of an Exchange’s experiences with 

current and past enrollments, and not 

solely based on previously published 

research or literature. For example, if an 

Exchange’s experience is that applicants 

from large companies that have different 

classes of employees, who may or may 

not qualify for employer sponsored 

coverage due to the number of hours 

they work per week, represent a higher 

risk of improper APTC/CSR payments, 

then the Exchange may implement a 

risk-based verification process to 

confirm whether applicants employed 

by such companies appropriately are 

allowed APTC/CSRs. 

Given that the risk-based approach to 

verify whether an applicant has 

received an offer of coverage through an 

employer or is enrolled in employer 

sponsored coverage depends largely on 


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an Exchange’s assessment of risk and 

unique populations, we noted in the 

proposed rule that we believe that there 

are various ways in which a risk-based 

approach can be operationalized. Below 

we outline a few scenarios to provide 

illustrative examples of the procedures 

an Exchange may follow. 

The first scenario concerns Exchanges 

that do not have access to an approved 

trusted data source that provides 

accurate and up-to-date information 

regarding enrollment or pre-enrollment 

in coverage offered through an employer 

and have determined that manual 

verification, such as conducting random 

sampling of enrollees to determine if 

any had an offer of affordable coverage 

through their employer but chose to 

enroll in an Exchange QHP with APTC/ 

CSR instead, requires significant 

resources to conduct and have 

determined that the risk for improper 

APTC/CSR payment is low. In this 

scenario, Exchanges may make a 

reasonable determination and decide to 

accept a consumer(s)’ attestation 

without any further manual verification, 

similar to current procedures to accept 

attestation only for residency and 

incarceration status. 

Conversely, if an Exchange has 

determined a high risk for improper 

APTC/CSR payment exists within its 

enrolled population, but also does not 

have access to an approved trusted data 

source for electronic verification, an 

Exchange may make a reasonable 

determination that conducting manual 

verification as part of its risk-based 

approach, such as conducting random 

sampling, is the appropriate risk-based 

approach to conduct employer 

sponsored coverage verification. 

Because we found that the risk for 

improper APTC payment is low in 

Exchanges using the Federal eligibility 

and enrollment platform, these 

Exchanges would leverage the current 

attestation questions on the single, 

streamlined application and accept 

attestation without further verification 

against other trusted data sources. The 

attestation questions include, ‘‘Are any 

of these people currently enrolled in 

health coverage? ’’ and ‘‘Will any of 

these people be offered health coverage 

through their job, or through the job of 

another person, like a spouse or 

parent? ’’. We would also accept 

attestations related to employer 

sponsored coverage because we 

currently lack access to another 

approved data source to verify whether 

an applicant has an offer of employer 

sponsored coverage that is affordable 

and meets minimum value standards. In 

the 2019 study referenced earlier in the 

preamble, we examined whether the use 

of other data sources would be feasible 

to verify offers and affordability of 

employer sponsored coverage, such as 

the National Directory of New Hires 

(NDNH) database. We determined that 

all available data sources were 

insufficient and did not provide the 

necessary information to satisfy the 

requirement, or would require 

legislative changes to give Exchanges 

permission to access and use them for 

verification of employer sponsored 

coverage. We noted that additional data 

source access, such as the NDNH, would 

improve accuracy and reduce the 

administrative burden to consumers for 

the income verification step during the 

eligibility process. 

Finally, under this proposal, we 

clarified that since SBE–FPs use the 

HealthCare.gov platform for eligibility 

and enrollment determinations, SBE– 

FPs would be required to follow the 

approach outlined above consistent 

with CMS regulations and the 

agreements SBE–FPs sign with us. 

Current Federal platform agreements 

require that SBE–FPs adhere to the same 

policy and operations as Exchanges that 

use the Federal eligibility and 

enrollment platform regarding eligibility 

for and enrollment in QHP coverage. 

Furthermore, in accordance with 

§ 155.120(c), an Exchange’s verification 

program cannot be discriminatory in 

nature, and State Exchange’s 

verification processes will be monitored 

by HHS in accordance with its authority 

under §§ 155.1200 and 155.1210. In 

designing their verification program, 

Exchanges should pay special attention 

to known risks, including risk pool 

manipulation or steering high risk 

employees from the group health market 

into the Exchanges. The goal of 

proposing this policy was to ensure that 

only applicants eligible for APTC/CSRs 

benefit from these subsidies, and we 

would exercise our oversight authorities 

to ensure an Exchange’s verification 

policies are not used to prevent any 

particular class of applicants from 

enrolling in QHP coverage with APTC/ 

CSRs. We continue to believe that this 

approach would allow Exchanges to 

proactively identify and target 

applicants who may, for example, have 

an incentive to enroll in Exchange 

coverage with APTC/CSRs rather than 

their employer sponsored plan that 

meets minimum value and affordability 

standards. Further, we believe that a 

risk-based approach for verification of 

eligibility for employer sponsored 

eligibility or coverage verification 

would allow Exchanges to identify a 

larger population of Exchange enrollees 

who would be ineligible for APTC/CSRs 

due to an offer of employer sponsored 

coverage, as compared to the random 

sampling method. We continue to 

believe that the new policy we proposed 

would more effectively protect the 

integrity of Exchange programs, as 

Exchanges would be able to mitigate the 

risk of improper Federal payments in 

the form of APTC during the year more 

effectively. 

We sought comment on these 

proposals. 

After reviewing the public comments, 

we are finalizing these proposals as 

proposed, with some non-substantive 

revisions for clarity. These include 

removing the reference to paragraph 

(d)(4)(ii) in paragraph (d)(4), as this 

paragraph has been removed and is no 

longer necessary, and streamlining 

language under paragraph (d)(4)(i)(A) to 

make it clearer that Exchanges must 

notice employers, if employer 

notification is part of an Exchange’s 

risk-based approach. 

We summarize and respond to public 

comments received on the verification 

process related to eligibility for 

insurance affordability programs— 

employer sponsored plan verification 

(§ 155.320) below. 

Comment: The majority of 

commenters supported HHS’ proposal 

to provide all Exchanges with the 

flexibility to tailor their employer 

sponsored coverage verification 

procedures based on the Exchange’s 

own assessment of the risk for 

inappropriate payments of APTC/CSRs 

in their enrolled populations. The 

commenters agreed with HHS’ prior 

study findings that the current sampling 

process outlined in paragraph (d)(4)(i) 

requires significant Exchange resources 

with little return on investment given 

the low volume and risk of consumers 

with offers of employer sponsored 

coverage who inappropriately enroll in 

Exchanges with APTC/CSRs and stated 

that HHS’ study results were consistent 

with State Exchanges’ own observations. 

Commenters also agreed with HHS that 

an employer sponsored coverage 

verification approach should provide 

State Exchanges with enough flexibility 

and more opportunities to use 

verification processes that are evidencebased, while imposing the least amount 

of burden on consumers, States, 

employers, and taxpayers. Commenters 

also noted that increased flexibility to 

use a risk-based approach allows all 

Exchanges to focus and expend 

resources on expanding coverage. 

Finally, commenters stated that they 

appreciated how the proposed riskbased approach provides State 

Exchanges with the freedom to review 

their own data and determine the most 

appropriate verification approach for 


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258See 42 U.S.C. 653(j) (identifying the entities 

that are authorized to access NDNH data and the 

permissible purposes for which those entities may 

use NDNH data). 

employer sponsored coverage that 

accurately reflects the risk for 

inappropriate APTC/CSR payments 

within their unique populations. 

Response: HHS agrees that the current 

random sampling process required 

under § 155.320(d)(4)(i) is not only 

burdensome for States, employers, 

consumers, and taxpayers, but it also 

does not provide enough flexibility to 

all Exchanges to develop a process for 

employer sponsored coverage 

verification that more accurately reflects 

their respective enrolled Exchange 

populations. As discussed in the 

proposed rule (87 FR 649), HHS shares 

the same concerns regarding the 

feasibility and effectiveness of sampling 

and agrees that a verification process 

should be evidence-based and informed 

by certain risk-factors for inappropriate 

payment of APTC/CSRs. HHS also 

agrees that additional flexibilities are 

important to help States better serve 

their populations and to allow for 

Exchange staff time and resources to be 

better spent on activities that help 

promote and retain enrollment in 

Exchanges. 

Comment: A few commenters 

supported the proposed changes, but 

also recommended that HHS revise 

paragraph (d)(4)(i) to state that all 

Exchanges can accept an applicant’s 

attestation when an Exchange 

determines that the risk for improper 

APTC/CSR payment is low and does not 

have access to an available, approved 

data source to verify whether an 

applicant has an offer of or is enrolled 

in coverage offered through an 

employer. Some of these commenters 

further questioned what additional 

information or value a State’s own study 

or risk assessment would bring if HHS 

already conducted studies on the risk 

for inappropriate APTC/CSR payments 

and as discussed in the preamble of the 

proposed rule that, as part of their riskbased approach, Exchanges using the 

Federal eligibility and enrollment 

platform would accept attestations in 

absence of an approved data source, and 

requested that HHS clarify who is 

responsible for conducting the risk 

assessment, how it should be 

conducted, and how State Exchanges 

can meet this assessment requirement. 

Response: HHS reiterates and reminds 

State Exchanges that it is their 

responsibility to conduct their own riskassessments for inappropriate APTC/ 

CSRs payments; while HHS determined 

based on its study that the Exchanges 

that use the Federal platform will use an 

attestation-based approach to employer 

sponsored coverage verification, State 

Exchanges cannot rely on the findings of 

the studies that HHS conducted to serve 

as the basis for their risk-based 

approaches for employer sponsored 

coverage verification as this study 

pertained to Exchanges that use the 

Federal eligibility and enrollment 

platform. Similarly, the risk-based 

approach and subsequent verification 

processes for employer sponsored 

coverage verification must be based on 

an Exchange’s own data analysis and 

research, and State Exchanges may not 

solely rely on previously published 

literature, research, and/or the studies 

conducted by HHS as justification for 

their risk-based approach. Furthermore, 

State Exchanges have the sole 

responsibility and flexibility to 

determine the manner of assessment 

that is suitable for their respective 

populations and markets, and should 

propose their assessment approach to 

HHS for review. However, the process 

that is appropriate for some State 

Exchanges may not be to solely accept 

attestation for all applicants. Therefore, 

HHS disagrees with commenters that 

changes to paragraph (d)(4)(i) to 

explicitly state that all Exchanges may 

accept attestation when an Exchange 

does not have access to an available data 

source are necessary. 

Comment: A few commenters stressed 

the importance of and urged HHS to 

explore other relevant, reliable thirdparty data sources that could be used to 

verify offers of or enrollment in 

employer sponsored coverage, such as 

whether HHS could gain access to firmlevel data about employer sponsored 

insurance through the annual ACA 

reports that are filed with the IRS or 

access to the NDNH to help Exchanges 

determine whether certain companies 

offer coverage to their employees. 

Response: We agree with the 

importance of relevant and reliable 

third-party data sources to verify offers 

of or enrollment in employer sponsored 

coverage such as the NDNH. As part of 

the 2019 study discussed in the 

preamble to the proposed rule and this 

final rule, HHS explored the feasibility 

of using the NDNH, or other data 

sources such as reporting from IRS, the 

Department of Labor (DOL), or State 

quarterly wage data to verify eligibility 

for employer sponsored coverage. 

However, HHS determined that either 

available data sources were insufficient 

and did not provide the necessary 

information to satisfy the requirement, 

or, in the case of the NDNH, legislative 

changes would be required to give 

Exchanges permission to access and use 

the data source for verification of 

employer sponsored coverage. 

For example, HHS found that these 

data sources, such as IRS Forms 

1095–B and 1095–C, DOL, and State 

wage quarterly data, are subject to 

significant time lags and that HHS 

would not have access to reliable, up-todate information regarding employment 

when needed the most, immediately 

before and after the annual individual 

market Exchange open enrollment 

period. Finally, HHS also considered 

using data available to Exchanges using 

the Federal eligibility and enrollment 

platform to automatically verify the loss 

of minimum essential coverage for 

verification of special enrollment period 

eligibility (see preamble discussion at 

§ 155.420 in section III.D.10. of the final 

rule). However, not all employers 

participate in the database to verify loss 

of minimum essential coverage nor does 

it provide information on whether an 

applicant has an offer of employer 

sponsored coverage so it would not be 

a reliable verification source for 

verifying employer sponsored coverage. 

Additionally, Exchanges are not 

among the entities Congress authorized 

to access NDNH data.258 HHS explored 

the feasibility of creating a new database 

that Exchanges could leverage with 

employer contact information and 

information on the coverage offered, but 

because HHS currently lacks the 

statutory authority to require employers 

to share contact information or 

information about coverage offered for 

this purpose, employer participation in 

such a database would be purely 

voluntary, and therefore, may not be 

sufficiently effective. Granting HHS and 

Exchanges the authority to pursue either 

of these options would require an act of 

Congress. 

Comment: Two commenters that were 

neutral in their support of the proposed 

changes, stressed that Exchanges should 

be prohibited from implementing riskbased approaches that are 

discriminatory in nature, specifically 

that Exchanges cannot target consumers 

solely based on income status, as a 

targeted, income-based verification 

process for employer sponsored 

coverage would have disproportionate, 

adverse impacts on applicants of color 

and other underserved groups. One 

commenter further recommended that 

HHS modify the language under 

paragraph (d)(4) to prevent States from 

needlessly imposing procedural burdens 

on consumers seeking to enroll in 

coverage offered through Exchanges. 

Response: HHS agrees with 

commenters that an Exchange’s riskbased approach to verify whether an 

applicant is enrolled in or has been 


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offered coverage through an employer 

must not be discriminatory in nature, 

especially towards applicants who have 

household income levels within a 

certain percentage of the Federal 

Poverty Level (FPL), as applicants of 

color or other underserved groups are 

more likely to be targeted by such 

practices. As such, HHS reminds States 

and Exchanges that per § 155.120(c), an 

Exchange’s verification program cannot 

be discriminatory in nature, and State 

Exchange’s verification processes will 

be monitored by HHS in accordance 

with its authority under §§ 155.1200 

and 155.1210, nor should an Exchange 

and/or a State’s risk-based approach 

place any additional, unnecessary 

procedural burdens or barriers to 

enrollment for consumers seeking to 

enroll in Exchange coverage. 

Comment: Two commenters opposed 

HHS’ proposal that Exchanges use a 

risk-based approach to determine the 

best process to verify whether an 

applicant has an offer of or is enrolled 

in coverage through an employer. One 

commenter stated that HHS should 

continue to verify offers of or 

enrollment in employer sponsored 

coverage and that Exchanges using the 

Federal eligibility and enrollment 

platform should not rely solely on 

consumer attestations as the ACA states 

that these applicants are not eligible to 

receive APTC/CSRs; this is similar to 

how Exchanges verify other eligibility 

criteria like annual household income, 

or enrollment in other qualifying 

coverage such as Medicare, Medicaid, 

CHIP, or, if applicable, the Basic Health 

Program (BHP). Another commenter 

opposed the proposal and stated that, in 

addition to many individuals with offers 

of or enrollment in coverage offered 

through an employer benefitting from 

APTC/CSRs inappropriately, HHS 

should consider the tax consequences 

for individuals and liability concerns for 

applicable large employers (ALE) that 

receive IRS 226–J letters because one or 

more of their employees received APTC 

through an Exchange. The commenter 

further noted that the process of penalty 

enforcement is arduous and costly for 

the IRS and affected ALEs and that more 

effective employer sponsored coverage 

verification could significantly reduce 

the volume of enforcement actions that 

are ultimately resolved in the favor of 

the ALE and that HHS should work with 

the IRS to improve the verification 

process at the national level and not 

pursue the risk-based approach. 

Response: As discussed in the 

preamble, HHS has confirmed via two 

separate research studies conducted 

multiple years apart that the risk of an 

applicant choosing to forego enrolling in 

employer sponsored coverage that is 

affordable and meets minimum value 

standards to enroll in an Exchange QHP 

with APTC/CSR remains low. Also, 

HHS has determined that reliable and 

accurate data sources exist for the other 

eligibility criteria that commenters 

flagged, such as IRS data for annual 

household income, Medicare enrollment 

data that is provided to CMS via the 

Social Security Administration, and 

State Medicaid Agency data to verify 

Medicaid/CHIP enrollment. As HHS has 

noted, the same quality and caliber of 

data on employer sponsored coverage 

do not exist due to the various 

limitations discussed earlier in the 

preamble. 

Furthermore, HHS understands the 

concerns raised by the commenter 

regarding the process of assessing 

employer shared responsibility 

payments (ESRP), and that more robust 

real-time verification of consumers’ 

access to employer sponsored coverage 

may result in some employers avoiding 

the ESRP process. However, as noted in 

an earlier response in this section of the 

preamble, options for obtaining the 

necessary data are limited. In the 

absence of Congressional action to 

provide access to the NDNH or to create 

a new database with mandatory 

employer reporting, HHS remains 

committed to working with IRS to use 

the information currently available to 

ensure our processes are fair to both 

consumers and employers. 

8. Annual Eligibility Redetermination 

(§ 155.335) 

We solicited comments on 

incorporating the net premium, MOOP, 

deductible, and annual out-of-pocket 

costs (OOPC) of a plan into the reenrollment hierarchy as well as on 

additional criteria or mechanisms HHS 

could consider to ensure the Exchange 

hierarchy for re-enrollment aligns with 

plan generosity and consumer needs, 

with consideration for the potential 

impact of the proposed amendments to 

the actuarial value de minimis 

guidelines. For example, HHS could 

consider re-enrolling a current bronze 

QHP enrollee into an available silver 

QHP with a lower net premium and 

higher plan generosity offered by the 

same QHP issuer. Additionally, HHS 

could consider re-enrolling a current 

silver QHP enrollee into another 

available silver QHP, under the 

enrollee’s current product and with a 

service area that is serving the enrollee 

that is issued by the same QHP issuer, 

that has lower OOPC. Please see the 

proposed rule preamble (87 FR 651 

through 652) for a complete description 

of the comment solicitation. 

We will consider proposing 

amendments to the re-enrollment 

hierarchy at § 155.335(j) in future 

rulemaking. 

We summarize and respond to public 

comments received on annual eligibility 

redetermination (§ 155.335) below. 

Comment: Some commenters opposed 

the proposal to revise the re-enrollment 

hierarchy and explicitly expressed that 

HHS should retain the current reenrollment hierarchy. These 

commenters stated that consumers 

choose to enroll in plans for a number 

of reasons and that the Exchange cannot 

accurately predict the factors most 

valuable to consumers; thus, revising 

the re-enrollment hierarchy could lead 

to consumer confusion and 

dissatisfaction. A few commenters noted 

that the discretion to select the most 

appropriate plans for consumers should 

be left to the issuers. Two commenters 

expressed concern about enrollees being 

auto enrolled without their knowledge 

or explicit approval. 

A few commenters encouraged HHS 

to focus on enhancing the consumer 

shopping experience and decision 

support tools to improve initial plan 

selection and alert consumers of plans 

that better meet their needs instead of 

altering the re-enrollment hierarchy in 

the Exchanges. A couple of commenters 

explained that improving consumer 

education can help ensure consumers 

understand all aspects of cost-sharing 

and how they impact coverage, which 

will help consumers make an initial 

plan selection that best meets their 

needs. One commenter suggested that 

HHS could rebrand the concept of metal 

levels to make actuarial values more 

accessible to consumers. 

Response: HHS understands the 

importance of ensuring a revised reenrollment hierarchy does not result in 

consumer confusion or harm and will 

take these comments into account in 

considering whether to revise the 

current re-enrollment hierarchy as part 

of future rulemaking. 

Comment: Commenters submitted 

comments regarding the incorporation 

of consumer cost into the re-enrollment 

hierarchy. Several commenters 

encouraged HHS to take net premium 

and/or total OOPC into account for the 

re-enrollment hierarchy. Some 

commenters cited research in Covered 

California’s market which showed that 

30 percent of households whose 

coverage was automatically renewed 

were certain to be better off in a 

different plan. Furthermore, these 

commenters referenced that, on average, 

families in California were charged an 

extra $466 a year in annual premiums, 

as a result of remaining with a plan that 


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no longer served their interests. For this 

reason, a number of commenters 

expressed that re-enrollment should 

prioritize consumer affordability rather 

than continuity of issuer and product 

line, stating that the vast majority of 

consumers who do not make active 

selections during the OEP care more 

about cost than issuer or provider 

network. One commenter cautioned that 

net premium itself is not always a 

reliable factor to determine the best plan 

for a consumer. Another commenter 

recommended that the plan’s net 

premium, MOOP, deductible, and 

annual OOPC be considered only when 

the enrollee’s current QHP is not 

available and the enrollee’s product no 

longer includes a plan that is at the 

same metal level as, or one metal level 

higher or lower than, the enrollee’s 

current QHP. A few commenters stated 

that including OOPC and plan 

generosity into re-enrollment rules will 

be particularly beneficial for when 

enrollees are eligible for cost-sharing 

reductions and are not enrolled in a 

silver plan. One commenter explicitly 

requested that if an enrollee is shifted to 

a different metal level plan, then that 

enrollee should remain enrolled in a 

plan offered by the same issuer to 

prevent potential adverse consequences 

of an enrollee losing access to 

medications or experiencing increased 

drug costs. However, two commenters 

expressed that incorporating OOPC into 

the hierarchy would likely lead to 

increased enrollment in plans with 

lower OOPC for prescription drugs. Two 

other commenters explained the critical 

importance of auto re-enrollment 

policies for immigrants and racial and 

ethnic minorities who face barriers, 

such as lack of in language outreach and 

notices, and are disproportionately 

impacted by cost increases due to lower 

wealth and discretionary income. 

Response: HHS will take comments 

regarding the incorporation of consumer 

costs into the re-enrollment hierarchy 

into account in future rulemaking. 

Comment: We received multiple 

comments with specific 

recommendations regarding how the 

priority of the current hierarchy could 

be modified. Multiple commenters 

raised concerns with § 155.335(j)(1)(i) 

which ensures the enrollee’s coverage 

will be renewed in the same plan as 

their current QHP, unless the current 

QHP is not available through the 

Exchange. Commenters explained that 

the current policy does not provide 

flexibility for enrollees to be re-enrolled 

into a different plan even if market 

conditions increase costs. For this 

reason, some commenters recommended 

that § 155.335(j)(1)(i) be amended to 

allow the enrollee’s coverage to be 

renewed into a different plan if there is 

no change in the issuer, product, service 

area, provider network, and prescription 

drug formulary, and the new plan is 

more generous and has lower net 

premiums. These commenters urged the 

Exchange to provide accessible notices 

and reasonable opportunities for the 

consumer to return to their former plan 

or drop coverage. Furthermore, a few 

commenters recommended that 

enrollees should be eligible for a 60-day 

special enrollment period after the close 

of the annual individual market 

Exchange Open Enrollment Period or at 

the start of the plan year to allow 

enrollees whose was coverage was 

shifted to choose a different plan. This 

commenter stated that if the de minimis 

guidelines proposed in this rule at 

§§ 156.135 and 156.140 are finalized 

HHS should not alter the hierarchy for 

within-metal level changes. 

Some commenters raised concerns 

with § 155.335(j)(1)(ii) through (iv) and 

(j)(2)(iii), which outline the reenrollment rules when an enrollee’s 

current QHP is no longer available, 

since consumers may be re-enrolled in 

a plan with far higher costs if the issuer 

and provider networks types are 

prioritized. These commenters 

expressed that the vast majority of 

enrollees who do not make active 

selections during the open enrollment 

period care more about cost than the 

issuer or provider network. All of these 

commenters recommended that HHS 

prioritize keeping the consumer’s net 

premium and approximate actuarial 

value (AV) at levels as close as possible 

to the enrollee’s current QHP. One 

commenter recommended HHS should 

perform targeted outreach to consumers 

who have been auto re-enrolled and 

whose premium has increased and 

should extend the open enrollment 

period, outlined in § 155.410, to January 

31 and require coverage to begin 

February 1. 

Response: HHS will take comments 

on factors to consider prioritizing in the 

re-enrollment hierarchy into account in 

future rulemaking. HHS understands the 

importance of comments that urged the 

Exchange to provide accessible notices 

and reasonable opportunities for 

enrollees to select a QHP that is 

different from their auto reenrollment 

option. Currently, 45 CFR 156.1255 and 

its implementing guidance outline the 

information a QHP issuer must provide 

in renewal and re-enrollment notices to 

qualified individuals. Additionally, a 

qualified individual is eligible under 

§ 155.420(d)(1)(i) for a special 

enrollment period (SEP) to enroll in or 

change from one QHP to another if the 

qualified individual loses minimal 

essential coverage. If the enrollee’s 

current plan is no longer available for 

renewal, HHS would consider this a loss 

of minimum essential coverage that 

would trigger a SEP. 

Comment: Several commenters 

recommended provider network 

considerations be incorporated into any 

revised re-enrollment hierarchy. 

Commenters explained that a revised 

hierarchy that does not incorporate 

provider networks could result in 

enrollees losing access to their 

providers, increased out-of-network 

costs, and/or being placed in narrower 

network plans. Furthermore, two 

commenters cautioned that not 

including provider network 

considerations in the re-enrollment 

hierarchy could have negative 

consequences for racial and ethnic 

minority groups and those living with 

disabilities who rely on providers with 

certain cultural backgrounds or 

longtime key providers. Two 

commenters recommended that HHS 

use provider network as the foremost 

criterion. 

Response: HHS will take these 

comments regarding incorporating 

provider networks in the re-enrollment 

hierarchy into account in future 

rulemaking. 

Comment: A few commenters 

recommended that SBEs, SBE–FPs, or 

States performing plan management 

functions should have the flexibility to 

determine the appropriate criteria for reenrollment determinations with respect 

to their unique markets. One commenter 

explained that incorporating new 

criteria and mechanisms into reenrollment determinations could 

impose significant operational and 

financial burdens on SBEs. Another 

commenter stated that a substantial 

number of enrollees actively select their 

auto re-enrollment option which could 

indicate enrollees trust their State or 

issuer. One commenter proposed HHS 

should work with States to design safe 

and appropriate flexibility for issuers to 

facilitate plan changes after open 

enrollment, but only when the change 

would lower premiums and/or OOPC 

for members with everything else 

(network, benefits, deductibles, MOOPs) 

being the same or better for consumers. 

This commenter raised the concern that 

the examples HHS provided in the 

comment solicitation could conflict 

with State law requirements. 

Response: HHS will take these 

comments regarding State flexibility 

into account in future rulemaking. 

Comment: A few commenters urged 

HHS to conduct stakeholder engagement 

and provide transparency on the reVerDate Sep<11>2014 18:46 May 05, 2022 Jkt 256001 PO 00000 Frm 00068 Fmt 4701 Sfmt 4700 E:\FR\FM\06MYR2.SGM 06MYR2

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enrollment process to all stakeholders. 

Two commenters requested additional 

clarification on the proposed changes to 

the re-enrollment hierarchy for the 

Exchanges while one commenter 

requested that HHS provide further 

transparency into the alternate 

enrollment process. One commenter 

recommended that HHS conduct further 

stakeholder feedback and consumer 

testing prior to finalizing any revisions 

to the re-enrollment hierarchy. 

Response: HHS will take these 

considerations into account in future 

rulemaking, including how to 

incorporate transparency and 

stakeholder feedback into a revised reenrollment hierarchy. 

9. Administration of Advance Payments 

of the Premium Tax Credit and CostSharing Reductions (§ 155.340) 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 648 through 653), we 

proposed to amend §§ 155.240(e), 

155.305(f)(5), and 155.340 to clarify that 

an Exchange is required to prorate the 

calculation of premiums for individual 

market policies and the calculation of 

the APTC in cases where an enrollee is 

enrolled in a particular policy for less 

than the full coverage month, including 

when the enrollee is enrolled in 

multiple policies within a month, each 

lasting less than the full coverage 

month. The proposed APTC proration 

methodology was the product of (1) the 

APTC applied on the policy for one 

month of coverage divided by the 

number of days in the month, and (2) 

the number of days for which coverage 

is provided on that policy during the 

applicable month. HHS proposed to 

require all Exchanges, including the 

Exchanges on the Federal platform (FFE 

and SBE–FP) and State Exchanges that 

operate their own eligibility and 

enrollment platforms, to implement this 

proposed proration methodology 

beginning with PY 2024. Please see the 

proposed rule preamble (87 FR 648 

through 649 and 652 through 653) for a 

complete description of the proposed 

policy. 

After considering the comments 

received, under HHS’ authority to 

administer APTC, we are codifying the 

proposed APTC proration methodology 

as the methodology Exchanges on the 

Federal platform will continue to use, 

but we are not finalizing the 

requirement for State Exchanges to use 

the proposed methodology to prorate 

premium or APTC amounts. Rather, we 

will formalize additional efforts under 

existing Exchange program integrity and 

oversight authorities to ensure that, 

beginning with PY 2024, State 

Exchanges will implement an APTC 

methodology consistent with the 

requirement we are finalizing at 

§ 155.305(f)(5) at 155.340(i), described 

later in this section, that will not cause 

the amount of APTC applied to an 

enrollee’s monthly premium to exceed 

their total monthly PTC amount as 

defined in 26 CFR 1.36B–3. We note 

that all the Exchanges on the Federal 

platform (FFE and SBE–FP) would 

implement HHS’ codified methodology 

because all Exchanges on the Federal 

platform rely on the Federal platform to 

perform the proration calculations, and 

the Federal platform is not designed to 

implement different methodologies by 

State. We believe that this final policy 

will ensure Exchange compliance with 

IRS rules and equal treatment for 

enrollees across Exchanges, while 

minimizing the burden for State 

Exchanges and granting State Exchanges 

flexibility in how to comply with these 

APTC calculation requirements when an 

enrollee is enrolled in a particular 

policy for less than the full coverage 

month, including when the enrollee is 

enrolled in multiple policies within a 

month, each lasting less than the full 

coverage month. We will require State 

Exchanges to prospectively report their 

PY 2024 methodology in the year prior 

to implementation (in 2023) and will 

allow State Exchanges the option to 

report their PY 2023 methodology in 

2022. Any State that begins operating a 

State Exchange for PY 2024, or for 

subsequent plan years, will also be 

required to comply with this timeline by 

prospectively reporting the 

methodology for the following plan year 

during their first reporting cycle. 

To support this policy, we are 

finalizing a series of conforming 

amendments to parts §§ 155.305(f)(5) 

and 155.340. We are not amending as 

proposed § 155.240(e), which 

establishes the methodology the 

Exchanges on the Federal platform (FFE 

and SBE–FP) use to prorate premiums, 

to add new paragraph § 155.240(e)(2), 

which would have established a 

methodology for State Exchanges using 

their own platform to prorate premiums. 

However, we are amending 

§ 155.305(f)(5), which currently 

provides that Exchanges must calculate 

APTC in accordance with 26 CFR 

1.36B–3, by adding that Exchanges must 

also calculate APTC in accordance with 

new paragraph § 155.340(i) where we 

describe the requirements for 

calculating APTC when policy coverage 

lasts less than the full coverage month. 

In new paragraph § 155.340(i)(1), we 

establish that Exchanges on the Federal 

platform will be required to use the 

APTC proration methodology described 

at § 155.340(i)(1)(i) and (ii), and at new 

paragraph § 155.340(i)(2) we establish 

that State Exchanges will be required to 

calculate APTC in accordance with a 

methodology that does not cause the 

amount of APTC applied to an 

enrollee’s monthly premium to exceed 

their expected total monthly PTC 

amount when an enrollee is enrolled in 

a policy for less than the full coverage 

month, including when the enrollee is 

enrolled in multiple policies within a 

month, each lasting less than the full 

coverage month, and to report the 

methodology to HHS in accordance with 

the requirements of 155.1200(b)(2). 

Most of the comments on proposed 

amendments to the administration of 

APTC (§ 155.340) were presented in 

combination with comments on the 

other proposed amendments that made 

up the proposal to require premium and 

APTC proration (§§ 155.240(e), 

155.305(f)(5)). We summarize and 

respond to public comments received 

on all three sections in a unified 

summary below. 

Comment: Several commenters 

expressed their support for the proposal 

to require that all Exchanges prorate 

both premium amounts and APTC 

amounts and noted that the proposal 

would ensure accurate and consistent 

calculation of APTC which would 

support consumer protection. One 

commenter observed that the proposal 

would lower the operational burden for 

issuers participating across multiple 

types of Exchanges. One commenter 

stated that the proposed policy would 

encourage enrollees to enroll in a new 

QHP if enrollment was terminated midmonth. 

However, the majority of commenters 

opposed the proposal and criticized the 

proposed APTC proration methodology, 

and its potential impact on enrollees. 

Several commenters asserted that the 

proposed methodology is not necessary 

to ensure that the calculation of APTC 

does not cause excess APTC because 

calculating APTC in the same way as 

PTC; that is, using the calculations 

defined at 26 CFR 1.36B–3(d) will not 

result in excess APTC. Several 

commenters included examples of how 

the proposed proration methodology 

would result in less generous amounts 

of APTC for enrollees, and asserted that 

the proposed methodology would 

reduce plan affordability, in contrast to 

the stated goals of HHS and the 

Administration. Others stated that the 

requirement to prorate premiums is not 

supported by the PTC regulation. 

Response: We are not finalizing the 

policy as proposed. We will codify the 

method of APTC proration as proposed 


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for the Exchanges using the Federal 

platform, but we will grant flexibility to 

State Exchanges to use a methodology 

that does not cause the amount of APTC 

applied to an enrollee’s monthly 

premium to exceed their expected total 

monthly PTC amount when an enrollee 

is enrolled in a policy for less than the 

full coverage month, including when 

the enrollee is enrolled in multiple 

policies within a month, each lasting 

less than the full coverage month. We 

will require State Exchanges to report 

their methodology to HHS in 

accordance with the requirements of 

§ 155.1200(b)(2). 

PTC is calculated for each month of 

the tax year retrospectively, and 

therefore can account for the changes in 

an applicable enrollee’s premium month 

to month before the final amount is 

calculated at the time of tax filing. 

However, Exchanges administer APTC 

prospectively to issuers by advancing 

premium assistance to issuers based on 

enrollees’ eligibility determinations and 

elections, which may also change 

month-to-month (and before final 

reconciliation occurs), putting affected 

enrollees at risk of repaying the excess 

APTC. 

The proposal sought to align the 

manner in which HHS administers 

APTC with the IRS’ PTC calculation for 

all Exchanges, by establishing a 

consistent methodology for 

administering APTC in instances when 

there is a change in the applicable 

enrollee’s coverage mid-month, which 

the PTC regulation accounts for at 26 

CFR 1.36B 3(d)(1)(i) by retrospectively 

calculating the monthly enrollment 

premiums to ensure that PTC does not 

exceed that amount. We believe the 

ability to account for mid-month 

coverage changes is most important 

when an enrollee is enrolled in two 

policies in the same coverage month. 

The examples included by commenters 

take into consideration only mid-month 

terminations, but do not consider midmonth terminations followed by midmonth enrollments into a new plan. In 

such instances when there are multiple 

policies in a single policy month, HHS 

data on APTC payment reflects that 

some State Exchanges are not prorating 

or otherwise accounting for a potential 

over-payment of APTC. 

Under 26 CFR 1.36B–3(d), PTC 

eligibility for a partial month of 

coverage is calculated as the lesser of 

the premiums for the month (reduced by 

any amount of such premiums 

refunded), or the adjusted monthly 

premium for the applicable second 

lowest cost silver plan (SLCSP) reduced 

by the taxpayer’s monthly contribution 

amount. 

HHS remains concerned that when an 

enrollee is enrolled in more than one 

policy during a single coverage month, 

and the Exchange applies APTC to each 

of those policies based on the eligibility 

requirements under 26 CFR 1.36B–2 

without prorating both policies or 

conducting a reconciliation between 

them, the calculation will in some cases 

cause the total monthly APTC to exceed 

the amount that would be calculated 

under 26 CFR 1.36B–3(d). HHS data 

indicate that when Exchanges do not 

link the two policies to account for the 

excess APTC, the Exchanges tend to 

apply the maximum eligible APTC 

amounts, capped at the prorated 

premium amount, for both policies. 

When added together the total applied 

APTC often exceeds the maximum 

expected PTC amount for which the 

enrollee will be eligible for that month. 

However, if the Exchange applied the 

proration methodology used by the 

Exchanges on the Federal platform (that 

is, FFE and SBE–FPs) which is the 

product of (1) the APTC applied on the 

policy for 1 month of coverage divided 

by the number of days in the month, 

and (2) the number of days for which 

coverage is provided for that policy 

during the applicable month, the 

calculation would not cause the total 

APTC for the month to exceed the PTC 

allowed for the month. 

Further, we acknowledge the concern 

raised by commenters that under the 

proposed policy, prorating the APTC 

amounts applied to enrollee’s monthly 

premium could result in a lower total 

amount of APTC than if the nonprorated amounts of APTC capped at 

the reduced premium were applied to 

an enrollee’s monthly premium. We 

appreciate the perspective on 

affordability, and agree that the nonprorated amount of APTC would likely 

be more generous than the prorated 

amount if a mid-month termination was 

not followed by enrollment in another 

plan. However, since many mid-month 

terminations are followed by enrollment 

in a new plan, we remain concerned 

that applying both plans’ non-prorated 

APTC amounts could exceed the 

maximum expected monthly PTC 

amount for which the enrollee taxpayer 

will be eligible. When an enrollee is 

enrolled in more than one plan during 

one coverage month and has APTC from 

both policies applied to their premium, 

the generosity of non-prorated APTC 

amounts described by commenters has 

the potential to result in APTC overpayments and to trigger a costly tax 

liability which could surprise the 

enrollee later. Income tax liability due 

to excess APTC could pose a significant 

financial burden to applicable enrollees, 

particularly low-income enrollees. 

Further, if this partial month of coverage 

triggered a higher applied APTC, it has 

the potential to confuse enrollees about 

their true monthly member 

responsibility for their new plan, 

creating confusion about the 

affordability of health care coverage 

offered by an Exchange. Therefore, we 

determined that the benefit of avoiding 

potential, unexpected tax liability and 

of reducing potential confusion 

outweighs the cost to enrollees of 

potentially lower APTC payments for 

those enrolled in two policies for partial 

months within one coverage month. 

We acknowledge that proration based 

on the number of coverage days, like the 

methodology currently used by 

Exchanges on the Federal platform, is 

not the only approach to address the 

issue of excess APTC. For example, a 

monthly calculation linking two partial 

month policies for an applicable 

taxpayer to account for changes in 

APTC could also align with the current 

PTC regulation at 26 CFR 1.36B–3(d). 

However, in practice, HHS has noticed 

that State Exchanges often do not 

prorate or link the two mid-month 

policies, which leads to APTC payments 

that exceed an enrollee’s expected 

monthly PTC amount. 

However, in an effort to preserve State 

Exchange flexibility and to be 

responsive to the concerns regarding the 

proposed methodology, we are 

modifying the finalized policy to require 

only that State Exchanges use a 

methodology that ensures that their 

calculation of APTC does not cause the 

amount of APTC applied to an 

enrollee’s monthly premium to exceed 

their expected monthly PTC amount 

when an enrollee is enrolled in a policy 

for less than the full coverage month, 

including when the enrollee is enrolled 

in multiple policies within a month, 

each lasting less than the full coverage 

month, and to report the methodology to 

HHS in accordance with the 

requirements of § 155.1200(b)(2). 

Comment: A few commenters who 

supported the proposal expressed 

hesitancy regarding the State Exchanges’ 

ability to implement the proposed 

methodology and requested maximum 

flexibility for the State Exchanges in 

their implementation of the policy and 

the timing of implementation. 

Additionally, many opposing 

commenters, specifically several State 

Exchanges, noted that the proposal 

would impose significant 

implementation burden on States 

Exchanges. These commenters 

expressed concern that the estimated 

implementation cost would be 

extremely burdensome to State 


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Exchanges, and the complex, resourceintensive IT and administrative systems 

builds would require them to divert 

large portions of their budget away from 

other priority operations such as 

Medicaid unwinding related to the PHE 

among other projects. In addition, 

several commenters explained that State 

Exchanges are already implementing 

their own successful methods of 

ensuring that their calculation of APTC 

does not cause excess APTC, some of 

which already include prorating 

premiums, and that these State 

Exchanges should not be required to 

cease their effective methods, in favor of 

the proposed proration methodology. 

One commenter asserted that HHS does 

not have the authority to require 

Exchanges to implement the proposed 

proration methodology for premium and 

APTC amounts. Several of these 

commenters remarked that State 

Exchanges have the best insight into 

their Exchange populations and HHS 

should defer to their authority on how 

to approach the issue of APTC overpayment in their jurisdiction without 

limiting their flexibility. 

Response: We maintain that 

regulating the administration of APTC is 

within HHS’ statutory authority, as 

defined in section 1412 of the ACA, 

which grants authority to the Secretary 

of HHS to establish a program for APTC, 

and in HHS regulation under § 155.340, 

which establishes HHS’ requirements 

regarding administration of the APTC. 

However, in light of comments 

regarding the need for more State 

Exchange flexibility, as noted earlier, we 

are not finalizing the policy as 

proposed. 

We appreciate the competing 

priorities of State Exchanges and the 

potential costs of implementing the 

proposed policy. In the proposed rule, 

we acknowledged that implementing 

the proposed methodology would 

require implementation and operational 

costs and time on the part of most State 

Exchanges. We estimated a one-time 

implementation cost of approximately 

$1 million dollars for each State 

Exchange, and we address specific 

comments on the estimated cost of 

implementation further in the comment 

and response section of the Regulatory 

Impact Analysis in this final rule. In an 

effort to be responsive to State Exchange 

concerns, we are finalizing the method 

of APTC proration as proposed for the 

Exchanges using the Federal platform, 

but HHS will require only that, 

beginning with PY 2024, State 

Exchanges use a methodology that 

ensures that the calculation of APTC 

does not cause APTC applied to an 

enrollee’s monthly premium to exceed 

the enrollee’s expected monthly PTC 

amount when the enrollee is enrolled in 

a policy for less than the full coverage 

month, including when the enrollee is 

enrolled in multiple policies within a 

month, each lasting less than the full 

coverage month, and to report the 

methodology to HHS in accordance with 

the requirements of § 155.1200(b)(2). We 

estimate that State Exchanges will be 

required to prospectively submit their 

planned PY 2024 methodology for the 

first time through the State-based 

Marketplace Annual Reporting Tool 

(SMART) tool in the summer of 2023 

and will provide the option for State 

Exchanges to submit their methodology 

for PY 2023 through the SMART tool in 

the summer of 2022. HHS believes that 

finalizing this modification will provide 

the State Exchanges flexibility and 

sufficient time to implement a new 

methodology, if necessary, and to report 

the methodology to HHS. 

HHS will be available to work with 

State Exchanges and address questions 

as they prepare to report on their 

methods to ensure that APTC 

calculations do not cause excess APTC 

for enrollees. 

Comment: Several commenters 

opposing the proposal asserted that 

there is no need to issue regulations on 

the issue of APTC over-payment. Some 

of these commenters noted that the 

topic of APTC over-payment and the 

potential resulting income tax liability 

is not being reported as a problem by 

States Exchanges, consumers, or 

consumer advocacy groups. A few 

commenters noted that if this type of 

over-payment does occur, it is rare, and 

affects very few enrollees. Further, some 

of these commenters stated that if State 

Exchanges were over-paying APTC and 

exceeding premium amounts for partialmonth coverage, enforcing compliance 

with the existing PTC rule would 

sufficiently address the issue. 

Response: We remain concerned 

about the issue of APTC over-payments 

among State Exchanges, as described in 

the previous response. Recent APTC 

payment data indicates that APTC overpayments due to mid-month coverage 

changes cost the Federal government 

approximately $0.5 million to $1 

million annually. While the issue of 

APTC over-payment may not impact 

very many enrollees annually, we 

believe that these over-payments are a 

legitimate source of consumer harm and 

may trigger a Federal income tax 

liability for the applicable enrollee. 

However, we agree that the reference at 

§ 155.305(f)(5) to current PTC 

regulations at 26 CFR 1.36B–3(d) sets a 

clear enough standard to hold all 

Exchanges sufficiently accountable to 

making correct payments of APTC. In an 

effort to ensure compliance with the 

existing IRS PTC rules, we are finalizing 

the requirement that State Exchanges 

use a methodology that ensures that 

their calculation of APTC does not 

cause the amount of APTC applied to an 

enrollee’s monthly premium to exceed 

their expected monthly PTC amount 

when an enrollee is enrolled in a policy 

for less than the full coverage month, 

including when the enrollee is enrolled 

in multiple policies within a month, 

each lasting less than the full coverage 

month, and to report the methodology to 

HHS in accordance with the 

requirements of § 155.1200(b)(2). 

10. Special Enrollment Periods—Special 

Enrollment Period Verification 

(§ 155.420) 

In 2017, the 2017 Market Stabilization 

final rule preamble (82 FR 18346, 18355 

through 18358) explained that HHS 

would implement pre-enrollment 

verification of eligibility for certain 

special enrollment periods in all 

Exchanges on the Federal platform. HHS 

also clarified its intention to not 

establish a regulatory requirement that 

all Exchanges conduct special 

enrollment period verifications to allow 

State Exchanges additional time and 

flexibility to adopt policies that fit the 

needs of their State (82 FR 18355 

through 18358). However, all State 

Exchanges conduct verification of at 

least one special enrollment period 

type, and most State Exchanges have 

implemented a process to verify the vast 

majority of special enrollment periods 

requested by consumers. 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 653), we proposed to 

amend § 155.420 to add new paragraph 

(g) to state that Exchanges may conduct 

pre-enrollment verification of eligibility 

for special enrollment periods, at the 

option of the Exchange, and that 

Exchanges may provide an exception to 

pre-enrollment special enrollment 

period verification in special 

circumstances, which could include 

natural disasters or public health 

emergencies that impact consumers or 

the Exchange. We further proposed that 

Exchanges’ pre-enrollment verification 

process must be implemented in a 

manner that is not based on a prohibited 

discriminatory basis. This is to 

encourage State Exchanges to conduct 

special enrollment period verification, 

but also allow the FFEs, SBE–FPs, and 

State Exchanges to maintain flexibility 

in implementing and operating special 

enrollment period verification. 

Since 2017, Exchanges on the Federal 

platform implemented pre-enrollment 


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259See 45 CFR 155.420(d)(1)(i). 

special enrollment period verification 

for certain special enrollment period 

types commonly used by consumers to 

enroll in coverage. New consumers, 

meaning consumers who are not 

currently enrolled in coverage through 

the Exchange, who apply for coverage 

through a special enrollment period 

type that requires pre-enrollment 

verification by the Exchanges on the 

Federal platform must have their 

eligibility electronically verified using 

available data sources or submit 

supporting documentation to verify 

their eligibility for the special 

enrollment period before their 

enrollment can become effective. As 

stated in the HHS Marketplace 

Stabilization Rule (82 FR 18355 through 

18360), pre-enrollment special 

enrollment period verification is only 

conducted for consumers newly 

enrolling due to the potential for 

additional burden on issuers and 

confusion for consumers if required for 

existing enrollees. 

While pre-enrollment special 

enrollment period verification can 

decrease the risk for adverse selection 

and improve program integrity, it can 

also deter eligible consumers from 

enrolling in coverage through a special 

enrollment period because of the barrier 

of document verification. Younger, often 

healthier consumers submit acceptable 

documentation to verify their special 

enrollment period eligibility at much 

lower rates than older consumers, 

which can negatively impact the risk 

pool. Additionally, our experience 

operating the FFEs and the Federal 

platform shows that pre-enrollment 

special enrollment period verification 

disproportionately negatively impacts 

Black and African American consumers 

who submit acceptable documentation 

to verify their special enrollment period 

eligibility at much lower rates than 

White consumers. 

To support program integrity and 

streamline the consumer experience, we 

also proposed that the Exchanges on the 

Federal platform would conduct preenrollment verification of eligibility for 

only one type of special enrollment 

period—the special enrollment period 

for new consumers who attest to losing 

minimum essential coverage.259 The 

loss of minimum essential coverage 

special enrollment period type 

comprises the majority, about 58 

percent, of all special enrollment period 

enrollments on the Exchanges on the 

Federal platform and has electronic data 

sources that can be leveraged for autoverification. By verifying eligibility for 

this special enrollment period type and 

not for other special enrollment periods, 

the Exchanges on the Federal platform 

could limit the negative impacts of 

special enrollment period verification 

and decrease overall consumer burden 

without substantially sacrificing 

program integrity. 

We sought comment on these 

proposals. 

After reviewing the public comments, 

we are finalizing this provision as 

proposed, except that we have added a 

specific reference to § 155.120(c) to the 

new regulation text at § 155.420(g) to 

clarify the precise nondiscrimination 

standards that are applicable to an 

Exchange’s process for granting 

exceptions to pre-enrollment 

verification for special enrollment 

periods. 

We summarize and respond to public 

comments received on the special 

enrollment period verification proposal. 

Comment: The majority of 

commenters supported HHS’ proposal. 

Many commenters agreed that this 

policy helps minimize barriers to 

enrollment while still maintaining 

program integrity. Most also agreed that 

this policy will advance health equity 

by alleviating barriers to enrollment for 

historically disadvantaged and 

marginalized communities. Several 

commenters mentioned that preenrollment special enrollment period 

verification can be especially 

burdensome for low-income 

individuals, since they are more likely 

to have inadequate internet access at 

home and are more likely to use a 

primary language other than English. 

Commenters also noted additional 

groups that would benefit from this 

policy: Immigrants, Native Americans, 

and those living in rural areas who may 

not have high-quality internet access. 

Several commenters agreed that 

special enrollment period verification 

requirements can cause gaps in coverage 

and stated that reducing these barriers 

will encourage continuous coverage. 

Commenters mentioned that it can be 

difficult to verify life events, such as 

proving a change in household size 

when someone becomes a tax 

dependent. One commenter noted that 

pre-enrollment verification is not only 

time consuming for consumers, but also 

for brokers who could be using that time 

to help more clients enroll in coverage. 

Many commenters agreed that this 

proposal will encourage younger and 

healthier consumers who are eligible for 

a special enrollment period to enroll 

and that this will be good for the risk 

pool. Several commenters highlighted 

that concerns from issuers about scaling 

back pre-enrollment verification for 

special enrollment periods harming 

market stability have not been proven. 

Response: We appreciate the 

comments highlighting that this policy 

will have a positive impact on 

consumers from historically 

disadvantaged and marginalized 

communities. We agree that this policy 

will decrease consumer burden and 

barriers to enrollment for eligible 

consumers, while still supporting 

program integrity. We also agree that 

this policy will increase enrollments 

among younger and healthier consumers 

and that this will have a positive impact 

on the risk pool. 

Comment: Several commenters 

mentioned that, as written, this proposal 

would still pose a barrier for consumers, 

particularly those who face 

disproportionately high rates of being 

uninsured, such as immigrants and 

Black and African American consumers. 

Some commenters explained accessing 

documents from past employers to 

prove loss of minimum essential 

coverage can be challenging, especially 

for immigrants or those who are more 

likely to have unstable employment or 

work in the informal economy. One 

commenter also raised concern that 

losing coverage can place significant 

stress on a household and consumers 

may not have the bandwidth to 

complete a pre-enrollment verification 

process for a special enrollment period. 

Several commenters recommended that 

HHS further act to reduce consumer 

burden and barriers to enrollment by 

eliminating pre-enrollment verification 

for all special enrollment period types. 

A few commenters advocated for selfattestation in lieu of document 

verification and mentioned that many 

other Federal programs rely on selfattestation. 

Response: We appreciate commenters’ 

concerns related to health equity and 

consumer burden. We believe that by 

scaling back pre-enrollment verification 

for special enrollment periods, this 

policy will decrease consumer burden 

and barriers to enrolling through a 

special enrollment period. At this time, 

we believe that pre-enrollment 

verification for special enrollment 

periods is appropriate for the most 

commonly used special enrollment 

period type in order to support program 

integrity. HHS works to reduce 

consumer burden imposed by preenrollment verification for special 

enrollment periods based on loss of 

minimum essential coverage while still 

supporting program integrity by using 

available data to automatically verify 

loss of minimum essential coverage for 

a large portion of consumers requesting 

a loss of minimum essential coverage 


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260The Exchanges Trends Report (2018, July 2). 

CMS. https://www.cms.gov/CCIIO/Programs-andInitiatives/Health-Insurance-Marketplaces/ 

Downloads/2018-07-02-Trends-Report-3.pdf. 

special enrollment period, which 

requires no additional consumer action 

and does not delay enrollment. We will 

continue to evaluate whether additional 

changes are appropriate. 

Comment: Some commenters 

supported the clarified flexibility for 

State Exchanges. Commenters stated 

that this change will enable State 

Exchanges to implement pre-enrollment 

special enrollment period verification 

processes that are tailored to their 

respective Exchanges and consumer 

populations. One commenter also 

appreciated that Exchanges may provide 

an exception to pre-enrollment special 

enrollment period verification for 

special circumstances. A couple of 

commenters highlighted that the new 

paragraph (g) language is redundant 

since State Exchanges already have 

flexibility to exercise discretion under 

current rules. 

Many commenters expressed concern 

that State Exchanges may conduct preenrollment verification for additional 

special enrollment period types— 

outside of loss of minimum essential 

coverage—which could cause barriers to 

enrollment in those States, particularly 

for younger and Black and African 

American consumers. Due to this 

concern, these commenters 

recommended that HHS should not 

permit State Exchanges to have broader 

pre-enrollment verification of eligibility 

for special enrollment periods than the 

FFEs. 

One commenter urged HHS to 

monitor how State Exchanges 

implement pre-enrollment verification 

for special enrollment periods to ensure 

their processes are not discriminatory. 

Another commenter suggested that HHS 

prohibit State Exchanges from 

implementing pre-enrollment 

verification that differs from that of the 

FFEs, unless the State Exchange can 

prove that pre-enrollment verification 

for special enrollment periods will not 

have a disproportionate impact on 

communities of color in their State. 

Response: We agree that the new 

paragraph (g) allows State Exchanges to 

continue to implement pre-enrollment 

verification processes for special 

enrollment periods that are tailored to 

their respective populations and needs. 

We also agree that clarifying that 

Exchanges may provide an exception for 

pre-enrollment special enrollment 

period verification for special 

circumstances will enable Exchanges to 

be flexible so that eligible consumers 

can easily enroll in coverage when they 

may need it most, such as during the 

current COVID–19 PHE unwinding 

period. HHS is committed to equity in 

health care and plans to monitor use of 

SEP pre-enrollment verification in State 

Exchanges to ensure that they are 

following the non-discrimination 

standards under § 155.120(c). 

Comment: Several commenters, 

particularly issuers, opposed this 

proposal due to concerns that scaling 

back pre-enrollment verification for 

special enrollment periods would lead 

to an increase in fraud and abuse that 

would negatively impact market 

stability and premium costs. A few of 

these commenters mentioned concerns 

about consumers temporarily relocating 

to a State for medical care, which could 

lead to increased costs in areas with 

renowned medical centers. Commenters 

stated that HHS should encourage yearlong continuous coverage. One 

commenter cautioned that this policy, 

combined with other recent policy 

changes such as a longer open 

enrollment period and the special 

enrollment period for individuals with 

incomes under 150 percent of the 

Federal poverty level, will harm market 

stability. 

Several commenters stated that before 

the 2017 Market Stabilization final rule 

(82 FR 18346), the market was unstable 

and costs were higher due to fraud and 

abuse in consumers’ use of special 

enrollment periods as consumers would 

wait to enroll until they needed care. 

One commenter noted that data from a 

2018 CMS report showed that most 

consumers with special enrollment 

period verification issues submitted the 

necessary documents to resolve their 

issue.260 In addition, the report revealed 

that fewer consumers enrolled through 

an exceptional circumstance SEP 

(suggesting less abuse), and that the 

average age of special enrollment period 

enrollees was younger than that of open 

enrollment period enrollees. 

Commenters also stated that risk 

adjustment data suggests that consumers 

with chronic conditions are abusing 

special enrollment periods and are 

waiting to enroll until they need care. 

One commenter highlighted that the 

loss ratios after risk adjustment for 

special enrollment period enrollments, 

relative to open enrollment period 

enrollments, has increased for some of 

their plans since 2019. They stated that 

this is likely due to Exchanges relaxing 

pre-enrollment verification for special 

enrollment periods during the PHE. 

Response: We disagree that this policy 

will destabilize the market and cause 

large increases in premium costs. We 

believe that while pre-enrollment 

special enrollment period verification 

can decrease the risk of adverse 

selection and improve program 

integrity, it can also deter eligible 

consumers from enrolling in coverage 

through a special enrollment period 

because of the barrier of document 

verification. By verifying eligibility for 

the most commonly used special 

enrollment period type and removing 

verification for other special enrollment 

periods, we believe that the Exchanges 

on the Federal platform will 

successfully mitigate the negative 

impacts of special enrollment period 

verification without substantially 

sacrificing program integrity or market 

stability. 

We acknowledge the data from the 

2018 CMS report regarding special 

enrollment period verification. While 

most SEP verification issues have been 

resolved, current HHS data shows that 

younger consumers submit acceptable 

documentation to verify their special 

enrollment period eligibility at much 

lower rates than older consumers, 

which can negatively impact the risk 

pool as younger consumers are often 

healthier. We believe that improving 

access for younger and healthier eligible 

consumers will be good for the risk pool 

and offset the effect of potential 

increased adverse selection. Current 

HHS data also shows that Black and 

African American consumers submit 

acceptable documentation at much 

lower rates than White consumers. This 

suggests that pre-enrollment verification 

may be a barrier to enrollment for 

eligible Black and African American 

consumers. This policy change may 

improve health equity, and access to 

affordable, quality coverage for all. 

Comment: Many commenters who 

opposed this proposal, agreed that 

document verification for special 

enrollment periods can be a barrier to 

enrollment for some eligible consumers. 

Therefore, they expressed support for 

more automation of special enrollment 

period verification. One commenter also 

encouraged HHS to evaluate why some 

consumers submit acceptable 

documents at lower rates and 

recommended redesigning the 

document collection process 

accordingly. 

Response: We acknowledge these 

concerns and will continue to conduct 

automated, pre-enrollment verification 

when possible for the loss of minimum 

essential coverage SEP type. We note 

that automated verification is not 

always possible. However, we continue 

to believe that the approach we are 

adopting balances the priorities of 

reducing consumer burden with 

supporting program integrity. HHS 


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261Public Law 116–117 (2020, March 2). 

262Public Law 116–117 (2020, March 2). 

263 87 FR 654 through 660. 

264Presentation and materials provided to the 

then operational State Exchanges as part of ‘All 

States’ meeting held on February 21, 2019. 

265 Ibid. 

continues to evaluate document 

submission rates and consumer 

outcomes to inform process and policy 

improvements for successful SEP 

verification. 

11. General Program Integrity and 

Oversight Requirements (§ 155.1200) 

The Payment Integrity Information 

Act of 2019 (PIIA) 261 requires Federal 

agencies to annually identify, review, 

measure, and report on the programs 

they administer that are considered 

susceptible to significant improper 

payments. Pursuant to the Payment 

Integrity Information Act of 2019 

(PIIA),262 HHS is in the planning phase 

of establishing a State Exchange 

Improper Payment Measurement 

(SEIPM) program, as HHS has 

determined that APTC payments may be 

susceptible to significant improper 

payments and are subject to additional 

oversight. 

State Exchanges must meet specific 

program integrity and oversight 

requirements specified at section 

1313(a) of the ACA, as well as 

§§ 155.1200 and 155.1210. These 

requirements provide HHS with the 

authority to oversee the Exchanges after 

their establishment. Under 

§ 155.1200(c), each State Exchange is 

required to engage or contract with an 

independent qualified auditing entity 

that follows generally accepted 

government auditing standards 

(GAGAS) to perform annual 

independent external financial and 

programmatic audits. 

We proposed to add new 

§ 155.1200(e) to permit a State Exchange 

to meet the requirement to conduct an 

annual independent external 

programmatic audit, as described at 

§ 155.1200(c), by completing the 

required annual SEIPM program 

process. Therefore, under the proposal, 

HHS would generally accept a State 

Exchange’s completion of the SEIPM 

process for a given benefit year as 

acceptable to meet the annual 

programmatic audit requirement for that 

benefit year. We had also proposed to 

amend § 155.1200(c) to cross-reference 

proposed § 155.1200(e) to ensure the 

coordination of these two requirements. 

Please see the proposed rule preamble 

for a complete description of the 

proposed policy and the SEIPM 

program.263

We sought comment on these 

proposals. 

After reviewing the public comments, 

we are not finalizing this proposed 

provision at this time as it is interrelated 

with the SEIPM program proposal, 

which will not be finalized at this time 

through this final rule. HHS will 

continue to engage with the State 

Exchanges as we continue to develop 

the SEIPM program, which we plan to 

codify in future rulemaking. Please refer 

to section 12 for further details. 

We summarize and respond to public 

comments received on general program 

integrity and oversight requirements 

(§ 155.1200) below. 

Comment: Several commenters 

generally opposed the amendment to 

the programmatic audit requirement to 

permit a State Exchange to meet the 

requirement under § 155.1200(c) by 

completing the SEIPM program process, 

as proposed under subpart P. 

Commenters noted that the proposed 

change is duplicative because the 

existing programmatic audit 

requirement under § 155.1200(d) 

already addresses eligibility and 

enrollment compliance. One commenter 

explained that imposing a new audit 

requirement under SEIPM creates 

additional burden that is not offset by 

the amendment to the programmatic 

audit requirement under § 155.1200(e). 

Another commenter stated that while 

HHS is permitting a State Exchange to 

meet the programmatic audit 

requirement under § 155.1200(c) by 

completing the SEIPM program process, 

State Exchanges will need to spend 

substantial time and resources to 

prepare for SEIPM. Commenters noted 

that State Exchanges are already subject 

to extensive oversight under 

§§ 155.1200 and 155.1210 and requested 

HHS clarify how the SEIPM will impact 

the SMART for Plan Years 2023–2025. 

Another commenter requested that HHS 

grant programmatic audit relief while 

State Exchanges prepare to comply with 

the SEIPM program and also consider 

how the existing programmatic audit 

requirement may be able to meet SEIPM 

goals. A few commenters requested that 

HHS consider alternative approaches to 

the implementation of the proposed 

SEIPM program, such as enhancing the 

current programmatic audit requirement 

under § 155.1200 to review for improper 

payments or maintain the programmatic 

audit requirement intact, as it permits 

flexibility and does not add undue 

burden. One commenter recommended 

that HHS use onsite audits to reduce 

burden on the State Exchanges resulting 

from the SEIPM program. 

Response: HHS will continue to 

evaluate how to minimize duplicative 

requirements and reduce burden on 

State Exchanges as we work toward 

implementation of the proposed SEIPM 

program. After considering the 

comments received, we are not 

finalizing this provision at this time, as 

it is interrelated with the SEIPM 

program proposal, which will not be 

finalized through this final rule. We 

clarify that the existing oversight and 

audit requirements under §§ 155.1200 

and 155.1210 were not intended to be a 

part of any measurement program that 

may have been required under the 

Improper Payments Elimination and 

Recovery Act of 2010, and updated 

through PIIA. The maintenance of 

records requirement under § 155.1210 

requires that State Exchanges keep 

eligibility and enrollment records, but it 

does not establish requirements specific 

to improper payments. The independent 

external programmatic audits required 

under 155.1200(c) do not review, 

estimate, or report the amounts or rates 

of improper payments and do not allow 

for standardized comparison or analysis 

across State Exchanges. In order to 

comply with the PIIA, HHS will 

continue to develop the SEIPM program 

and plans to engage in future 

rulemaking to codify the SEIPM 

program. 

Regarding the SMART, we clarify that 

State Exchanges will continue to report 

on Exchange compliance through the 

annual SMART process, as required 

under § 155.1200(b)(2). 

12. State Exchange Improper Payment 

Measurement Program (§§ 155.1500 

Through 155.1540) 

In 2016, HHS completed a risk 

assessment of the APTC program. 

Similar to other public-facing benefit 

programs, HHS determined that the 

APTC program is susceptible to 

significant improper payments, and as a 

result, HHS announced plans to 

increase the oversight of the APTC 

program through the development and 

reporting of annual improper payment 

estimates, and facilitating corrective 

actions.264 At that time, we also 

announced that we would undertake 

rulemaking before implementing the 

improper payment measurement 

methodology. 

In line with our prior 

announcement,265 and as mentioned in 

section 11 of the preamble, HHS 

proposed regulations governing HHS’ 

SEIPM program. 

As noted in the HHS Notice of Benefit 

and Payment Parameters for 2023 

proposed rule (87 FR 584, 655), current 

regulations found at 45 CFR 155.1200 

and 155.1210 require that a State 


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Exchange have financial and operational 

safeguards in place to avoid making 

inaccurate eligibility determinations, 

including those related to APTC, CSR, 

and enrollments. The regulations at 

§ 155.1200(c) require State Exchanges to 

hire an independent qualified auditing 

entity and submit the external audit 

results to HHS. The programmatic 

audits do not review, estimate, or report 

on the amounts or rates of improper 

payments as the result of eligibility 

determination errors made by State 

Exchanges. To meet the requirements of 

PIIA, to reduce burden on State 

Exchanges, and to ensure consistency 

across State Exchanges in terms of our 

review methodology, we proposed to 

update programmatic auditing 

requirements such that the completion 

of the annual SEIPM program would 

satisfy the current auditing 

requirements prescribed in 

§ 155.1200(c). Therefore, we proposed to 

establish a new subpart P under 45 CFR 

part 155 (containing §§ 155.1500 

through 155.1540) to codify the SEIPM 

program requirements. Please see the 

proposed rule preamble (87 FR 654 

through 655) for a complete description 

of the proposed policy. 

After reviewing and considering the 

public comments, we will not finalize 

the SEIPM proposals at this time due to 

commenters’ concerns surrounding the 

proposed implementation timeline and 

other burdens that would be imposed by 

the proposed SEIPM program. 

We summarize and respond to public 

comments received on the State 

Exchange Improper Payment 

Measurement Program (§§ 155.1500 

through 1540) below. 

Comment: Several commenters 

addressed the implementation timeline 

for the SEIPM program. One commenter 

expressed concerns with the relatively 

short implementation time frame and 

questioned whether it was 

operationally, fiscally, and 

technologically feasible for State 

Exchanges to comply with the program’s 

requirement by the proposed PY 2023 

effective date. A few commenters 

characterized the timeline for SEIPM 

implementation as inadequate. One 

commenter recommended several years 

of implementation in a pilot before HHS 

publishes error rates to ensure the data 

accurately reflect errors. One 

commenter characterized the 

implementation timeline as 

administratively and financially 

burdensome and unrealistic because 

State Exchanges would need to 

implement new processes and possibly 

technology changes by the end of 2022 

to meet the proposed 2024 reporting 

requirements. One commenter proposed 

an effective date of plan year 2024 

rather than 2023. One commenter 

requested extending the deadline for 

SEIPM. 

Response: Given the additional 

burden that was placed upon State 

Exchange resources during the PHE, we 

agree that additional time should be 

provided for implementation and 

consequently we are not finalizing the 

provision at this time to allow for a 

longer implementation timeline. We 

also generally agree with the commenter 

who stated that additional piloting is 

needed. Because piloting efforts have 

also been hindered by the PHE, HHS 

will consider more robust piloting 

options in which the State Exchanges 

can participate prior to HHS publishing 

estimates of improper payment rates. 

Comment: Several commenters 

supported the need for review of 

eligibility determinations that result in 

improper payments of APTC and 

encouraged HHS to collect more 

detailed documentation of eligibility 

denials. 

Response: We thank the commenters 

for their support of the SEIPM program 

and we will consider this feedback as 

we continue to develop the program. We 

address the commenters’ specific 

suggestions in the data collection 

section below. 

Comment: One commenter indicated 

that it was neutral as to the 

establishment of the SEIPM program. 

The commenter noted that there are 

obvious potential benefits to the Federal 

oversight model instead of the 

programmatic audit model currently in 

use by State Exchanges, and the 

commenter also noted that it is 

currently too early to fully assess 

whether the tradeoffs regarding the cost 

and work related to the audit model will 

be more or less than the cost and work 

to meet the reporting requirements of 

the proposed Federal oversight model. 

Response: We thank the commenter 

for sharing its view of the SEIPM 

program. 

Comment: Many commenters 

expressed opposition regarding the 

SEIPM proposal noting it is duplicative 

because the existing SMART and 

programmatic audit requirements under 

§ 155.1200 address eligibility and 

enrollment compliance. 

Response: We address these 

comments under section 11 of the 

preamble. 

Comment: A few commenters stated 

that the SEIPM program is duplicative 

because consumers already reconcile 

APTC on their tax returns. 

Response: We appreciate the 

commenters’ observation, but note that 

the APTC reconciliation process on the 

tax return only addresses the APTC 

calculation and not the accuracy of the 

eligibility determination. The IRS uses 

the annual enrollment data and monthly 

reconciliation data provided by HHS to 

calculate the PTC and to verify 

reconciliation of APTC made to the QHP 

issuers on enrollees’ individual tax 

returns. However, the IRS does not 

address other issues related to the APTC 

calculation, particularly in examining 

the eligibility and enrollment processes 

including the verification of citizenship, 

social security number, residency, 

minimum essential coverage, special 

enrollment period circumstance, 

income, family size, and data matching 

issues related to document authenticity. 

Examination of these areas would be 

necessary to identify any underlying 

issues that could lead to improper 

payments, and therefore may need to be 

addressed through corrective action as 

stipulated under the PIIA. 

Comment: A few commenters stated 

that the data HHS is proposing to collect 

are already available to HHS through the 

Federal Data Services Hub (FDSH), the 

State-based Marketplace Inbound 

(SBMI), or enrollment and 

disenrollment reports, making the 

additional SEIPM collection effort 

burdensome and duplicative. 

Response: We appreciate the feedback 

regarding the potential duplication of 

Federal requirements and increased 

burden. As we continue to develop the 

SEIPM program, we intend to work 

collaboratively with State Exchanges to 

continue to evaluate how to best 

minimize duplicate requirements and 

reduce burden on the State Exchanges, 

as well as how HHS can use data 

submitted by State Exchanges under 

existing Federal requirements to help 

streamline SEIPM processes. We note 

that as of this writing, HHS does not 

collect data regarding verification and 

eligibility determination, enrollment 

reconciliation, or plan management 

from the State Exchanges to determine 

whether they comply with existing 

regulations. While the FDSH does 

provide applicant verification 

information, it does not provide 

evidence that the State Exchange used 

FDSH data to conduct verifications or 

whether verification inconsistencies 

were resolved properly. Moreover, the 

FDSH does not provide the information 

needed to determine whether a State 

Exchange evaluated the verified 

information properly to determine an 

applicant’s eligibility for enrollment in 

a QHP and receipt of APTC. We 

recognize that the State-Based 

Marketplace Inbound (SBMI) data 

provides the policies and payments for 

an applicant, however, that data cannot 


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be matched to a specific application 

submission, which prevents HHS from 

using the data to verify that eligibility 

determinations and associated APTC 

payments were made correctly. Further, 

the SBMI data does not include the 

reconciliation that occurs with the State 

Exchange and its issuers to provide 

evidence that the State Exchange 

resolved any data discrepancies with 

the issuers that may result in incorrect 

APTC payments being made. 

Additionally, the SBMI data does not 

indicate whether policies were certified 

as QHPs. HHS currently uses this data 

to understand the sampling of policies 

from each State Exchange and to 

determine an appropriate sample that 

would be selected to reflect the State 

Exchange’s applicant population. We 

will continue to evaluate this and other 

data that HHS currently collects and 

will use it to the maximum extent 

feasible as we continue to develop the 

SEIPM program. 

Comment: A few commenters 

expressed concern that the proposed 

rule does not provide enough 

information to assess the SEIPM 

program proposal or to evaluate the 

tradeoffs related to the current Federal 

programmatic audit requirements under 

§ 155.1200(c) compared to the proposed 

audit processes under the SEIPM 

program. 

Response: Although commenters did 

not specify what additional information 

would have been helpful in assessing 

the program, HHS believes that this 

concern is related to potential 

duplication of effort and whether 

current requirements under 

§ 155.1200(d) are consistent with SEIPM 

requirements. Though we are not 

finalizing this proposed provision, we 

will consider these comments as we 

continue to develop the SEIPM program. 

Comment: One commenter requested 

that the SEIPM program not collect data 

from the State Exchanges during the 

annual individual market Exchange 

Open Enrollment Period (OEP) 

timeframe, which is from the end of 

October (final preparation for annual 

OEP) to the end of January (distribution 

of Forms 1095–A). 

Response: We will consider this 

feedback as we continue to develop the 

SEIPM program. As we continue to 

develop the program, we aim to 

coordinate with State Exchanges to offer 

maximum flexibility to account for 

State’s enhanced workloads during the 

OEP. 

Comment: One commenter noted that 

despite the provision allowing 

completion of the SEIPM requirements 

to satisfy the existing independent 

external programmatic audit 

requirement under § 155.1200(c), State 

Exchanges would have to spend time 

and resources to prepare for and procure 

a separate audit when participating in 

the SEIPM program. 

Response: We appreciate the feedback 

around potential duplication of Federal 

requirements and increased burden. We 

address these concerns in section 11 of 

the preamble. 

Comment: One commenter suggested 

that HHS convene an HHS and State 

Exchanges working group to identify 

approaches to the specific areas that 

HHS wants to address through current 

Federal audit requirements. 

Response: We appreciate the 

commenter’s suggestion and value the 

feedback we have received from the 

State Exchanges during the SEIPM pilot 

process. We have been engaging in 

discussions regarding the SEIPM with 

the State Exchanges since 2019 and we 

continue to meet with State Exchanges 

individually to gather feedback on the 

SEIPM approach. We will continue 

these efforts as we move forward in the 

development of the SEIPM program. 

Comment: One commenter 

recommended that the SEIPM program 

operate as a minimum threshold for 

State Exchanges to meet the proposed 

SEIPM requirements and to allow 

flexibility for any individual State 

Exchange to create more stringent 

auditing criteria above and beyond what 

is required in the proposed SEIPM 

program. The commenter suggested 

allowing State Exchanges to meet their 

independent external programmatic 

audit requirements by complying with 

the SEIPM program. In cases where the 

State Exchange has more stringent 

auditing criteria than the SEIPM 

program, the commenter suggested that 

the State Exchange should be able to 

maintain its criteria. 

Response: We understand that the 

State Exchanges may expand on the 

Federal regulations to create more 

stringent policies and procedures. In 

addition to evaluating compliance with 

Federal requirements during the 

planned SEIPM review process, our goal 

is to also measure compliance with 

State Exchange specific policies and 

procedures to the extent that State 

Exchange specific policies and 

procedures do not conflict with Federal 

requirements. As we continue to 

develop the SEIPM program, we will 

collaborate with each State Exchange to 

modify the review criteria so that each 

State Exchange is evaluated against their 

own policies and procedures. 

Comment: One commenter 

encouraged HHS to take a risk-based 

approach that focused on reviews of a 

specific area or areas that have a higher 

risk of over-payments. The commenter 

suggested HHS use a more proactive 

approach that used test scenarios to 

demonstrate APTC accuracy. 

Response: We appreciate the feedback 

and recognize that certain State 

Exchange system functions may have 

more risk than others in implementing 

Federal regulations. We appreciate the 

recommendation to use test scenarios 

and have begun to do so, in some 

instances, as we engage with State 

Exchanges on SEIPM pilot and 

preparatory activities. We will consider 

this comment as we continue to develop 

the SEIPM program. 

Comment: One commenter 

recommended modifying the SEIPM’s 

scope to focus on APTC in addition to 

the SEIPM process replacing the annual 

programmatic audit requirement. 

Response: As we continue to develop 

the SEIPM program, we plan for the 

SEIPM review process to focus on 

identifying, measuring, estimating, and 

reporting errors made in determining 

eligibility for APTC greater than $0 that 

resulted in improper payments. We plan 

for this to include the examination of 

eligibility and enrollment processes, 

which consists of verifications of 

citizenship, social security number, 

residency, minimum essential coverage, 

special enrollment period circumstance, 

income, family size, and data matching 

issues related to document authenticity. 

Examination of these areas would be 

necessary to identify any underlying 

issues that could lead to improper 

payments, and therefore would need to 

be addressed through corrective action, 

as stipulated under the PIIA. 

Comment: One commenter suggested 

that HHS observe trends that emerge 

during SEIPM implementation and 

propose Corrective Action Plan 

parameters in future rulemaking, and 

then release the first improper payment 

report in November 2025, at the earliest. 

Response: We appreciate the 

comments offering support to defer the 

CAP parameters. We plan to engage in 

future rulemaking to codify the SEIPM 

program and will solicit comments 

regarding the CAP at that time. 

a. Purpose and Definitions (§ 155.1500) 

We proposed to add new § 155.1500 

to convey the purpose of subpart P and 

definitions that are relevant to the 

SEIPM program. 

• At paragraph (a), we proposed the 

purpose of subpart P as setting forth the 

requirements of the SEIPM program for 

State Exchanges. 

• At paragraph (b), we proposed to 

codify the definitions that are specific to 

the SEIPM program and key to 


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understanding the process 

requirements. 

• We proposed the definition of 

‘‘Appeal of redetermination decision (or 

appeal decision)’’ to mean HHS’ appeal 

decision resulting from a State 

Exchange’s appeal of a redetermination 

decision. 

• We proposed the definition of 

‘‘Corrective action plan (CAP)’’ to mean 

the plan a State Exchange develops to 

correct errors resulting in improper 

payments. 

• We proposed the definition of 

‘‘Error’’ to mean a finding by HHS that 

a State Exchange did not correctly apply 

a requirement in subparts D and E of 

part 155 regarding eligibility for and 

enrollment in a QHP; APTC, including 

the calculation of APTC; 

redeterminations of eligibility 

determinations during a benefit year; or 

annual eligibility redeterminations. 

• We proposed the definition of 

‘‘Error findings decision’’ to mean HHS’ 

enumeration of errors made by a State 

Exchange, including a determination of 

how the enumerated errors inform 

improper payment estimation and 

reporting requirements. 

• We proposed the definition of 

‘‘Redetermination of an error findings 

decision (or redetermination decision)’’ 

to mean HHS’ decision resulting from a 

State Exchange’s request for a 

redetermination of HHS’ error findings 

decision. 

• We proposed the definition of 

‘‘Review’’ to mean the process of 

analyzing and assessing data submitted 

by a State Exchange to HHS in order for 

HHS to determine a State Exchange’s 

compliance with subparts D and E of 

part 155 as it relates to improper 

payments. 

• We proposed the definition of 

‘‘State Exchange improper payment 

measurement (SEIPM) program’’ to 

mean the process for determining 

estimated improper payments and other 

information required under the PIIA, 

and implementing guidance, for APTC, 

which includes a review of a State 

Exchange’s determinations regarding 

eligibility for and enrollment in a QHP; 

the calculation of APTC; 

redeterminations of eligibility 

determinations during a benefit year; 

and annual eligibility redeterminations. 

After reviewing the public comments, 

we are not finalizing this provision at 

this time. We summarize and respond to 

public comments received on purpose 

and definitions (§ 155.1500) below. 

Comment: One commenter 

recommended that HHS also define the 

following terms: (1) Annual Program 

Schedule, (2) Measurement Cycle, (3) 

Measurement Year, and (4) Reporting 

Year. The commenter also 

recommended clarifying the meaning of 

two statistical terms: (1) Pre-sampling 

Data and (2) Sampled Unit Data. 

Response: HHS agrees that the 

defining these additional terms would 

provide greater clarity to State 

Exchanges regarding SEIPM program 

requirements. We will consider defining 

these terms in future rulemaking. 

b. Program Notification and Planning 

Process (§ 155.1505) 

We proposed to add new § 155.1505 

to outline the annual program 

notification requirements related to the 

SEIPM program. 

• At paragraph (a), we proposed the 

requirements associated with HHS’ 

responsibility to notify the State 

Exchanges prior to the start of the 

measurement year regarding 

information pertinent to the SEIPM 

program and the program’s upcoming 

measurement cycle, which may include 

but would not be limited to review 

criteria; key changes from prior 

measurement cycles, where applicable; 

or other modifications regarding specific 

SEIPM activities. This proposed 

notification would occur during the 

benefit year (that is, the year under 

review for which data would be 

collected), which immediately precedes 

the proposed measurement year (that is, 

the year in which the measurement will 

be completed). The proposed 

measurement cycle would conclude 

with the reporting year during which all 

data issues would be resolved and the 

improper payment rate would be 

calculated and published. 

• At paragraph (b), we proposed the 

requirements associated with HHS’ 

responsibility to notify the State 

Exchanges prior to the proposed 

measurement year regarding SEIPM 

schedules, which will include relevant 

timelines. For example, among other 

things, the proposed SEIPM annual 

program schedule would detail the time 

period during which HHS would 

provide the proposed SEIPM data 

request form to State Exchanges with 

instructions regarding how to complete 

each part of the form. The proposed 

SEIPM annual program schedule would 

also provide the deadlines prescribed 

for State Exchanges to complete each 

part of the form. 

• At paragraph (c), we proposed the 

requirements associated with 

information to be provided by State 

Exchanges to HHS regarding the 

operations and policies of the State 

Exchange, and changes that have been 

made by the State Exchange which 

could impact the proposed SEIPM 

review process such as changes to 

business rules, business practices, 

policies, and information systems (for 

example, data elements and table 

relationships), which are used to review 

the State Exchange’s execution of 

consumer verifications, verification 

inconsistency resolutions, eligibility 

determinations, enrollment 

management, and APTC calculations. 

Please see the proposed rule preamble 

(87 FR 656) for a complete description 

of the proposed policy. 

We did not receive any comments in 

response to the proposals on the 

program notification and planning 

process. 

As previously stated, we are not 

finalizing this provision at this time. 

c. Data Collection (§ 155.1510) 

We proposed to add new § 155.1510 

to address the data collection 

requirements to support the SEIPM 

process. 

• At paragraph (a)(1), we proposed 

the requirement that the State Exchange 

annually provide pre-sampling data to 

HHS by the deadline provided in the 

annual program schedule. The proposed 

pre-sampling data request would 

provide HHS with essential information 

about the composition of the State 

Exchange’s application population to 

appropriately stratify and sample the 

population. 

Please see the proposed rule preamble 

for a complete description of the 

sampling methodology for this proposal 

(87 FR 656). 

• At paragraph (a)(2) we proposed 

annual requirement that the State 

Exchange provide sampled unit data to 

HHS. To meet this requirement under 

the proposal, a State Exchange can 

submit consumer-submitted 

documentation in one or more batches 

so long as all of the batches are provided 

to HHS within the deadline specified in 

the annual program schedule. The 

proposed sampled unit data request 

would include the list of sampled units 

and the associated information specific 

to each unit. The information required 

under the proposal for the sampled 

units would include data and 

supporting documentation regarding 

various State Exchange functions, for 

example, electronic verifications, 

manual reviews of data matching 

inconsistencies, special enrollment 

period verifications, eligibility 

determinations, redeterminations, 

enrollment reconciliation, and plan 

management. 

• At paragraph (b), we proposed the 

State Exchange submit the pre-sampling 

and sampled unit data specified in 

paragraph (a) to be submitted to HHS in 

a manner and within a deadline 


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specified in the annual program 

schedule. We also proposed language 

regarding requests for extension which 

may be submitted by State Exchanges. 

Given the importance of the time frames 

associated with the measurement 

process, through this proposal, we did 

not anticipate granting extensions in 

most situations. Rather, the approval of 

extension requests was envisioned to be 

reserved for extreme circumstances that 

would directly impact operations of the 

particular State Exchange. Such 

situations might include natural 

disasters, interruptions in business 

operations such as major system 

failures, or other extenuating 

circumstances. 

• At paragraph (c), we proposed 

language regarding potential 

consequences as a result of a State 

Exchange’s failure to timely provide the 

information in accordance with the 

schedule and deadlines detailed in the 

annual program schedule, or in 

response to a request for extension in 

paragraph (b). Under the proposal, as a 

result of not timely providing required 

data, we may have cited errors due to 

lack of documentation to support the 

State’s eligibility or payment decisions. 

After reviewing the public comments, 

we are not finalizing this provision at 

this time. 

We summarize and respond to public 

comments received on data collection 

(§ 155.1510) below. 

Comment: A few commenters pointed 

out that there may be differences 

between State Exchanges in terms of 

database structures, data fields, and 

reporting. A few commenters stated that 

implementing the SEIPM data 

requirements will create a financial and 

operational burden as it will require 

them to change their information 

technology systems, and they will need 

to employ new staff or forgo other 

activities such as standing up other 

programs. 

Response: We appreciate these 

comments and will take them into 

consideration as we continue to develop 

the SEIPM program. However, we 

emphasize that it was not the intention 

of the proposed SEIPM program to drive 

changes to a State Exchange’s 

information technology systems. One 

goal of HHS is to reduce burden by 

requesting State Exchanges to populate 

the information elements of the data 

request form by using existing data 

elements from their current IT system. 

Still, we recognize there is a cost burden 

related to the employment of staff 

resources required to conduct data 

analysis, perform data mapping 

activities, and extract data to support 

submission requirements. We will 

consider these costs in future 

rulemaking to codify the SEIPM 

program. 

Comment: A few commenters noted a 

desire for flexibility in the data fields 

they provide to HHS. One commenter 

appreciated that under the pilot 

program, State Exchanges were allowed 

flexibility in what data fields could be 

provided. 

Response: We recognize that State 

Exchange systems and business 

processes may vary in the way that data 

is used and stored. For this reason, we 

are conducting information review 

sessions with State Exchanges to 

address State Exchange-specific needs. 

There are many complex elements that 

must be met for any applicant who is 

deemed eligible for APTC. Because of 

the complexity and breadth of those 

elements, a very structured review 

methodology is required. To meet that 

need, certain data fields have been 

identified that are required for the 

purposes of conducting a review of this 

nature. The data request form was 

designed to aid in the matching of 

information fields that are needed by 

HHS with the States’ data in order to 

conduct the required measurement in a 

consistent manner across all State 

Exchanges. The ongoing review sessions 

will allow opportunities to identify the 

most efficient means for collecting the 

information that is ultimately deemed 

necessary. We will continue to engage 

with State Exchanges through such 

sessions as we continue to develop the 

SEIPM program. 

Comment: A few commenters 

suggested changes to the program 

sample size. One commenter 

recommended that the sample size be 

from 100–1,000 tax households to 

account for the variation in State 

Exchange populations. One commenter 

suggested that HHS choose a different 

method for sampling and auditing 

eligibility and enrollment data to 

instead allow a State Exchange to pull 

data records for a ‘‘reasonable’’ sample 

size, which it did not further define, and 

work with an HHS auditor for data 

review. 

Response: We appreciate and thank 

commenters for their suggestions 

regarding sample size. We clarify that 

the PIIA and OMB Circular A–123, 

Appendix C require HHS to produce a 

statistically valid point estimate of the 

improper payment rate aggregated 

across all State Exchanges. This requires 

determining the sample size that is 

necessary for meeting the targeted 

margin of error to estimate a total 

improper payment rate across all State 

Exchanges and determining the sample 

sizes for the individual State Exchanges 

under that parameter. To reduce State 

burden, we plan to assess various 

stratification variables which may 

optimize the sample size and will 

continue to assess the benefits and 

deficiencies of various other sampling 

methodologies. 

Comment: A few commenters 

suggested that HHS require State 

Exchanges to collect additional 

information such as data on erroneous 

coverage denials and incorrect financial 

assistance allocations. 

Response: We appreciate the 

commenters’ suggestions to expand the 

scope of CMS data collection to include 

erroneous coverage denials and 

incorrect financial assistance 

allocations. The focus of the planned 

SEIPM program, however, is to identify, 

measure, estimate, and report on 

erroneous determinations of eligibility 

for APTC payments in an amount 

greater than $0 that result in improper 

payments. We continue to assess and 

identify improvements to the planned 

SEIPM review process with a focus on 

the statutory and regulatory 

requirements and compliance with 

OMB guidance. 

Comment: A few commenters 

suggested requiring State Exchanges to 

disaggregate eligibility and enrollment 

data by race and ethnicity. One 

commenter also suggested 

disaggregating data by primary 

language, sex, sexual orientation, gender 

identity, and disabilities. One 

commenter suggested disaggregating 

data by applicants who indicate their 

primary language is other than English. 

Response: We will consider the 

commenters’ suggestions as we continue 

to develop the SEIPM program. We also 

respectfully remind commenters that 

the focus of the planned SEIPM program 

is to identify, measure, estimate, and 

report on erroneous determinations of 

eligibility for APTC payments in an 

amount greater than $0 that result in 

improper payments. As we continue to 

develop the SEIPM program, we plan to 

audit State Exchanges in compliance 

with the PIIA and OMB guidance to 

estimate improper payments. 

Comment: One commenter suggested 

that HHS explicitly require any 

protected health information (PHI) or 

personally identifying information (PII) 

shared with HHS or contractors be 

transmitted using a secure file transfer 

mechanism such as Secure File Transfer 

Protocol (SFTP). 

Response: HHS will consider how to 

establish a secure file transfer 

mechanism between the State 

Exchanges and HHS to support the 

exchange of files that may contain PII 

and PHI data. 


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Comment: A few commenters noted 

that they had worked in pilots of the 

SEIPM program with CMS and that the 

process was difficult either because the 

program based its effort to standardize 

audits across State Exchanges on the 

FFE data model or because the program 

required manual review of records. 

Response: We recognize that State 

Exchange systems and business 

processes may vary in the way that data 

is used and stored. For this reason, we 

are conducting information review 

sessions with State Exchanges to 

address State Exchange-specific needs. 

The data request form was designed to 

aid in the matching of information fields 

that are needed by HHS in order to 

conduct the required measurement in a 

consistent manner across all State 

Exchanges. The information review 

sessions allow opportunities to identify 

the most efficient means for collecting 

this information from each State 

Exchange. We will continue to engage 

with State Exchanges through such 

sessions as we continue to develop the 

SEIPM program. HHS developed a 

review modules document (RMD) to 

establish the baseline set of review 

criteria that will be applied across all 

State Exchanges. Each review criterion 

is based on specific Federal regulations 

or on a State Exchange’s own policies 

that may expand on how a regulation is 

implemented in their State Exchange. In 

support of the review criteria in the 

RMD, CMS developed the data request 

form detailed above. We note that CMS 

developed the data request form to 

define a set of generalized data elements 

that are not specific to the FFE data 

model. These data elements should be 

common to all State Exchanges as they 

would be needed to execute general 

Federal regulation requirements 

established for the enrollment and 

eligibility process. 

Comment: One commenter noted that 

there are not clear standards for the data 

that would satisfy an SEIPM audit. The 

commenter noted that the State 

Exchanges may not have the requested 

data available where self-attestation is 

accepted. 

Response: We recognize the need for 

clear standards for data to satisfy an 

SEIPM review. As we continue to 

develop the SEIPM program, we will 

continue with our current 

communications with State Exchanges 

to address State Exchange-specific 

needs and to convey planned standards 

and data requirements that can be found 

in the corresponding PRA package, 

including the pre-sampling and sampled 

unit data request. State Exchanges that 

have voluntarily chosen to participate in 

the current engagement process will 

continue to benefit from receiving 

guidance regarding planned standards 

and data requirements. HHS encourages 

all State Exchanges to voluntarily 

engage with HHS to better understand 

the planned data collection 

requirements. During these engagement 

sessions, HHS can better understand the 

unique business rules and environment 

the State Exchange is operating within 

and make appropriate modifications to 

the review criteria and data that is 

requested to evaluate the State Exchange 

against those criteria. In addition, HHS 

recognizes that utilization of selfattestation may limit the availability of 

certain data and is taking this into 

account as we continue to develop the 

SEIPM program. Finally, we note that 

additional detail regarding the proposed 

SEIPM data request form is provided 

above in the preamble to the data 

collection process. 

d. Review Process and Improper 

Payment Rate Determination 

(§ 155.1515) 

We proposed to add new § 155.1515 

to address the review process and the 

determination of the improper payment 

rate. 

• At paragraph (a), we proposed that 

HHS would keep a record of the status 

of receipt for information requested 

from each State Exchange for a 

minimum of 10 years. 

• At paragraph (b), we proposed to 

review the following for compliance 

with subparts D and E of part 155: A 

State Exchange’s determinations 

regarding eligibility for and enrollment 

in a QHP; APTC, including the 

calculation of APTC; redeterminations 

of eligibility determinations during a 

benefit year; and annual eligibility 

redeterminations. As part of the 

proposed review process, HHS would 

issue error findings decisions and 

render redeterminations of error 

findings decisions within the timeframe 

specified in the annual program 

schedule. 

• At paragraph (c), we proposed to 

notify each State Exchange of HHS’ 

error findings decisions for that State 

Exchange and HHS’ calculation of that 

State Exchange’s improper payment 

rate. 

We did not receive any comments in 

response to the proposals on the review 

process and improper payment rate 

determination. 

As previously stated, we are not 

finalizing this provision at this time. 

e. Error Findings Decisions (§ 155.1520) 

We proposed to add new § 155.1520 

to address the issuance of error findings 

decisions and the content of error 

findings decisions. 

• At paragraph (a), we proposed that 

HHS will issue error findings decisions 

to each State Exchange. While we 

anticipate that error findings decisions 

would be issued at regular and recurring 

points of time within the measurement 

year during each review cycle under the 

proposal, we recognize that certain 

events could result in necessary delays, 

for example, public health emergencies, 

natural disasters, interruptions in 

business practices, or other extenuating 

circumstances. Thus, we proposed that, 

should these types of events warrant the 

additional time, we would notify State 

Exchanges of the delay via the CMS 

website. In the situation where no errors 

are found during the course of the 

review, HHS would still issue an error 

findings decision to the State Exchange 

indicating that no errors were identified. 

As proposed, the error findings 

decisions are intended to be 

communicated to each respective State 

Exchange only and would not be 

published publicly. 

• At paragraph (b), we proposed 

language regarding the specific 

information that would be included in 

error findings decisions. We proposed 

that, at a minimum, error findings 

decisions will include HHS’ findings 

regarding errors made by the State 

Exchange and information about the 

State Exchange’s right to request a 

redetermination of the error findings 

decision in accordance with proposed 

§ 155.1525. 

After reviewing the public comments, 

we are not finalizing this provision at 

this time. 

Comment: One commenter expressed 

concern that each State Exchange’s error 

findings decision would not be made 

easily accessible to the public and 

requested that HHS post each State 

Exchange’s error findings decision on 

the HHS website to ensure transparency. 

Response: We thank the commenter 

for the recommendation to make each 

State Exchange’s error findings 

decisions easily accessible to the public 

by posting each State Exchange’s error 

findings decision on the HHS website to 

ensure transparency. We will take the 

recommendation into consideration as 

we continue to develop the SEIPM 

program. 

f. Redetermination of Error Findings 

Decisions (§ 155.1525) 

We proposed to add new § 155.1525 

to address a State Exchange’s request for 

a redetermination, as well as HHS’ 

issuance of the redetermination decision 

and the content of that decision. 


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• At paragraph (a), we proposed 

language indicating a State Exchange’s 

ability to request a redetermination of 

the error findings decision within the 

deadline prescribed in the annual 

program schedule. As proposed, during 

the period for a State Exchange to 

request a redetermination of the error 

findings decision, HHS would consider 

a request for an extension in extreme 

circumstances, which includes but is 

not limited to situations such as natural 

disasters, interruptions in business 

operations such as major system 

failures, or other extreme circumstances. 

While we recognize that each State 

Exchange has a multitude of 

responsibilities, as proposed, HHS 

would not otherwise accept any request 

for a redetermination received after the 

expiration of the deadline prescribed by 

the annual program schedule, which is 

designed to enable HHS to meet 

deadlines for the publication of the 

improper payment rate. 

• At paragraph (a)(1), we proposed 

language requiring that the State 

Exchange identify the specific error(s) 

for which the State Exchange would be 

requesting a redetermination. As 

proposed, this identification may 

pertain to a single individual’s 

application or to a type of error affecting 

a class of applications. As proposed, a 

redetermination would constitute a 

review of the initial decision and not a 

de novo investigation. Thus, we 

proposed that the State Exchange would 

base its request on documentation and 

other information already submitted to 

HHS (for example, we proposed that if 

the application lacked income 

information, the State Exchange may not 

retrospectively seek this documentation 

and add it to the record). As proposed, 

any issues unrelated to an error 

identified by HHS in the initial error 

findings decision would not be 

addressed. 

• At paragraph (a)(2), we proposed 

language that the State Exchange must 

include all data and information that 

support the State Exchange’s request for 

a redetermination. Note that, as 

proposed, while State Exchanges can 

submit data and information in 

requesting a redetermination, new 

information submitted as part of the 

request for redetermination should 

supplement data previously submitted 

as part of the SEIPM data request form 

for the benefit year under review and 

would be accepted at HHS’ discretion. 

In the proposal, we explained that State 

Exchanges may not use the 

redetermination process as a means to 

circumvent prior deadlines for 

submitting data or information to HHS. 

• At paragraph (a)(3), we proposed 

language that would require a State 

Exchange to provide an explanation of 

how the data and information submitted 

under paragraph (a)(2) pertains to the 

error(s) specified in paragraph (a)(1). In 

the proposal, we stated that the State 

Exchange should clearly articulate how 

the data and information is related to 

HHS’ findings, and how it impacts HHS 

findings. We proposed that if a State 

Exchange did not provide this 

explanation, HHS would not anticipate 

or assume a State Exchange’s reasoning 

in requesting a redetermination on a 

particular error. 

• At paragraph (b), we proposed 

language regarding the issuance of 

redetermination decision. As proposed, 

the redetermination of an error findings 

decision would be issued within the 

deadline prescribed in the annual 

program schedule. The goal of this 

proposal was to ensure that each State 

Exchange has ample time to assess the 

error findings decision, give HHS 

adequate time to thoroughly evaluate a 

State Exchange’s request for a 

redetermination, and calculate an 

improper payment rate in adequate time 

to publish aggregate findings across all 

State Exchanges in the Agency Financial 

Report. Thus, we also proposed that if 

circumstances like natural disasters or 

other extenuating circumstance resulted 

in HHS needing additional time to 

render the redetermination decisions, a 

State Exchange would be notified of the 

delay. 

• At paragraph (c), we proposed 

language conveying the minimum 

content requirements for HHS’ 

redetermination decision. 

• At paragraph (c)(1), we proposed 

language specifying that HHS’ decision 

must address its findings regarding the 

impact of any additional data and 

information provided by the State 

Exchange on the error(s) for which the 

State Exchange requested a 

redetermination. 

• At paragraph (c)(2), we proposed 

language that would establish HHS’ 

responsibility to give a State Exchange 

information about the right to request an 

appeal of the redetermination of error 

findings decision in accordance with 

proposed § 155.1530. 

After reviewing the public comments, 

we are not finalizing this provision at 

this time. 

We summarize and respond to public 

comments received on redetermination 

of error findings decisions (§ 155.1525) 

below. 

Comment: A few commenters 

expressed concern that HHS would 

consider only the initial data submitted 

in response to the data request form 

when a State Exchange requests 

redetermination of an error findings 

decision. These commenters requested 

that HHS allow State Exchanges to 

introduce new information that could 

help clarify the process used by a State 

Exchange and possibly negate the need 

for an error findings decision. 

Response: We will take this feedback 

into consideration as we continue to 

evaluate any adjustments that may be 

needed to the redetermination process 

as State Exchanges participate in the 

pilot program, prior to SEIPM 

implementation. 

g. Appeal of Redetermination Decision 

(§ 155.1530) 

We proposed to add a new § 155.1530 

to address a State Exchange’s ability to 

request an appeal of the redetermination 

decision. Appeals will be administered 

by HHS. 

• At paragraph (a), we proposed 

language regarding a State Exchange’s 

right to request an appeal of a 

redetermination within the deadline 

prescribed in the annual program 

schedule. Moreover, we proposed that, 

in the request for an appeal, the State 

Exchange must indicate the specific 

error(s) identified in the 

redetermination decision for which the 

State Exchange is requesting an appeal. 

• At paragraph (b), we proposed 

language that conveys the appeal 

entity’s review would be an on-therecord review, meaning that the appeal 

entity would only review data and 

information provided at the time of a 

State Exchange’s redetermination 

request. As proposed, no additional new 

data or information submitted in 

support of the request for appeal would 

be considered. 

• At paragraph (c), we proposed 

language that the appeal decision would 

be issued within the deadline 

prescribed in the annual program 

schedule unless there is a delay, and 

that the State Exchange will be notified 

in the event of any delay in the appeal 

entity’s ability to reach a decision. 

• At paragraph (d), we proposed the 

content of the appeal decision. 

• At paragraph (d)(1), we proposed 

that the appeal decision would include 

the findings on the error for which an 

appeal was requested and that those 

findings would be limited to the errors 

that were identified in the request for 

appeal. 

• At paragraph (d)(2), we proposed 

that the appeal decision would include 

the final disposition of the appeal 

request. 

• At paragraph (e), we proposed that 

upon completion of the review and the 

closure of all appeals, HHS may issue to 


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266See, for example, section 1313(a)(2) of the 

ACA (HHS may investigate the affairs of an 

Exchange, may examine the properties and records 

of an Exchange, and may require periodic reports 

in relation to activities undertaken by an Exchange, 

and an Exchange must fully cooperate in any 

investigation conducted under this paragraph). 

each individual State Exchange, a report 

containing the error findings and the 

estimated improper payment rate for 

their respective program. As proposed, 

that report would not be made public. 

Additionally, through the proposal, it 

was described that the estimated 

improper payment rates for each State 

Exchange would be used to estimate an 

aggregate improper payment rate across 

all State Exchanges and that the 

aggregate rate would be published in the 

agency’s Annual Financial Report. 

After reviewing the public comments, 

we are not finalizing this provision at 

this time. 

We summarize and respond to public 

comments received on the appeal of the 

redetermination decision (§ 155.1530) 

below. 

Comment: One commenter requested 

that HHS provide more detail regarding 

the effects of a fully adjudicated error 

and specifically asks whether an 

enrollee would be retroactively 

impacted by a fully adjudicated error or 

whether the IRS would require changes 

through Form 1095–A reporting. 

Response: At this time, HHS has not 

determined to what extent, if at all, fully 

adjudicated error findings decisions 

may impact an enrollee. HHS, in 

collaboration with IRS, the Department 

of the Treasury, and other agencies as 

required, will make this decision based 

on further research and evaluation of 

how recoveries could be implemented, 

including the authority to pursue any 

such recoveries. Further, any decision 

relating to the recovery will be 

communicated through future 

rulemaking. HHS is not aware of any 

intended changes in Form 1095–A 

reporting to support the planned SEIPM 

program. 

Comment: One commenter expressed 

concern that publishing aggregate error 

rates across all State Exchanges rather 

than publishing error rates for each 

State Exchange could negatively reflect 

on higher-performing State Exchanges. 

The commenter also stated that SEIPM 

design flaws could result in a higher 

assessed rate of improper payments. 

Response: We appreciate the 

comment. As we continue to develop 

the SEIPM program, HHS will consider 

methodologies for identifying errors 

with the goal of determining an accurate 

estimate of improper payments that 

meet OMB criteria. With regard to 

SEIPM design flaws, HHS is continuing 

to engage State Exchanges in order to 

test the planned SEIPM data collection, 

sampling, and review processes to 

determine if any adjustments are 

needed. 

h. Corrective Action Plan (§ 155.1535) 

Under the proposed rule, we 

proposed to add a new § 155.1535 to 

address the scenario in which a State 

Exchange’s improper payment rate for a 

given benefit year, in HHS’ reasonable 

discretion, necessitates a CAP to correct 

the causes of any payment errors. With 

regard to the CAP process, we proposed 

the minimum set of requirements with 

the intent to define full CAP parameters 

in future rulemaking, using the 

standards provided under Appendix C 

to OMB Circular No. A–123, to support 

State Exchanges in satisfying the 

requirement of developing, 

implementing, and monitoring a CAP. 

As we gather additional information 

and data, and observe trends based on 

experience with implementing the 

SEIPM program, we will detail CAP 

parameters or requirements in future 

rulemaking. 

• At paragraph (a), we proposed that, 

depending on a State Exchange’s error 

rate for a given benefit year, we would 

require the State Exchange to develop 

and submit a CAP to HHS to correct 

errors resulting in improper payments. 

• At paragraph (b), we proposed that 

Appendix C to OMB Circular No. A–123 

would serve as a minimum set of 

guidelines to any State Exchange that is 

developing a CAP. 

• At paragraph (c), we proposed that 

a State Exchange would be required to 

develop an implementation schedule to 

accompany its CAP, and implement any 

CAP initiatives in accordance with that 

schedule. 

• At paragraph (d), we proposed the 

recourse HHS has in the event that a 

State Exchange that is required to 

submit a CAP fails to timely do so by 

stating that HHS may take actions 

consistent with § 155.1540. 

After reviewing the public comments, 

we are not finalizing this provision at 

this time. 

We summarize and respond to public 

comments received on the corrective 

action plan (§ 155.1535) below. 

Comment: A few commenters 

supported the proposal to implement 

CAP under § 155.1535. One commenter 

supported deferring the CAP parameters 

to future rulemaking to observe trends 

that emerge from the SEIPM 

implementation. One commenter 

requested that all State Exchange CAPs 

be made public. Another commenter 

stated that State Exchanges are already 

subject to CAPs to remedy eligibility 

and enrollment errors. 

Response: We appreciate the 

comments offering support to defer the 

CAP parameters to future rulemaking. 

Based on the public comments received, 

we are not finalizing this provision at 

this time. 

i. Failure To Comply (§ 155.1540) 

We proposed to add a new § 155.1540 

that would address failures to comply 

with SEIPM requirements. At paragraph 

(a), we proposed that if a State Exchange 

fails to substantially comply with the 

SEIPM collection requirements or CAP 

provisions and HHS determines such 

failures undermine or prohibit HHS’ 

efficient administration of improper 

payment measurement activities of the 

State Exchange, HHS would have the 

discretion to address failures of 

compliance with audit data submission 

and CAP requirements contained in 

subpart P under paragraph (a)(1), and 

consistent with authorities HHS 

possesses under title I of the ACA or any 

other Federal law as proposed under 

paragraph (a)(2). 

HHS considered exercising its 

authority under § 1313(a)(5) of the ACA 

to ensure State Exchange compliance 

with SEIPM program data collection and 

CAP requirements. For instance, upon a 

State Exchange’s failure to substantially 

comply with data collection 

requirements, HHS could require the 

State Exchange to provide on-site access 

to required data and State Exchange 

personnel capable of displaying 

requested data directly to HHS 

personnel or contractors.266 If a State 

Exchange failed to substantially comply 

with requirements under an existing 

CAP, HHS could require the State 

Exchange to revise the CAP and its 

related implementation plan to contain 

revised or additional requirements 

specifically designed to address the 

State Exchange’s compliance failures 

and ensure the State Exchange’s future 

compliance with CAP requirements. We 

sought comment on these measures and 

invited suggestions for other measures 

HHS might undertake in relation to 

State Exchanges to incentivize 

compliance with data collection and 

CAP requirements (or cure noncompliance) and to ensure the efficient 

administration of APTC. 

Please see the proposed rule preamble 

(87 FR 658 through 659) for a complete 

description of the proposed policy. 

After reviewing the public comments, 

we are not finalizing this provision at 

this time. 


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We summarize and respond to public 

comments received on failure to comply 

(§ 155.1540) below. 

Comment: One commenter expressed 

support for the failure to comply with 

provisions that allow HHS to require a 

State Exchange to revise their corrective 

action plan and implementation plan 

where there is a compliance failure to 

curtail flawed eligibility processes and 

ensure CAP compliance in a timely 

fashion. 

Response: We clarify that the purpose 

of this proposed provision was to 

incentivize compliance with the 

planned data collection and CAP 

requirements. As we continue to 

develop the SEIPM program, we do not 

anticipate broad or willful 

noncompliance with planned 

requirements. 

E. Part 156—Health Insurance Issuer 

Standards Under the Affordable Care 

Act, Including Standards Related to 

Exchanges 

1. FFE and SBE–FP User Fee Rates for 

the 2023 Benefit Year (§ 156.50) 

Section 1311(d)(5)(A) of the ACA 

permits an Exchange to charge 

assessments or user fees on health 

insurance issuers offering a QHP 

through an FFE or SBE–FP as a means 

of generating 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 ACA directs HHS to operate an 

Exchange within the State. Accordingly, 

in § 156.50(c), we specified that an 

issuer offering a plan through an FFE or 

SBE–FP must remit a user fee to HHS 

each month that is equal to the product 

of the annual user fee rate specified in 

the annual HHS notice of benefit and 

payment parameters for FFEs and SBE– 

FPs for the applicable benefit year and 

the monthly premium charged by the 

issuer for each policy where enrollment 

is through an FFE or SBE–FP. 

OMB Circular No. A–25 established 

Federal policy regarding user fees; it 

specifies that a user fee charge will be 

assessed against each identifiable 

recipient of special benefits derived 

from Federal activities beyond those 

received by the general public. 

a. FFE User Fee Rates for the 2023 

Benefit Year 

Based on estimated costs, enrollment, 

and premiums for the 2023 benefit year, 

in the HHS Notice of Benefit and 

Payment Parameters proposed rule (87 

FR 584, 660), we proposed a 2023 

benefit year user fee rate for all issuers 

offering a plan through an FFE of 2.75 

percent of monthly premiums charged 

by the issuer for each policy under the 

plan where enrollment is through an 

FFE. This is the same user fee rate that 

we established for the 2022 benefit year 

(86 FR 53412). We stated that we believe 

the proposed 2023 user fee rate would 

not result in a substantial increase to 

consumer premiums from prior years, 

and would also ensure adequate funding 

for Federal Exchange operations. We 

refer readers to the proposed rule (87 FR 

660) for further discussion of this 

proposal and a description of the cost, 

premium, and enrollment projections 

that went into calculating the proposed 

2023 FFE user fee rates. 

As we explained in the proposed rule 

(87 FR 660), activities performed by the 

Federal government that do not provide 

issuers offering a plan in an FFE with 

a special benefit are not covered by the 

FFE user fee. As in benefit years 2014 

through 2022, issuers seeking to 

participate in an FFE in the 2023 benefit 

year 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. For the 2023 

benefit year, issuers offering a plan in an 

FFE will receive special benefits from 

the following Federal activities: 

• Provision of consumer assistance 

tools; 

• Consumer outreach and education; 

• Management of a Navigator 

program; 

• Regulation of agents and brokers; 

• Eligibility determinations; 

• Enrollment processes; and 

• Certification processes for QHPs 

(including ongoing compliance 

verification, recertification, and 

decertification). 

b. SBE–FP User Fee Rates for the 2023 

Benefit Year 

SBE–FPs enter into a Federal platform 

agreement with HHS to leverage the 

systems established for the FFEs to 

perform certain Exchange functions, and 

to enhance efficiency and coordination 

between State and Federal programs. 

Accordingly, in § 156.50(c)(2), we 

specified that an issuer offering a plan 

through an SBE–FP must remit a user 

fee to HHS, in the timeframe and 

manner established by HHS, 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 where enrollment is through an 

SBE–FP, unless the SBE–FP and HHS 

agree on an alternative mechanism to 

collect the funds from the SBE–FP or 

State instead of direct collection from 

SBE–FP issuers. 

The user fee rate for SBE–FPs is 

calculated based on the proportion of 

user fee eligible FFE costs that are 

associated with the FFE information 

technology infrastructure, the consumer 

call center infrastructure, and eligibility 

and enrollment services, and allocating 

a share of those costs to issuers in the 

relevant SBE–FPs. 

To calculate the proposed SBE–FP 

rates for the 2023 benefit year, we used 

the same assumptions on contract costs, 

enrollment, and premiums as the 

proposed FFE user fee rates. We 

calculated the SBE–FP user fee rate 

based on the proportion of all FFE 

functions that are also conducted for 

SBE–FPs. The final SBE–FP user fee rate 

for the 2022 benefit year of 2.25 percent 

of premiums was based on HHS’ 

calculation of the percent of costs of the 

total FFE functions utilized by SBE– 

FPs—the costs associated with the 

information technology, call center 

infrastructure, and eligibility 

determinations for enrollment in QHPs 

and other applicable State health 

subsidy programs, which we estimate to 

be approximately 80 percent. Based on 

this methodology, in the proposed rule 

(87 FR 661), we proposed to charge 

issuers offering QHPs through an SBE– 

FP a user fee rate of 2.25 percent of the 

monthly premium charged by the issuer 

for each policy under plans offered 

through an SBE–FP for the 2023 benefit 

year. This is the same user fee rate that 

we established for the 2022 benefit year. 

We sought comment on these proposed 

user fee rates. We refer readers to the 

proposed rule (87 FR 660 through 661) 

for a complete description of the 

proposal and calculation methodology. 

After reviewing the public comments, 

for the reasons discussed in this rule 

and the proposed rule, we are finalizing 

for the 2023 benefit year, as proposed, 

a user fee rate for all issuers offering 

QHPs through an FFE of 2.75 percent of 

the monthly premium charged by the 

issuer for each policy under the plan 

where enrollment is through an FFE, 

and a user fee rate for all issuers offering 

QHPs through an SBE–FP of 2.25 

percent of the monthly premium 

charged by the issuer for each policy 

under plans offered through an SBE–FP. 

We summarize and respond to public 

comments received on FFE and SBE–FP 

user fee rates for the 2023 benefit year 

(§ 156.50). 

Comment: Several commenters 

supported the proposed user fee rates 

and appreciated the rates being held 

constant with 2022. One supporting 

commenter stated that avoiding an 

increase in user fees may help to 


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incentivize additional issuers to 

participate in the Exchanges, providing 

consumers with additional choice. 

Another commenter noted that 

maintaining the user fee level has the 

benefit of steady administrative costs to 

issuers, which translates to stable 

premiums for consumers. 

Other commenters disagreed with the 

proposed user fee rates, asking HHS to 

either increase or decrease the user fee 

rates. One commenter encouraged HHS 

to lower user fee rates based on 

decreasing technology costs. Another 

suggested decreasing the user fee rates 

noting that higher rates raise premiums 

and are unnecessary due to user fee 

collections that could have carried over 

from prior years. Other commenters 

requested that HHS increase the user fee 

rates in order to improve Exchange 

functions, and requested that HHS 

increase funding for Navigators, 

HealthCare.gov, appeals, investments in 

technology, investments in language 

services, investments in disability 

accessibility, and access to back-end 

data with approval from clients. 

Response: We appreciate the support 

for the proposed user fee rates of 2.75 

percent of monthly premiums charged 

by FFE issuers and 2.25 percent of 

monthly premiums charged by SBE–FP 

issuers and are finalizing the user fee 

rates as proposed. We will continue to 

examine cost estimates for the special 

benefits provided to issuers offering 

QHPs on the FFEs and SBE–FPs for 

future benefit years, and will continue 

to establish the user fee rates that are 

reasonable and necessary to fully fund 

user fee eligible Exchange operation 

costs. 

As we discussed in the proposal to 

maintain the user fee rates for the 2023 

benefit year (87 FR 660), we developed 

the user fee rates based upon estimated 

costs, enrollment, and premiums. We 

specifically noted that the user fee rates 

incorporate our estimates of premium 

and enrollment changes for the 2023 

benefit year, and are not solely a 

reflection of the total expenses 

estimated to operate and maintain the 

Federal platform and FFE operations. 

Finally, we noted that technology 

upgrades and maintenance efforts will 

continue to be evaluated annually and 

funded at levels appropriate to ensure a 

smooth enrollee experience. We do not 

believe that a decrease in user fee rates 

is appropriate as HHS remains 

committed to providing a seamless 

enrollment experience for Federal 

platform consumers and applying 

resources to cost-effective, high-impact 

enrollment activities that offer the 

highest return on investment. While we 

did not anticipate any new services or 

contracts to require the expenditure of 

additional FFE user fees for the 2023 

benefit year, we believe that we have 

estimated adequate funding for these 

services in the 2023 benefit year user 

fees. 

As for commenters requesting 

increased funding for language services 

and disability accessibility, we note that 

under § 155.205(c)(2)(i)(A), HHS 

currently provides telephonic 

interpreter services in at least 150 

languages at no cost to applicants and 

enrollees. Translation services are 

provided telephonically and for written 

communications at no cost to the 

consumer. HHS additionally notes that 

under § 155.205(c)(1), information must 

be provided to applicants and enrollees 

in plain language and in a manner that 

is accessible and timely to individuals 

living with disabilities including 

accessible websites and the provision of 

auxiliary aids and services at no cost to 

the individual in accordance with the 

Americans with Disabilities Act and 

section 504 of the Rehabilitation Act. 

We have included the costs of these 

services in the estimates used in setting 

the 2023 benefit year user fees. 

For the request that we increase 

funding for Navigators, HealthCare.gov, 

and access to back-end data, we 

anticipate spending on the management 

of a Navigator program and consumer 

assistance tools will be similar to what 

was estimated for the 2022 benefit year, 

as we believe that was an adequate level 

of funding for these activities, and thus 

we do not believe it is necessary to 

increase user fees for these purposes. As 

discussed in the proposed rule (87 FR 

660), for the 2023 benefit year, we 

anticipate that spending on consumer 

outreach and education, eligibility 

determinations, and enrollment process 

activities will increase above the 2022 

benefit year level. 

Comment: Some commenters believed 

that changes should be made to how 

user fees are charged. Specifically, 

several commenters requested that HHS 

explore a PMPM user fee structure. 

Response: HHS did not propose any 

changes to the user fee structure, as 

such the user fee rates will continue to 

be set as a percent of the premium. 

However, HHS will continue to engage 

with stakeholders regarding how the 

FFE and SBE–FP user fee policies can 

best support consumer access to 

affordable, quality health insurance 

coverage through the Exchanges that use 

the Federal platform. 

Comment: Some commenters 

requested additional transparency into 

user fees; specifically, one commenter 

requested a report reflecting how much 

of the user fee is used for the Navigator 

program. Other commenters requested 

additional information about how funds 

generated by the user fees are allocated 

across Exchange functions, as well as 

greater transparency regarding the cost 

of the Federal platform, call center, 

other programs associated with running 

the Exchanges, individual State usage of 

Federal resources, allocated costs, and 

how State user fees compare with each 

State’s applicable costs. To further 

transparency of the development of the 

SBE–FP user fee rates, one commenter 

urged HHS to provide the enumeration 

and specific calculation of costs 

associated with FFE infrastructure and 

services provided to each State. 

Response: HHS provided additional 

information in the proposed rule (87 FR 

660 through 661) to show how we 

expect costs to grow under certain 

categories. We are limited by two main 

constraints when it comes to projecting 

costs. First, we are projecting contracts 

and costs into the future. Second, we are 

projecting revenues against these costs, 

which are based on estimated 

enrollments and premiums. 

Additionally, HHS is not permitted to 

publicly provide information that is 

confidential due to trade secrets 

associated with contracting. As such, we 

believe that providing a range of 

premium and enrollment projections in 

setting the 2023 benefit year FFE and 

SBE–FP user fee rates is sufficient to 

project revenues for user fee rate setting 

purposes. The weighted average 

premium projections that we considered 

ranged from $618 to $625 per month. 

The annual enrollment percentage 

change projections that we considered 

ranged from –1 percent to 2 percent. We 

took a number of factors into 

consideration in choosing which 

premium and enrollment projections 

should inform the 2023 FFE and SBE– 

FP user fee rates. The assumption that 

the enhanced PTC subsidies in section 

9661 of the ARP will expire after the 

2022 benefit year significantly 

influenced our development of the 2023 

enrollment and premium projections. 

We expected the expiration of this 

provision of the ARP to revert 

enrollment and premium projections to 

the pre-ARP level observed in the 2020 

benefit year. Our 2023 enrollment 

estimates also account for the 2021 

benefit year transition (and projected 

transitions through the 2023 benefit 

year) of States from FFEs or SBE–FPs to 

State Exchanges, as well as the 

enrollment impacts of section 1332 

waivers. We projected that 2023 benefit 

year premiums will generally increase at 

the rate of medical inflation after 

expiration of the enhanced PTC 


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267CMS Navigator Cooperative Agreement 

Awardees. (2021). CMS. https://www.cms.gov/files/ 

document/2021-navigator-grant-recipients.pdf. 

268We also clarified that the repeal of the 

Exchange DE option is specific to removing the 

Exchange DE option codified at § 155.221(j) and the 

accompanying FFE–DE and SBE–FP–DE user fees, 

and that the other Federal requirements applicable 

to the FFE DE Pathways, as outlined in §§ 155.220, 

155.221, and 156.1230, remain intact. See 86 FR 

53427. 

subsidies in section 9661 of the ARP. 

After considering the range of costs, 

premium and enrollment projections, 

we proposed a 2023 user fee rate that 

will not result in a substantial increase 

in consumer premiums from prior years, 

and that also ensures adequate funding 

for Federal Exchange operations. 

As for transparency in the Navigator 

program, the Navigator program makes 

the most recent awards public.267 We 

anticipate spending on consumer 

assistance tools, management of a 

Navigator program, regulation of agents 

and brokers, and certification of QHPs 

will be similar to what was estimated 

for the 2022 benefit year, as we believe 

that was an adequate level of funding 

for these activities. 

FFE and SBE–FP user fee costs are not 

allocated to or provided to each State. 

User fees cover activities performed by 

the Federal government that provide 

issuers offering a plan in an FFE or 

SBE–FP with a special benefit. As 

stated, these services are generally IT, 

eligibility, enrollment, and QHP 

certification services that are more 

efficiently conducted in a consolidated 

manner across the Federal platform, 

rather than by State, so that the services, 

service delivery, and infrastructure can 

be the same for all issuers in the FFEs 

and SBE–FPs. For example, all FFE and 

SBE–FP issuers send their 834 

enrollment transactions to the Federal 

platform database, which are processed 

consistently regardless of State. 

Contracts are acquired to provide 

services for the Federal platform. The 

services do not differ by State, and 

therefore, we do not calculate costs on 

a State-by-State basis. 

As we explained in the proposed rule 

(87 FR 660 through 661), to calculate the 

SBE–FP rates for the 2023 benefit year, 

we used the same assumptions on 

contract costs, enrollment, and 

premiums as we use to develop the 

proposed FFE user fee rates. We 

calculated the SBE–FP user fee rate 

based on the proportion of all FFE 

functions that are also conducted for 

SBE–FPs. The benefits provided to 

issuers in SBE–FPs by the Federal 

government include the use of the 

Federal Exchange information 

technology and call center infrastructure 

in connection with eligibility 

determinations for enrollment in QHPs 

and other applicable State health 

subsidy programs, as defined at section 

1413(e) of the ACA, and QHP 

enrollment functions under 45 CFR part 

155, subpart E. The user fee rate for 

SBE–FPs is calculated based on the 

proportion of user fee eligible FFE costs 

that are associated with the FFE 

information technology infrastructure, 

the consumer call center infrastructure, 

and eligibility and enrollment services, 

and allocating a share of those costs to 

issuers in the relevant SBE–FPs. 

The final SBE–FP user fee rate for the 

2022 benefit year of 2.25 percent of 

premiums was based on HHS’ 

calculation of the percent of costs of the 

total FFE functions utilized by SBE–FPs 

(the costs associated with the 

information technology, call center 

infrastructure, and eligibility 

determinations for enrollment in QHPs 

and other applicable State health 

subsidy programs), which we estimate 

to be approximately 80 percent. 

2. User Fees for FFE–DE and SBE–FP– 

DE States 

Consistent with the removal of 

§ 155.221(j) and the repeal of the 

Exchange DE option in part 3 of the 

2022 Payment Notice (86 FR 53412, 

53424 through 53429, 53445),268 in the 

HHS Notice of Payment and Benefit 

Parameters for 2023 proposed rule (87 

FR 584, 661), we proposed a technical 

correction to remove from § 156.50 all 

references to the Exchange DE option 

and cross-references to § 155.221(j). In 

part 3 of the 2022 Payment Notice (86 

FR 53429), we also finalized the repeal 

of the accompanying user fee rate for 

FFE–DE and SBE–FP–DE States for 

2023; however, HHS inadvertently did 

not amend the accompanying regulatory 

text in § 156.50 related to the Exchange 

DE option user fees. As such, in the 

proposed rule (87 FR 661), we proposed 

to make conforming changes to 

§§ 156.50(c) and (d) to remove all 

references to the Exchange DE option 

and 155.221(j). Specifically, we 

proposed to remove § 156.50(c)(3), and 

amend §§ 156.50(d)(1), (d)(2)(i)(A) and 

(B), (d)(2)(ii), (d)(2)(iii)(B), (d)(3), (d)(4), 

(d)(6), and (d)(7) to remove the 

references to the Exchange DE option. 

We sought comment on these proposed 

technical amendments. 

We received one comment offering 

general support for these technical 

amendments. After consideration of this 

comment, for the reasons set forth in 

this rule and in the proposed rule, we 

are finalizing, as proposed, the 

amendments to § 156.50(c) and (d) to 

remove all references to the Exchange 

DE option and § 155.221(j); specifically, 

we are removing § 156.50(c)(3), and 

amending §§ 156.50(d)(1), (d)(2)(i)(A) 

and (B), (d)(2)(ii), (d)(2)(iii)(B), (d)(3), 

(d)(4), (d)(6), and (d)(7) to remove the 

references to the Exchange DE option. 

3. State Selection of EHB-Benchmark 

Plan for Plan Years Beginning on or 

After January 1, 2020 (§ 156.111) 

a. States’ EHB-Benchmark Plan Options 

At § 156.111(a), we allow a State to 

modify its EHB-benchmark plan by: (1) 

Selecting the EHB-benchmark plan that 

another State used for PY 2017; (2) 

replacing one or more EHB categories of 

benefits in its EHB-benchmark plan 

used for PY 2017 with the same 

categories of benefits from another 

State’s EHB-benchmark plan used for 

PY 2017; or (3) otherwise selecting a set 

of benefits that would become the 

State’s EHB-benchmark plan. In 

implementing this section, we stated in 

the 2019 Payment Notice that we would 

propose EHB-benchmark plan 

submission deadlines in the HHS 

annual Notice of Benefit and Payment 

Parameters. 

Accordingly, in the HHS Notice of 

Benefit and Payment Parameters for 

2023 proposed rule (87 FR 584, 661), we 

proposed that the first Wednesday in 

May that is 2 years before the effective 

date of the new EHB-benchmark plan to 

be the deadline for States to submit the 

required documents for the State’s EHBbenchmark plan selection for that PY. 

For example, under this proposal, the 

deadline for PY 2025 would be May 3, 

2023, and the deadline for PY 2026 

would be May 4, 2024. We proposed 

corresponding edits to § 156.111(d) and 

(e) to reflect the proposed deadline. We 

stated in the proposed rule that we 

believe that it is in the interest of States 

and issuers that we formalize a 

consistent, permanent annual deadline 

in early-May for EHB-benchmark 

submissions. We refer readers to the 

proposed rule (87 FR 661) for further 

background and information regarding 

this proposal. We invited comments on 

this approach, including whether there 

are any unforeseen consequences to 

establishing this perpetual deadline. 

After reviewing the public comments, 

for the reasons set forth in this rule and 

in the proposed rule, we are finalizing 

the proposal with minor edits to the 

language for clarity. Specifically, in the 

proposed rule, we proposed the first 

Wednesday in May that is two years 

before the effective date of the new 

EHB-benchmark plan to be the deadline 

for States to submit the required 

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269For PY 2021, the deadline was May 6, 2019 

(see 84 FR 17534); for PY 2022, it was May 8, 2020 

(84 FR 17534); for PY 2023, it was May 7, 2021 (85 

FR 29226); for PY 2024 it is May 6, 2022 (86 FR 

24232). 

benchmark plan selection for that PY, 

and we gave the example that the 

deadline for PY 2025 would be May 3, 

2023, and the deadline for PY 2026 

would be May 4, 2024. To more clearly 

reflect the examples provided in the 

proposed rule, we are finalizing minor 

edits to the proposed regulation text to 

establish the permanent deadline for 

States to submit the required documents 

for the State’s EHB-benchmark plan 

selection as the first Wednesday in May 

‘‘of the year’’ that is 2 years before the 

effective date of the new EHBbenchmark plan. Moving forward, we 

will not be proposing deadlines for the 

process in annual Notices of Benefit and 

Payment Parameters. We summarize 

and respond to public comments 

received on States’ EHB-benchmark 

plan options below. 

Comment: All commenters expressed 

support for the proposed deadline. 

Some noted that the set deadline would 

make the process more predictable for 

both States and stakeholders involved 

with EHB-benchmark development. 

Others noted that the proposed timeline 

should give States and HHS sufficient 

time to solicit comments and opinions 

on proposed benchmarks while also 

enabling issuers to determine how they 

will provide EHB consistent with the 

new EHB-benchmark plan. 

Response: We agree with commenters 

that the permanent deadline will 

provide more predictability to the EHBbenchmark plan selection process for all 

parties involved. Since we finalized the 

2019 Payment Notice, we have set an 

early-May deadline for the submission 

of EHB-benchmark plans by States for 

each year from PY 2021–2024.269 We 

believe that requiring these submissions 

in the first week of May of the year that 

is two years before the effective date of 

the new EHB-benchmark plan has 

worked well. The feedback received 

from States that have submitted new 

EHB-benchmark plans indicates that 

this timeframe provides the States with 

enough time to prepare EHB-benchmark 

plan submissions. It also provides us 

with sufficient time to review and 

respond to these submissions in 

advance of issuers needing to make 

changes to plan design to conform with 

EHB-benchmark plan changes. 

Comment: We also received several 

comments that were outside the scope 

of the proposal. One commenter noted 

that most States currently have no 

established process for updating their 

EHB-benchmark plans and could add 

benefits to address unmet health care 

needs in their States without exceeding 

generosity limits. They urged HHS to 

identify best practices in EHBbenchmark plan selection and provide 

additional guidance and training for 

States to update their EHB-benchmark 

plans. Several commenters urged HHS 

to strengthen the transparency of the 

public comment process for EHBbenchmark plan selection to ensure that 

stakeholders and other interested parties 

have ample opportunity to provide 

meaningful input. A commenter 

suggested that HHS should require 

States to adopt standards for public 

commenting that mirror those specified 

by HHS for States requesting 

demonstration projects through section 

1115 of the Act. One commenter 

expressed support for the flexibility 

provided to States under the EHBbenchmark plan selection policy. 

Another commenter cautioned HHS to 

remain vigilant that any changes in a 

State’s EHB-benchmark plan do not 

result in a decreased availability of EHB. 

The commenter requested that HHS 

collect and report data on States that 

utilize flexibility under the policy to 

allow consumers, advocates, and other 

stakeholders to better identify and 

understand any trends with regard to 

EHB-benchmark plans. 

Response: Although these comments 

are outside the scope of HHS’ proposal 

regarding the deadline for EHBbenchmark plan submissions, we note 

that HHS is committed to ensuring 

access to EHB while providing States 

with flexibility under the EHBbenchmark plan selection policy. We 

will consider these comments and 

requests for future guidance or 

proposals. However, as they are out-ofscope with regard to this specific 

proposal, we decline to comment 

further on them at this time. 

b. Annual Reporting of State-Required 

Benefits 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 662), we proposed to 

eliminate the requirement at 

§ 156.111(d) and (f) to require States to 

annually notify HHS of any Staterequired benefits applicable to QHPs in 

the individual or small group market 

that are considered to be ‘‘in addition to 

EHB’’ and any benefits the State has 

identified as not in addition to EHB and 

not subject to defrayal. We also 

proposed to revise the section heading 

to § 156.111 to reflect the proposed 

removal of the annual reporting 

requirements such that it would instead 

read, ‘‘State selection of EHBbenchmark plan for PYs beginning on or 

after January 1, 2020.’’ As we explained 

in the proposed rule, since finalizing the 

annual reporting requirement in the 

2021 Payment Notice, we have received 

consistent feedback from States and 

stakeholders restating the concerns 

raised by the majority of commenters on 

the annual reporting requirement in the 

2021 and 2022 Payment Notices. 

Although some commenters agreed that 

this policy is important to ensure States 

are defraying State benefit requirements 

consistently, most commenters objected 

to the policy as unnecessary, 

burdensome on States, and without 

adequate justification. We refer readers 

to the proposed rule (87 FR 661 through 

662) for further information and 

background regarding this proposal. We 

solicited comment on this proposal, 

including on whether we should retain 

the reporting requirement or make it 

voluntary. 

After considering the public 

comments, for the reasons set forth in 

this rule and in the proposed rule, we 

are finalizing, as proposed, repeal of the 

annual reporting requirement at 

§ 156.111(d) and (f), including revising 

the section heading to § 156.111 to 

instead read, ‘‘State selection of EHBbenchmark plan for PYs beginning on or 

after January 1, 2020.’’ Thus, States will 

no longer be required to annually notify 

HHS of any State-required benefits 

applicable to QHPs in the individual or 

small group market that are considered 

to be ‘‘in addition to EHB’’ or any 

benefits the State has identified as not 

in addition to EHB and not subject to 

defrayal. We note that we will continue 

to engage in technical assistance with 

States to help ensure State 

understanding of when a State-benefit 

requirement is in addition to EHB and 

requires defrayal and will provide 

additional written technical assistance 

and outreach to clarify the defrayal 

policy more generally and to provide 

States with a more precise 

understanding of how HHS analyzes 

and expects States to analyze whether a 

State-required benefit is in addition to 

EHB pursuant to § 155.170. We also note 

that, although this policy will relieve 

States of the annual reporting 

requirements, it will not pend or 

otherwise impact the defrayal 

requirements under section 

1311(d)(3)(B) of the ACA, as 

implemented at § 155.170. 

We summarize and respond to public 

comments on the proposal to eliminate 

the annual reporting of State-required 

benefits. 

Comment: The majority of 

commenters supported the repeal of the 

annual reporting policy at § 156.111(d) 

and (f), reiterating many of the same 


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objections and concerns raised by 

commenters on the initial proposal for 

this policy in the 2021 Payment Notice 

and echoed by States and stakeholders 

since the finalization of the policy. 

Many commenters stated that the 

annual reporting policy is unnecessary 

and overly burdensome as the 

requirements already in regulation at 

§ 155.170 are sufficient at instructing 

States and issuers on how to comply 

with the defrayal requirement. Many 

commenters supporting repeal of the 

policy also noted the policy was an 

unjustified new administrative burden 

and duplicative of State efforts, as many 

States already engage in in-depth 

processes with their State legislatures to 

evaluate State defrayal obligations, 

make actuarially sound analyses 

regarding State benefit requirements, 

and subsequently make defrayal 

payments if necessary in compliance 

with § 155.170. These commenters 

stated that the reporting requirement 

would unnecessarily burden both State 

and Federal officials, requiring State 

officials to either procure consultants or 

divert existing staff from other work to 

comply with an entirely new reporting 

process. 

One commenter expressed that States 

are the primary regulators of the 

individual and small group markets, 

and therefore, maintain the authority to 

mandate benefits in those markets and 

monitor issuer compliance, which is at 

odds with the duplicative oversight 

required through the annual reporting 

requirement. 

Many commenters stated that HHS 

already has the requisite authority to 

investigate States that the agency 

believes are not in compliance with the 

defrayal requirement. Such commenters 

emphasized that there is therefore no 

demonstrated need to require States to 

report all State mandates on an annual 

basis to show compliance and that this 

is particularly true for States that do not 

have any State-required benefits that are 

in addition to EHB. Other commenters 

supporting repeal of the policy stated 

HHS had not demonstrated evidence of 

widespread State noncompliance with 

defrayal requirements to warrant the 

policy and expressed concern regarding 

ambiguity around how HHS would 

enforce the annual reporting policy. 

Some commenters expressed support 

for repealing the annual reporting policy 

because they believe it was designed to 

discourage States from expanding upon 

EHB in their State to improve benefit 

coverage, which one commenter 

explained is concerning as enhanced 

EHB benefits are particularly beneficial 

for people with chronic conditions and 

disabilities, who are disproportionately 

women, LGBTQI+ people, and people of 

color. As an example, one commenter 

explained that Colorado’s enhanced 

EHB-benchmark plan effective 

beginning in plan year 2023 includes 

coverage of an annual mental wellness 

exam, services related to substance use 

disorder, and comprehensive genderaffirming care. 

Commenters objecting to the repeal of 

the annual reporting policy expressed 

that the policy was justified to protect 

Federal expenditures as only a small 

number of States have actually 

identified State-required benefits that 

are in addition to EHB and have 

transparent processes in place to 

identify and defray costs as required by 

section 1311(d)(3)(B) of the ACA. 

Commenters objecting to repeal further 

explained that the policy would have 

supported transparency and increased 

understanding of the costs of Staterequired benefits and promoted 

uniformity in the application of the 

ACA. Commenters also stated that the 

policy would have promoted 

accountability and helped to ensure that 

benefit packages remain affordable. 

Some commenters noted that requiring 

States to report in this manner would 

have made issuer compliance with 

defrayal requirements easier to manage 

and others explained it would have 

promoted a more consistent 

understanding of new benefit mandates 

that a State enacts to better inform 

policymaking. One commenter noted 

that absent State reporting, it is unclear 

how the defrayal requirement may be 

enforced. 

Commenters objecting to the repeal of 

the annual reporting policy also 

challenged claims that the policy was 

overly burdensome. Such commenters 

noted that States should already have 

determined the status and cost of Staterequired benefits and that, therefore, the 

reporting requirement should not place 

a burden on States of conducting new 

analyses. Commenters further noted that 

the minimal administrative burden on 

States would decrease further after the 

initial reporting cycle. 

Response: We continue to believe that 

repealing the annual reporting policy at 

§ 156.111(d) and (f) is warranted and 

would not weaken State compliance 

with the defrayal requirement. 

Therefore, we are finalizing the repeal of 

the policy, as proposed, including 

revising the section heading to § 156.111 

to instead read, ‘‘State selection of EHBbenchmark plan for PYs beginning on or 

after January 1, 2020.’’ 

We understand the frustration 

expressed by States that already may 

appropriately identify which Staterequired benefits are in addition to EHB 

and provide defrayal, for which 

reporting this information to HHS on an 

annual basis would have added burden 

without increasing compliance. 

However, we acknowledge the concerns 

of many commenters that emphasized 

the importance of the annual reporting 

policy to address inconsistent State 

compliance and application of the 

defrayal requirements at § 155.170. 

Although we continue to share concerns 

that some States may not be properly 

identifying all State-required benefits 

that are in addition to EHB, we also 

believe alternative approaches to the 

annual reporting policy—such as 

expanded technical assistance and 

issuing clarifying guidance—can 

achieve improved State adherence with 

§ 155.170 without imposing a 

requirement on States to submit detailed 

annual reports on State-required 

benefits. 

We acknowledge that the information 

States would have submitted through 

annual reporting would have supported 

increased oversight over whether States 

are appropriately identifying which 

State benefit requirements are in 

addition to EHB and promoted 

increased transparency for stakeholders. 

We further acknowledge that receipt of 

such reports by HHS would have been 

helpful for identifying noncompliant 

States, although this would not have 

been accomplished without also 

requiring already compliant States to 

submit reports. However, after carefully 

considering the comments, we believe 

that a more targeted approach where 

HHS provides written guidance on how 

to assess State-required benefits, paired 

with continued individualized technical 

assistance and outreach to States better 

balances the goal of increased State 

compliance with the competing priority 

of preserving State resources and 

reaffirming State authority as the entity 

responsible for identifying which Staterequired benefits are in addition to EHB. 

We reiterate that the obligation for a 

State to defray the cost of QHP coverage 

of State-required benefits in addition to 

EHB is a statutory requirement 

independent from the annual reporting 

policy we are now repealing at 

§ 156.111(d) and (f). Therefore, even 

with the repeal of the annual reporting 

policy, States remain responsible for 

identifying which State-required 

benefits are in addition to EHB and 

require defrayal, making payments to 

defray the cost of additional required 

benefits to either the issuer or the 

enrollee, and note that issuers are still 

responsible for quantifying the cost of 

these benefits and reporting the cost to 

the State. With regard to future HHS 

enforcement of the defrayal policy in 


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instances where we have State 

compliance concerns, we intend to work 

closely with any such State to monitor 

compliance and address any areas of 

confusion through continued outreach 

and technical assistance. 

Even though defrayal is a statutory 

requirement, we understand the critique 

that it can function as a restriction on 

States in mandating coverage of benefits 

in addition to EHB by requiring States 

to absorb new State expenditures. We 

are very supportive of States making 

improvements to the scope of EHB in 

their markets within the limits imposed 

by the generosity and typicality 

standards at § 156.111(b)(2) and 

encourage State utilization of any of the 

three methods available to States for 

selecting a new EHB-benchmark plan at 

§ 156.111, a process Colorado used to 

select a new EHB-benchmark plan that 

will be effective for the 2023 plan year 

and many other States utilized in years 

past. We note as a reminder that the act 

of selecting a new EHB-benchmark plan 

does not alone create new State 

mandates, but it also does not relieve 

the State of its obligation to continue 

defraying the cost of QHPs covering any 

State-mandated benefits that are in 

addition to EHB. The annual reporting 

policy would not have changed that 

standard, nor does repeal of the annual 

reporting policy. 

Although we are finalizing the repeal 

of the annual reporting policy, we 

maintain that it would have imposed a 

minimal burden on States as the 

information that States would have been 

required to report to HHS should 

already be readily accessible to States, 

as every State should already be 

identifying which State-required 

benefits are in addition to EHB and 

should be defraying any such costs. 

However, even if the State burden from 

the annual reporting policy would have 

been minimal, we still believe it is 

appropriate to repeal the annual 

reporting policy and instead take a more 

targeted approach of engaging with 

individual States on questions of 

compliance with the defrayal 

requirement. We believe this modified 

approach will yield similar results to 

the annual reporting policy without 

requiring all States, including compliant 

States, to expend additional time and 

resources submitting a report with this 

detailed information. 

Comment: The majority of all 

commenters—both those supporting and 

those objecting to repeal of the annual 

reporting policy—encouraged HHS to 

issue additional technical assistance 

and guidance clarifying the defrayal 

policy. Commenters supporting repeal 

expressed gratitude for the existing 

technical assistance HHS provides. 

Such commenters further agreed it 

would be helpful for HHS to issue 

additional written guidance paired with 

additional outreach regarding how HHS 

analyzes and expects States to analyze 

whether a State mandate is in addition 

to EHB, especially given how often 

questions regarding defrayal arise in 

States. 

Commenters objecting to the repeal of 

the annual reporting policy stated that 

if the policy is ultimately rescinded, 

HHS should still take the alternative, 

but a less effective step, of publishing 

technical guidance. Such commenters 

urged HHS to include guidance on the 

standards, including required actuarial 

analyses, to determine if a benefit 

exceeds EHB and, if so, the cost of the 

mandated benefit, to ensure States and 

issuers have a consistent understanding 

of whether a State-mandated benefit 

will actually increase health care costs. 

Other commenters acknowledged that 

there are other ways to achieve the 

oversight goals of the annual reporting 

policy if the reporting requirement is 

removed, such as providing additional 

written guidance or performing targeted 

audits of States. Other commenters 

stated that, although technical 

assistance and outreach are important, 

the periodic reporting that would have 

been required under the annual 

reporting policy would have had a 

valuable sentinel effect that cannot be 

duplicated through simple outreach and 

assistance. 

Response: We agree that engaging in 

technical assistance with States to help 

ensure State understanding of when a 

State-benefit requirement is in addition 

to EHB and requires defrayal will 

bolster State compliance with defrayal 

requirements in the absence of the 

annual reporting policy. We also 

reaffirm our intent to provide additional 

written guidance and outreach to clarify 

the defrayal policy more generally and 

to provide States with a more precise 

understanding of how HHS analyzes 

and expects States to analyze whether a 

State-required benefit is in addition to 

EHB pursuant to § 155.170. 

We believe that a more targeted 

approach where HHS provides written 

guidance on how to assess Staterequired benefits, paired with continued 

individualized technical assistance and 

outreach to States will still effectively 

promote State compliance with the 

defrayal requirement. It will enable us 

to instead concentrate HHS efforts on 

providing better, more tailored technical 

assistance to States rather than 

reviewing detailed reports for 

compliance across all States, even those 

that are already compliant. Although we 

acknowledge that the annual reporting 

policy may have ultimately had a 

sentinel effect on State adherence to the 

defrayal policy, we also believe 

continued ad hoc monitoring of States 

will yield similar compliance results 

without requiring all States to report 

each year. We believe our future 

technical assistance and guidance will 

ultimately facilitate an environment 

where States are more confident that 

their analysis of State-required benefits 

aligns with § 155.170 and will be 

instructive for States that need to 

subsequently make any necessary 

adjustments to State policy to comply 

with the defrayal policy. 

Comment: Many commenters that 

supported issuing additional technical 

assistance provided policy 

recommendations with regard to the 

content of such guidance that are not 

within the scope of HHS’ proposal 

regarding annual reporting of Staterequired benefits, such as requesting 

that HHS interpret the defrayal policy to 

be more lenient for States (for example, 

interpreting more State mandates to fall 

within the ‘‘benefit delivery method’’ 

exception that would not require 

defrayal or otherwise allowing States to 

change their benefit requirements to 

keep up with medical advancements 

without being required to defray). Other 

commenters urged HHS to include 

additional guidance on the defrayal 

requirements for habilitative services. 

One commenter urged HHS to require 

that State calculations for defrayal also 

be performed by a member of the 

American Academy of Actuaries. 

Response: Although such comments 

are out-of-scope, we will consider such 

recommendations as we continue to 

develop guidance and conduct outreach. 

We encourage States to reach out to 

CMS with specific defrayal questions in 

the interim. 

4. Provision of EHB (§ 156.115) 

In the 2019 Payment Notice, we 

finalized flexibility through which 

States may opt to permit issuers to 

substitute benefits between EHB 

categories. In the preamble to that rule, 

we stated that this option would 

promote greater flexibility, consumer 

choice, and plan innovation through 

coverage and plan design options. 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 662 through 663), we 

proposed to withdraw this flexibility by 

amending § 156.115 to no longer allow 

States to permit issuers to substitute 

benefits between EHB categories. 

In addition, in the event we did not 

finalize the proposal to eliminate the 

State option for between-category 


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substitution, we proposed to establish a 

static, permanent annual deadline for 

States to notify HHS that they wish to 

permit issuers to substitute benefits 

between EHB categories. 

We sought comment on these 

proposals. We refer readers to the 

proposed rule for further discussion of 

these proposals and our rationale (87 FR 

662 through 663). 

After reviewing the public comments, 

for the reasons set forth in this rule and 

in the proposed rule, we are finalizing, 

as proposed, an amendment to § 156.115 

to no longer allow States to permit 

issuers to substitute benefits between 

EHB categories. We are therefore not 

establishing a static, permanent annual 

deadline for States to notify HHS that 

they wish to permit issuers to substitute 

benefits between EHB categories. 

We summarize and respond to public 

comments regarding the proposal to 

eliminate substitution of benefits 

between EHB categories. 

Comment: The majority of the 

commenters supported the proposal to 

amend § 156.115 to no longer allow 

States to permit issuers to substitute 

benefits between EHB categories. Many 

of the commenters opposed the 

between-category substitution when it 

was proposed in the 2019 Payment 

Notice. Some of these commenters 

noted that Congress expressly included 

each EHB category in the ACA to ensure 

a comprehensive and appropriate range 

of benefits to meet patients’ needs 

across their lifespan. They added that 

Congress selected those benefits because 

they were not often covered by private 

insurance prior to the ACA and 

recognized that they were not 

interchangeable. A few commenters 

expressed concerns that substitution of 

benefits between EHB categories would 

result in issuers creating narrowed plans 

that would not ensure access to and 

would increase out-of-pocket costs for 

the items and services consumers need 

to manage their health conditions, 

particularly for consumers with chronic 

conditions and disabilities. They added 

that between-category substitution 

could lead to adverse selection and 

discrimination by allowing issuers to 

cut benefits needed by people with 

significant health needs and substituting 

them with benefits meant to attract 

healthier enrollees. 

One commenter noted that the 

argument that benefit substitution will 

allow consumers to find a plan that is 

better tailored to their needs is based on 

the false assumption that consumers can 

accurately predict their health needs. 

The commenter noted that this rationale 

undercuts the purpose of health 

insurance: To ensure access to 

affordable and comprehensive coverage 

even when one enters a period of 

unanticipated, increased health care 

need. 

Commenters noted that if a State were 

to permit issuers to substitute benefits 

between EHB categories, it would make 

it difficult for regulators to ensure that 

issuers are actually covering the EHBs 

they are required to provide and 

confusing for consumers who expect to 

have coverage for all EHBs in ACA 

plans. Many commenters noted that any 

potential benefit of flexibility to States 

in selecting EHB-benchmark plans does 

not justify the policy given the potential 

harm to consumers. 

Response: We agree with commenters 

that the negative effects on consumers of 

allowing States to permit issuers to 

substitute benefits between EHB 

categories outweigh any flexibility it 

could have afforded to States and 

issuers. For example, we agree with 

commenters that allowing States to 

permit issuers to substitute benefits 

between EHB categories could 

negatively affect access to and increase 

out-of-pocket costs for the items and 

services consumers need to manage 

their health conditions, and could lead 

to adverse selection and discrimination 

by allowing issuers to substitute benefits 

needed by people with significant 

health needs with benefits meant to 

attract healthier enrollees. In addition, 

we agree that allowing such substitution 

would make it difficult for regulators to 

ensure that issuers are actually covering 

the EHBs they are required to provide 

and could be confusing for consumers. 

As we stated in the proposed rule (87 

FR 662), to date, no State has ever 

notified HHS that it would permit 

issuers to substitute benefits between 

EHB categories. Given that this policy 

has never been utilized, it has not 

promoted greater flexibility, consumer 

choice, or plan innovation through 

coverage and plan design options as 

intended. Rather, as we explained in the 

proposed rule (87 FR 662), HHS is of the 

view that it may only create potential 

harm for consumers with chronic 

conditions and disabilities and that 

whatever theoretical flexibility this 

policy could have afforded to States is 

not justified given the potential negative 

effects on consumers. 

Comment: One commenter opposed 

eliminating the option for States to 

permit issuers to substitute benefits 

across categories and stated that 

theoretical harm from allowing 

substitution of benefits between EHB 

categories and the fact that this option 

has not been used are not sufficient 

justifications for withdrawing the 

policy. The commenter noted that 

States’ use of other flexibilities to make 

changes to their EHB-benchmark plans 

is an indication of their continued 

interest in exploring flexibilities and 

that States may have been too 

overwhelmed with the COVID–19 PHE 

to avail themselves of this particular 

flexibility. They requested that HHS 

leave the flexibility in place. 

Response: We do not agree with the 

commenters that opposed eliminating 

the option for States to permit issuers to 

substitute benefits across categories. 

HHS is of the view that whatever 

untapped theoretical flexibility this 

policy could have afforded to States is 

not justified given the potential negative 

effects on consumers, including 

increased out-of-pocket costs for 

consumers with chronic conditions and 

disabilities and adverse selection and 

discrimination of consumers with 

significant health needs. We note that 

States continue to be able to use existing 

flexibilities to make changes to their 

EHB-benchmark plans. 

Comment: Several of the supportive 

commenters included additional points 

that were outside the scope of the 

proposal. Many commenters urged HHS 

to prohibit substitution within EHB 

categories. They noted that the potential 

harm to consumers with chronic 

conditions and disabilities that may 

arise from substitution between EHB 

categories may also arise from 

substitution within EHB categories. 

Commenters noted that benefit 

components are not interchangeable 

within EHB categories that list multiple 

components, such as the ‘‘mental health 

and substance use disorder services 

including behavioral health treatment,’’ 

the ‘‘preventive and wellness services 

and chronic disease management,’’ and 

the ‘‘rehabilitative and habilitative 

services and devices’’ categories. 

One commenter expressed concerns 

that the flexibility to adopt benchmark 

plans from other States and replace EHB 

categories with categories of benefits 

from another State’s less generous 

benchmark plan could lead to a ‘‘race to 

the bottom’’ and erode EHB benefits. 

The commenter noted the effect could 

be even more damaging if a State chose 

the least generous coverage categories 

from various EHB-benchmark plans 

around the country to aggregate as their 

new EHB-benchmark plan. One 

commenter requested that CMS collect 

and publish data on State EHBbenchmark plan substitution so that 

interested parties can better assess the 

coverage of specific services. 

Response: Although these comments 

are outside the scope of the proposal, 

we will consider these comments and 

suggestions and also note that benefit 


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270ACA section 1302(b)(4) prohibits 

discrimination based on age, disability, or expected 

length of life, and requires that benefits not be 

subject to denial based on age or expected length 

of life, present or predicted disability, degree of 

medical dependency, or quality of life. 

271 45 CFR 156.200(e) states that a QHP issuer 

may not discriminate based on ‘‘race, color, 

national origin, disability, age, or sex.’’ 

272The examples of potentially discriminatory 

practices were: (1) Attempting to circumvent 

coverage of medically necessary benefits by labeling 

the benefit as a ‘‘pediatric service,’’ thereby 

excluding adults; (2) refusing to cover a singletablet drug regimen or extended release 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. 80 FR 10750, 10822. 

273 Merriam-Webster.com Dictionary, s.v. 

‘‘unscientific,’’ Retrieved November 5, 2021, from 

https://www.merriam-webster.com/dictionary/ 

unscientific (defining ‘unscientific’ as ‘‘not based on 

or exhibiting scientific knowledge or scientific 

methodology: Not in accord with the principles and 

methods of science’’). 

designs that are discriminatory or 

intended to discourage enrollment by 

certain populations or individuals with 

significant health needs are prohibited 

under 45 CFR 156.125(b). In addition, 

we note that States may collect data on 

EHB benefit substitution. However, as 

the comments are outside the scope of 

this specific proposal, we decline to 

comment further on them at this time. 

5. Prohibition on Discrimination 

(§ 156.125) 

Section 156.125(b) states that an 

issuer providing EHB must comply with 

the requirements of § 156.200(e), which 

currently states that a QHP issuer must 

not, with respect to its QHP, 

discriminate on the basis of race, color, 

national origin, disability, age, or sex. In 

the proposed rule (87 FR 584, 671), we 

proposed to amend § 156.200(e) to 

explicitly prohibit different forms of 

discrimination based on sex— 

specifically, discrimination based on 

sexual orientation and gender identity. 

As explained in the SUPPLEMENTARY

INFORMATION section earlier in this 

preamble, HHS will address this policy, 

as well as the public comments 

submitted in response to this proposal, 

in a future rulemaking. 

6. Refine EHB Nondiscrimination Policy 

for Health Plan Designs (§ 156.125) 

We proposed to refine HHS’ EHB 

nondiscrimination policy under 

§ 156.125 and proposed a regulatory 

framework for entities that are required 

to comply with the EHB 

nondiscrimination policy. 

Under § 156.125(a), 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.270 Section 156.125(b) 

requires that issuers must also comply 

with § 156.200(e), which provides that a 

QHP issuer must not, with respect to its 

QHP, discriminate on the basis of race, 

color, national origin, disability, age, or 

sex.271 Section 156.110(d) states that an 

EHB-benchmark plan may not include a 

discriminatory benefit design that 

contravenes § 156.125. In the 2016 

Payment Notice (80 FR 10750, 10822), 

we provided examples of potentially 

discriminatory practices,272 and in the 

2017 Payment Notice (81 FR 12244), we 

noted that we would consider providing 

further guidance regarding 

discriminatory benefit designs in the 

future. 

In the proposed rule, we first 

proposed to revise § 156.125(a) to 

provide that a nondiscriminatory benefit 

design that provides EHB is one that is 

clinically based, incorporates evidencebased guidelines into coverage and 

programmatic decisions, and relies on 

current and relevant peer-reviewed 

medical journal article(s), practice 

guidelines, recommendations from 

reputable governing bodies, or similar 

sources. 

Second, we proposed examples of 

health plan designs and practices that 

HHS would deem to be presumptively 

discriminatory. HHS identified these 

examples as presumptively 

discriminatory practices based on 

whether the issuer’s benefit design or 

coverage decisions were adequately 

supported by appropriate clinical 

evidence relevant to each circumstance. 

Through these examples, HHS sought to 

further clarify its EHB 

nondiscrimination policy to better 

ensure that unlawful discrimination 

does not impede consumers’ ability to 

access benefits for medically necessary 

treatment. 

Third, we proposed to further refine 

our EHB nondiscrimination policy by 

describing and identifying examples of 

guidelines and resources (such as 

medical journals) that HHS would deem 

appropriate to counter a claim that an 

issuer’s benefit design or its 

implementation of the design is 

discriminatory. We proposed that 

unscientific 273 evidence, disreputable 

sources, and other bases or justifications 

that lack the support of relevant, 

clinically-based evidence would be an 

unacceptable basis upon which to 

dispute a claim that an issuer’s benefit 

design is discriminatory. We stated that 

we did not intend to limit the scope of 

acceptable peer-reviewed journal 

articles to those authored by persons 

who have earned the degree Doctor of 

Medicine (or M.D.). Rather, we 

proposed that HHS would consider 

sufficient peer-reviewed articles 

authored by other relevant, licensed 

health professionals, including, for 

example, doctors of osteopathy, 

chiropractors, optometrists, nurses, 

occupational therapists, pharmacists, 

and dentists. Notwithstanding, we also 

proposed that articles that are not peerreviewed or that are written primarily 

for a lay audience would be insufficient 

to dispute a claim that an issuer’s 

benefit design is discriminatory. We 

proposed that we would not consider 

sufficient a peer-reviewed journal article 

that has not been accepted for 

publication in a reputable medical 

publication. 

We further sought comment on the 

types of clinically-based justifications 

and the level of clinical evidence that 

should be acceptable. Specifically, we 

sought comment on whether we should 

further define the types of acceptable 

clinical evidence. 

We stated in the proposed rule that 

presumptively discriminatory practice 

examples may point to a State’s EHBbenchmark plan, State law, or an 

issuer’s application of a State’s 

benchmark plan or law as being the 

source of the discriminatory benefit 

design. We stated that a benefit design 

that is discriminatory and inconsistent 

with § 156.125 must be cured regardless 

of how it originated. For example, if a 

State EHB-benchmark plan has a 

discriminatory benefit design, we 

explained that a State may issue 

guidance to issuers in the State 

explaining that to be compliant, plans 

providing benefits that are substantially 

equal to the EHB-benchmark plan must 

not replicate this discriminatory design. 

Similarly, if a State-mandated benefit 

has a discriminatory benefit design, the 

State may attempt to remedy this by 

revising the mandate or issuing 

guidance. Regardless, we stated that 

plans required to provide EHB would 

need to alter the benefit design or justify 

their approach with clinical evidence 

when designing plans that meet EHB 

standards. We sought comment on 

whether there are any unforeseen 

barriers in the ability to remedy 

inconsistencies with this refined EHB 

nondiscrimination policy. 

We also stated in the proposed rule 

that, in ensuring that benefit designs are 

not discriminatory, issuers should also 

consider the method in which EHBs are 

delivered and not inadvertently 

discriminate based on the service 

delivery model. Accessibility to EHB 

delivered virtually has significantly 


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27296 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

274See 42 CFR 440.347(e). 

275 Merriam-Webster.com Dictionary, s.v. 

‘‘unscientific,’’ Retrieved November 5, 2021, from 

https://www.merriam-webster.com/dictionary/ 

unscientific (defining ‘unscientific’ as ‘‘not based on 

or exhibiting scientific knowledge or scientific 

methodology: Not in accord with the principles and 

methods of science ’’). 

increased during the COVID–19 PHE as 

enrollees had limited options for inperson health care visits. We noted that 

some issuers have designed health plans 

that deliver services virtually with no 

copay, compared to in-person health 

care services with a copay. We stated 

that this type of health plan design 

could inadvertently incentivize 

enrollees to access EHB using a certain 

delivery method. We further stated that 

although this approach may not amount 

to a discriminatory practice under 

§ 156.125, such a health plan design 

could influence whether an enrollee 

seeks medically necessary in-person 

care due to the variation in the amount 

of copayment, potentially leading to 

adverse health outcomes. We noted that 

we intend to monitor the issue and 

remind issuers that while we 

encouraged expanded use of EHB 

virtually, it should be done in a 

nondiscriminatory manner. 

In relation to the proposed 

refinements of the nondiscrimination 

standard under § 156.125, we proposed 

that the policy would become effective 

60 days after the publication of the final 

rule in the Federal Register. We sought 

comments regarding whether the 

proposed effective date would be 

sufficient to allow issuers to come into 

compliance with our proposed 

refinements to our EHB 

nondiscrimination policy. 

In addition, we recognized that other 

nondiscrimination and civil rights law 

may apply. These laws are distinct from 

the nondiscrimination requirements in 

CMS regulations, and compliance with 

§ 156.125 is not determinative of 

compliance with any other applicable 

requirements, nor is additional 

enforcement precluded. Section 156.125 

does not apply to the Medicaid and 

CHIP programs generally, but a parallel 

provision applies to EHB furnished by 

Medicaid Alternative Benefit Plans.274

We sought comment on the examples of 

presumptively discriminatory benefit 

designs. 

After reviewing the public comments, 

we are finalizing the proposed revisions 

to § 156.125(a) to provide that a 

nondiscriminatory health plan design 

that provides EHB is one that is 

clinically based, but we do not finalize 

the proposed regulation text that would 

have provided that a nondiscriminatory 

health plan design that provides EHB is 

one that incorporates evidence-based 

guidelines into coverage and 

programmatic decisions, and relies on a 

current and relevant peer-reviewed 

medical journal article(s), practice 

guidelines, recommendations from 

reputable governing bodies, or similar 

sources. We also do not finalize our 

proposal to further refine our EHB 

nondiscrimination policy by describing 

and identifying examples of guidelines 

and resources (such as medical journals) 

that HHS would deem appropriate to 

counter a claim that an issuer’s benefit 

design or its implementation of the 

design is discriminatory. Rather, under 

§ 156.125(a), we finalize only that 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; and 

that a non-discriminatory benefit design 

that provides EHB is one that is 

clinically based. As we explain in 

further detail in the comment responses 

later in this section, we credit 

commenter concerns that information 

relevant to whether a benefit design is 

unlawfully discriminatory could appear 

in reputable publications or come from 

sources that are not peer-reviewed 

medical journals or those that are 

otherwise dissimilar to the sources and 

information HHS discussed in the 

proposed rule’s preamble discussion on 

§ 156.125(a). Although we do not 

finalize the proposal to specifically 

define the evidence and sources that 

would be sufficient to counter a claim 

that a plan’s benefit design is 

discriminatory, this should not be 

construed to mean that HHS will deem 

unscientific 275 evidence, disreputable 

sources, or other bases or justifications 

that lack the support of relevant, 

clinically-based evidence as sufficient to 

dispute a claim that an issuer’s benefit 

design is discriminatory. 

We are also providing final versions 

of the examples of presumptively 

discriminatory benefit designs outlined 

in the proposed rule, except that we do 

not address the example related to 

gender-affirming care. For the reasons 

explained in the Supplementary 

Information section earlier in the 

preamble, HHS will address the genderaffirming care example, including the 

public comments that addressed this 

example, in future rulemaking. 

For the final examples included in 

this final rule, we have revised the 

examples in response to commenter 

questions and concerns to clarify key 

points in relation to HHS’ refined EHB 

nondiscrimination policy. First, we 

clarify that the requirement § 156.125 

and HHS’ refined EHB 

nondiscrimination policy apply only to 

services that are covered as EHB under 

a plan and do not require a plan to cover 

services that the plan does not already 

cover as EHB. Second, we clarify that 

neither § 156.125 nor the examples 

reflecting HHS’ refined EHB 

nondiscrimination policy require health 

care professionals to perform services 

outside of their normal specialty area or 

scope of practice. 

Lastly, we do not finalize the 

proposed applicability date of HHS’ 

refined EHB nondiscrimination policy. 

Instead, to allow issuers sufficient time 

to come into compliance with our 

refined nondiscrimination policy and to 

better align with the ability of plans to 

make uniform modifications of coverage 

at the time of renewal, we are finalizing 

that the refined EHB nondiscrimination 

policy will be applicable starting on the 

earlier of January 1, 2023 (the start of PY 

2023) or upon renewal of any plan 

subject to the EHB requirements. We 

have added text to § 156.125(a) to reflect 

this applicability date. 

General Comments on the Proposal To 

Refine EHB Nondiscrimination Policy 

for Health Plan Designs (§ 156.125) 

Comment: Many commenters broadly 

supported the proposals to refine the 

EHB nondiscrimination policy, 

implement a clinical evidence 

framework, and provide discriminatory 

benefit design examples in an effort to 

reduce discriminatory benefit designs 

and safeguard consumers who depend 

on nondiscrimination protections. Such 

commenters recognized the need for 

such safeguards and stated that many 

aspects of health plan design may be 

arbitrary, not clinically based, and have 

discriminatory impacts. These 

commenters noted that these proposals 

would reduce the incidents of 

discriminatory benefit design, which 

still occur despite the ACA’s 

nondiscrimination protections. One 

commenter provided feedback that, by 

implementing consistent requirements 

under § 156.125, the proposal ensures 

that enrollees can fairly access covered 

benefits. 

Response: We agree with commenters 

that despite current EHB 

nondiscrimination protections, 

enrollees may be harmed by 

discriminatory health plan designs. We 

also agree with commenters that 

requiring nondiscriminatory benefit 

designs to be clinically based will help 

ensure that plan limitations on benefits 

covered as EHB will not discriminate on 

the bases prohibited under § 156.125. 


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Specifically, § 156.125(a) prohibits 

plans from discriminating in their 

benefit design, or the implementation of 

its benefit design, 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. Further, 

§ 156.125(c) requires that an issuer 

providing EHB must comply with the 

requirements of § 156.200(e). Section 

156.200(e) currently prohibits 

discrimination on the basis of race, 

color, national origin, disability, age, 

and sex. Thus, any limitation on 

coverage of an EHB in a plan (that is 

subject to EHB standards) based on an 

individual’s age, expected length of life, 

present or predicted disability, degree of 

medical dependency, quality of life, 

other health conditions, race, color, 

national origin, disability, age, or sex, 

must be based on clinical evidence. We 

believe that the clinical evidence 

standard that we are finalizing at 

§ 156.125 in this rule will reduce 

incidents of discriminatory benefit 

design of EHBs by ensuring that any 

plan design limiting coverage of an EHB 

on a protected basis in § 156.125 is 

clinically based, better safeguarding all 

consumers’ access to medically 

necessary care. 

We emphasize that issuers of EHBcompliant plans may continue to utilize 

reasonable medical management 

techniques in accordance with 

§ 156.125(c). Further, our refined EHB 

nondiscrimination policy does not 

require issuers subject to § 156.125 to 

cover services under a health plan that 

are not already covered by the plan as 

EHB; and it does not create a general 

requirement that a health plan cover any 

and all medically necessary services. 

Even when not intended, health plan 

designs that limit coverage of EHBs on 

the basis of characteristics protected 

from discrimination in § 156.125 can 

lead to negative health outcomes when 

such limitations lack clinical 

justification. We believe the refinements 

to our EHB nondiscrimination policy 

will improve issuer compliance with the 

nondiscrimination standards at 

§ 156.125 and help ensure that enrollees 

can fairly and more easily access 

benefits covered as EHB, ultimately 

promoting improved health outcomes. 

Comments on the Impact on Issuers and 

States 

Comment: One commenter expressed 

concern that the proposal would require 

States to update their EHB-benchmark 

plans to remove unjustifiable 

discriminatory benefit designs, like age 

limitations and limitations based on 

health conditions. Some commenters 

requested that HHS clarify whether 

issuers modifying existing plan designs 

to conform with nondiscriminatory 

benefit design requirements would meet 

uniform modification exceptions to 

uniformly modify the benefits in their 

plans. 

Response: As we stated in the 

proposed rule, a plan’s benefit design 

that is discriminatory and inconsistent 

with § 156.125 must be cured regardless 

of how it originated. The 

nondiscrimination requirements at 

§ 156.125, including the clinical 

evidence standard we are finalizing, 

apply to an issuer’s benefit design or 

implementation of a benefit design for 

all benefits the issuer covers as EHB. 

Because some current EHB-benchmark 

plans continue to be based on plan year 

2014 plans, some of the EHB-benchmark 

plan designs may not comply with 

current Federal requirements such as 

nondiscrimination requirements at 

§ 156.125. Therefore, when designing 

plans that are substantially equal to the 

EHB-benchmark plan, issuers may need 

to further conform plan benefits, 

including coverage and limitations, to 

comply with current Federal 

requirements, such as the 

nondiscrimination requirement of 

§ 156.125. This requirement is not new. 

Plans subject to the EHB requirement 

have always been required to comply 

with the nondiscrimination 

requirements in § 156.125 regardless of 

the presence of any noncompliant 

discriminatory language in the relevant 

EHB-benchmark plan. 

Under the guaranteed renewability 

provision at 45 CFR 147.106, a health 

insurance issuer offering nongrandfathered health insurance coverage 

in the individual, small group, or large 

group market is required to renew or 

continue in force the coverage at the 

option of the plan sponsor or the 

individual, unless the issuer 

discontinues all coverage, the product is 

discontinued, or the issuer’s action is 

otherwise excepted from this 

requirement. One such exception is for 

the modification of coverage made 

uniformly and solely pursuant to 

applicable Federal or State 

requirements, as described at 

§ 147.106(e)(2). This allows an issuer to, 

at the time of renewal, modify its plans 

uniformly if the modification is made 

within a reasonable time period after the 

imposition or modification of a Federal 

or State requirement and the 

modification is directly related to the 

imposition or modification of the 

Federal or State requirement. An issuer 

revising its benefit design to conform 

with these nondiscrimination 

requirements could constitute a 

modification under a Federal 

requirement; thus, issuers may exercise 

the exception at § 147.106(e)(2) to 

uniformly modify their plans in 

accordance with guaranteed 

renewability requirements. As 

explained later in this section, we are 

finalizing that the refined EHB 

nondiscrimination policy at § 156.125 

will be applicable on the earlier of PY 

2023 or upon renewal of any plan 

subject to the EHB requirements and, 

therefore, this policy should not conflict 

with uniform modification 

requirements. 

To address State EHB-benchmark plan 

compliance with the non-discrimination 

standards, we further stated in the 

proposed rule that, if a state EHBbenchmark plan has a discriminatory 

benefit design, the State may issue 

guidance to issuers in the State 

explaining that plans providing benefits 

that are substantially equal to the EHBbenchmark must not replicate that 

discriminatory benefit design. We 

clarify that we will not consider State 

EHB-benchmark plan designs to be out 

of compliance with § 156.110(d) or 

§ 156.111(b)(2)(v) if the State provides 

such guidance or otherwise directs 

issuers to comply with these refined 

nondiscrimination standards, 

notwithstanding any aspects of the EHBbenchmark plan that are not consistent 

with these refined nondiscrimination 

standards. Under this approach, States 

are not required at this time to go 

through the formal process at § 156.111 

to update their EHB-benchmark plans 

solely for the purpose of removing any 

such discriminatory benefit designs. But 

States that do elect to update their EHBbenchmark plans at any point going 

forward will be expected to ensure their 

new EHB-benchmark plans are 

compliant with Federal discrimination 

law and policy. 

Comment: Several commenters 

asserted that the proposed rule violates 

the Administrative Procedure Act 

(APA). Some commenters expressed 

concern that the lack of a cost-benefit 

analysis in the proposed rule could be 

a violation of the APA, noting HHS did 

not cite how many plans already cover 

the procedures specified in the 

examples in a nondiscriminatory 

manner, how the refined EHB policy 

will impact utilization, and any 

premium impact. Other commenters 

asserted that the proposed changes to 

§ 156.125 are overly broad. Some of 

these commenters expressed concerns 

that the proposed rule may impede 

States’ ability to regulate and put forth 

benefit packages that are affordable and 

best meet the needs of their residents 

and recommended that HHS should 


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276See, for example, Colorado 2023 EHBBenchmark Plan Actuarial Report. CMS. https://

www.cms.gov/CCIIO/Resources/Data-Resources/ehb 

Suite of Gender-affirming care benefits to treat 

gender dysphoria resulted cost estimate was 0.04 

percent of the total allowed claims assuming 

utilization would be for adults. 

alternatively continue to work with 

States and issuers to develop sufficient 

coverage for enrollees while applying 

protections against discrimination. 

Other commenters expressed concern 

that issuers may see increased 

utilization of benefits and therefore 

higher costs. Some commenters 

recommended that HHS should conduct 

and publish the results of a detailed cost 

study demonstrating premium impacts 

for consumers prior to finalizing the 

proposal. 

Response: We do not agree with 

commenters that our proposals under 

§ 156.125 violate the APA. Additionally, 

the revisions we are finalizing in this 

rule do not impose an unreasonable 

burden on States, are not overly broad, 

and do not impede States’ ability to 

regulate or put forth benefit packages 

that are affordable and meet the needs 

of consumers. The revisions to § 156.125 

clarify existing Federal regulation 

regarding the prohibition on 

discriminatory benefit designs for plans 

subject to the requirement to provide 

EHB. 

Specifically, this final rule affirms the 

existing requirement that an issuer 

provides EHB when its benefit design or 

implementation of its benefit design 

does not discriminate on bases 

prohibited under § 156.125. This final 

rule further clarifies that a plan design 

that includes limitations on EHB on a 

basis prohibited under § 156.125 must 

be clinically based in order to be 

considered nondiscriminatory. We 

reiterate that these nondiscrimination 

requirements at § 156.125 apply to any 

benefit design or implementation of a 

benefit design to the extent that the 

issuer covers benefits as EHB. This does 

not substantively alter or broaden the 

regulatory requirements under this 

section, as issuers of non-grandfathered 

individual and small group health 

insurance are already prohibited from 

offering plans with discriminatory 

benefit designs under § 156.125 in the 

provision of EHB. 

We explained in the proposed rule the 

potential that there would be 

administrative burden on States and 

issuers when coming into compliance 

with the proposal to require clinical 

evidence to support EHB limitations 

that may otherwise be considered 

discriminatory under § 156.125. 

However, we clarify that States are not 

required at this time to formally update 

their EHB-benchmark plans through 

§ 156.111 solely for the purpose of 

removing any such discriminatory 

benefit designs. Therefore, any such 

administrative burden on the part of 

States would be limited to instances 

where, at the State’s discretion, the State 

updates its EHB-benchmark plans to 

remove discriminatory benefit designs 

or otherwise issues guidance to issuers 

on how to comply with § 156.125 in 

spite of any discriminatory limits that 

may be present in the State’s EHBbenchmark plan. The examples in the 

final rule of presumptively 

discriminatory plan designs do not 

substantively change the existing 

regulatory EHB nondiscrimination 

requirements, but provide further 

guidance for plans to design benefit 

limitations that follow those 

requirements. Accordingly, we are 

unable to isolate and identify the 

burdens of providing those additional 

examples as a tool to guide issuers’ 

efforts to comply with the existing 

requirements. 

We disagree with commenters that 

suggest that the proposals we are 

finalizing in this rule will result in 

increased utilization and higher costs 

due to an unintended adverse impact on 

issuers’ ability to administer packages 

that are safe and clinically effective. We 

stated in the proposed rule that, based 

on our experience with States updating 

benefits 276 covered as EHB in their 

EHB-benchmark plans under § 156.111, 

any actions necessary to come into 

compliance with the requirement to 

justify potentially discriminatory benefit 

limitations with clinical evidence will 

cause only a minimal increase in 

premiums. Thus, we do not find 

credible those assertions that the policy 

finalized in this rule will have a 

significant cumulative effect on issuers’ 

ability to administer packages of 

benefits that are affordable. 

We acknowledge that States are 

generally the primary enforcers of EHB 

requirements and HHS will continue to 

provide technical assistance to assist 

States as applicable. HHS will also 

consider whether additional guidance is 

necessary as we monitor issuer 

compliance with EHB 

nondiscrimination requirements and 

States’ oversight and enforcement 

activities. 

Comments on the Requirement That 

Health Plan Designs Be Supported by 

Clinical Evidence 

Comment: Many commenters were 

broadly supportive of including a 

clinical evidence standard at § 156.125, 

but disagreed with or had 

recommendations regarding the 

appropriate scope of such a standard. 

For example, many commenters noted 

that the clinical evidence required 

under § 156.125 should not be limited to 

evidence provided by doctors of 

medicine and that HHS should allow 

evidence provided by other qualified, 

licensed health professionals, including 

nurses. Such commenters also urged 

HHS to include the relevant ‘‘standard 

of care’’ within the list of appropriate 

clinical evidence to rely upon as 

standards of care are the leading guide 

for treatment. Other commenters urged 

HHS to clarify that the list of reputable 

sources is only illustrative and 

recommended that HHS add more peerreviewed journals to the sources list in 

the preamble. One commenter noted the 

concern of overlapping or potentially 

inconsistent standards as issuers already 

use clinical evidence in plan designs. 

Other commenters strongly supported 

the incorporation of evidence-based 

guidelines and recommendations from 

appropriate governing bodies into 

coverage decisions, but recommend that 

HHS not further define the acceptable 

types of clinical evidence. Some 

commenters recommended that the 

opinion of recognized, disease-specific 

experts be included as additional 

appropriate evidence sources. 

Response: In light of the myriad 

comments we received regarding the 

appropriate scope of clinical evidence to 

include at § 156.125, we have 

reconsidered whether the proposed 

clinical evidence standard appropriately 

reflects the breadth and types of clinical 

evidence that issuers may rely upon to 

demonstrate that a plan design 

limitation is not discriminatory under 

§ 156.125. We are therefore finalizing 

§ 156.125 only to require that a 

nondiscriminatory benefit design that 

provides EHB be one that is clinically 

based. We are declining to finalize that 

a nondiscriminatory benefit design that 

provides EHB must incorporate 

evidence-based guidelines into coverage 

and programmatic decisions, and rely 

on current and relevant peer-reviewed 

medical journal articles, practice 

guidelines, recommendations from 

reputable governing bodies, or similar 

sources, or the related examples of 

acceptable sources included in the 

preamble of the proposed rule. We 

believe that requiring plan designs 

providing EHB to be clinically based, 

without these additional requirements, 

is sufficient to protect consumers from 

discriminatory benefit designs. We will 

reassess whether refining this standard 

in future rulemaking is warranted as we 

continue to monitor issuer compliance 

with the nondiscrimination standards at 

§ 156.125. 


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277 45 CFR 156.115(a)(4). 278U.S. Preventative Services Task Force (n.d.) 

USPSTF A & B Recommendations. https://

www.uspreventiveservicestaskforce.org/uspstf/ 

recommendation-topics/uspstf-a-and-brecommendations. 

We did not propose a requirement 

that clinically-based benefit designs be 

supported by evidence provided by 

individuals with specific credentials or 

areas of expertise, and we do not 

finalize any such requirement in this 

final rule. The presence or absence of 

any specific degree by the individual(s) 

that develops resources for clinical 

evidence is not by itself sufficient to 

satisfy or preclude compliance under 

this rule, nor is inclusion of particular 

types of expert. 

When designing nondiscriminatory 

plan designs and ensuring that any 

limitations on EHB on a basis prohibited 

under § 156.125 are clinically indicated, 

we encourage issuers to seek current 

and relevant clinical evidence, rather 

than utilizing standards that tend to 

overlap or are potentially inconsistent 

with the scope of the plan design. 

However, we also acknowledge that 

limitations in medical research may 

restrict availability of such clinical 

evidence. Since we are not finalizing 

our proposal to specify sources of 

acceptable clinical information an issuer 

may use to show that a coverage 

limitation or a benefit design is not 

discriminatory, we also decline to 

include any specific ‘‘standard of care’’ 

within a list of appropriate clinical 

evidence that issuers may rely upon. 

HHS is of the view that the 

requirements of this rule and the 

guidance provided are sufficient to 

enable issuers to set coverage 

limitations that comply with the EHB 

requirements. We will continue to 

assess issuer compliance under this rule 

and will consider if future rulemaking is 

warranted. 

We also clarify that HHS would not 

consider a plan design subject to 

§ 156.125 to be discriminatory when the 

plan design limits coverage of an EHB 

on a basis that is prohibited under the 

regulation, but the limitation is a direct 

result of the issuer’s compliance with 

other applicable Federal coverage 

requirements. For example, Federal law 

requires issuers of plans that must meet 

EHB standards to cover all evidencebased items or services that have in 

effect a rating of A or B in the current 

recommendations of the United States 

Preventive Services Task Force 

(USPSTF).277 278 However, evidencebased items and services with A or B 

ratings in effect by USPSTF often 

contain age limits. We would not 

consider a plan design subject to 

§ 156.125 to be discriminatory when the 

plan design limits an EHB on a 

prohibited basis under § 156.125 but 

such limitation is due to compliance 

with an otherwise applicable Federal 

requirement. As explained in greater 

detail later in this final rule in relation 

to the finalized example of 

discrimination based on age, this policy 

is not meant to conflict with or 

supersede the policy at § 156.115(d), 

which prohibits coverage of, among 

other things, routine non-pediatric 

dental services and eye exam services as 

EHB. 

Comment: Many commenters 

supported the proposal to require 

clinical evidence for health plan 

designs. Some commenters who 

supported the proposal cautioned HHS 

that clinical evidence used to defend 

plan designs may itself be 

discriminatory due to embedded 

systemic racism and bias in medical 

research. 

Response: We recognize that 

embedded systemic racism and bias are 

pervasive and limit many aspects of 

medical research. HHS is committed to 

reducing the effects of such racism and 

bias on consumers and consumer health 

outcomes, which is why we are 

finalizing that a nondiscriminatory plan 

design that provides EHB is one that is 

clinically based, without specifying that 

the plan design must rely on current 

and relevant peer-reviewed medical 

journal article(s), practice guidelines, 

recommendations from reputable 

governing bodies, or similar sources. 

Overall, we are working to advance 

health equity by designing, 

implementing, and operationalizing 

policies and programs that promote and 

support health coverage that provides 

fair access to covered health care 

services for all person who purchase (or 

would purchase) the plan, eliminating 

avoidable differences in health 

outcomes experienced by people who 

are disadvantaged or underserved, and 

providing access to the care and support 

that enrollees need to thrive. 

Finalizing this proposal is another 

step towards achieving that goal, but we 

recognize that this policy, by itself, is 

insufficient to address broader concerns 

that the existing clinical evidence on 

which issuers may design 

nondiscriminatory benefit limitations 

cannot be cured of the effects of 

embedded systemic racism, bias, and 

limits in available medical research. We 

expect issuers to work cooperatively 

with States to design nondiscriminatory 

plans and expect States to evaluate the 

clinical evidence for plan designs while 

conducting form reviews and issuing 

guidance. 

Comment: Some commenters 

expressed concern that clinical evidence 

may be used by issuers as justification 

to perpetuate discriminatory plan 

designs and urged HHS to clarify that 

lack of clinical evidence does not 

provide the license to deny access to 

new innovations or therapies that are 

difficult to research. They noted that 

some services and treatments that may 

be beneficial may not be conducive to 

conventional methodologies for 

developing a clinical evidence-base, 

such as some treatments for rare 

diseases. 

Response: The policy finalized in this 

final rule at § 156.125(a) provides 

mandatory guidelines to issuers to 

support their design and 

implementation of benefit packages that 

conform to EHB nondiscrimination 

requirements. Under § 156.115, plans 

subject to the requirement to provide 

EHB must provide benefits that are 

substantially equal to the EHBbenchmark plan, including covered 

benefits; limitations on coverage, 

including benefit amount, duration, and 

scope; and prescription drug benefits. 

Thus, issuers cannot omit coverage of an 

EHB by asserting a lack of clinical 

evidence to support a discriminatory 

limitation on that EHB. However, 

separate from the policy finalized in this 

rule, issuers continue to have the ability 

to substitute benefits provided in the 

EHB-benchmark plan under 

§ 156.115(b). In fact, utilizing the 

flexibility available under § 156.115(b) 

to substitute benefits may be a way for 

issuers to cover new and innovative 

benefits. 

Comment: Some commenters 

expressed concern that the new 

proposed policy will unintentionally 

limit plan designs that strive to address 

health disparities. They noted that HHS 

should clarify that actions taken to 

reduce health disparities would not 

violate EHB nondiscrimination 

requirements. They expressed concern 

that limitations in clinical evidence may 

hinder innovative plan designs and 

issuers’ ability to respond to a public 

health emergency. 

Response: We disagree with 

commenters that assert this policy will 

inhibit efforts to advance health equity 

or efforts to address public health 

emergencies. We also do not find 

credible any assertion that the pursuit of 

sound clinical evidence in coverage 

decisions will in any way hinder the 

creation of innovative plan designs. We 

believe that requiring issuers to ensure 

their plan designs are clinically based is 

essential to achieving health equity and 

reducing health disparities. 


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27300 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

279See proposed example of Age Limits for 

Infertility which provides a rationale when plans 

include age limitation due to variations in clinical 

effectiveness of treatment for infertility, defined as 

not being able to achieve pregnancy after 1 year of 

having regular, unprotected intercourse, or after 6 

months if the woman is older than 35 years. 

Infertility and Fertility. (2017, January 31). NIH. 

https://www.nichd.nih.gov/health/topics/infertility. 

Comment: One commenter expressed 

concern that relying on clinical 

guidelines exclusively to determine 

discriminatory design may lead to 

issuers using clinical evidence or 

research as a shield to escape valid 

claims of discriminatory benefit. The 

commenter noted that if issuers begin to 

counter enrollee’s arguments with 

clinical evidence, it may be hard to 

evaluate the validity of their sources as 

there is often a lack of transparency 

about the data or underlying 

assumptions in research. The 

commenter suggested that HHS should 

continue to employ other tools such as 

outlier analyses to reveal problematic 

plan design and consider approaches to 

compliance borrowed from mental 

health parity enforcement, such as 

disclosure requirements. 

Response: We appreciate these 

recommendations and are exploring 

ways to improve our nondiscrimination 

reviews and develop new tools to detect 

discriminatory practices. In addition, 

we note that previously awarded State 

grants have focused on enhancing 

policy filing review processes to 

enhance enforcement of 

nondiscrimination (among several 

others). 

Comments on Unforeseen Barriers and 

Remedying Inconsistencies With the 

EHB Nondiscrimination Policy 

Comment: Some commenters 

expressed concern that the proposed 

changes may preempt State benefit 

mandates, which could create 

inconsistencies and impact health care 

affordability and accessibility. One 

commenter expressed concerns that 

State legislatures may enact mandates 

that are limited to a specific subpopulation, as they often balance 

expanding coverage with the potential 

additional cost to those purchasing 

health insurance and their defrayal 

obligations pursuant to § 155.170. As 

such, this commenter noted that it is not 

appropriate for HHS to designate 

benefits being offered in accordance 

with State law as presumptively 

discriminatory. The commenter further 

stated that HHS should clarify that 

benefits offered in accordance with a 

duly enacted State law would not be 

considered presumptively 

discriminatory and that HHS finalize a 

process by which a health insurer could 

rebut any allegations that a benefit 

design is discriminatory. Another 

commenter urged HHS to provide 

additional compliance resources to 

allow plans and States to assess both 

what State mandates may not be 

allowed under this proposal, and how 

plans and States can work together to 

ensure consistent benefit coverage. 

Some commenters expressed concern 

that it is premature and inappropriate 

for HHS to include the examples given 

in the proposed rule without further 

analysis of how the examples relate to 

existing State and Federal 

nondiscrimination policies. 

Response: We disagree with the 

premise that it is inappropriate to apply 

this policy to issuer plan designs that 

are the result of State-required benefits. 

We also clarify that § 156.125 would 

only apply to State-required benefits 

that are considered EHB. For example, 

benefits required by a State mandate 

enacted on or after January 1, 2012, are 

generally not considered EHB pursuant 

to § 155.170. Therefore, an issuer 

covering a State-required benefit that is 

not EHB would not be required to 

modify the benefit in its plan design to 

comply with the nondiscrimination 

standards under § 156.125. A Staterequired benefit enacted on or before 

December 31, 2011, is considered EHB, 

and issuers covering that State-required 

benefit would therefore be required to 

comply with the nondiscrimination 

standards in § 156.125 when including 

that State-required benefit in their plan 

designs. 

If a State-mandated benefit that is 

considered EHB is discriminatory under 

this policy, the State may attempt to 

remedy this through various ways, 

including revising the mandate, issuing 

guidance as described earlier in this 

section of the preamble, or otherwise 

furthering issuer compliance such as by 

amending form filing checklists or 

providing technical assistance to 

issuers. Regardless, issuers subject to 

§ 156.125 would need to modify any 

discriminatory benefit designs for 

benefits the issuer is covering as EHB or 

be prepared to justify their approach 

with clinical evidence when designing 

plans that meet EHB nondiscrimination 

requirements. We would expect an 

issuer to be able to rebut a presumption 

of discriminatory plan design by 

demonstrating that such plan designs 

are clinically based.279 This policy does 

not disallow any benefit mandates 

required under State law, but does 

require issuers to comply with the nondiscrimination provisions if benefits 

mandated by the State are EHB. 

The preceding clarifications should 

address the concerns raised by 

commenters regarding how this policy 

impacts State mandates and potential 

defrayal implications. As noted in 

relation to the policy we are finalizing 

to repeal the annual reporting 

requirement for State benefit 

requirements at § 156.111, we intend to 

provide additional guidance regarding 

the defrayal of State-required benefits in 

the future. We encourage States to reach 

out to HHS when regulatory concerns 

arise in this area in the interim. We 

further note that, under defrayal 

regulations at § 155.170, State mandates 

imposed for purposes of coming into 

compliance with Federal requirements 

are not ‘in addition to EHB’ and do not 

require defrayal. 

Comments on Telehealth Oversight 

Comment: Many commenters 

supported oversight to ensure that 

telehealth is not being utilized in a 

discriminatory fashion. They noted that 

telehealth utilization is often preferred 

for clinical reasons or to increase 

convenience. One commenter 

recommended that HHS continue to 

monitor this issue closely and ensure 

that the decision for an in-person or 

virtual visit is made between the health 

care provider and the patient, based on 

medical necessity and convenience, and 

not based on preferential plan 

structuring. Another commenter noted 

that telehealth is best utilized when it 

is provided within the context of the 

medical home and utilized as a 

component of, and coordinated with, 

longitudinal care. Some commenters 

noted that some issuers have arbitrarily 

terminated coverage of telehealth 

services which they noted is not based 

on any clinical rationale. Further, some 

commenters stated that the arbitrary and 

inconsistent coverage impedes care 

coordination and transition care 

planning, and adds to the stress on the 

patient, their family, and the treatment 

team. Some commenters provided 

consumer survey information related to 

patients’ concerns that telehealth 

coverage may be denied as an available 

option upon the expiration of the 

COVID–19 PHE. They urged HHS to not 

define plan designs that incentivize the 

use of virtual services as discriminatory. 

Response: We are aware that States 

have primary oversight of telehealth 

practices and coverage. We encourage 

the commenters to work with States to 

help ensure consistent coverage 

considering the increased availability of 

telehealth services experienced during 

the COVID–19 PHE. As we noted in the 

proposed rule, we do not currently 

believe that the practice of health plans 


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280National Institute on Deafness and Other 

Communication Disorders FAQ on Hearing Aids 

(2017). NIH. https://www.nidcd.nih.gov/health/ 

hearing-aids#hearingaid_01. 

281 21 CFR 801.420(a)(1). Please note that this 

provision is subject to a pending rulemaking. See 

86 FR 58150. 

282Blazer, D.G., Domnitz, S., & Liverman, C.T. 

(2016). Hearing Health Care for Adults: Priorities 

for Improving Access and Affordability. National 

Academies of Sciences, Engineering, and Medicine. 

National Academies Press (US). https://doi.org/ 

10.17226/23446. 

283 In the 2016 Payment Notice proposed rule, we 

cautioned both issuers and States that age limits are 

discriminatory when applied to services that have 

been found clinically effective at all ages. For 

example, it would be arbitrary to limit a hearing aid 

to enrollees who are 6 years of age and younger 

since there may be some older enrollees for whom 

a hearing aid is medically necessary. 

covering services delivered virtually 

with no copay while requiring a copay 

for in-person health care services 

amounts to be a discriminatory practice 

under § 156.125. However, we intend to 

monitor telehealth utilization as it 

pertains to the delivery of benefits and 

how the utilization of telehealth may 

impact nondiscriminatory access to 

EHB. 

General Comments Relating to Examples 

of Presumptively Discriminatory Benefit 

Designs 

As noted earlier, we made some 

clarifying changes to the examples of 

presumptively discriminatory benefit 

designs after considering public 

comments, and the final examples 

follow later in this section of this 

preamble. Our explanations and 

rationale for the changes are noted in 

this response to comments section. 

Comment: Several commenters 

supportive of the examples of 

presumptively discriminatory plan 

designs asked HHS to include 

additional specific examples or 

provided their own examples of what 

they believed to be presumptively 

discriminatory plan designs. 

Response: We acknowledge and 

appreciate the additional examples from 

the commenters. As discussed in the 

proposed rule, we provided examples 

that illustrate presumptively 

discriminatory practices that HHS 

believes amount to prohibited 

discrimination under § 156.125. 

However, it is not the intent of HHS to 

imply that any of the services or specific 

benefits noted in the examples are 

always EHB, as that can vary among 

States. We also do not plan at this time 

to add additional examples. The 

examples provided are non-exhaustive 

and provide adequate guidance for 

setting coverage limitations that comply 

with existing regulatory requirements 

prohibiting discriminatory benefit 

design. We emphasize that it is not the 

intent of HHS to list every possible 

instance of presumptively 

discriminatory plan design and that the 

absence of a specific plan design 

practice within these examples does not 

mean it does not constitute a 

presumptively discriminatory practice. 

Rather, the refined policy provides 

guidance to issuers on the kind of 

evidence that we would find acceptable 

to justify limitations to benefits, to the 

extent they are EHB. 

Comments on the Example Illustrating a 

Discriminatory Benefit Design Based on 

Age 

Comment: One commenter supporting 

the age limitation example asserted that 

labeling certain benefits as ‘‘pediatric’’ 

should be considered age discrimination 

as this labeling could potentially 

exclude coverage for adults with 

chronic health conditions. 

Response: As finalized at § 156.125, 

plan designs may include age 

limitations on coverage for EHB so long 

as those limitations are supported by or 

consistent with relevant clinical 

guidelines or standards. We also 

recognize that in defining the EHB 

package at section 1302(b) of the ACA, 

Congress included pediatric services 

among the items and services that must 

be covered as EHB. As such, in 

implementing this section, we recognize 

that the statute explicitly requires 

certain medically necessary services to 

be covered as EHBs, such as those 

services required under the preventive 

services and pediatric service category. 

Therefore, plan designs may be limited 

to pediatric enrollees without running 

afoul of discriminatory benefit design 

concerns when such limitations are 

permitted under Federal law. Further, 

the policy is not meant to conflict with 

or supersede the policy at § 156.115(d), 

which prohibits coverage of, among 

other things, routine non-pediatric 

dental services and eye exam services as 

EHB. However, to the extent an issuer’s 

plan provides coverage of an EHB other 

than oral and vision care only for 

pediatric enrollees and no applicable 

Federal requirement only requires 

covering such EHB for that limited age 

group, the issuer will be held to the 

clinically based standard finalized at 

§ 156.125. HHS will continue to monitor 

issuer compliance with EHB 

nondiscrimination requirements to 

discern whether additional assistance, 

policy changes, or rulemaking is 

necessary. 

Finalized Examples: Discrimination 

Based on Age 

We are finalizing these examples as 

proposed, but with minor clarifications 

to the conclusion of each example to 

clarify that these examples apply and 

are presumptively discriminatory to the 

extent issuers cover benefits as EHB. 

1. Limitation on Hearing Aid Coverage 

Based on Age 

a. Background: The National Institute 

on Deafness and Other Communication 

Disorders (NIDCD) defines a hearing aid 

as a small electronic device that you 

wear in or behind the ear. It makes some 

sounds louder so that a person with 

hearing loss can listen, communicate, 

and participate more fully in daily 

activities.280 The FDA defines a hearing 

aid as ‘‘any wearable instrument or 

device designed for, offered for the 

purpose of, or represented as aiding 

persons with or compensating for, 

impaired hearing.’’ 281

b. Circumstance: Some States have 

included age limits in their benefit 

mandates that require coverage for 

hearing aids by specifying in the 

mandate that such coverage applies only 

to enrollees in a certain age group. For 

example, a State has required hearing 

aid coverage for enrollees only up to age 

21 with certain cost-sharing conditions. 

c. Rationale: Individuals can 

experience hearing loss at any stage of 

life, and therefore, the limitation in 

coverage would impact an individual in 

a different age group who has impaired 

hearing. Neither the FDA definition of a 

hearing aid nor NIDCD specifies an age 

when individuals need hearing aids. 

However, the definitions explain that a 

hearing aid is for ‘‘a person with hearing 

loss’’ and is for ‘‘aiding persons with or 

compensating for, impaired hearing.’’ 

Access to hearing aids can positively 

affect an individual’s communication 

abilities, quality of life, social 

participation, and health.282

d. Conclusion: Age limits are 

presumptively discriminatory under 

§ 156.125 when applied to EHB and 

there is no clinical basis for the age 

limitation. A plan subject to § 156.125 

that covers medically necessary hearing 

aids as an EHB, but limits such coverage 

based on age is presumptively 

discriminatory under § 156.125 unless 

the limitation is clinically based. For 

example, it would be presumptively 

discriminatory for an issuer subject to 

§ 156.125 to cover medically necessary 

hearing aids as EHB under its plan, but 

limit such coverage to a subset of 

individuals, such as enrollees who are 

6 years of age or younger, since hearing 

aids may be medically necessary for 

enrollees over the age of 6.283 The 


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284Autism Spectrum Disorder. (2013). American 

Psychiatric Association. https://

www.psychiatry.org/File%20Library/Psychiatrists/ 

Practice/DSM/APA_DSM-5-Autism-SpectrumDisorder.pdf. 

285Autism Spectrum Disorder (ASD). (2020, June 

29). CDC. https://www.cdc.gov/ncbddd/autism/hcpdsm.html. 

286American Psychiatric Association. Diagnostic 

and statistical manual of mental disorders. 5th ed. 

Arlington, VA: American Psychiatric Association; 

2013. 

287Key Findings: CDC Releases First Estimates of 

the Number of Adults Living with Autism Spectrum 

Disorder in the United States. (2020, April 27). 

CDC. https://www.cdc.gov/ncbddd/autism/features/ 

adults-living-with-autism-spectrum-disorder.html. 

288 Infertility Statistics. (2021, December 20). 

CDC. https://www.cdc.gov/nchs/fastats/ 

infertility.htm. 

289Having a Baby After Age 35: How Aging 

Affects Fertility and Pregnancy. (2020). American 

College of Obstetricians and Gynecologists. https:// 

www.acog.org/womens-health/faqs/having-a-babyafter-age-35-how-aging-affects-fertility-andpregnancy. 

290Mean Age of Mothers is on the Rise: United 

States, 2000–2014. (2016, January 14). CDC. https:// 

www.cdc.gov/nchs/products/databriefs/db232.htm. 

291Key Statistics from the National Survey of 

Family Growth. (2017, June 20). CDC. https://

www.cdc.gov/nchs/nsfg/key_statistics/i.htm. 

292Routine Foot Care. Medicare Benefit Policy 

Manual (pp. 265). CMS. https://www.cms.gov/ 

Regulations-and-Guidance/Guidance/Manuals/ 

Downloads/bp102c15.pdf. 

policy reflected in this example does 

not apply to benefits that are not 

covered by a plan as EHB. For example, 

pursuant to § 155.170, a health benefit 

an issuer covers under a plan pursuant 

to a State mandate adopted on or after 

January 1, 2012, other than for purposes 

of compliance with Federal 

requirements, is not considered EHB 

and would not be subject to the policy 

reflected in this example. 

2. Autism Spectrum Disorder (ASD) 

Coverage Limitations Based on Age 

a. Background: According to the 

American Psychiatric Association, 

‘‘[p]eople with ASD may have 

communication deficits, such as 

responding inappropriately in 

conversations, misreading nonverbal 

interactions, or having difficulty 

building friendships appropriate to their 

age. In addition, people with ASD may 

be overly dependent on routines, highly 

sensitive to changes in their 

environment, or intensely focused on 

inappropriate items.’’ 284

b. Circumstance: We noted that some 

States have mandated coverage for the 

diagnosis and treatment for of ASD up 

to a certain age. For example, a State has 

required coverage for enrollees up to age 

18 with certain cost-sharing conditions. 

Similarly, some States’ EHB-benchmark 

plans that cover applied behavior 

analysis (ABA therapy) include age 

limits. 

c. Rationale: The CDC recognizes the 

American Psychiatric Association’s fifth 

edition of the Diagnostic and Statistical 

Manual of Mental Disorders (DSM–5) as 

standardized criteria to help diagnose 

ASD.285 Under the DSM–5 criteria, 

individuals with ASD must show 

symptoms from early childhood, but 

may not be fully recognized until later 

in life.286 We noted that screening for 

ASD is usually done at a young age 

although an individual may not be 

diagnosed until later in life. The CDC 

estimates that 2.21 percent of adults in 

the U.S. have ASD.287

d. Conclusion: Age limits are 

presumptively discriminatory under 

§ 156.125 when applied to services that 

are covered as EHB and there is no 

clinical basis for the age limitation. A 

plan subject to § 156.125 that covers 

diagnoses and treatment of ASD as an 

EHB, but limits such coverage in its 

plan benefit design based on age is 

presumptively discriminatory under 

§ 156.125 unless the limitation is 

clinically based. This example does not 

apply to benefits that are not EHB. For 

example, pursuant to § 155.170, a 

benefit required by State action taking 

place on or after January 1, 2012, other 

than for purposes of compliance with 

federal requirements, is not considered 

EHB, and this example would not apply. 

3. Age Limits for Infertility Treatment 

Coverage When Treatment Is Clinically 

Effective for the Age Group 

a. Background: The National Center 

for Health Statistics reported that 8.8 

percent of couples in the U.S. have 

experienced infertility issues while 9.5 

percent have received infertility services 

(for example, medical assistance, 

counseling, testing for the woman and 

man, ovulation drugs, fallopian tube 

surgery, artificial insemination, assisted 

reproductive technology, and 

miscarriage preventive services).288

b. Circumstance: We noted that some 

States have defined ‘‘infertility’’ in State 

law, which impacts insurance 

companies, hospitals, medical service 

corporations, and health care centers 

providing coverage for medically 

necessary expenses of the diagnosis and 

treatment of infertility. For example, a 

State restricted coverage for treatment of 

infertility to individuals who are 

‘‘presumably healthy,’’ thus excluding 

from coverage of treatment for infertility 

those who are not presumably healthy. 

c. Rationale: We noted that an 

individual’s age is an important factor 

for reproductive health and 

development. Fertility, especially in 

women, declines with age, which makes 

natural conception more unlikely as 

women get older.289 However, we also 

noted that the mean age for individuals 

experiencing their first childbirth has 

increased in recent years.290 We also 

understand that not all individuals 

would be eligible for infertility 

treatment if they are not at the stage of 

development for reproduction or have 

certain medical conditions. Younger 

individuals, for example, who are not at 

the stage of reproductive development 

would reasonably not require treatment 

for infertility. Older adults as well 

would not need treatment for infertility, 

for example women who have reached 

post-menopause. 

d. Conclusion: Age limits are 

presumptively discriminatory under 

§ 156.125 when applied to EHB services 

and there is no clinical basis for the age 

limitation. A plan subject to § 156.125 

that covers treatment of infertility as an 

EHB but limits such coverage in its plan 

benefit design based on age is 

presumptively discriminatory under 

§ 156.125 unless the limitation is 

clinically based. An issuer could rebut 

the presumption that the plan’s age 

limit on the coverage for treatment of 

infertility is discriminatory by 

demonstrating clinical evidence that 

infertility treatments have low efficacy 

for the excluded age groups and/or are 

not clinically indicated for the excluded 

age groups. This example does not 

apply to benefits that are not EHB. For 

example, pursuant to § 155.170, a 

benefit required by State action taking 

place on or after January 1, 2012, other 

than for purposes of compliance with 

federal requirements, is not considered 

EHB and this example would not 

apply.291

Comments on the Example Illustrating a 

Discriminatory Benefit Design Based on 

Health Conditions 

We did not receive substantive 

comments related to the example, 

Limitations on Foot Care Coverage 

Based on Diagnosis (Whether Diabetes 

or Another Underlying Medical 

Condition). 

Finalized Example: Discrimination 

Based on Health Conditions 

4. Limitation on Foot Care Coverage 

Based on Diagnosis (Whether Diabetes 

or Another Underlying Medical 

Condition) 

a. Background: Routine foot care 

includes cutting or removing corns and 

calluses; trimming, cutting, or clipping 

or debriding of nails; and hygienic or 

other preventive maintenance care, such 

as using skin creams, cleaning, and 

soaking the feet.292 Although basic foot 

care is part of an individual’s personal 

self-care, a health care provider in 


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Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 27303 

293Statistics About Diabetes. (2022, February 4). 

American Diabetes Association. https://

www.diabetes.org/resources/statistics/statisticsabout-diabetes. 

294Hicks, C.W., Selvarajah, S., Mathioudakis, N., 

Sherman, R.E., Hines, K.F., Black, J.H., 3rd, & 

Abularrage, C.J. (2016). Burden of Infected Diabetic 

Foot Ulcers on Hospital Admissions and Costs. 

Annals of vascular surgery, 33, 149–158. https://

doi.org/10.1016/j.avsg.2015.11.025. 

295 Foot Care Coverage Guidelines. (2010). CMS. 

https://wayback.archive-it.org/2744/ 

20191012061156/https:/www.cms.gov/Outreachand-Education/Medicare-Learning-Network-MLN/ 

MLNMattersArticles/Downloads/SE1113.pdf. 

certain situations may perform routine 

foot care for a patient to the degree that 

is medically necessary to prevent the 

perpetuation of chronic conditions. 

b. Circumstance: We noted that some 

issuers have restricted coverage for 

routine foot care to individuals 

diagnosed with diabetes. For example, 

several issuers have limited coverage for 

routine foot care to diabetes care only. 

c. Rationale: The American Diabetes 

Association estimates that over 10 

percent of the American population has 

diabetes, which costs $237 billion for 

direct medical costs.293 The annual cost 

of diabetic foot ulcer treatment, for 

example, is significantly greater than 

non-diabetic foot ulcer treatment, 

estimated at $1.38 billion versus $0.13 

billion.294

Although diabetes is a vast medical 

expenditure in the United States, 

individuals may need routine foot care 

to treat other conditions associated with 

metabolic, neurologic, or peripheral 

vascular disease.295

d. Conclusion: Benefit designs that 

restrict coverage on the basis of health 

condition are presumptively 

discriminatory under § 156.125 when 

applied to EHB services and there is no 

clinical basis for the limitation. A plan 

subject to § 156.125 that covers routine 

foot care as EHB in its health plan but 

limits such coverage on the basis of 

health condition to only apply to 

individuals diagnosed with diabetes 

despite clinical evidence demonstrating 

that routine foot care may also be 

medically necessary for treatment of 

other conditions, such as metabolic, 

neurologic, or peripheral vascular 

disease, is presumed to be 

discriminatory under § 156.125. This 

example does not apply to benefits that 

are not EHB. For example, pursuant to 

§ 155.170, a benefit required by State 

action taking place on or after January 

1, 2012, other than for purposes of 

compliance with federal requirements, 

is not considered EHB and this example 

would not apply. 

Comments on the Example Illustrating a 

Discriminatory Benefit Design Based on 

Adverse Tiering of Prescription Drugs 

After reviewing the public comments 

for the Adverse Tiering example (87 FR 

667 through 668), we are finalizing this 

proposed example in our EHB 

nondiscrimination policy for health 

plan benefit designs under § 156.125 as 

proposed with some minor 

clarifications. We clarify that this 

example applies to benefits that are 

EHB. This example does not apply to 

benefits that are not EHB; for example, 

under § 155.170, coverage of a specific 

drug that a State mandated on or after 

January 1, 2012 be covered does 

generally not qualify as EHB and this 

example does not apply. 

Comment: Many commenters 

supported the example related to 

discrimination in accessing prescription 

drugs for chronic health conditions and 

adverse tiering, as the further emphasis 

on the existing prohibition against 

adverse tiering would only further 

expand access to care and improve 

health outcomes. One commenter noted 

that the prohibition of adverse tiering 

under § 156.125 is consistent with 

Medicare Part D and emerging State 

practices. Commenters agreed with the 

application of § 156.125 to adverse 

tiering because using cost as the primary 

factor in formulary decisions can cause 

tangible patient harm including 

nonadherence and negative health 

outcomes. 

Response: We agree with commenters 

that the inclusion of the Adverse Tiering 

example clarifies our existing position 

that adverse tiering, which occurs when 

an issuer assigns all or the majority of 

drugs for certain medical conditions to 

a high-cost prescription drug tier to 

discourage enrollment by people with 

those medical conditions, is 

presumptively discriminatory under 

§ 156.125. Allowing this practice would 

allow issuers to discourage enrollment 

for entire segments of the population 

with a particular medical condition by 

placing all or the majority of drugs for 

that medical condition on a high-cost 

tier. 

To be clear, and as reiterated below, 

in finalizing this example, we are not 

prohibiting issuers from considering 

drug cost in setting drug formularies. On 

the contrary, we believe that it is 

prudent for a plan to consider a drug’s 

cost in determining on which tier to 

place a particular drug. For example, if 

there are two effective drugs available to 

treat a particular condition, and one 

drug is less expensive than the other, it 

may be appropriate for the issuer to 

place the less expensive drug on a lower 

tier to incentivize usage of the less 

expensive drug. However, under this 

example, it is presumptively 

discriminatory for an issuer to place 

both of these drugs on a high-cost 

prescription drug tier in order to 

actively discourage enrollment by those 

with that condition in the plan. HHS or 

the State, in determining whether the 

issuer has rebutted this presumption 

that a formulary that places all drugs for 

a particular condition on a high-cost tier 

is discriminatory, will look at the 

totality of the circumstances, including 

whether the issuer demonstrated that 

neutral principles were used in 

assigning tiers to drugs and that those 

principles were consistently applied 

across types of drugs, particularly as 

related to other drugs in the same class 

(for example, demonstrating that the 

issuer or pharmacy benefit manager 

(PBM) weighed both cost and clinical 

guidelines in setting tiers). 

Thus, we urge issuers and PBMs to 

pay close attention to any instance 

where all or the majority of drugs to 

treat a particular condition are placed 

on the highest-cost tiers. As we noted in 

the proposed rule, a generic drug 

requiring no special handling that is 

inexpensive to obtain might be rightly 

placed on a generic tier or the lowest 

tier, whereas a specialty drug requiring 

special handling and counseling, and 

that is also very costly, might be rightly 

placed on a specialty tier that has the 

highest cost sharing. We acknowledge 

that cost is often an important factor in 

how issuers and PBMs that service 

issuers tier their drugs and note that 

plans and issuers are permitted to use 

reasonable medical management 

practices and consider cost in 

structuring plan designs and cost 

sharing. 

We believe finalizing this example is 

consistent with the requirement 

finalized in this rule at § 156.125 to 

justify limitations on EHBs with clinical 

guidelines. As explained in the 

proposed rule and in more detail below, 

this example and the existing pharmacy 

and therapeutics (P&T) committee 

requirements at § 156.122(a)(3) operate 

together to require issuers to base their 

drug formulary tier decisions on 

clinically indicated evidence. 

Comment: Some commenters 

recommended that HHS allow 

individual plan P&T committees to 

determine formularies, as P&T 

committee recommendations are 

flexible in the face of constant change in 

the clinical evidence and other industry 

considerations. These commenters 

stated that formulary plan designs 

developed through the P&T committee 

process should not be deemed 


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27304 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

296 Jacobs, D.B., & Sommers, B.D. (2015). Using 

drugs to discriminate—adverse selection in the 

insurance marketplace. The New England journal of 

medicine, 372(5), 399–402. https://doi.org/10.1056/ 

NEJMp1411376. 

297Boersma, P., Black, L.I., & Ward, B.W. (2020). 

Prevalence of Multiple Chronic Conditions Among 

US Adults, 2018. Preventing chronic disease, 17, 

E106. https://doi.org/10.5888/pcd17.200130. 

discriminatory simply because the 

formularies place higher cost drugs in 

higher drug tiers. They noted that the 

proposed EHB policy would not only 

undermine the role of the P&T 

committee, but would also impact the 

ability of issuers to develop costeffective formulary plan designs and 

may compel plans to include at least 

some high-cost specialty drugs in lower 

tiers, contrary to clinical evidence. In 

addition, they asserted that the 

proposed EHB policy would encourage 

manufacturers of these drugs to impose 

higher drug prices, which will drive up 

premiums. 

Response: We acknowledge the 

importance of P&T committees in 

setting clinically indicated, nondiscriminatory drug formularies; since 

2017, we have required plans subject to 

the requirement to provide EHB to 

utilize P&T committees that meet the 

standards at § 156.122(a)(3). Based in 

part on those standards, we expect that 

P&T committees for issuers of such 

plans provide recommendations 

consistent with the most current and 

relevant clinical evidence for their 

respective service area. 

Formulary plan designs are not 

discriminatory simply because 

formularies place higher cost drugs in 

higher drug tiers. Under this finalized 

example, formularies are presumptively 

discriminatory when all or a majority of 

drugs for a particular condition are 

placed on a high-cost prescription drug 

tier to discourage enrollment by those 

with that condition. As we noted in the 

proposed rule, HHS or the State may 

determine that an issuer can rebut this 

presumption by a totality of the 

circumstances, including by showing 

that neutral principles were applied 

consistently across the entire formulary 

in assigning all or a majority of drugs for 

a particular condition on a high-cost 

prescription drug tier. These principles 

harmonize with the existing 

requirements for P&T committees at 

§ 156.122(a)(3)(iii) in establishing and 

managing an EHB-compliant formulary 

drug list. In this way, this example 

places even greater importance on the 

independent nature and clinically-based 

endeavors of P&T committees. Further, 

we do not agree that a P&T committee’s 

input would likely compel plans to 

include at least some high-cost specialty 

drugs in lower tiers. We do not agree 

with commenters who asserted that this 

example will encourage manufacturers 

of these drugs to impose higher drug 

prices, which will drive up premiums. 

We believe this example will contribute 

to controlling the costs of drugs by 

ensuring that issuers do not 

inappropriately place additional drugs 

on higher cost drug tiers. 

Comment: Some commenters 

suggested that HHS needs to promulgate 

clear parameters of what is considered 

discriminatory, including a tool for QHP 

issuers to perform their own verification 

that their formularies meet the new nondiscrimination requirements in advance 

of their plan submission. One 

commenter urged HHS to monitor 

issuers for compliance with 

nondiscrimination requirements, and to 

assist States with oversight and 

enforcement. One commenter 

recommended HHS should review 

issuers’ internal coverage guidelines for 

discriminatory benefit designs as part of 

the QHP certification process. 

Response: We believe that this final 

rule provides issuers clear guidance 

regarding the EHB nondiscrimination 

policy and encourage issuers to utilize 

tools that are appropriate for their own 

practices to aid with meeting EHB 

nondiscrimination requirements. For 

example, HHS currently uses and makes 

available a non-discrimination cost 

sharing review tool to identify and 

analyze outlier plans seeking 

certification as QHPs on the FFEs, as a 

means to identify potentially 

discriminatory benefit designs and 

strives to enhance such techniques. In 

the proposed rule, we stated that we 

will continue to monitor issuer 

compliance with EHB 

nondiscrimination requirements and 

States’ oversight and enforcement 

activities to discern whether additional 

guidance, policy changes, or rulemaking 

are necessary. HHS will also consider 

whether additional guidance is 

necessary as we monitor issuer 

compliance with EHB 

nondiscrimination requirements and 

States’ oversight and enforcement 

activities. 

Finalized Example: Discrimination 

Based on Health Conditions 

5. Access to Prescription Drugs for 

Chronic Health Conditions (Adverse 

Tiering) 

a. Background: QHP issuers are 

allowed to structure and offer tiered 

prescription drug formularies. As a 

result, QHPs will have different tier 

structures depending on decisions that 

issuers make about their formulary 

structure, including decisions made on 

the basis of cost. However, there is 

concern that formulary tiers may also be 

structured to discourage enrollment by 

consumers with certain chronic 

conditions. One approach to this, called 

adverse tiering, occurs when plans 

structure the formulary by assigning all 

or the majority of drugs for certain 

medical conditions to a high-cost 

prescription drug tier.296

b. Circumstance: Individuals with 

certain chronic health conditions, for 

example, have reported that the majority 

of their prescription drugs have been 

designated as specialty drugs and 

placed in the highest cost tier. 

Individuals have also seen most or all 

prescription drugs in the same 

therapeutic class, used to treat their 

chronic health condition, placed on the 

highest cost tiers. 

c. Rationale: More than half of U.S. 

adults are diagnosed with a chronic 

condition. In 2018, the prevalence of 

multiple chronic conditions was higher 

among women, non-Hispanic white 

adults, older adults, adults aged 18–64 

enrolled in Medicaid, adults dually 

eligible for Medicare and Medicaid, and 

adults in rural areas.297 Adults with 

certain high-cost chronic conditions 

require long-term treatment to manage 

their chronic health conditions. Health 

benefit designs with adverse tiering may 

discriminate based on an individual’s 

present or predicted disability or other 

health conditions in a manner 

prohibited by § 156.125(a). 

d. Conclusion: It is presumptively 

discriminatory under § 156.125 for an 

issuer providing EHB to place all drugs 

for a particular condition on a high-cost 

tier to discourage enrollment by those 

with that condition. To rebut the 

presumption that a formulary that 

places all drugs for a particular 

condition on a high-cost tier is 

discriminatory, HHS or the State will 

consider the totality of the 

circumstances, including whether the 

issuer has demonstrated that neutral 

principles were used in assigning tiers 

to drugs and that those principles were 

consistently applied across types of 

drugs, particularly as related to other 

drugs in the same class (for example, 

demonstrating that the issuer or PBM 

weighed both cost and clinical 

guidelines in setting tiers). 

The 2016 Payment Notice provides 

that if an issuer places most or all drugs 

that treat a specific condition on the 

highest cost tiers, that such plan designs 

could be found to discriminate against 

individuals who have those chronic 

high-cost conditions under the 

§ 156.125(a) standard. We clarified that 


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51Letter to Issuers on Federally-facilitated and 

State Partnership Exchanges (pp.15). (2013, April 

5). CMS. https://www.cms.gov/cciio/resources/ 

regulations-and-guidance/downloads/2014_letter_

to_issuers_04052013.pdf. 299 2015 Letter to Issuers in the Federally 

facilitated Marketplaces (pp.29). (2014, March 14). 

CMS. https://www.cms.gov/CCIIO/Resources/ 

Regulations-and-Guidance/Downloads/2015-finalissuer-letter-3-14-2014.pdf. 

300Letter for Premium Adjustment Percentage, 

Maximum Annual Limitation on Cost Sharing, 

Reduced Maximum Annual Limitation on Cost 

Sharing, and Required Contribution Percentage for 

the 2023 Benefit Year (2021, December 28). CMS. 

https://www.cms.gov/files/document/2023-papiparameters-guidance-v4-final-12-27-21-508.pdf. 

301Expanded bronze plans are bronze plans 

currently referenced in § 156.140(c) that cover and 

pay for at least one major service, other than 

preventive services, before the deductible or meet 

the requirements to be a high deductible health 

plan within the meaning of section 223(c)(2) of the 

Code. 

such instances of adverse tiering are 

presumptively discriminatory and that 

issuers and PBMs assigning tiers to 

drugs should weigh the cost of drugs on 

their formulary with clinical guidelines 

for any such drugs used to treat highcost chronic health conditions to avoid 

tiering such drugs in a manner that 

would discriminate based on an 

individual’s present or predicted 

disability or other health conditions in 

a manner prohibited by § 156.125(a). 

In addition, we indicated in the 2016 

Payment Notice and the 2014 Letter to 

Issuers that we will notify an issuer 

when we see an indication of a 

reduction in the generosity of a benefit 

in some manner for subsets of 

individuals that is are not based on 

clinically indicated, reasonable medical 

management practices.298 299 Issuers 

should expect to cover and provide 

sufficient access to treatment 

recommendations that have the highest 

degree of clinical consensus based on 

available data, such as professional 

clinical practice guidelines. 

Comments on Implementing the Refined 

EHB Nondiscrimination Policy 60 Days 

After Final Rule Publication 

Comment: One commenter supported 

the proposed effective date of 60 days 

after the publication of the final rule, 

given the negative effects that 

discriminatory benefit designs can have 

on enrollees with chronic conditions, 

especially during a public health 

emergency. Another commenter 

supported the 60-day effective date, 

noting that since the proposed clinical 

standards framework is consistent with 

HHS’ earlier rulemaking and plan 

compliance reviews, it should not 

unduly burden issuers to review and 

update their plans for compliance. 

Many commenters objected to the 

proposed implementation timeframe as 

too immediate. Commenters requested 

that HHS extend the effective date until 

one year after the publication of this 

final rule to allow time for review of 

benefits coverage and making necessary 

adjustments. Other commenters 

recommended implementation of the 

policy no earlier than the 2024 plan 

year, while two other commenters 

recommended that the policy become 

effective at the beginning of a plan year 

so that formularies do not change in the 

middle of a plan year. Commenters 

explained that issuers will need to work 

with States to assess this requirement 

and administrative changes while 

reviewing existing networks and any 

new benefits. Commenters also noted 

they need adequate implementation 

time to prevent duplicative health plan 

designs and potential inconsistent 

standards as many health plans already 

use clinical evidence-based guidelines. 

Response: We recognize that issuers 

subject to § 156.125 requirements may 

choose to carefully review the refined 

EHB nondiscrimination final rule. We 

recognize that such reviews may take 

time and that issuers may experience 

added burden to the extent that issuers 

make additional changes to their EHB 

plan designs in response to those 

reviews. While we expect that issuers 

are already compliant with current 

§ 156.125 requirements, we recognize 

that in reviewing and implementing the 

refined EHB nondiscrimination policy, 

issuers may still have to make changes 

to benefits covered as EHB to ensure 

compliance, which may not always be 

done mid-plan year. Therefore, the 

refined EHB nondiscrimination policy 

will be applicable starting on the earlier 

of PY 2023 or upon renewal of any plan 

subject to the EHB requirements. We 

encourage issuers to promptly update 

their practices to more immediately 

reduce the impact of presumptively 

discriminatory practices, consistent 

with applicable State and Federal 

requirements. HHS intends to work 

collaboratively to address compliance 

issues with issuers that are acting in 

good faith to comply with the refined 

EHB nondiscrimination policy. 

7. Publication of the 2023 Premium 

Adjustment Percentage, Maximum 

Annual Limitation on Cost Sharing, 

Reduced Maximum Annual Limitation 

on Cost Sharing, and Required 

Contribution Percentage in Guidance 

(§ 156.130) 

As established in part 2 of the 2022 

Payment Notice, HHS will publish the 

premium adjustment percentage, the 

required contribution percentage, and 

maximum annual limitations on cost 

sharing and reduced maximum annual 

limitation on cost sharing in guidance 

annually starting with the 2023 benefit 

year. In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 668), we noted that 

these parameters were not included in 

the proposed rule, as HHS did not 

propose to change the methodology for 

these parameters for the 2023 benefit 

year, and therefore, HHS published 

these parameters in guidance on 

December 28, 2021 (Premium 

Adjustment Percentage, Maximum 

Annual Limitation on Cost Sharing, 

Reduced Maximum Annual Limitation 

on Cost Sharing, and Required 

Contribution Percentage for the 2023 

Benefit Year).300

8. Levels of Coverage (Actuarial Value) 

(§§ 156.140, 156.200, 156.400) 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 668), HHS proposed to 

change the de minimis ranges at 

§ 156.140(c) beginning in PY 2023 to 

+2/¥2 percentage points for all 

individual and small group market 

plans subject to the AV requirements 

under the EHB package, other than for 

expanded bronze plans,301 for which 

HHS proposed a de minimis range of 

+5/¥2. Under § 156.200, HHS 

proposed, as a condition of QHP 

certification, to limit the de minimis 

range to +2/0 percentage points for 

individual market silver QHPs; HHS 

also proposed under § 156.400 to 

specify a de minimis range of +1/0 

percentage points for income-based 

silver CSR plan variations. 

Section 2707(a) of the PHS Act and 

section 1302 of the ACA direct issuers 

of non-grandfathered individual and 

small group health insurance plans 

(including QHPs) to ensure that these 

plans adhere to the levels of coverage 

specified in section 1302(d)(1) of the 

ACA. A plan’s level of coverage, or AV, 

is determined based on its coverage of 

the EHB for a standard population. 

Section 1302(d)(1) of the ACA requires 

a bronze plan to have an AV of 60 

percent, a silver plan to have an AV of 

70 percent, a gold plan to have an AV 

of 80 percent, and a platinum plan to 

have an AV of 90 percent. Section 

1302(d)(2) of the ACA directs the 

Secretary of HHS to issue regulations on 

the calculation of AV and its application 

to the levels of coverage. Section 

1302(d)(3) of the ACA authorizes the 

Secretary to develop guidelines to 

provide for a de minimis variation in the 

actuarial valuations used in determining 

the level of coverage of a plan to 

account for differences in actuarial 

estimates. 


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We sought comments on this 

proposal. We refer readers to the 

proposed rule (87 FR 668 through 671) 

for further discussion of these proposals 

and our rationale. 

After reviewing the public comments, 

for the reasons set forth in this rule and 

in the proposed rule, we are finalizing 

the proposed changes to the de minimis 

ranges at §§ 156.140(c), 156.200, and 

156.400 as proposed. 

First, beginning in PY 2023, we are 

finalizing that all individual and small 

group market plans subject to the AV 

requirements under the EHB package 

will be subject to a de minimis range of 

+2/¥2 percentage points, except for 

expanded bronze plans, for which we 

finalize a de minimis range of +5/¥2 

percentage points. 

As we explained in the proposed rule 

(87 FR 668), since we finalized these de 

minimis ranges in the 2018 Payment 

Notice (81 FR 94058, 94142) and the 

2017 Market Stabilization final rule (82 

FR 18346, 18368), we have observed an 

increasing percentage of bronze plans 

offered on HealthCare.gov with AVs in 

the upper end of the current de minimis 

range. In PY 2018, 8.45 percent of all 

bronze plans offered on HealthCare.gov 

had an AV between 64 and 65 percent. 

In PYs 2019 and 2020, this number grew 

to 14.29 percent and 24.44 percent, 

respectively. For PY 2021, 67.55 percent 

of bronze plans offered on 

HealthCare.gov had an AV between 64 

and 65 percent. As the cost of health 

care services continues to increase, we 

expect more bronze plans to have an AV 

of at least 64 percent in future PYs. 

During PYs 2018 through 2021, as the 

percentage of bronze plans within the 

upper limit of the +5/¥4 percentage 

point range increased, the percentage of 

silver plans offered on HealthCare.gov 

within the lower end of the current 

+2/¥4 percentage point range remained 

consistent, with less than a third of 

silver plans having an AV between 66 

and 68 percent. 

Despite the consistency of silver plan 

distribution by AV percentage, the 

number of enrollees in silver plans on 

HealthCare.gov within the lower end of 

the current +2/¥4 percentage point 

range has decreased each year since 

2018, while the number of enrollees in 

bronze plans within the upper end of 

the current +5/¥4 percentage point 

range has increased each year since 

2018. 

As the availability of and enrollment 

in bronze plans within the upper end of 

the current de minimis range increases 

and the enrollment in silver plans 

within the lower end of the current de 

minimis range decreases, we believe it 

is increasingly important for consumers 

to be able to distinguish the levels of 

coverage between bronze plans and 

silver plans and be assured that the 

level of coverage of their plan 

corresponds to the relevant metal tier. 

We are not confident that, with current 

de minimis ranges, consumers can 

reliably distinguish plans that have 

similar AV percentages, but 

significantly different cost sharing. 

Despite their similar AVs, there is 

generally a 10-percentage point 

difference in median coinsurance per 

EHB between expanded bronze and base 

silver plans offered on HealthCare.gov. 

The difference between copayment 

amounts for the expanded bronze plan 

and the base silver plan is also apparent. 


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Thus, we are no longer of the view 

that a silver de minimis range of +2/¥4 

percentage points ensures the 

meaningful comparison of plans 

between the silver and bronze levels of 

coverage. However, we continue to 

recognize the importance of permitting 

issuers to offer expanded bronze plans 

because the rationale for expanding the 

upper limit of the de minimis range for 

these plans to +5 still applies to the 

current market: Issuers continue to 

require greater flexibility for bronze 

plan design to assist with innovation, 

premium impact, and future impacts to 

the AV Calculator methodology, to 

ensure that bronze plans can continue to 

be more generous than catastrophic 

plans and to ensure that high deductible 

health plans (HDHPs) can be offered at 

the bronze level. At the same time, the 

2017 Market Stabilization final rule also 

noted the narrow difference in bronze 

and silver QHPs and therefore, to 

improve a consumer’s ability to 

meaningfully compare the bronze and 

silver levels of coverage, pursuant to our 

authority under sections 1302(d)(3) and 

1321(a)(1)(A) and (D) of the ACA, and 

sections 2707 and 2792 of the PHS Act, 

we are changing the de minimis range 

for standard silver plans as proposed. 

Additionally, as shown in Tables 10 

and 11, we stated that we have observed 

a shift in enrollment for gold plans in 

2021 and bronze plans since 2019 

within the +2/¥4 de minimis towards 

the center of the de minimis (+2/¥2). 

Because of this shift, and for 

consistency across the metal levels, 

which would help reduce potential 

consumer confusion, we believed it is 

appropriate, starting with PYs beginning 

in 2023, to change the de minimis 

ranges for the standard bronze, gold, 

and platinum levels of coverage from 

+2/¥4 percentage points to +/¥2 

percentage points. Likewise, we have 

observed a similar shift in enrollment 

for expanded bronze plans that 

currently utilize a +5/¥4 de minimis 

range. Because of this shift, and to align 

with the change above, starting with 

PYs beginning in 2023, we are changing 

the de minimis range for expanded 

bronze plans from +5/¥4 to +5/¥2. 

Further, States generally remain the 

primary enforcers of the requirement to 

meet AV requirements, including, to the 

extent required by § 156.135, the use of 

the Federal AV Calculator or an AV 

Calculator that utilizes State-specific 

data under § 156.135(e). In the 2017 

Market Stabilization final rule (82 FR 

18369), we stated that States are the 

primary enforcers of AV requirements 

and can apply stricter AV standards that 

are consistent with Federal law. We also 

stated that a State cannot require issuers 

to design plans that apply an AV range 

that is not consistent with our 

implementation of sections 1302(d)(1) 

and (d)(3) of the ACA (which defines 

the metal levels and de minimis ranges). 

We reiterate those statements here. 

Under this final rule, a State cannot 

apply an AV range that exceeds +2/¥2 

percentage points, except for under the 

expanded bronze range originally 

provided for in § 156.140(c). 

In addition to the changes applicable 

to non-grandfathered individual and 

small group market health insurance 

coverage market-wide, we are also 

amending § 156.200(b)(3) to state that, 

beginning with year PY 2023, as a 

requirement for certification, the 

allowable variation in AV for individual 

market silver QHPs would be +2/0 

percentage points. Through the 

authority granted to HHS in sections 

1311(c) and 1321(a) of the ACA to 

establish minimum requirements for 

QHP certification, we are finalizing this 

narrower de minimis range for 

individual market silver QHPs to 

maximize PTC and APTC for subsidized 

enrollees. We believe that narrowing the 


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de minimis range of individual market 

silver QHPs will influence the 

generosity of the SLCSP, the benchmark 

plan used to determine an individual’s 

PTC. We note that a subsidized enrollee 

who has an SLCSP that is currently 

below 70 percent AV will see the 

generosity of their current SLCSP 

increase, likely accompanied by a 

corresponding increase in premium, 

resulting in an increase in PTC. As 

shown in Table 8, since 2018, 

enrollment in 66.00 to 69.99 percent AV 

silver plans has decreased and 

enrollment in 62 to 64.99 percent AV 

bronze plans has increased; enrollees in 

such bronze plans now outnumber 

enrollees in such silver plans by more 

than ten to one. 

In addition, as we stated in the 

proposed rule (87 FR 670), after the 

implementation of the ARP enhanced 

financial subsidies, there are even fewer 

enrollees remaining in silver QHPs with 

AVs between 66.00 and 69.99 percent 

offered through Exchanges that use the 

Federal platform. Approximately 

248,000 enrollees remain, of which 

about 91,000 are unsubsidized. By 

comparison, enrollment for the incomebased silver CSR variations 

corresponding to the above silver QHPs 

has increased to about 4.2 million. We 

believe the amendment we are finalizing 

to the de minimis range for individual 

market silver QHPs will reduce the cost 

of insurance coverage for an increasing 

population of subsidized enrollees. It 

will also mitigate the net burden of the 

additional cost to a decreasing 

population of unsubsidized enrollees by 

incentivizing healthier, subsidy-eligible 

enrollees to participate in the 

Exchanges. 

Thus, we believe increasing PTC for 

all subsidized enrollees justifies a 

narrower de minimis range on 

individual market silver QHPs that have 

fewer enrollments each year. 

Finally, we are changing the de 

minimis variation for individual market 

income-based silver CSR plan variations 

from +1/¥1 to +1/0 with a revision to 

the definition of ‘‘De minimis variation 

for a silver plan variation’’ at § 156.400. 

Similar to the +2/0 de minimis change 

for individual market silver QHPs, we 

believe the change to the de minimis 

variation for individual market incomebased silver CSR plan variations will 

deliver further subsidization of 

premiums via increased APTC and PTC 

for subsidized enrollees in the incomebased silver CSR plan variations and 

increase the generosity of these plans. 

While there will be an expected increase 

to the premium for the CSR plan 

variations as a result of the increased 

generosity, it will be substantially offset 

by increases to the APTC and PTC. 

We summarize and respond to public 

comments received on levels of 

coverage (actuarial value) (§§ 156.140, 

156.200, 156.400). 

Comment: Many commenters 

expressed general support for the 

proposed changes to the de minimis 

ranges, agreeing with the rationale from 

the proposed rule that narrowing the de 

minimis ranges would increase PTC and 

APTC, and make coverage more 

affordable for subsidized enrollees. 

Many other commenters did not support 

the proposal and expressed satisfaction 

with the current de minimis ranges, 

asserting that not every enrollee would 

be eligible for the increased subsidies 

that would offset any premium 

increases due to the narrowed de 

minimis ranges. These commenters 

noted that the expanded PTC under 

section 9661 of the ARP is set to expire 

after PY 2022. 

Response: We agree with commenters 

that the proposed de minimis changes 

would increase PTC and APTC to make 

coverage more affordable for subsidized 

enrollees. As we noted in the proposed 

rule, after implementation of the ARP 

enhanced financial subsidies, there are 

even fewer enrollees remaining in silver 

QHPs with AVs between 66.00 and 

69.99 percent offered through 

Exchanges that use the Federal platform, 

of which about 91,000 are unsubsidized. 

By comparison, enrollment for the 

income-based silver CSR variations 

corresponding to the above silver QHPs 

has increased to about 4.2 million. 

We recognize that this change will 

increase premiums for enrollees in the 

individual and small group market. We 

estimated that the premiums would 

increase approximately 2 percent on 

average because of this change, which 

accounts for changes after the expiration 

of the expanded PTC under section 9661 

of the ARP. We received no comments 

that addressed the accuracy of this 

estimate or its effects as a whole. While 

we recognize that not every enrollee in 

plans subject to the AV requirement is 

eligible for APTC and lives in an area 

with a SLCSP that is currently below 70 

percent AV, we believe that the benefit 

of increased PTC and APTC for the 

majority of enrollees in the Exchanges 

outweighs the effects of wider de 

minimis ranges and the burden of 

premium increases. 

Comment: Some commenters 

requested clarification on the 

applicability of uniform-modificationof-coverage rules should the narrower 

de minimis ranges be finalized. One 

such commenter requested clarification 

that plans within the current de minimis 

ranges, but outside of the proposed 

narrower ranges for PY 2023, will be 

allowed to renew within the same metal 

level of coverage under the Federal 

uniform-modification-of-coverage rules. 

These commenters generally contended 

that discontinued plans not subject to 

those rules would cause disruption for 

enrollees. 

Response: Under the guaranteed 

renewability provision at 45 CFR 

147.106(e), a health insurance issuer 

offering health insurance coverage in 

the individual, small group, or large 

group market is required to renew or 

continue in force the coverage at the 

option of the plan sponsor or the 

individual, unless the issuer 

discontinues all coverage, the product is 

discontinued, or the issuer’s action is 

otherwise excepted from this 

requirement. One such exception that 

applies to individual and small group 

coverage is the modification of coverage 

at the time of renewal made consistent 

with State law, effective uniformly and 

solely pursuant to applicable Federal or 

State requirements, as described at 

§ 147.106(e)(1)–(2). This allows an 

issuer to modify its plans uniformly if 

the modification is made within a 

reasonable time period after the 

imposition or modification of a Federal 

or State requirement and the 

modification is directly related to the 

imposition or modification of the 

Federal or State requirement. As 

finalizing these changes to the de 

minimis ranges constitutes a 

modification of a Federal requirement, 

issuers that, consistent with State law, 

uniformly modify their plans solely to 

bring the plans’ AV levels into the 

narrower de minimis ranges to maintain 

the same metal level will be considered 

to have modified their plans consistent 

with the Federal uniform-modificationof-coverage rules outlined in 45 CFR 

147.106(e). Such changes would not 

cause any product, or any plan within 

a product, to be a different product or 

plan, as explained in the definitions of 

product and plan in 45 CFR 144.103. 

Comment: Many commenters opposed 

the proposed +2/0 de minimis range for 

individual market silver QHPs and 

+2/¥2 de minimis range for other silver 

plans and recommended keeping the 

+2/¥2 de minimis range consistent 

across the individual market. These 

commenters cited concerns about the 

effects of non-uniform de minimis 

ranges for silver plans across the 

individual market, asserting that 

applying different de minimis ranges 

on- and off-Exchange could destabilize 

the individual market. They further 

believe that the different de minimis 

ranges could adversely impact 


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consumers who choose to buy health 

coverage off-Exchange. 

Response: We strive to maintain 

consistency for the de minimis ranges as 

much as possible. A consistent de 

minimis range allows for the most 

reliable determination of the differences 

between metal levels of coverage which, 

overall, improves the consumer 

shopping experience. We diverge from 

that goal only to the extent necessary to 

achieve compelling policy interests. For 

example, we previously regulated by 

this guideline in the 2017 Market 

Stabilization final rule, changing the de 

minimis ranges to +2/¥4 from the 

original +2/¥2 allowable AV variation 

finalized in the Final 2018 Payment 

Notice, in an attempt to achieve the 

compelling policy interest of improving 

plan variability and choice. In this rule, 

we believe it is appropriate to adopt 

separate de minimis ranges for 

individual market silver QHPs to 

achieve the compelling policy interest 

of addressing the rising costs of health 

insurance premiums by influencing the 

generosity of the SLCSP to increase the 

amounts of PTC and APTC. 

Comment: Many commenters urged 

that we not finalize changes to de 

minimis ranges for small group market 

plans, asserting that the proposed rule’s 

rationale for changing the de minimis 

ranges applies only to changes to 

individual market plans. These 

commenters pointed out that HHS did 

not describe similar shifts in 

enrollments in small group QHPs 

offered on HealthCare.gov that are 

towards the upper end of the expanded 

bronze de minimis range as done with 

enrollment in individual market QHPs 

offered on HealthCare.gov, and that 

enrollees in small group market plans 

would experience premium increases as 

a result of the proposal, without the 

benefit of increased PTC or APTC. 

Further, these commenters stated that, 

because small group enrollees purchase 

their coverage through employers, they 

are not involved with plan comparison 

in the same way as individual market 

enrollees and HHS’ justification for 

maintaining the integrity between metal 

levels is inapplicable to the small group 

market. These commenters also asserted 

that sponsors of small group market 

plans prefer the variety of plan choices 

under a wider de minimis range, and 

explained that these employers would 

experience disruption to existing plans 

or decide to drop coverage entirely. 

Response: We recognize the concern 

raised by commenters that the proposed 

de minimis changes will lead to 

increased premiums for small group 

market enrollees without any subsidies 

to offset the cost. We are of the view that 

the burden of small premium increases 

in the small group market does not 

outweigh the benefits of ensuring that 

all purchasers of health coverage, 

including small group employers and 

their employees, can discern the 

material differences in benefits provided 

under competing health insurance 

plans. In response to the assertion that 

sponsors of small group market plans 

prefer the variety of plan choices that 

wider de minimis ranges allow for, and 

that these employers would experience 

disruption to existing plans or decide to 

drop coverage entirely, we believe that 

the benefits of improved plan 

comparability outweigh the advantages 

of wider de minimis ranges. 

We do not have sufficient data to 

confidently describe enrollment trends 

in small group market QHPs. However, 

enrollment trends were not the basis for 

proposing to change the de minimis 

range for small group market plans. As 

we explained in the proposed rule (87 

FR 669 through 670), the rationale for 

making equivalent changes to the de 

minimis ranges across the individual 

and small group markets is to maintain 

consistency across the metal levels, as 

an effort to reduce potential consumer 

confusion. Maintaining consistency for 

the metal level de minimis ranges 

allows for the greatest degree of 

confidence that consumers can 

recognize and understand the 

differences between metal levels. We 

diverge from the standard +2/¥2 de 

minimis range for expanded bronze 

plans (+5/¥2) for the reasons described 

in the preamble of the proposed rule, 

and for individual market silver QHPs 

offered both on-Exchange and offExchange (+2/0) and income-based 

silver CSR plan variations (+1/0) only to 

further the compelling policy interests 

described elsewhere in this section. 

Comment: Many commenters 

supported the proposed de minimis 

ranges by citing the expected 

improvement in consumers’ ability to 

meaningfully compare plans and make 

informed decisions related to their 

health coverage. These commenters 

stated that the current de minimis 

ranges are too permissive and blur the 

distinction between the metal levels of 

coverage envisioned by the ACA, which 

makes the plan comparison process 

difficult for consumers. They noted that 

the proposed de minimis ranges would 

narrow the allowable variation in plan 

generosity per metal level and should 

improve the plan comparison process 

for consumers, leading to more 

informed decisions on effective health 

coverage. The commenters also stated 

that the proposed de minimis ranges 

could lead to higher enrollment, as 

consumers would better understand the 

difference between metal level QHPs 

and more efficiently choose their health 

coverage. Additionally, one of the 

commenters noted that narrowing the 

allowable levels of coverage would 

positively impact plan marketing and 

display practices across issuers and 

keep consistent thresholds across 

competitors. They particularly noted 

that the narrow de minimis ranges 

would end the ‘‘race to the bottom’’ of 

underbidding high generosity 

competitor plans by offering plans with 

lower generosity that still display under 

the same metal level of coverage within 

marketing. 

Opposing commenters expressed a 

preference for the current de minimis 

ranges, asserting that the proposed 

ranges are too disruptive to the current 

market of plan offerings and could lead 

to more difficulty for consumers during 

plan selection. According to these 

commenters, consumer feedback 

indicates a preference for consistently 

similar plan offerings year-over-year. 

These commenters also generally 

asserted that the proposed ranges would 

cause fluctuations in available plan 

offerings, and could lead to consumers 

choosing coverage that is not in their 

best interests. These commenters also 

noted that the proposal may eliminate 

popular plan options at lower bound 

levels of coverage and that the gap in 

the allowable de minimis range could 

lead to limited plan design flexibility. 

Some commenters raised concerns 

about the effect of the proposed de 

minimis ranges on future plan designs 

as well, stating that narrowing the 

ranges for plans on and off the 

Exchanges would reduce issuers’ ability 

to create plan designs that meet the 

specific needs of enrollees. These 

commenters further contended that 

popular plan designs would become 

non-compliant, with one State Exchange 

commenting that a standardized gold 

plan design, currently at 76 percent AV 

and accounting for 51 percent of the 

Exchange’s gold metal level enrollment, 

would be non-compliant under this 

proposal. Some commenters also 

expressed general concerns about 

market disruption and requested a delay 

of any changes to the de minimis ranges 

to at least PY 2024. 

Response: We agree with commenters 

that this policy will improve 

comparability, ensuring that consumers 

can more meaningfully distinguish 

between plans in different metal levels 

of coverage, and ensure consistency 

across metal levels. Increased 

recognition by consumers of the 

fundamental differences between the 

benefits offered under different health 


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302 Information on state specific rating variation is 

available at Market Rating Reforms. (2021, 

December 10). CMS. https://www.cms.gov/CCIIO/ 

Programs-and-Initiatives/Health-Insurance-MarketReforms/state-rating. Also see Green Mountain Care 

Board Reduces Rate Requests for Individual and 

Family Plans for 2022. (2021, August 5). Green 

Mountain Care Board. https://

gmcboard.vermont.gov/sites/gmcb/files/documents/ 

GMCB%20Press%20Release%20-%202022

%20BCBSVT%20and%20MVP%20

Individual%20Decisions.pdf. 

303Massachusetts is considered to have a merged 

market for purposes of the HHS-operated risk 

adjustment program. See https://regtap.cms.gov/ 

uploads/library/RA_MergedMarketsFAQ_021522_

5CR_021522.pdf. 304See Or. Admin. R. 836–053–0009. 

plans means that consumers will be less 

likely to choose a health plan ill-fitted 

to their circumstances, which may 

discourage consumers from using and 

maintaining their coverage in the future. 

Furthermore, we believe that the 

implementation of the proposed de 

minimis ranges can lead to higher 

enrollment in plans. Requiring that 

plans offer the levels of coverage 

described at section 1302(d) of the ACA 

promotes consumers’ ability to more 

easily recognize, understand, and 

compare plan offerings. As commenters 

noted, there is a general consensus of a 

connection between the ease of 

consumer plan selection and their 

enrollment decisions. These narrower 

de minimis ranges will allow consumers 

to better differentiate between plan 

offerings and reduce consumer 

confusion, which we believe will 

motivate increased overall enrollment. 

In response to comments that the new 

de minimis ranges may eliminate 

popular plan options at lower bound 

levels of coverage and could lead to 

limited plan design flexibility, we are of 

the view that the burdens to issuers of 

conforming their plan offerings to the 

new de minimis ranges will be offset by 

the positive impacts on the consumer 

plan selection process. We reiterate our 

note from the proposed rule that we 

have no evidence that the expanded 

variation in allowable levels of coverage 

under current rules actually improved 

the consumer experience, including a 

consumer’s ability to choose the plan 

that best meets their needs. As we stated 

previously, we believe the revised de 

minimis ranges we are finalizing in this 

rule will improve comparability, 

ensuring that consumers can more 

meaningfully distinguish between plans 

in different metal levels of coverage. 

Although initial compliance with the 

new de minimis ranges may require 

additional effort from stakeholders, we 

still believe that this change is necessary 

to respond to observed changes in 

consumer plan selection behavior. We 

note that any initial disruption to issuer 

plans in the –4 to –2 percentage point 

de minimis range will be limited to a 

one-time cost-sharing adjustment to 

conform with up to a 2-percentage point 

change in the AV (except for individual 

market silver QHPs, which would have 

up to a 4-percentage point change). 

Issuers will be permitted to make these 

changes to existing plans consistent 

with the uniform modification 

provisions under the guaranteed 

renewability statute and regulation. 

Furthermore, while we believe issuers 

can operationalize these changes in time 

for plan year 2023, we recognize that 

this one-time cost-sharing adjustment 

may create substantial burden for 

issuers. This is a burden we do not 

impose lightly; in addition to increasing 

PTC and APTC for eligible enrollees, 

these changes to the de minimis ranges 

are necessary to assure consumers that 

a plan’s generosity conforms to the 

appropriate metal level and to prevent 

overlap in plan generosity across metal 

levels. 

Comment: Some commenters stated 

that plans within States requiring the 

individual and small group insurance 

markets to be merged into a single risk 

pool under § 156.80 would be disrupted 

by the proposal to establish different de 

minimis ranges for individual market 

silver QHPs and for other individual 

and small group plans. 

Response: Vermont, which previously 

had merged its individual and small 

group markets transitioned to separate 

individual and small group market risk 

pools beginning January 1, 2022.302

While both Massachusetts and the 

District of Columbia have State-specific 

factors that combine certain aspects of 

their individual and small group plans, 

we do not consider their individual and 

small group markets to be merged into 

a single risk pool under § 156.80.303 For 

example, Massachusetts permits issuers 

in its small group market to update their 

index rates once every quarter, allowing 

small group market rating to operate 

separately from individual market rating 

in a manner that does not reflect a 

merged single risk pool. Similarly, the 

District of Columbia permits issuers to 

use different premium rating factors for 

its individual and small group markets 

in a manner that does not reflect a 

merged single risk pool. As such, there 

are currently no States with individual 

and small group markets that meet the 

Federal definition of a merged market 

under § 156.80. Therefore, we do not 

agree with commenters that there will 

be disruption to existing plans in 

merged markets in 2023. However, we 

recognize that if a State chooses to 

merge risk pools in future plan years, 

plans in that State could not utilize 

separate de minimis ranges for 

individual and small group market 

silver QHPs, and would need to 

conform all individual market silver 

QHPs to a +2/0 de minimis range, and 

income-based silver CSR plan variations 

to a +1/0 de minimis range. 

9. QHP Issuer Participation Standards 

(§ 156.200) 

Section 156.200(e) states that a QHP 

issuer must not, with respect to its QHP, 

discriminate on the basis of race, color, 

national origin, disability, age, or sex. In 

the HHS Notice of Benefit and Payment 

Parameters for 2023 proposed rule (87 

FR 584, 671), we proposed to amend 45 

CFR 156.200(e) such that its 

nondiscrimination protections would 

explicitly prohibit discrimination based 

on sexual orientation and gender 

identity. As explained in the 

Supplemental Information section 

earlier in this preamble, HHS will 

address this proposed policy, as well as 

the public comments submitted in 

response to this proposal, in future 

rulemaking. 

10. Standardized Plan Options 

(§ 156.201) 

In the 2023 Payment Notice proposed 

rule (87 FR 584, 671 through 680), HHS 

proposed a requirement that issuers 

offering QHPs through FFEs and SBE– 

FPs, for PY 2023 and beyond, must offer 

through the Exchange standardized QHP 

options designed by HHS at every 

product network type (as described in 

the definition of ‘‘product’’ at 

§ 144.103), metal level, and throughout 

every service area that they offer nonstandardized QHP options. We did not 

propose to limit the number of nonstandardized plan options that issuers 

can offer but noted that we were 

considering whether it would be 

appropriate to do so in a future plan 

year. Furthermore, we did not propose 

to subject issuers in State Exchanges to 

this requirement to avoid duplicative 

standardized plan option requirements 

on State Exchange issuers and because 

we are of the view that State Exchanges 

are best positioned to design and 

implement standardized plan option 

requirements for their State. We also 

proposed that FFE and SBE–FP issuers 

that are already required to offer 

standardized plan options under State 

action taking place on or before January 

1, 2020, such as issuers in the State of 

Oregon,304 be exempt from the 

standardized plan option requirements 

in the proposal. 

HHS proposed the following 

standardized plan options: one bronze 

plan, one bronze plan that meets the 


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requirement to have an AV up to 5 

points above the 60 percent standard, as 

specified in § 156.140(c) (known as an 

expanded bronze plan), one standard 

silver plan, one version of each of the 

three income-based silver CSR plan 

variations, one gold plan, and one 

platinum plan. We did not propose 

standardized plan options for the Indian 

CSR plan variations as provided for at 

§ 156.420(b) since the cost sharing 

parameters for these plans are already 

largely specified. 

HHS proposed two sets of 

standardized plan options to 

accommodate different States’ cost 

sharing laws. HHS proposed that the 

first set apply to all FFE and SBE–FP 

issuers excluding issuers in Delaware 

and Louisiana, and that the second set 

apply to issuers in Delaware and 

Louisiana. 

HHS also noted that it was 

considering exercising the existing 

authority under § 155.205(b)(1) to 

differentially display standardized plan 

options on HealthCare.gov. Similarly, 

HHS noted that it was considering 

resuming enforcement of the existing 

standardized plan options display 

requirements for approved web-brokers 

and QHP issuers using a direct 

enrollment pathway to facilitate 

enrollment through an FFE or SBE–FP— 

including both the Classic Direct 

Enrollment (DE) and enhanced direct 

enrollment (EDE) Pathways—at 

§§ 155.220(c)(3)(i)(H) and 

156.265(b)(3)(iv), respectively. HHS 

noted that if it did exercise these 

existing authorities, these entities would 

be required to differentially display 

standardized plan options beginning 

with the PY 2023 open enrollment 

period in accordance with the 

requirements under § 155.205(b)(1) in a 

manner consistent with how 

standardized plan options are displayed 

on HealthCare.gov, unless HHS 

approves a deviation. We also noted that 

any requests from web-brokers and QHP 

issuers seeking approval for an alternate 

differentiation format would be 

reviewed based on whether the same or 

a similar level of differentiation and 

clarity is being provided under the 

requested deviation as is provided on 

HealthCare.gov. 

We proposed this approach for several 

reasons. To begin, the 2019 Payment 

Notice final rule eliminated 

standardized plan options with the 

intention of maximizing innovation and 

variety at a time when the individual 

market was considered to be at risk of 

destabilization. In the proposed rule, we 

explained that we believe that current 

market conditions differ significantly 

from the market conditions that defined 

the individual market when 

standardized plan options were 

eliminated. For example, the number of 

issuers offering plans on the Exchanges 

has increased considerably, the number 

of counties with a single issuer offering 

plans through the Exchange has 

decreased significantly, and the number 

of plan options that consumers have 

access to on the Exchanges has 

increased substantially since 

standardized plan options were 

discontinued in the 2019 Payment 

Notice final rule. 

We explained in the proposed rule 

that with increased enrollment, 

increased issuer participation, 

decreased single issuer counties, and 

increased plan options available to 

consumers, HHS is of the view that 

resuming standardized plan options at 

this time could play a constructive role 

in enhancing the consumer experience, 

increasing consumer understanding, 

simplifying the plan selection process, 

combatting discriminatory benefit 

designs that disproportionately impact 

disadvantaged populations, and 

advancing health equity. We also 

explained that we believe that given the 

large number of plan offerings on the 

Exchanges, a sufficiently diverse range 

of plan offerings exists for consumers to 

continue to select innovative plans that 

meet their unique health needs. 

We did not propose to require issuers 

in State Exchanges to offer standardized 

plan options for several reasons, 

including that eight State Exchanges 

already require or will require issuers to 

offer standardized plan options by PY 

2023. In addition, imposing duplicative 

standardized plan option requirements 

on issuers in State Exchanges that 

already have existing State standardized 

plan option requirements runs counter 

to our goals of enhancing the consumer 

experience, increasing consumer 

understanding, simplifying the plan 

selection process, combatting 

discriminatory benefit designs, and 

advancing health equity. We also 

explained that we believe that State 

Exchanges are uniquely positioned to 

best understand the nature of their 

respective markets as well as the 

consumers in these markets. As such, 

we explained in the proposed rule that 

we believe that State Exchanges are best 

positioned to design standardized plan 

options suitable for their respective 

markets. 

We further explained in the proposed 

rule that we believe that States that have 

invested the necessary time and 

resources to become State Exchanges 

have done so in order to implement 

innovative policies that differ from 

those on the FFEs. We explained that 

we do not wish to impede these 

innovative policies so long as they 

comply with existing legal 

requirements. However, because we 

proposed to impose this requirement in 

the FFEs, and because the SBE–FPs use 

the same platform as the FFEs, we 

proposed to apply these requirements 

equally on FFEs and SBE–FPs. We 

explained that changing the platform to 

permit distinction on this proposal 

between FFEs and SBE–FPs would 

require a very substantial financial and 

operational burden that we believe 

outweighs the benefit of permitting such 

a distinction. 

In the proposed rule, we explained 

that we proposed to exempt FFE and 

SBE–FP issuers that are subject to State 

standardized plan option requirements 

from these standardized plan option 

requirements since we do not wish to 

impose duplicative requirements that 

could conflict with these existing State 

standardized plan option requirements 

and the QHP plan designs applicable in 

such States. Regardless, we proposed to 

differentially display these existing 

State standardized plan options on the 

Federal platform in the same manner as 

the standardized plan options in this 

rule to ensure a consistent experience 

for all consumers utilizing the Federal 

platform. 

In the proposed rule, we explained 

that we designed two sets of 

standardized plan options to 

accommodate applicable State cost 

sharing laws in different sets of FFE and 

SBE–FP States. We also explained that 

we designed these standardized plan 

options to be similar to the most 

popular QHPs in FFEs and SBE–FPs in 

PY 2021 in terms of cost sharing 

parameters, MOOPs, and deductibles in 

order to ensure these plans are similar 

to plans that most consumers are 

already currently enrolled in, thereby 

reducing the risk of disruption for 

consumers and issuers alike. 

In the proposed rule, we explained 

that we believe that resuming the 

differential display of standardized plan 

options on HealthCare.gov per the 

existing authority at § 155.205(b)(1) 

would further streamline the plan 

selection and enrollment process for 

Exchange consumers, aid consumers in 

distinguishing standardized plan 

options from non-standardized plan 

options, and enhance consumer 

understanding of the benefits of 

standardized plan options, such as 

having more pre-deductible coverage. 

We also explained that we believe that 

resuming enforcement of the existing 

standardized plan options display 

requirements applicable to approved 

web-brokers and QHP issuers using a 


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305See Or. Admin. R. 836–053–0009. 

306 In general, MHPAEA and its implementing 

regulations apply to group health plans and health 

insurance issuers in the group and individual 

markets, and require that the financial requirements 

(such as coinsurance and copays) and treatment 

limitations (such as visit limits) imposed on mental 

health or substance use disorder benefits cannot be 

more restrictive than the predominant financial 

requirements and treatment limitations that apply 

to substantially all medical/surgical benefits in a 

classification. 

direct enrollment pathway to facilitate 

enrollment through an FFE or SBE–FP— 

including both the Classic DE and EDE 

Pathways—at §§ 155.220(c)(3)(i)(H) and 

156.265(b)(3)(iv), respectively, is 

important considering that a steadily 

increasing number of consumers are 

enrolling in Exchange plans via these 

pathways, and that doing so will ensure 

a consistent consumer experience 

whether consumers are selecting plans 

on or off the Exchanges. 

We refer readers to the proposed rule 

(87 FR 671 through 680) for a complete 

description of the proposals and 

rationale. 

After considering comments received, 

for the reasons set forth in this rule and 

in the proposed rule, HHS finalizes the 

policies as proposed. Specifically, HHS 

finalizes the requirement for PY 2023 

and beyond that issuers offering QHPs 

through FFEs and SBE–FPs must offer 

through the Exchange standardized QHP 

options designed by HHS at every 

product network type (as described in 

the definition of ‘‘product’’ at 

§ 144.103), at every metal level, and 

throughout every service area that they 

offer non-standardized QHP options in 

the individual market. We note that we 

added the phrase ‘‘at every’’ to the metal 

level component of the above 

requirement for additional clarification 

and to minimize the risk of 

misunderstanding these requirements. 

We also clarify that these requirements 

are applicable to the FFE and SBE–FP 

issuers offering QHPs in the individual 

market but not the small group market. 

Similar to its stance in the proposed 

rule, HHS will not limit the number of 

non-standardized QHP options that 

issuers of QHPs in FFEs and SBE–FPs 

can offer through the Exchange in PY 

2023. We also finalize, as proposed, that 

issuers in State Exchanges be exempt 

from the requirement to offer 

standardized plan options. Similarly, 

we finalize, as proposed, that issuers of 

QHPs in FFEs and SBE–FPs that are 

already required to offer standardized 

plan options under State action taking 

place on or before January 1, 2020, such 

as issuers in the State of Oregon,305 are 

exempt from these requirements. 

HHS finalizes the following 

standardized plan options, as proposed: 

one bronze plan, one bronze plan that 

meets the requirement to have an AV up 

to 5 points above the 60 percent 

standard, as specified in § 156.140(c) 

(known as an expanded bronze plan), 

one standard silver plan, one version of 

each of the three income-based silver 

CSR plan variations, one gold plan, and 

one platinum plan. HHS did not 

propose standardized plan options for 

the Indian CSR plan variations as 

provided for at § 156.420(b), and 

therefore is not finalizing standardized 

plan options for these plan variations. 

HHS also finalizes two sets of 

standardized plan options to 

accommodate different States’ cost 

sharing laws, as proposed. Specifically, 

the first set of standardized plan options 

will apply to all FFE and SBE–FP 

issuers, except issuers in Delaware and 

Louisiana. We add as a point of 

clarification that this first set of 

standardized plan options will also not 

apply to issuers in Oregon, since Oregon 

enacted standardized plan options 

requirements before January 1, 2020 and 

issuers in Oregon are thus exempt from 

these requirements. The second set of 

standardized plan options will apply 

only to issuers in Delaware and 

Louisiana in order to accommodate 

these two States’ specialty tier 

prescription drug cost sharing laws. 

In the first set of standardized plan 

options finalized in this rule (see Table 

12), applicable to all FFE and SBE–FP 

issuers, except issuers in Delaware, 

Louisiana, and Oregon, there is cost 

sharing parity between the primary care 

visit, the speech therapy, and the 

occupational and physical therapy 

benefit categories. There are also copays 

for all prescription drug tiers, including 

the non-preferred brand and specialty 

tiers, instead of coinsurance rates. 

Finally, the copay for the mental health/ 

substance use disorder in-network 

outpatient office visit sub-classification 

is equal to the least restrictive level for 

copays for medical/surgical benefits in 

the in-network, outpatient office visit 

sub-classification (and copays apply to 

substantially all medical/surgical 

benefits in this sub-classification), to 

ensure issuers can design plans that 

comply with the Paul Wellstone and 

Pete Domenici Mental Health Parity and 

Addiction Equity Act of 2008 

(MHPAEA) and its implementing 

regulations.306

The second set of standardized plan 

options finalized in this final rule (see 

Table 13), applicable only to issuers in 

Delaware and Louisiana, has copays of 

$150 or less for the specialty drug tiers 

of standardized plan options at all metal 

levels. This copay limitation for 

specialty drug tiers is the key feature 

that distinguishes the second set of 

standardized plan options from the first. 

The two sets of standardized plan 

options finalized in this rule were 

designed to reflect the benefit categories 

in the actuarial value calculator (AVC), 

along with the addition of the ‘‘Urgent 

Care’’ benefit category. The cost sharing 

values for ‘‘Mental/Behavioral Health 

Inpatient Services’’ and ‘‘Substance 

Abuse Disorder Inpatient Services’’ 

benefits were not included in the 

proposed rule. However, we clarify that 

the ‘‘Mental/Behavioral Health Inpatient 

Services’’ and ‘‘Substance Abuse 

Disorder Inpatient Services’’ cost 

sharing values are populated based on 

the ‘‘Inpatient Hospital Services (for 

example, Hospital Stay)’’ cost sharing 

values since this benefit correlates to 

admission in a hospital or mental health 

facility. We further clarify that for the 

‘‘Inpatient Hospital Services’’ benefit 

category in Tables 12 and 13, the 

‘‘(Including Mental Health and 

Substance Use Disorder)’’ portion of the 

benefit category name was mistakenly 

excluded in the proposed rule. We 

therefore amended the name of this 

benefit category to more closely align 

with the corresponding benefit category 

in the AVC. 

We also clarify that the AVs for 

several of the plans in each set differ 

slightly from the AVs of the 

corresponding plans in the proposed 

rule, due to a miscalculation with the 

AVC. We clarify that when a 

prescription drug formulary tier has 

copay after deductible as the form of 

cost sharing, both the ‘‘Subject to 

Deductible? ’’ and ‘‘Copay only applies 

after deductible?’’ boxes must be 

selected in the AVC for that particular 

tier, or an incorrect AV will be 

calculated. 

In both sets of standardized plan 

options, expanded bronze, standard 

silver, the silver 73 CSR variant, and the 

silver 87 CSR variant were affected by 

this miscalculation. After resolving this 

miscalculation, in the first set of 

standardized plan options, the AV for 

expanded bronze changed from 64.06 

percent to 64.18 percent; the AV for 

standard silver changed from 70.04 

percent to 70.06 percent; the AV for the 

silver 73 CSR variant changed from 

73.10 percent to 73.11 percent; and the 

AV for the silver 87 CSR variant 

changed from 87.04 percent to 87.05 

percent. In the second set of 

standardized plan options, the AV for 

expanded bronze changed from 64.07 

percent to 64.18 percent; the AV for 

standard silver changed from 70.05 

percent to 70.06 percent; the AV for the 

silver 73 CSR variant changed from 


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307The PY 2023 OEP is scheduled from 

November 1, 2022 to January 15, 2023. See 45 CFR 

155.410(e)(3). 308See 81 FR 94118. 

73.01 percent to 73.03 percent; and the 

AV for the silver 87 variant changed 

from 87.05 percent to 87.06 percent. The 

AVs for other metal levels were not 

affected by this miscalculation since 

these plans did not have copay after 

deductible as the cost sharing type for 

any benefits. 

We also note that one asterisk (*) was 

mistakenly excluded in the plan designs 

in the proposed rule. Specifically, in the 

second set of standardized plan options, 

the gold plan’s specialty drug tier 

should be exempt from the deductible 

and should thus have an asterisk next to 

its cost sharing amount. All other cost 

sharing parameters in both of the below 

sets of standardized plan options remain 

unchanged from the original plans in 

the proposed rule. 

HHS also finalizes, as proposed, that 

we will exercise our existing authority 

under § 155.205(b)(1) to resume the 

differential display of standardized plan 

option plans on HealthCare.gov 

beginning with the PY 2023 open 

enrollment period.307 Similarly, also 

beginning with the PY 2023 open 

enrollment period, HHS finalizes, as 

proposed, that we will resume 

enforcement of the existing 

standardized plan options display 

requirements under 

§§ 155.220(c)(3)(i)(H) and 

156.265(b)(3)(iv) for approved webbrokers and QHP issuers using a direct 

enrollment pathway to facilitate 

enrollment through an FFE or SBE–FP— 

including those using the Classic DE 

and EDE Pathways—meaning that these 

entities are required to differentially 

display standardized plan options in a 

manner consistent with how 

standardized plan options are displayed 

on HealthCare.gov, unless HHS 

approves a deviation. 

HHS also finalizes, as proposed, that 

any requests from web-brokers or QHP 

issuers that seek approval for an 

alternate differentiation format will be 

reviewed based on whether the same or 

similar level of differentiation and 

clarity would be provided under the 

requested deviation as is provided on 

HealthCare.gov. We also reaffirm that a 

QHP issuer using a direct enrollment 

pathway to facilitate enrollment through 

an FFE or SBE–FP—including both the 

Classic DE and EDE pathways—only 

needs to differentially display those 

standardized plan options it offers.308

To minimize the burden of complying 

with these display requirements, HHS 

will provide access to information on 

standardized plan options to webbrokers and QHP issuers through the 

Health Insurance Exchange Public Use 

Files (PUFs) and QHP Landscape file. 


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309 In connection with HHS’ proposal to require 

FFE and SBE–FP issuers to offer standardized plan 

options, HHS sought comment on: (1) Requiring 

FFE and SBE–FP issuers to offer standardized plan 

options at every product network type, metal level, 

and throughout every service area that they offer 

non-standardized plan options; (2) not limiting the 

number of non-standardized plan options that 

issuers can offer through the Exchanges; (3) the 

feasibility, advantages, and disadvantages of 

gradually limiting the number of plan options over 

the course of several PYs; (4) whether standardized 

plan options should be differentially displayed on 

HealthCare.gov as well as the best manner for doing 

so; (5) whether web-brokers and issuers using the 

Classic DE and EDE Pathways should remain 

subject to differential display requirements; (6) the 

continuation of an exceptions process that allows 

these entities to deviate from the display of 

standardized plan options on HealthCare.Gov; (7) 

exempting State Exchange issuers from these 

requirements; (8) whether these plan designs 

should apply to State Exchanges that do not use the 

Federal platform and that have not implemented 

their own standardized plan options; (9) exempting 

FFE and SBE–FP issuers that are subject to existing 

state standardized plan options requirements under 

state action taking place on or before January 1, 

2020 from being required to offer the standardized 

plan options in this proposal; (10) the methodology 

used to design these standardized plan options; (11) 

if the proposed standardized plan options are 

compliant with state cost sharing laws in FFE and 

SBE–FP states; (12) the cost-sharing parameters and 

plan designs for these standardized plan options; 

(13) how these plans can be designed in a way that 

maximizes the likelihood that plans will be able to 

Continued 

We summarize and respond to public 

comments received on the proposals 

related to the standardized plan 

options.309 We also offer several points 

of clarification. 


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comply with MHPAEA; (14) the policy approach for 

PY 2023 and beyond; and (15) having two sets of 

standardized plan options (that is, a separate set for 

Delaware and Louisiana). See 87 FR 671 through 

680. 

310 523 F. Supp. 3d 731 (D. Md. 2021). 

311 In part 3 of the 2022 Payment Notice final 

rule, we explained that we would not be able to 

fully implement those aspects of the court’s 

decision regarding standardized plan options in 

time for issuers to design plans and for Exchanges 

to be prepared to certify such plans as QHPs for PY 

2022, and therefore intended to address these issues 

in time for plan design and certification for PY 

2023. See 86 FR 24140, 24264. 

312Executive Order 14036 on Promoting 

Competition in the American Economy. (2021, July 

9). 86 FR 36987. 

Comment: Many commenters 

supported requiring issuers offering 

QHPs through FFEs and SBE–FPs to 

offer standardized plan options at every 

product network type, at every metal 

level, and throughout every service area 

that they offer non-standardized plan 

options, explaining that standardized 

plan options could play an important 

role in simplifying the plan selection 

process. These commenters explained 

this approach will enable consumers to 

more easily compare plans by 

standardizing cost sharing parameters, 

thereby allowing individuals to focus on 

other factors crucial to their health, such 

as premiums, networks, quality, and 

customer satisfaction. 

Many commenters also explained that 

requiring issuers to offer standardized 

plan options could improve 

affordability by requiring pre-deductible 

coverage of key services. These 

commenters explained that lowering 

cost barriers to services and supplies 

that address health conditions that 

disproportionately affect historically 

underserved communities aligns with 

broader Federal efforts intended to 

reduce health disparities. These 

commenters also explained that 

consumers frequently choose plans 

based only on premiums—without a 

clear understanding of additional out-ofpocket costs they might experience. 

These commenters thus explained that 

requiring issuers to offer standardized 

plan options with enhanced predeductible coverage could reduce the 

risk of consumers experiencing 

unexpected financial costs for receiving 

care. 

Several commenters explained that 

the effectiveness of plan standardization 

in improving access to care and 

enhancing affordability is evinced by 

the experience of the nine States that 

have already adopted standardized plan 

option requirements in their respective 

State Exchanges. These commenters 

explained that several of these State 

Exchanges have required issuers to offer 

standardized plan options since their 

inception in 2014. These commenters 

also explained that standardized plan 

option requirements have played an 

important role in achieving some of the 

lowest rates of premium growth in the 

country in these State Exchanges. 

Response: We agree that consumers 

will benefit from tools that further 

streamline the decision-making process, 

especially given that there has been a 

proliferation of plan offerings on the 

Exchanges in the last several years. We 

also agree that standardized plan 

options can play an important role in 

that simplification by allowing 

consumers to compare offerings based 

on other meaningful features, such as 

premiums, networks, formularies, and 

quality ratings. We believe that 

employing standardized plan option 

requirements while simultaneously 

narrowing the AV de minimis ranges 

will allow consumers to more easily and 

more meaningfully differentiate 

between choices and select a plan that 

meets their unique needs. 

We believe the approach to 

standardized plan options finalized in 

this rule strikes an appropriate balance 

between simplifying the plan selection 

process, making it easier for consumers 

to more meaningfully compare available 

plan options, combatting potentially 

discriminatory benefit designs, reducing 

health disparities, and advancing health 

equity, while simultaneously preserving 

a sufficient range of consumer choice, 

minimizing the degree of disruption 

arising from the implementation of 

these requirements, and continuing to 

foster competition in the Exchanges. 

We also agree that implementing the 

standardized plan option requirements 

finalized in this rule will improve 

access to care, enhance affordability, 

and advance health equity. The 

standardized plan options finalized in 

this rule include several important plan 

design features that we believe will 

provide additional consumer 

protections and mitigate health 

disparities, aligning with several of 

HHS’ top priorities. Several of these 

design features include enhanced predeductible coverage for many EHB 

services, greater consumer certainty 

from having copays instead of 

coinsurance as the form of cost sharing 

for as many benefits as possible, and 

having copays for all prescription drug 

tiers, including for the specialty drug 

tier. 

Comment: Several commenters 

disagreed that HHS is legally obligated 

to resume standardized plan options, 

explaining that the City of Columbus, et 

al. v. Cochran ruling simply stated that 

the prior administration provided 

insufficient justification for 

discontinuing standardized plan 

options, but not that doing so was 

unlawful. These commenters noted that 

instead of resuming standardized plan 

options, HHS should issue a new rule 

with a more thorough explanation than 

what was provided in the 2019 Payment 

Notice final rule explaining why 

standardized plan options should 

remain discontinued. 

Response: As we discussed in the 

proposed rule, we first introduced 

standardized plan options in the 2017 

Payment Notice. We then discontinued 

standardized plan options in the 2019 

Payment Notice, but the discontinuance 

was challenged in the United States 

District Court for the District of 

Maryland. On March 4, 2021, the court 

decided City of Columbus.310 The court 

specifically vacated the portion of the 

2019 Payment Notice that ceased HHS’ 

practice of designating some plans in 

the FFEs as ‘‘standardized plan 

options,’’ a policy that the 2019 

Payment Notice (83 FR 16930, 16974 

through 16975) described as seeking to 

maximize innovation by issuers in 

designing and offering a wide range of 

plans to consumers. As such, we 

announced our intent to engage in 

rulemaking under which we would 

propose to resume standardized plan 

options in time for PY 2023.311 More 

recently, President Biden’s Executive 

Order on Promoting Competition in the 

American Economy directed HHS to 

implement standardized plan options to 

facilitate the plan selection process for 

consumers on the Exchanges.312

Although we agree with commenters 

that the City of Columbus ruling did not 

require HHS to resume standardized 

plan options, it did cause HHS to 

reevaluate its prior decision to 

discontinue the designation of 

standardized plan options in the 2019 

Payment Notice. As we explained in the 

proposed rule (87 FR 672), we believe 

that the conditions that currently define 

the individual market differ 

significantly from the conditions that 

defined the market when standardized 

plan options were discontinued in 2019, 

when the market was considered to be 

at risk of destabilization. We believe 

that the risk of market destabilization 

has subsided, as is demonstrated by the 

proliferation of plan offerings, increased 

issuer participation in the Exchanges, 

and record high enrollment. We believe 

that resuming standardized plan options 

at this time can play a constructive role 

in enhancing the consumer experience, 

increasing consumer understanding, 

and simplifying the decision-making 

process for consumers on the Exchanges 


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despite the fact that the City of 

Columbus ruling does not legally 

obligate HHS to do so. 

Comment: Several commenters who 

opposed these standardized plan option 

requirements noted that the current 

degree of standardization enabled by 

plan AV, different metal tiers of 

coverage, and mandatory coverage of 

EHB is sufficient to allow for easier plan 

comparison. 

Response: We disagree that the 

current degree of standardization 

enabled by AV, different metal tiers of 

coverage, and mandatory coverage of 

EHB is adequate to enable sufficiently 

easy plan comparison, especially given 

the proliferation of plan offerings in 

recent years. As discussed later in the 

Choice Architecture and Preventing 

Plan Choice Overload Comment 

Solicitation, the proliferation of plan 

offerings available to consumers 

increases the risk of choice overload, 

coverage disruption, and suboptimal 

plan selection. We believe that given 

this proliferation of plan offerings, 

additional standardization is needed, 

and that consumers will benefit from 

additional tools that facilitate decisionmaking, including from the 

standardized plan option requirements 

finalized in this rule. 

Comment: Some commenters stated 

that HHS should not require issuers to 

offer standardized plan options since 

consumer uptake of standardized plan 

options was low in previous years. 

Response: We believe it is appropriate 

to require FFE and SBE–FP issuers to 

offer standardized plan options despite 

the comparatively low uptake of these 

plans in PY 2017 and PY 2018 for 

several reasons. As previously 

discussed, there has been a considerable 

proliferation of plan offerings available 

to consumers on the Exchanges over the 

last several years, and we believe that 

requiring issuers to offer these 

standardized plan options will play an 

important role in mitigating the risk of 

plan choice overload associated with 

the proliferation of plan offerings. 

We also believe that these 

standardized plan options contain 

several plan design features, such as 

enhanced pre-deductible coverage, 

copays for as many benefit categories as 

possible, and copays for all tiers of 

prescription drug coverage, that provide 

important consumer protections. We 

believe these design attributes can play 

a significant role in decreasing barriers 

to access for several important health 

services, reducing the risk of 

unexpected costs and the associated 

financial harm, mitigating the risk of 

health disparities, combatting 

potentially discriminatory benefit 

designs, and advancing health equity. 

Altogether, we believe the advantages of 

standardized plan options outweigh the 

fact that consumer uptake of these 

options was comparatively low in 

previous plan years. 

Comment: Many commenters opposed 

to requiring issuers to offer standardized 

plan options generally noted that these 

requirements would impede innovative 

plan designs that are tailored to meet 

the unique needs of enrollees. These 

commenters explained that when 

issuers develop plan offerings, they 

conduct extensive research to develop 

innovative plans that meet the needs of 

the populations and communities 

within their service areas. These 

commenters also expressed concerns 

that standardized plan options would 

not be able to keep pace with the 

innovation in the market. 

Response: We disagree that requiring 

issuers to offer these standardized plan 

options will impede innovative plan 

designs tailored to meet the unique 

needs of enrollees. After considering 

comments received in response to the 

proposed rule, and based on our 

experience with reviewing plan costsharing structures during QHP 

certification, we are not of the view that 

non-standardized plans have 

sufficiently innovated with cost-sharing 

structures to justify not requiring issuers 

to offer standardized plans. We believe 

these standardized plan options 

requirements will increase enrollment 

and improve health outcomes without 

impeding issuers’ ability to innovate in 

plan designs in their non-standardized 

offerings. We also note that we will 

continue to investigate whether there 

are lessons that we can draw from nonstandardized plan options in terms of 

innovative plan designs that can apply 

to standardized plan options in future 

plan years. 

Comment: Many commenters opposed 

to requiring standardized plan options 

stated that these requirements would 

unnecessarily constrain consumer 

choice. These commenters pointed out 

that some consumers choose less 

generous plans while others choose 

more generous plans, suggesting that 

there is not a one-size-fits-all plan 

design capable of satisfying all 

enrollees’ unique health needs. 

Response: We disagree that requiring 

issuers to offer standardized plan 

options would unnecessarily constrain 

consumer choice. First, the standardized 

plan options finalized in this rule reflect 

the most popular plan design attributes 

that consumers are already accustomed 

to. Second, as discussed elsewhere in 

this section, there has been a 

proliferation of plan choices available to 

consumers on the Exchanges. This 

proliferation significantly complicates 

the plan selection process, and increases 

the risk of choice overload, coverage 

disruption, and suboptimal plan 

selection. Contrary to the claim that 

these standardized plan option 

requirements will constrain consumer 

choice, we believe they will facilitate 

consumer choice by allowing consumers 

to more meaningfully compare between 

plans. Finally, if consumers believe that 

their unique health needs are not met 

with the standardized plan options 

finalized in this rule, they retain the 

ability to choose from non-standardized 

plan options. 

Comment: Several commenters stated 

that requiring issuers to offer 

standardized plans at every product 

network type, at every metal level, and 

throughout every service area in which 

they offer non-standard plans could 

increase the total number of plan 

offerings on Exchanges that rely on the 

Federal platform, exacerbating 

consumer confusion and increasing the 

risk of choice overload. 

To circumvent this problem, some of 

these commenters recommended that 

HHS simply not require issuers to offer 

standardized plans, while others 

recommended requiring issuers to offer 

standardized plan options while also 

simultaneously limiting the number of 

non-standardized plan options that 

issuers can offer. The commenters who 

supported limiting the number of nonstandardized plan options issuers can 

offer cited the increased number of 

plans that HHS described in the 

proposed rule as evidence that the 

number of plan choices on the 

Exchanges has increased to a point 

where it is difficult for consumers to 

make informed decisions, which can 

result in decreased enrollment. Several 

of the commenters who supported 

limiting the number of nonstandardized plan options issuers can 

offer also cited the success of State 

Exchanges that limit the number of plan 

offerings in order to facilitate consumer 

decision-making. 

Response: We are aware that these 

standardized plan option requirements 

could potentially increase the total 

number of plan offerings on the 

Exchanges. We also agree that the 

number of plan offerings on the 

Exchanges has increased to a point that 

is detrimental to consumers. That said, 

we chose to require issuers to offer 

standardized plan options while not 

also simultaneously limiting the number 

of non-standardized plan options 

issuers can offer in order to strike the 

greatest balance between simplifying the 

plan selection process and not causing 


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an excessive amount of disruption in 

too condensed a timeframe. Considering 

that the QHP certification cycle for PY 

2023 will have begun by the time this 

rule has been published, we do not 

believe it feasible to limit the number of 

non-standardized plan options that 

issuers can offer without causing 

significant disruption to issuers’ 

portfolios of plan offerings, which 

would also increase the risk of 

enrollment disruption. 

In addition, we believe it would be 

important to first conduct extensive 

stakeholder engagement in order to 

determine whether limiting the number 

of non-standardized plan options that 

issuers can offer would be appropriate 

before proposing adoption of such an 

approach. We anticipate initiating this 

stakeholder engagement in the coming 

months and applying the lessons 

learned from this stakeholder 

engagement to our approach to 

standardized plan options in the 2024 

Payment Notice. 

Furthermore, we encourage issuers to 

modify their existing non-standardized 

plan offerings—in accordance with 

uniform modification requirements at 

45 CFR 147.106(e)—to conform with the 

cost-sharing parameters of the 

standardized plan options finalized in 

this rule, if possible and so desired. This 

would significantly reduce the number 

of total new plan offerings on the 

Exchanges, which would also reduce 

the risk of choice overload, while 

allowing issuers to easily crosswalk 

enrollees from their current nonstandardized plan offering to the 

standardized plan option equivalent. 

Comment: Some commenters 

explained that requiring issuers to offer 

standardized plan options would 

increase issuer burden by increasing the 

total number of plan offerings in their 

portfolios. Several of these commenters 

stated that this increased burden could 

discourage issuers from entering new 

markets, thus reducing competition. 

Response: We believe that requiring 

issuers to offer the standardized plan 

options finalized in this rule will not 

significantly increase issuer burden. As 

previously discussed, we encourage 

issuers to modify their existing nonstandardized offerings to conform with 

the cost sharing parameters for the 

standardized plan options finalized in 

this rule so they do not have to offer 

both their non-standardized plan 

offerings and standardized plan option 

equivalents side by side in order to 

minimize issuer burden, if so desired. 

We also believe that issuers will be able 

to utilize the same provider networks 

and formularies for these standardized 

plan options as they do for their current 

non-standardized offerings, which we 

believe will further minimize issuer 

burden. Given these considerations, we 

do not expect these requirements to 

impose an excessive amount of issuer 

burden that will discourage issuers from 

entering new markets, and we therefore 

do not expect these requirements to 

reduce competition in this regard. 

Comment: Several commenters 

recommended that HHS narrow the 

scope of the proposed rule and require 

issuers to offer only one standardized 

plan option at the silver metal level if 

it requires issuers to offer them at all. 

These commenters generally noted that 

HHS should only expand standardized 

plan options gradually, if at all, to 

minimize disruptions. 

Response: We disagree that we should 

narrow the scope of the rule and require 

issuers to offer only one standardized 

plan option at the silver metal level, and 

that we should only expand 

standardized plan options gradually to 

minimize disruption. We believe that 

our approach of requiring issuers to 

offer standardized plan options at every 

product network type, at every metal 

level, and throughout every service area 

(but not at product network types, metal 

levels, or service areas where issuers do 

not offer non-standardized plan options) 

while also not limiting the number of 

non-standardized plan options that 

issuers can offer strikes an appropriate 

balance between simplifying the plan 

selection process while also minimizing 

the risk of disruption. 

Comment: Many commenters 

explained that resuming the meaningful 

difference standard (previously codified 

at 45 CFR 156.298) would be an 

effective and targeted method to prevent 

duplicative plan offerings while 

simultaneously ensuring that issuers 

continue to have the flexibility 

necessary to innovate. Several of these 

commenters supported resuming the 

meaningful difference standard in 

conjunction with requiring issuers to 

offer standardized plan options, while 

several of these commenters supported 

resuming the meaningful difference 

standard in place of the standardized 

plan option requirements finalized in 

this rule. Many of the commenters who 

supported resuming the meaningful 

difference standard recommended that 

HHS adopt a more stringent approach 

than that previously taken, explaining 

that the standard in its previous 

iteration failed to prevent duplicative 

plan offerings. 

Several commenters cited States’ role 

in regulating individual market health 

insurance plans, requesting that HHS 

coordinate with State regulators in the 

event of HHS implementing a 

meaningful difference standard. 

Response: Although we do agree that 

resuming the meaningful difference 

standard in conjunction with the 

standardized plan option requirements 

finalized in this rule could be an 

effective and targeted method to prevent 

duplicative plan offerings, we do not 

believe it is appropriate to resume the 

meaningful difference standard for PY 

2023. We believe that additional 

research is needed to build upon and 

refine the previous version of the 

meaningful difference standard. We also 

believe that resuming the meaningful 

difference standard for PY 2023 would 

not grant issuers and States sufficient 

time to modify their portfolio of plan 

offerings prior to the PY 2023 QHP 

certification cycle. 

Comment: Several commenters 

requested that HHS clarify if issuers are 

required to offer these standardized plan 

options off-Exchange. 

Response: We clarify that issuers are 

generally required to offer standardized 

plan options off-Exchange pursuant to 

guaranteed availability requirements at 

45 CFR 147.104. That said, issuers are 

not required to actively market these 

plans off-Exchange. 

Comment: Several commenters 

requested that HHS clarify if issuers are 

required to offer the standardized plan 

options finalized in this rule in the 

small group market. 

Response: We clarify that FFE and 

SBE–FP issuers are only required to 

offer the standardized plan options 

finalized in this rule in the individual 

market, but not the small group market. 

Comment: Several commenters 

requested that HHS clarify whether 

issuers are required to offer 

standardized plan options for family 

plans, and if so, if HHS has designed 

standardized plan options for family 

plans. 

Response: HHS affirms that issuers 

are required to offer standardized plan 

options for family plans. HHS also 

clarifies that issuers are able to offer 

standardized plan options as family 

plans by applying a family (other than 

self-only) MOOP and a family (other 

than self-only) deductible that is double 

the self-only MOOP and the self-only 

deductible, respectively, provided for in 

the standardized plan options finalized 

in this rule. We note that this approach 

is consistent with the approach taken in 

the 2017 Payment Notice (81 FR 12204, 

12292). 

Comment: Several commenters 

supported exempting FFE and SBE–FP 

issuers that are already subject to State 

standardized plan option requirements 


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from the standardized plan option 

requirements finalized in this rule. 

Response: We agree that it is 

appropriate to exempt FFE and SBE–FP 

issuers that are already required to offer 

standardized plan options under State 

action taking place on or before January 

1, 2020 from the standardized plan 

option requirements finalized in this 

rule. We believe imposing duplicative 

Federal standards on these issuers 

would yield no benefit to consumers or 

issuers and that it would unnecessarily 

increase issuer burden. We further 

believe that FFE and SBE–FP States that 

have enacted standardized plan option 

requirements and implemented specific 

plan designs are positioned to best 

understand the unique needs and 

conditions in their respective markets. 

Comment: Several commenters 

requested that HHS clarify whether the 

requirement for FFE and SBE–FP issuers 

to offer standardized plan options 

applies to issuers in States that are 

transitioning to a State Exchange model 

type in a future plan year. 

Response: We clarify that all FFE and 

SBE–FP issuers are subject to these 

requirements, even if they anticipate 

that their State will transition from 

having an FFE or SBE–FP to a State 

Exchange in a future plan year (such as 

issuers in the State of Virginia). We 

reiterate that the only FFE and SBE–FP 

issuers exempt from the requirement to 

offer standardized plan options at every 

product network type, at every metal 

level, and throughout every service area 

they offer non-standardized plan 

options are those that are already 

subject to State requirements enacted 

prior to January 1, 2020, such as issuers 

in the State of Oregon. 

Comment: Several commenters 

recommended applying these 

standardized plan options requirements 

to State Exchange issuers that are not 

already required to offer standardized 

plan options per existing State 

requirements, while many were 

opposed to this approach, citing that 

State Exchanges are most familiar with 

the nuances and demands of their 

respective markets and should therefore 

be allowed to determine if issuers 

should be required to offer standardized 

plan options in these markets. 

Response: We do not believe it is 

appropriate to apply the standardized 

plan option requirements finalized in 

this rule to State Exchange issuers, 

including issuers that are not already 

required to offer standardized plan 

options per existing State requirements, 

because we believe State Exchanges are 

best positioned to understand both the 

nuances of their respective markets and 

consumer needs within those markets. 

We also believe that State Exchanges are 

best positioned to determine whether 

standardized plan options would be 

beneficial to consumers in their 

respective States. However, because the 

SBE–FPs use the same platform as the 

FFEs, we are finalizing the requirements 

equally on FFEs and SBE–FPs. Changing 

the platform to permit distinction on 

this proposal between FFEs and SBE– 

FPs would require a very substantial 

financial and operational burden that 

we believe outweighs the benefit of 

permitting such a distinction. 

Comment: Several commenters 

requested that HHS clarify whether 

pediatric dental benefits can be 

included in standardized plan options. 

Response: We affirm that pediatric 

dental benefits can be included in these 

standardized plan options if so desired, 

but note that the cost sharing parameters 

for these benefits are not standardized. 

Comment: Several commenters 

requested that HHS clarify if telehealth 

services can be offered at a lower cost 

sharing amount than in-person services. 

Response: Telehealth services cannot 

be offered at a lower cost sharing 

amount than in-person services, 

primarily due to limitations in the AVC. 

We intend to consider whether this 

flexibility should be afforded for future 

plan years. 

Comment: Several commenters asked 

HHS to clarify how they should assign 

cost sharing to benefits not included in 

the AVC or the standardized plan 

options finalized in this rule. 

Response: We note that when offering 

the standardized plan options finalized 

in this rule, issuers only have to match 

the cost sharing parameters for the 

benefits specified in the plan designs for 

the standardized plan options finalized 

in this rule. Issuers retain the ability to 

determine the cost sharing for benefits 

not included in the standardized plan 

options finalized in this rule, subject to 

State and Federal law. 

Comment: Many commenters made 

recommendations regarding specific 

features of the plan designs. Several 

commenters disagreed with the 

methodology used in designing these 

standardized plan options, stating that 

designing standardized plan options to 

reflect popular plan design features (in 

the form of enrollee-weighted medians) 

would fail to meet the unique health 

needs of consumers. Commenters also 

stated that health care markets vary 

dramatically between States, as do the 

most popular plan design features in 

each of these markets, and therefore, 

that these plan designs would not 

resonate with consumers in every State. 

Response: We designed the 

standardized plan options in this 

proposal by mirroring the most popular 

plan design features of QHPs offered 

through the FFEs and SBE–FPs in PY 

2021 (in the form of enrollee-weighted 

medians), meaning that these plan 

designs are similar to those that millions 

of consumers are already currently 

enrolled in. Furthermore, though we do 

agree that there are some differences 

between the health care markets of 

different States, as well as between the 

most popular plan design features in 

these States, there are many similarities 

between different States and plan design 

features, as well. 

For example, in the FFEs and SBE– 

FPs in PY 2021, 90 percent of non-CSR 

silver plan enrollees had plans with 

copays exempt from the deductible as 

the form of cost sharing for primary care 

visits. The 30th percentile copay 

amount for this benefit category was $30 

per visit, while the 70th percentile was 

$40 per visit. Thus, the range between 

the 30th and 70th percentiles for copay 

amounts for primary care visits for nonCSR silver plan enrollees in all FFEs 

and SBE–FPs in PY 2021 was only $10, 

meaning the standardized plan options 

finalized in this rule have design 

features that are largely compatible with 

plan design features that millions of 

enrollees are already accustomed to. 

The fact that there is little variation in 

many of the most frequently utilized 

benefit categories across FFEs and SBE– 

FPs supports the decision to employ an 

enrollee-weighted median methodology 

in designing these plans. 

To ensure these standardized plan 

options are able to meet the unique 

health needs of all consumers, we 

reiterate that we intend to conduct 

extensive stakeholder engagement 

(including with State regulators, issuers, 

provider groups, health advocacy 

groups, and consumer groups) over the 

next year. We anticipate incorporating 

the feedback we receive during this 

stakeholder engagement when designing 

standardized plan options for future 

plan years so that we can design plans 

that meet the unique health needs of all 

consumers. In the meantime, we believe 

the fact that consumers can still select 

from an unlimited number of nonstandardized plan options in PY 2023 

means that all consumers can select 

plans that meet their unique health 

needs. 

Comment: Several commenters 

expressed concern with having one set 

of standardized plan options apply to all 

FFE and SBE–FP States. These 

commenters stated that a uniform 

national set of plan designs is unlikely 

to be attractive to consumers since 

health care markets vary dramatically 

between States, as do the most popular 


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plan design features in these States. 

These commenters also stated that 

having State-specific plan designs could 

help mitigate the degree of disruption to 

local markets and increase consumer 

uptake of standardized plan options. 

These commenters also requested 

clarification on how these standardized 

plan options would interact with State 

cost sharing laws. 

Response: We designed two sets of 

standardized plan options to apply to 

different sets of States in order to more 

precisely tailor these plan designs to the 

unique market conditions in different 

States and to comply with the unique 

cost sharing laws in these different 

States. We also conducted extensive 

stakeholder engagement with more than 

30 State departments of insurance to 

ensure that these plan designs comply 

with unique cost sharing laws. We also 

solicited comments on potentially 

relevant State cost sharing laws that 

could affect plan designs in the 

proposed rule. We also note that we 

intend to assess the feasibility and 

utility of designing State-specific 

standardized plan options to further 

mitigate the risk of disruption and to 

increase consumer uptake of these plans 

in future plan years. 

Comment: Several commenters 

requested clarification regarding how 

these standardized plan options interact 

with State-mandated benefits. 

Response: Nothing in the design of 

these standardized plan options 

supersedes the obligation to cover Statemandated benefits, as applicable. 

Similar to other benefits not included in 

these standardized plan options, issuers 

retain the ability to set the cost sharing 

parameters for these benefits, subject to 

State and Federal law. 

Comment: Several commenters 

requested that HHS confirm that the 

standardized plan options finalized in 

this rule are compliant with MHPAEA 

and its implementing regulations. 

Response: We affirm that the cost 

sharing parameters for these plan 

designs are designed so that issuers can 

design standardized plan options that 

are compliant with the MHPAEA and its 

implementing regulations. For example, 

copays for mental health or substance 

use disorder benefits in the outpatient, 

in-network office visit sub-classification 

in each plan design are equal to the least 

restrictive level for copays that apply to 

substantially all medical and surgical 

benefits in that sub-classification. Since 

standardized plan options do not 

include standardized treatment 

limitations on any of these benefits, 

issuers will be responsible for ensuring 

that the plan features they design 

outside of these standardized cost 

sharing parameters are compliant with 

MHPAEA and its implementing 

regulations. 

Comment: Several commenters 

suggested that HHS incorporate VBID 

principles into future iterations of 

standardized plan options, explaining 

that doing so could further reduce 

barriers to necessary services and 

promote health equity among 

consumers. Similarly, many 

commenters supported including low 

deductibles and pre-deductible coverage 

for as many benefits as possible in plan 

designs, explaining that doing so would 

improve accessibility to important 

services. Some commenters requested 

that HHS modify the plan designs to 

include more pre-deductible coverage 

for particular benefits, including for 

preventive services beyond those 

mandated by Federal requirements, 

maternity care, laboratory and 

radiologic services, and some or all tiers 

of prescription drug coverage. Several 

commenters added that by improving 

the affordability of basic services that 

underserved populations typically lack 

access to, standardized plan options 

could also help address health 

disparities. 

Response: We affirm that VBID 

principles were incorporated into these 

plan designs by exempting particular 

services from the deductible, decreasing 

barriers to access for particular services 

and prescriptions drug tiers, and having 

copays as the form of cost sharing 

instead of coinsurance rates for 

particular benefit categories. We also 

intend to explore the utility of 

incorporating additional VBID 

principles into future iterations of 

standardized plan options. 

We attempted to exempt as many 

benefits as possible from the deductible 

while also maintaining the lowest 

deductible possible, designing a plan 

that has an AV within the permissible 

de minimis range of the metal level AVs, 

and ensuring the competitiveness of 

these plans’ premiums by having AVs 

near the floor of these de minimis 

ranges. Given these constraints, we are 

not able to exempt other benefits, such 

as laboratory and radiologic services, 

from the deductible without also raising 

the deductible or increasing the AV and 

therefore the expected premiums of 

these plans. We are also unable to 

decrease the deductibles for these plans 

without offsetting the change to AV by 

subjecting additional benefits to the 

deductible or increasing these plans’ AV 

or premiums. 

Comment: Several commenters 

requested that HHS clarify the specific 

types of specialist visits that are exempt 

from the deductible in these 

standardized plan options and if there 

are any limits on the number of visits 

exempt from the deductible. One 

commenter requested that HHS clarify 

that deductible exemptions apply to the 

full range of pediatric preventive 

services, including those provided by a 

pediatric specialist. 

Response: We clarify that we defer to 

issuers in how they classify which 

benefits belong to which benefit 

category, including how issuers classify 

‘‘specialist visits’’ and therefore which 

specialist visits are exempt from the 

deductible per the cost sharing 

parameters in these plan designs. We 

also clarify that there are no visit limits 

for any of the benefit categories, 

including specialist visits, for any metal 

level in either of the two sets of 

standardized plan options finalized in 

this rule. We also reiterate that nothing 

in the design of these standardized plan 

options supersedes the obligation to 

cover certain benefits, such as the 

preventive services required under 

§ 147.130, without cost sharing, even if 

such benefits would also fall into a 

category for which cost sharing is 

specified for the standardized plan 

option. 

Comment: Several commenters 

recommended including separate 

medical and drug deductibles in the 

plan designs to allow those who rely on 

prescription drugs to manage a 

particular health condition to more 

quickly meet their drug deductible. 

Response: We chose integrated 

medical and drug MOOPs and 

deductibles for these plan designs 

because this was the most popular plan 

design feature in the FFEs and SBE–FPs 

in PY 2021. Since the majority of 

enrollees have a plan with this design 

feature, and since we wish to minimize 

the risk of disruption, we included this 

feature in these standardized plan 

options. We also note that we intend to 

consider the utility of splitting medical 

and drug MOOPs and deductibles in 

future iterations of standardized plan 

options for future plan years. 

Comment: Several commenters 

requested that HHS clarify how 

deductibles and cost sharing should be 

applied to the specific benefit categories 

included in the standardized plan 

options finalized in this rule. 

Response: We clarify that in both sets 

of the standardized plan options above 

in Tables 12 and 13, if a cost sharing 

amount for a particular metal level is 

accompanied by a (*), this benefit 

category’s cost sharing is exempt from 

the deductible. 

Comment: Many commenters 

supported including copays instead of 

coinsurance for as many benefits as 


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possible. These commenters explained 

that coinsurance disproportionately 

burdens persons with chronic illness 

and disabilities and that by improving 

affordability for basic services that 

underserved populations typically lack 

access to, these plan designs would help 

address health disparities. Some 

commenters further explained that 

copays are more transparent than 

coinsurance and that copays make it 

easier to predict out-of-pocket costs. 

Several commenters recommended 

applying copays to more benefit 

categories, including for the emergency 

room, hospital inpatient, imaging, and 

lab work benefit categories. Several 

other commenters recommended 

eliminating coinsurance from the plan 

designs altogether. Several other 

commenters expressed concern that 

copays were too high for certain 

services. 

Response: We affirm that we applied 

copays instead of coinsurance rates for 

as many benefits as possible in order to 

enhance consumer certainty and 

decrease barriers that obstruct access to 

these services. We agree this design 

feature will play an important role in 

improving affordability and 

transparency for important services, and 

that this design feature will also address 

health disparities. That said, since we 

designed these standardized plan 

options to reflect the most popular 

design features of QHPs in the FFEs and 

SBE–FPs in PY 2021, and since the 

majority or plurality of consumers did 

not have copays for particular benefit 

categories (such as for hospital 

inpatient), we chose coinsurance rates 

for these particular benefit categories. 

For this reason, we are unable to 

eliminate coinsurance from the plan 

designs altogether. We also note that we 

are unable to decrease copays for certain 

services without concurrently offsetting 

these changes with increases to 

deductibles, MOOPs, or subjecting 

additional benefits to the deductible. 

Comment: Many commenters 

supported including copays as opposed 

to coinsurance specifically for 

prescription drugs, including for the 

non-preferred and specialty tiers, 

explaining that doing so would alleviate 

the burden for persons with chronic 

illnesses and disabilities. Commenters 

who supported the use of copays rather 

than coinsurance for prescription drugs 

explained that high cost sharing on 

prescription drugs negatively affects 

medication adherence, leading to 

increased health care costs overall. 

Several commenters requested that HHS 

exempt all drugs from the deductible, 

lower copays for the different drug tiers, 

and cap all specialty drug copays at 

$150 (as was done in the second set of 

standardized plan options). 

Conversely, some commenters were 

opposed to both incorporating copays 

instead of coinsurance for all tiers of 

prescription drugs as well as exempting 

non-preferred and specialty tier 

prescription drugs from the deductible. 

These commenters expressed concern 

that these plan design features would 

increase the risk of adverse selection 

and could therefore contribute to an 

increase in premiums that would 

undermine access to affordable health 

coverage. These commenters also 

explained that these plan designs are 

more generous than existing plan 

offerings, demonstrating that plan 

designs with these features are not 

sustainable within current market 

conditions. One commenter requested 

that HHS clarify whether the plan 

designs allow prescription drugs 

associated with preventive services to 

be covered with zero cost sharing. 

Response: We agree that having 

copays for all prescription drug tiers 

(including the non-preferred brand and 

specialty tiers) will enhance 

predictability, increase medication 

adherence, and decrease overall health 

care costs. We note that we were unable 

to exempt all drugs from the deductible 

and lower the cost sharing for all tiers 

due to constraints with AV. Exempting 

additional tiers from the deductible and 

lowering the cost sharing amounts for 

these tiers would require subjecting 

other medical benefits to the deductible, 

increasing the cost sharing for other 

medical benefit categories, or increasing 

the AV, and therefore increasing the 

premiums of these plans. We also note 

that we decided not to apply the $150 

copay cap to both sets of standardized 

plan options because only Delaware and 

Louisiana had State cost sharing laws 

that necessitated this design feature. 

We understand that these design 

features may increase the risk of adverse 

selection, but we believe this risk is 

sufficiently mitigated by the fact that all 

FFE and SBE–FP issuers are required to 

offer these plans at every product 

network type, at every metal level, and 

throughout every service area they offer 

non-standardized plan options. 

Therefore, we believe this risk to be 

distributed evenly among issuers. 

Furthermore, we reiterate that we 

designed these plans to have AVs near 

the floor of the de minimis range for 

each AV metal level to ensure these 

plans’ premiums are competitive. 

HHS reiterates once more that nothing 

in the design of these standardized plan 

options supersedes the obligation to 

cover certain benefits, such as the 

preventive services required under 

§ 147.130, without cost sharing, even if 

such benefits would also fall into a 

category for which cost sharing is 

specified for the standardized plan 

option. We clarify that these plan 

designs allow prescription drugs 

associated with preventive services to 

be covered with zero cost sharing. 

Comment: Several commenters 

expressed concern with the plan design 

including only four tiers of prescription 

drug cost sharing, stating that this plan 

design feature would be difficult for 

issuers to implement and disruptive for 

consumers. These commenters 

explained that having six tiers of 

formulary cost sharing is becoming 

increasingly common among 

commercial issuers and that this design 

feature is permitted under Medicare Part 

D. These commenters therefore 

recommended that HHS include six 

tiers of prescription drug cost sharing in 

the plan designs to allow issuers the 

flexibility to develop formularies in a 

way that is most effective in promoting 

affordability. Conversely, several 

commenters supported including only 

four tiers of prescription drug cost 

sharing in the plan designs, explaining 

that doing so would offer more 

affordable, predictable, understandable 

prescription drug coverage. 

Response: We agree that including 

only four tiers of prescription drug cost 

sharing in these plan designs offers 

more affordable, predictable, and 

understandable drug coverage, and that 

this design feature will play an 

important role in facilitating the 

consumer decision-making process by 

allowing consumers to more easily 

compare formularies between plans. 

That said, we intend to explore the 

feasibility and utility of including more 

than four tiers of prescription drug cost 

sharing in future iterations of 

standardized plan options in future plan 

years. 

Comment: Several commenters 

requested that HHS clarify if 

standardized plan options are permitted 

to have more than one tier of provider 

networks. 

Response: We clarify that we designed 

the standardized plan options finalized 

in this rule to have only one cost 

sharing tier such that no standardized 

plan option may have a tiered provider 

network. This approach aligns with the 

goals of simplifying the consumer 

decision-making process and making 

health insurance more understandable 

for consumers on the Exchanges. 

Furthermore, considering that the vast 

majority of plans offered through the 

Exchanges (nearly 90 percent) do not 

have tiered provider networks, we 

believe this plan design feature reflects 


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current market realities and minimizes 

the risk of disruption for both issuers 

and enrollees. 

Comment: Several commenters 

requested that HHS include health 

savings account (HSA)-eligible HDHPs 

in these sets of standardized plan 

options. 

Response: We have not included 

HSA-eligible HDHPs in these sets of 

standardized plan options because 

enrollees still have the opportunity to 

enroll in non-standardized HSA-eligible 

HDHPs, if they so desire. 

Comment: Many commenters 

supported differentially displaying 

standardized plan options on 

HealthCare.gov. Most of these 

commenters also supported extending 

standardized plan options differential 

display requirements to web-brokers 

and issuers’ direct enrollment websites. 

Citing the overwhelming number of 

plan offerings available for consumers, 

these commenters urged HHS to 

improve and simplify the shopping 

experience by allowing consumers to 

easily identify standardized plan 

options. Many of these commenters 

noted that differentially displaying 

standardized plan options assumes even 

greater importance if issuers are 

permitted to offer an unlimited number 

of non-standardized plan options. These 

commenters also noted that extending 

these display requirements to webbrokers’ and issuers’ direct enrollment 

websites would promote consistent 

messaging across platforms. Several 

commenters also explained that several 

State Exchanges have had success in 

differentially displaying standardized 

plan options and that HHS should draw 

from this experience. 

In contrast, many commenters 

opposed differentially displaying 

standardized plan options, explaining 

that doing so could direct consumers to 

more expensive plans that may not be 

best suited for their needs. Several of 

these commenters urged HHS to give 

web-brokers and issuers that utilize 

alternative enrollment pathways— 

including Classic DE and EDE— 

flexibility in how to display 

standardized plan offerings to 

consumers utilizing their platforms due 

to concerns over technical and platform 

limitations. 

Response: We agree that differentially 

displaying standardized plan options on 

HealthCare.gov and direct enrollment 

websites will improve and simplify the 

shopping experience by allowing 

consumers to more easily identify the 

standardized plan options. We also 

disagree that differentially displaying 

standardized plan options could direct 

consumers to more expensive plans that 

may not be best suited for their needs. 

We first note that we designed these 

standardized plan options to have AVs 

near the floor of the AV de minimis 

range for each metal level to ensure the 

competitiveness of these plans’ 

premiums. We also note that we 

designed these plans to reflect the most 

popular plan design features throughout 

the FFEs and SBE–FPs in PY 2021 and 

we therefore do not believe these plans’ 

premiums will differ significantly from 

the premiums of non-standardized plan 

options. 

Further, since we are differentially 

and not preferentially displaying these 

standardized plan options, we believe 

that we can structure choice 

architecture in a way that allows 

consumers to meaningfully evaluate 

other non-standardized plan options 

and select these plans, if they so desire. 

A comment summary regarding specific 

recommendations for the differential 

display of standardized plan options is 

discussed in the Comment Solicitation 

on Choice Architecture and Preventing 

Choice Overload section later in this 

rule. 

We also note that we will continue to 

provide web-brokers and issuers that 

utilize alternative enrollment 

pathways—including Classic DE and 

EDE—the ability to request to deviate 

from how standardized plan options are 

differentially displayed on 

HealthCare.gov due to concerns over 

technical and platform limitations. We 

will provide additional technical 

guidance on how to submit this request 

to deviate in the future. 

Comment: Several commenters 

expressed concern about the timing of 

the implementation of these 

requirements. These commenters 

explained that complying with these 

requirements would impose a 

significant burden on issuers as they try 

to meet filing deadlines for PY 2023, 

with several commenters requesting that 

HHS delay the implementation of these 

requirements until the plan year 2024, 

if they are implemented at all. 

Response: We are finalizing our 

proposal to require issuers to offer 

standardized plan options for PY 2023 

and beyond, as proposed. We first 

announced in part 2 of the 2022 

Payment Notice final rule (86 FR 24140, 

24265) our intent to resume 

standardized plan options and to 

propose specific plan designs in the 

2023 Payment Notice. We also sought 

comment on the best method to resume 

standardized plan options in part 3 of 

the 2022 Payment Notice proposed rule 

(86 FR 35156, 35162 through 25163). 

We then affirmed our intent to resume 

standardized plan options in PY 2023 

and explained our rationale for doing so 

in part 3 of the 2022 Payment Notice 

final rule (86 FR 53412, 53419 through 

23420). We believe these 

announcements provided ample notice 

of our intent to propose standardized 

plan option requirements in the 2023 

Payment Notice proposed rule such that 

States, issuers, and other affected 

stakeholders should have sufficient time 

to prepare for compliance with the 

requirements we finalize in this rule. 

Additionally, since the cost sharing 

parameters for the EHBs covered under 

these plans are already specified, issuers 

will be able to utilize existing networks 

and formularies they already utilize in 

connection with other plans in their 

portfolios, and since issuers are not 

required to offer standardized plan 

options at product network types, metal 

levels, or services areas in which they 

do not already offer non-standardized 

plan options, we do not anticipate that 

issuers will be unable to meet the filing 

deadlines. 

11. Network Adequacy (§ 156.230) 

We proposed to adopt FFE QHP 

certification standards that would 

ensure that QHP enrollees would have 

sufficient access to providers. HHS is of 

the view that strong network adequacy 

standards are necessary to achieve 

greater equity in health care and 

enhance consumer access to quality, 

affordable care through the Exchanges. 

We engaged and received feedback from 

numerous stakeholders representing 

diverse perspectives in developing the 

proposed policies. We are finalizing the 

following provisions as proposed, with 

two exceptions: (1) We are not finalizing 

the proposal on network tiering; (2) for 

appointment wait time standards, we 

are finalizing and delaying 

implementation until PY 2024. We are 

also finalizing the following updates to 

§ 156.230: Substituting the phrase 

‘‘substance use disorder’’ in place of 

‘‘substance abuse’’; and retaining 

paragraph (f), which was deleted in 

error. 

a. Background of Network Adequacy 

Standards 

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

directs HHS to establish by regulation 

certification criteria for QHPs, including 

criteria that require QHPs to ensure a 

sufficient choice of providers (in a 

manner consistent with applicable 

provisions under section 2702(c) of the 

PHS Act) and provide information to 

current and prospective enrollees on the 

availability of in-network and out-ofnetwork providers. Federal network 

adequacy standards were first detailed 

in the Patient Protection and Affordable 


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313 523 F. Supp. 3d 731 (D. Md. 2021). 

Care Act; Establishment of Exchanges 

and Qualified Health Plans; Exchange 

Standards for Employers final rule (77 

FR 18309) and codified at § 156.230. 

HHS seeks to ensure that quantitative, 

prospective network adequacy reviews 

occur for QHPs offered through the FFEs 

so that enrollees have reasonable, timely 

access to health care providers. 

The FFEs conducted network 

adequacy reviews of time and distance 

standards for QHPs for PYs 2015–2017. 

The 2017 Market Stabilization final rule 

(82 FR 18346) deferred reviews of 

network adequacy for QHPs to States 

that HHS determined to have a 

sufficient network adequacy review 

process, an approach that was extended 

by the 2019 Payment Notice (83 FR 

16930.) Specifically, CMS deferred to 

States that possessed sufficient 

authority to enforce standards that were 

at least equal to the reasonable access 

standard defined in § 156.230 and that 

had the means to assess the adequacy of 

plans’ provider networks. For PYs 

2018–2022, HHS determined that all 

States had sufficient legal authority and 

means to assess the adequacy of plans’ 

provider networks. On March 4, 2021, 

as noted previously, the United States 

District Court for the District of 

Maryland decided City of Columbus, et 

al. v. Cochran.313 One of the policies the 

court vacated was the 2019 Payment 

Notice’s elimination of the Federal 

Government’s reviews of the network 

adequacy of QHPs and plans seeking 

QHP certification to be offered through 

the FFEs. 

As such, we announced in Parts 2 and 

3 of the 2022 Payment Notice final rules 

(86 FR 24140; 86 FR 53412) our intent 

to undertake rulemaking to establish 

network adequacy standards, beginning 

in this rulemaking for PY 2023. 

b. FFE Network Adequacy Reviews 

In the 2023 Payment Notice proposed 

rule (87 FR 584), HHS proposed to 

evaluate the adequacy of provider 

networks of QHPs offered through the 

FFEs, or of plans seeking certification as 

FFE QHPs, except for FFEs in certain 

States beginning with the QHP 

certification cycle for PY 2023. HHS 

proposed not to evaluate QHP network 

adequacy in FFE States performing plan 

management functions that elect to 

perform their reviews of plans seeking 

QHP certification in their State, so long 

as the State applies and enforces 

quantitative network adequacy 

standards that are at least as stringent as 

the Federal network adequacy standards 

established for QHPs under § 156.230, 

and that network adequacy reviews are 

conducted before QHP certification. 

States performing plan management 

functions are States served by an FFE 

where the State has agreed to assume 

primary responsibility for reviewing 

issuer-submitted QHP certification 

material and making certification 

recommendations to HHS. 

We are finalizing this policy as 

proposed. 

We summarize and respond to public 

comments received on this proposal 

below. 

Comment: Many commenters 

expressed strong support for HHS’ 

proposal to conduct network adequacy 

reviews of the provider networks of 

QHPs offered through the FFEs. Key 

reasons for this support included 

ensuring consistency of network 

adequacy standards and reviews across 

States; providing a minimum set of 

network adequacy standards that States 

can meet or exceed; and addressing 

various issues related to consumer 

access. 

Response: We concur that conducting 

robust network adequacy reviews of 

QHPs on the FFEs will have numerous 

benefits, including strengthening QHP 

enrollees’ access to a variety of health 

care providers. 

Comment: Some commenters stated 

that HHS should defer to States’ reviews 

as they believe States are the most 

appropriate regulators of network 

adequacy. These commenters expressed 

that States understand and can tailor 

network adequacy reviews based on 

unique market conditions and that HHS 

network adequacy reviews could be 

duplicative and burdensome. 

Response: We understand that some 

States, issuers, and other stakeholders 

believe that States are best positioned to 

regulate network adequacy. Given that 

States have unique knowledge and 

experience that are beneficial to 

assessing QHPs’ provider networks, 

HHS will continue to partner with and 

learn from States as we conduct network 

adequacy reviews and pursue future 

network adequacy rulemaking. In 

recognition of this viewpoint, and as 

proposed, HHS will allow States 

performing plan management functions 

to choose to conduct their reviews, as 

long as they adhere to standards as 

stringent as HHS’ standards and 

conduct prospective reviews. For all 

other FFEs, HHS will conduct network 

adequacy reviews to assure that QHP 

enrollees across States have reasonable 

access to a variety of health care 

providers to meet their needs. 

Comment: Some commenters urged 

HHS to allow States performing plan 

management functions to conduct their 

network adequacy reviews if they have 

an approach that is ‘‘comparable to’’ 

Federal network adequacy standards, 

rather than ‘‘as stringent as’’ Federal 

standards. 

Response: HHS believes it is 

important for States performing plan 

management functions to conduct 

network adequacy reviews that are at 

least as stringent as Federal reviews for 

two main reasons. First, HHS seeks to 

ensure QHP enrollees in all FFEs have 

a minimum standard of consumer 

protections regarding reasonable access 

to providers. We believe the Federal 

standards set a strong floor from which 

States performing plan management 

functions can implement even more 

robust standards if desired. If HHS were 

to allow States performing plan 

management to conduct network 

adequacy reviews that are comparable to 

Federal reviews, rather than as 

stringent, this could lead to reviews of 

a smaller provider specialty list or 

reviews that have less stringent 

parameters, for example. Second, 

whether a network adequacy review is 

‘‘comparable’’ is a less concrete 

determination than whether it is ‘‘as 

stringent.’’ 

HHS is defining ‘‘as stringent as’’ to 

mean that the reviews include assessing 

compliance with time and distance 

standards and appointment wait time 

standards using the same specialty list 

and parameters. Time and distance 

reviews must be based on quantitative 

data collected from the issuer (not 

attestation) and supported by a 

justification requirement if an issuer 

does not meet one or more of the 

standards. We believe assessing 

quantitative data for time and distance 

reviews, rather than using qualitative 

measures, gives a fuller and more 

accurate picture of how a QHP assures 

reasonable access to providers. 

Assessing time and distance using 

quantitative data also allows us to make 

comparisons year-over-year and across 

issuers. We are codifying in § 156.230 

that time and distance reviews must be 

based on quantitative issuer-submitted 

data. 

Appointment wait time reviews, 

which will begin in PY 2024, must be 

based on methods as stringent as HHS’ 

methods (as a minimum standard) and 

supported by a justification requirement 

if an issuer does not meet one or more 

of the standards. HHS will propose the 

method for assessing compliance with 

appointment wait time standards in 

future rulemaking. States can 

implement network adequacy standards 

and reviews that are more stringent than 

HHS’ standards, described here. For 

example, we consider shorter time and 

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standards to be more stringent than 

longer ones. 

We also acknowledge that Statespecific challenges (for example, 

provider supply shortages, topographic 

barriers, etc.) may necessitate 

justification allowances, such as 

mitigating measures (for example, innetwork cost sharing for out-of-network 

providers) that ensure access to a 

provider specialty type that would 

otherwise be unavailable to enrollees, 

while the States partner with issuers 

and providers to reach a more 

permanent solution. We believe the 

justification process for network 

adequacy will sufficiently accommodate 

such challenges and allowances. 

Comment: Several commenters 

requested that HHS closely assess the 

network adequacy reviews of States 

performing plan management that elect 

to perform their reviews to ensure they 

review and enforce standards at least as 

stringent as HHS’ standards. 

Response: We will closely partner 

with these States to ensure they 

understand HHS’ standards, that the 

States have adequate State authority to 

conduct such reviews, and that their 

reviews will appropriately assess 

network adequacy for QHPs in their 

State before plan confirmation to 

support timely QHP certification. 

Comment: Some commenters 

expressed concern that the additional 

contracting required to achieve the new 

network adequacy standards could 

increase costs to consumers, while other 

commenters believe that the standards 

are unlikely to raise consumer costs. 

Response: We acknowledge that 

commenters shared mixed feedback 

about whether the new network 

adequacy standards would raise 

consumer costs. We do not anticipate 

that the updated network adequacy 

requirements will substantially raise 

costs to consumers. We acknowledge 

that there may be some additional 

burden for QHP issuers and States to 

comply with the new network adequacy 

requirements. We will work to minimize 

the burden to the extent feasible by 

increasing transparency of the network 

adequacy review process, offering 

technical assistance resources and 

consultations, and collaborating with 

issuers and States to address questions 

and issues that arise during the PY 2023 

network adequacy review process. We 

believe the benefits to consumer 

protection resulting from strengthened 

network adequacy standards strike a 

reasonable balance with the potential 

for increased issuer burden and cost, 

given the strategies described above that 

HHS will undertake to mitigate the 

burden. 

Comment: Some commenters 

expressed concern regarding the 

implementation timeline for network 

adequacy reviews and requested that 

reviews be delayed until PY 2024 due 

to the time needed by issuers and States 

to prepare for the reviews and given the 

continued impacts of the COVID–19 

pandemic on the health care system. 

Response: We understand the desire 

expressed by some commenters to delay 

the implementation of network 

adequacy reviews given the time needed 

to collect information from providers on 

appointment wait times in the COVID– 

19 context. We acknowledge these 

concerns and, as discussed in the 

Appointment Wait Times section of this 

preamble, we will finalize the 

appointment wait time standards, but 

delay their implementation until PY 

2024. We believe it is reasonable to 

implement the other finalized elements 

of the network adequacy proposal in PY 

2023 for reasons described in the Time 

and Distance and Telehealth sections of 

this preamble. 

Comment: Some commenters 

requested that HHS further align Federal 

network adequacy standards with the 

National Committee for Quality 

Assurance (NCQA) accreditation 

standards. 

Response: We have reviewed the 

NCQA standards regarding network 

adequacy. We believe it is appropriate 

to align with NCQA in its use of 

business days to measure appointment 

wait time standards, which will be 

finalized in the final PY 2023 Letter to 

Issuers. We will also finalize that the 

appointment wait time standard for the 

behavioral health category will align 

with NCQA’s standards; NCQA does not 

have quantitative parameters for the 

other categories we are finalizing for 

appointment wait times. NCQA does not 

currently have quantitative standards 

for time and distance so we cannot 

consider alignment. 

Comment: One commenter requested 

HHS retain the provision in the network 

adequacy regulation text that clarifies 

that QHPs do not have to use provider 

networks. 

Response: HHS will retain this 

provision that clarifies that QHPs do not 

have to use provider networks. In the 

proposed rule, the deletion was an error, 

and we appreciate the commenter 

bringing it to our attention. 

c. FFE Network Adequacy Standards 

Beginning With PY 2023 

i. Network Adequacy Standards 

Applicable to Plans That Use a Provider 

Network 

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

directs HHS to establish criteria for the 

certification of the health plan as QHPs, 

which includes the requirement that 

QHPs must ‘‘ensure a sufficient choice 

of providers.’’ HHS codified QHP 

network adequacy requirements under 

§ 156.230(a)(2). In the 2012 Exchange 

final rule (77 FR 18309), we established 

the minimum network adequacy criteria 

that health and dental plans must meet 

to be certified as QHPs at § 156.230. 

This regulation provided that an issuer 

of a QHP that uses a provider network 

must maintain a network that is 

sufficient in number and types of 

providers, including providers that 

specialize in mental health and 

substance use disorder services, to 

assure that all services will be accessible 

to enrollees without unreasonable delay. 

In the 2016 Payment Notice final rule 

(80 FR 10749), we modified § 156.230(a) 

in part to specify that network adequacy 

requirements only apply to QHPs that 

use a provider network and that a 

provider network includes only 

providers that are contracted as innetwork. 

In section c, parts ii, ii, and iv of this 

preamble, we proposed to refine the 

FFE’s QHP certification standards 

regarding the adequacy of plans’ 

provider networks by imposing time 

and distance standards, appointment 

wait time standards, and standards 

related to tiered networks. 

ii. Time and Distance Standards 

For the certification cycle for PYs 

beginning in 2023, HHS proposed to 

adopt for QHPs offered through the 

FFEs time and distance standards that 

HHS would use to assess whether FFE 

QHPs (or QHP candidates) fulfill 

network adequacy standards applicable 

to plans that use provider networks. 

The proposed provider specialty lists 

for time and distance standards for PY 

2023 were informed by prior HHS 

network adequacy requirements, 

consultation with stakeholders, and 

other Federal and State health care 

programs, such as Medicare Advantage 

and Medicaid. The provider specialty 

lists cover more provider types than 

previously evaluated under FFE 

standards so that QHP networks will be 

more robust, comprehensive, and 

responsive to QHP enrollees’ needs. The 

proposed provider specialty lists are 

generally consistent with standards 

used to evaluate Medicare Advantage 

plans. For brevity purposes, when 

discussing provider types for network 

adequacy, we will use the term 

‘‘behavioral health’’ to encompass 

mental health and substance use 

disorders. 

HHS proposed reviewing additional 

specialties for time and distance, 


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beyond those included by Medicare 

Advantage, that are necessary to meet 

the health care needs of QHP enrollees 

since Medicare Advantage and the FFEs 

serve different populations. The 

additional specialties proposed are 

emergency medicine, outpatient clinical 

behavioral health, pediatric primary 

care, and urgent care. 

HHS proposed that time and distance 

standards be calculated at the county 

level and vary by county designation. 

We would use a county type designation 

method that is based upon the 

population size and density parameters 

of individual counties, in alignment 

with Medicare Advantage. The time and 

distance standards would apply to the 

provider specialty lists contained in 

Tables 14 and 15. To count towards 

meeting the time and distance 

standards, individual and facility 

providers listed in Tables 14 and 15 

must be appropriately licensed, 

accredited, or certified to provide 

services in their State, as applicable, 

and must have in-person services 

available. 


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The county-specific time and distance 

parameters that plans would be required 

to meet would be detailed in future 

guidance. These parameters would be 

informed by industry standards. 

Issuers that are unable to meet the 

specified standards would be able to 

submit a justification to account for 

variances. HHS proposed to review such 

justifications to determine whether the 

variance(s) is/are reasonable based on 

circumstances, such as the local 

availability of providers and variables 

reflected in local patterns of care, and 

whether offering the plan through the 

FFE would be in the interest of qualified 

individuals and employers. We 

proposed to codify the network 

adequacy justification process in 

regulation at § 156.230(a)(2)(ii). 

HHS sought comment on this 

proposal, including on the specific 

parameters for time and distance 

standards, and flexibilities that may be 

needed in rural areas when there are 

provider or plan shortages. In particular, 

HHS sought comment on the parameters 

that should apply with respect to 

behavioral health providers to ensure 

adequate access to these services. HHS 

also sought comment on the specialty 

list to which time and distance 

standards would apply and whether 

HHS should establish time and distance 

standards for additional specialties in 

future PYs. 

We are finalizing this policy as 

proposed. 

We summarize and respond to public 

comments received on this policy 

below. 

Comment: Many commenters, across a 

range of stakeholder types, supported 

the proposed quantitative time and 

distance standards. Key reasons for this 

support included appreciation for 

instituting a quantitative assessment of 

consumer access; concurrence with the 

inclusion of a variety of individual and 

facility provider types, including QHPspecific additions to the Medicare 

Advantage provider specialty list; and 

varying time and distance standards by 

county type since provider availability 

can be influenced by local population 

density. 

Response: HHS agrees that stringent 

quantitative time and distance standards 

for the expanded provider specialty lists 

that vary by county designation will 

help strengthen QHP enrollees’ access to 

a variety of providers to meet their 

health care needs. 

Comment: There was mixed feedback 

on the inclusion of emergency medicine 

physicians: Some commenters stated 

that the addition would be duplicative 

of required facility types and No 

Surprises Act protections, while others 

agreed with HHS’ contention that 

including emergency medicine 

physicians would provide proactive 

consumer protections and increase 

enrollee access to in-network providers. 

Response: HHS understands that 

some stakeholders have differing 

opinions about the inclusion of 

emergency medicine physicians on the 

provider specialty list for time and 

distance reviews. We believe that the 

anticipated benefits to consumer access 

and protections outweigh the concerns 

about duplication, and we will include 

emergency medicine physicians as 

proposed. 

Comment: Numerous commenters 

requested that HHS consider additional 

provider specialties (for example, 

anesthesiologists, audiologists, and 

providers offering gender-affirming care, 

among others) for inclusion in future 

time and distance standards. 

Many commenters specifically 

requested additions to or refinement of 

the Outpatient Clinical Behavioral 

Health category, such as separate 

categories for mental health and 

substance use disorder services, and 

delineating between pediatric and adult 

behavioral health providers. Some 

commenters requested refining certain 

provider specialty types, including 

allowing OB/GYNs to count as primary 

care providers; aligning OB/GYN 

parameters with the parameters for 

specialists rather than for primary care; 

considering how safety-net family 

planning and sexual health services are 

delivered by a range of non-OB/GYN 

providers; dividing requirements for 

oncology providers into separate 

categories for medical and surgical 

oncology; allowing mid-level 

practitioners to count as specialty care 

providers for time and distance 

standards; and allowing family 

medicine physicians to count towards 

pediatric primary care. 

Response: HHS is finalizing the 

individual and facility provider 

specialty lists for time and distance as 

proposed. We believe the current 

specialty list builds on and strengthens 

the specialty list that HHS used for 

assessing time and distance when we 

previously did so in PYs 2015–2017, 

which will help increase access to a 

variety of provider types and strengthen 

consumer protections. HHS appreciates 

the feedback suggesting additions to and 

refinement of the provider specialty list 

for time and distance standards. Prior to 

considering the adoption of these 

suggestions in future rulemaking, HHS 

will need to conduct further assessment 

and research as they may also have 

unintended consequences. 

We appreciate the suggestion from 

commenters that OB/GYNs count 

towards time and distance standards for 

primary care providers. We believe 

there could be potential unintended 

consequences if we were to allow OB/ 

GYNs to count as primary care 

providers for time and distance 

standards. For example, since OB/GYNs 

most commonly care for female patients, 

including OB/GYNs as primary care 

providers for time and distance 

standards could hamper access to 


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primary care for male patients. We will 

further assess this suggestion and its 

potential implications and will consider 

this for future rulemaking. 

For PY 2023, while we will not have 

separate adult and pediatric standards 

for Outpatient Clinical Behavioral 

Health, we have unique specialty codes 

in the Essential Community Provider/ 

Network Adequacy (ECP/NA) template 

that distinguish the two age categories 

(adult and pediatric) for some 

behavioral health specialty types, 

allowing for data collection and 

analysis, and consideration of further 

refinement in the future. 

Though we do not have a time and 

distance standard specifically for 

gender-affirming care and surgery 

providers, the provider specialty list 

does include many providers who offer 

services that may be useful for 

individuals seeking gender-affirming 

care, like endocrinologists, urologists, 

and behavioral health clinicians. 

Comment: Some commenters 

expressed concerns that Federal time 

and distance standards cannot 

adequately account for geographic 

variations, like provider supply and 

population density. One commenter 

expressed concerns that many issuers in 

their state might fail the new standards, 

that the network adequacy standards 

could disincentivize new issuers from 

entering the market, and that counties 

would be left without available 

Exchange health insurance options. 

Several commenters shared suggestions 

for less stringent time and distance 

reviews, like broader qualitative 

standards, or separate time and distance 

standards for rural areas, geographies 

with provider shortages, and narrower 

networks. 

Response: We understand that some 

stakeholders have concerns about HHS 

assessing QHPs for compliance with 

quantitative time and distance 

standards. We believe that quantitative 

time and distance standards, when 

varied by county type, provide a useful 

assessment of whether QHPs provide 

reasonable access to care, and when 

combined with appointment wait time 

standards, will offer a more 

comprehensive evaluation of the 

adequacy of QHPs’ networks. HHS 

believes that less stringent time and 

distance standards (like qualitative 

standards or separate standards for rural 

areas, geographies with provider 

shortages, and narrower networks) 

would not sufficiently assure reasonable 

access to providers. 

Where QHPs cannot comply with 

these standards due to provider 

shortages and other factors that affect 

issuers of given service areas similarly 

(like topographic challenges, such as a 

lake in the middle of a county), issuers 

can include such explanations in their 

justifications. HHS will take such 

considerations into account in 

determining whether the justification is 

sufficient to satisfy this QHP 

certification standard. 

HHS is aware of the potential risks 

related to implementing time and 

distance standards, such as standards 

being too stringent, not accounting for 

geographic variations, and leading to 

fewer QHPs. We believe these risks can 

be managed with increased 

transparency, updates to network 

adequacy QHP application documents, 

and coordination and partnership with 

States and issuers. We have made 

several changes to increase 

transparency, which we anticipate will 

make it easier for issuers to understand 

and comply with network adequacy 

standards. The ECP/NA template will 

include the Taxonomy Codes tab that 

shows which taxonomy codes crosswalk 

into which individual provider and 

facility specialty types. The Instructions 

and FAQs will provide more detail on 

the network adequacy review process 

and what issuers need to submit to HHS 

to demonstrate satisfaction of network 

adequacy standards. The Network 

Adequacy Justification Form is a 

streamlined tool that will enable issuers 

to show HHS how they are making 

progress toward compliance with 

network adequacy standards. 

Coordination with States will allow for 

a two-way exchange of information so 

HHS can better understand local 

patterns of care and how they may relate 

to Federal network adequacy standards. 

This information helps us give issuers 

as much credit for their networks as 

possible. 

Comment: Other commenters 

expressed that due to the differences 

between QHPs and Medicare Advantage 

plans—in terms of consumers, provider 

reimbursements, and contracting 

dynamics—network adequacy standards 

applying to Medicare Advantage plans 

may not be appropriate to apply to 

QHPs. 

Response: HHS acknowledges that 

QHPs and Medicare Advantage plans 

serve different enrollee populations. 

HHS has tailored the provider specialty 

list accordingly to better align with the 

provider access needs of QHP enrollees. 

HHS has added the following provider 

specialties for time and distance: 

Emergency medicine, outpatient clinical 

behavioral health, pediatric primary 

care, and urgent care. Details on why 

each of these specialties was added are 

included in the proposed rule (87 FR 

584, 681). When HHS conducted 

Federal network adequacy reviews 

during PYs 2015–2017, our time and 

distance standards for network 

adequacy were also foundationally 

based on Medicare Advantage 

standards. Based on that prior 

experience, our research on network 

adequacy standards, and the public 

comments received on this rule 

supporting this approach, we believe it 

is reasonable to resume using time and 

distance network adequacy standards 

that are based on Medicare Advantage 

standards. 

Comment: Some commenters 

expressed that time and distance 

metrics are not appropriate for SADPs 

and that a network breadth measure 

might be more appropriate. However, 

while some commenters noted that time 

and distance standards are not 

appropriate for SADPs, most 

commenters supported the inclusion of 

dental providers. 

Response: Based on prior rates of 

SADPs’ compliance with time and 

distance standards and our assessment 

of the availability of dental providers 

against the time and distance 

parameters finalized in the 2023 Letter 

to Issuers, HHS anticipates most SADPs 

and medical QHPs with embedded 

dental benefits will be able to meet the 

standards for dental providers. If a plan 

is still working to come into compliance 

with network adequacy standards, they 

will be able to use the justification 

process as needed. Consequently, as 

proposed, HHS will include dental as a 

specialty for which compliance with 

time and distance standards is assessed. 

Comment: Several commenters stated 

that facility-based providers, such as 

physical, occupational, speech, and 

behavioral health therapists, should not 

be included in the individual provider 

specialty list for time and distance since 

some issuers may contract at the facility 

level for those services. 

Response: For rehabilitation and 

behavioral health therapists, we 

understand that some issuers contract at 

the facility level rather than with 

individual providers. We have decided 

to include these providers on the 

individual provider list because many of 

these providers offer services in varied 

locations and may not be contracted 

with a single facility. 

Comment: Several commenters made 

requests related to the justification 

process for issuers that do not meet 

network adequacy standards, including 

requests for greater clarity on the 

process; requested that HHS adopt a 

justification process that mirrors 

Medicare Advantage’s approach to 

justifications; and requested that HHS 

ensure that justifications are not used in 


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lieu of issuers contracting with 

additional providers. 

Response: Issuers with network 

adequacy deficiencies will receive a 

partially pre-populated Network 

Adequacy Justification Form via the 

Plan Management (PM) Community and 

will need to submit the completed form 

to the PM Community by the required 

deadline. The justification process will 

require issuers that do not yet meet 

network adequacy standards detail: The 

reasons that one or more standards were 

not met; the mitigating measures the 

issuer is taking to ensure enrollee access 

to respective provider specialty types; 

information regarding enrollee 

complaints regarding network adequacy; 

and the issuer’s efforts to recruit 

additional providers. HHS will use any 

updated provider data submitted on its 

ECP/NA template and the completed 

Network Adequacy Justification Form 

submitted as part of the certification 

process to assess whether the issuer 

meets the regulatory requirement, prior 

to making the certification decision. 

HHS reviewed the Medicare 

Advantage exception process and made 

the QHP network adequacy justification 

process align where it made sense to do 

so. HHS has made some distinctions, 

like using a partially pre-populated 

Excel form with information on all 

needed corrections, rather than issuers 

having to complete a separate 

justification request for each county/ 

specialty/network combination for 

which deficiencies are required. The 

justification process for QHP network 

adequacy is designed to help an issuer 

demonstrate its progress toward greater 

compliance with the standards. HHS 

will partner with issuers and States to 

ensure that the justification process is 

not used in place of contracting with 

additional providers. 

Comment: Some commenters also 

requested that HHS clarify what 

provider and facility types count 

towards certain provider specialty 

categories, including dental providers 

and urgent care. Several commenters 

requested greater transparency regarding 

how compliance with time and distance 

standards would be calculated. 

Response: In response to requests for 

additional clarity, further details on 

which provider specialty types count 

towards each time and distance 

category; and how compliance with 

time and distance standards are 

calculated, such information will be 

made available through materials such 

as the QHP Application Instructions, the 

ECP/NA template, Frequently Asked 

Questions and the final PY 2023 Letter 

to Issuers. 

Comment: Several commenters 

expressed concern about county type 

designations. They requested that HHS 

develop parameters for updating county 

type designations; requested that HHS 

ensure that county type designations 

can accurately reflect counties with both 

rural and metropolitan areas; and 

encouraged HHS to monitor the 

functionality of county type 

designations across various types of 

States, to ensure meaningful provider 

availability. 

Some commenters shared other 

suggestions regarding potential 

additions to time and distance 

standards, including requiring issuers to 

contract with all ECPs in the service 

area when provider shortages prevent 

the issuer from meeting time and 

distance standards. A commenter also 

suggested HHS consider possible 

interventions like provider incentives or 

transportation programs to assist areas 

experiencing provider shortages. One 

commenter requested that HHS 

systematically test network adequacy 

data submission and require issuers to 

provide additional information, like outof-network claims data, to enhance 

HHS’ understanding of how consumers 

are experiencing QHP networks in 

practice. 

Response: HHS thanks commenters 

for their feedback regarding county type 

designations and possible additions to 

the time and distance requirements. 

HHS will need to further research these 

suggestions and their implications 

before considering them for future 

rulemaking. 

Comment: A commenter encouraged 

HHS to require issuers to make 

telehealth psychiatry services available 

when Advanced Practice Registered 

Nurses (APRNs) are counted towards 

the Outpatient Clinical Behavioral 

Health category regardless of whether 

they are psychiatric APRNs. 

Response: In the ECP/NA template, 

HHS will detail which taxonomy codes 

will crosswalk into each individual 

provider and facility specialty type. For 

Outpatient Clinical Behavioral Health, 

only psychiatric APRNs would count 

towards this provider type; other APRNs 

are not included. 

iii. Appointment Wait Times 

For the certification cycle for PYs 

beginning in 2023, HHS proposed to 

adopt appointment wait time standards 

to assess whether QHPs offered through 

the FFEs fulfill network adequacy 

standards applicable to plans that use a 

provider network. We proposed a short 

list of critical service categories for 

which appointment wait time standards 

would be assessed. The proposed 

provider specialty list for appointment 

wait time standards for PY 2023 is 

included below and is informed by prior 

Federal network adequacy requirements 

and consultation with stakeholders, 

including issuers and other Federal and 

State health care programs, such as 

Medicare Advantage and Medicaid. 

HHS proposed that the appointment 

wait time standards would apply to 

medical QHPs. For stand-alone dental 

plans (SADPs), only the dental provider 

specialty within the Specialty Care 

(Non-Urgent) category of appointment 

wait time standards would apply. To 

count towards meeting appointment 

wait time standards, providers listed in 

Table 16 must be appropriately 

licensed, accredited, or certified to 

practice in their State, as applicable, 

and must have in-person services 

available. 


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Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 27329 

314 2023 Letter to Issuers in the Federallyfacilitated Exchanges. CMS. (2022, January 7). 

https://www.cms.gov/files/document/2023-draftletter-issuers-508.pdf. 

315 2023 Letter to Issuers in the Federallyfacilitated Exchanges. CMS. (2022, January 7). 

https://www.cms.gov/files/document/2023-draftletter-issuers-508.pdf. 

316 Draft ECP/NA template: Essential Community 

Providers and Network Adequacy. CMS. https://

www.qhpcertification.cms.gov/s/ 

ECP%20and%20Network%20Adequacy. 

The specific appointment wait time 

parameters that plans would be required 

to meet, including specifications for 

individual provider and facility types, 

would be detailed in future guidance. 

These parameters would be informed by 

industry standards. Issuers applying for 

FFE QHP certification would need to 

attest that they meet these standards as 

part of the certification process. HHS 

proposed to conduct post-certification 

reviews to monitor compliance with 

these standards. These compliance 

reviews would occur in response to 

access to care complaints or through 

random sampling. 

Similar to the proposed justification 

process for time and distance standards, 

issuers that are unable to meet the 

appointment wait time standards would 

be able to submit a justification to 

account for variances. HHS would 

review such justifications to determine 

whether the variance(s) is/are 

reasonable based on circumstances, 

such as the local availability of 

providers and variables reflected in 

local patterns of care, and whether 

offering the plan through the FFE would 

be in the interest of qualified 

individuals and employers. We 

proposed to codify the network 

adequacy justification process in 

regulation at § 156.230. 

HHS sought comment on this 

proposal, including on the specialty list 

to which appointment wait time 

standards would apply, specific 

parameters for appointment wait time 

standards, and other ideas to strengthen 

network adequacy policy in future 

years, such as provider-enrollee ratios, 

provider demographics, and 

accessibility of services and facilities. 

We also sought comment on possible 

methods to collect and analyze claims 

data to inform future network adequacy 

standards and other aspects of QHP 

certification that impact health equity. 

We are finalizing this policy as 

proposed and delaying the 

implementation of network adequacy 

reviews for appointment wait time 

standards until PY 2024. 

We summarize and respond to public 

comments received on this policy 

below. 

Comment: Many commenters from a 

variety of stakeholders supported the 

proposal to institute appointment wait 

time standards to assess the adequacy of 

provider networks. Other commenters 

suggested additions to and refinement of 

the list of categories for appointment 

wait time standards. Some commenters 

requested that the Primary Care 

(Routine) category apply to routine 

dental services, such as cleanings. 

Several commenters requested that HHS 

create separate appointment wait time 

standards for different levels of urgency, 

such as routine, urgent, and emergent, 

as well as discharge follow-up. One 

commenter requested that HHS apply 

appointment wait time standards to all 

individual providers and facility types. 

Other commenters suggested separate 

appointment wait time categories for 

substance use disorder treatment 

services, oncology specialties, urgent 

care, family planning providers, and 

sexual health care providers. One 

commenter encouraged HHS to partner 

with patient groups to further refine 

appointment wait time standards. 

Response: HHS agrees that 

implementing quantitative appointment 

wait time standards for network 

adequacy has multiple benefits, 

including helping ensure that QHP 

enrollees have timely access to care. We 

appreciate the feedback suggesting 

additions to and refinement of the list 

of categories for appointment wait time 

standards. HHS may pursue additional 

strategies to evaluate the 

appropriateness of appointment wait 

time standards for a variety of provider 

types. HHS also may engage with 

consumer groups on this topic as 

suggested in public comment for future 

policymaking. HHS will further assess 

these suggestions and consider them for 

future rulemaking. 

Comment: Many commenters 

encouraged HHS to conduct additional 

oversight of provider networks 

throughout the year (outside of QHP 

certification), using strategies such as 

direct testing and monitoring of 

appointment wait times, to ensure 

enrollees have reasonable access to 

providers. One commenter requested 

that HHS consider providing funding for 

one entity in each State to conduct 

ongoing monitoring of appointment wait 

times. 

Response: HHS is investigating 

approaches to monitor network 

adequacy outside of the QHP 

certification process. We appreciate 

commenters’ suggestions on possible 

methods for additional oversight and 

will assess further prior to future 

rulemaking. 

Comment: Some commenters 

suggested that appointment wait time 

standards be calculated using business 

days instead of calendar days to align 

with NCQA standards, some State 

network adequacy standards, and 

common business practices. 

Response: Draft parameters for 

appointment wait time standards were 

detailed in the draft PY 2023 Letter to 

Issuers.314 HHS agrees that aligning 

appointment standards with NCQA and 

some State network adequacy standards 

by using business days instead of 

calendar days will help minimize the 

burden and is reasonable given that 

many providers operate using business 

days. This change will be finalized in 

the final PY 2023 Letter to Issuers. 

Comment: Some commenters opposed 

the implementation of the proposed 

appointment wait time standards, 

stating that the standards may be too 

dynamic, non-standardized, and beyond 

the control of issuers (and sometimes 

providers, particularly given the context 

of the COVID–19 pandemic). Some 

commenters expressed concern that the 

data collection required for the 

appointment wait time standards would 

be burdensome for issuers and 

providers, and they suggested possibly 

delaying the implementation of such 

standards to PY 2024 or beyond. 

Response: HHS acknowledges that 

some stakeholders have concerns about 

the appointment wait time standards 

and the timeline for their 

implementation, including that 

appointment wait time requirements are 

not standardized, can be challenging for 

issuers to improve, and that data 

collection would be too burdensome. In 

recognition of those concerns, we have 

made several accommodations to the 

implementation of this new provision to 

ease the transition to this new standard. 

As noted above, HHS is finalizing 

appointment wait time standards, but 

delaying their implementation until PY 

2024. HHS will also align the 

appointment wait time standards with 

appointment wait time standards used 

by NCQA and some States by using 

business days instead of calendar days. 

Regarding concerns that appointment 

wait time requirements are not 

standardized, specific draft parameters 

for appointment wait times are 

described in the draft PY 2023 Letter to 

Issuers 315 and will be finalized in the 

final PY 2023 Letter to Issuers. The ECP/ 

NA template 316 shows which provider 

types crosswalk into which 

appointment wait time categories. We 

believe that the appointment wait time 

parameters are reasonable based on 


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27330 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

317 2023 Letter to Issuers in the Federallyfacilitated Exchanges. CMS. (2022, January 7). 

https://www.cms.gov/files/document/2023-draftletter-issuers-508.pdf. 

318 Draft ECP/NA template: Essential Community 

Providers and Network Adequacy. CMS. https://

www.qhpcertification.cms.gov/s/ 

ECP%20and%20Network%20Adequacy. 

existing industry standards, such as 

those from NCQA and some States. 

Issuers that do not yet meet the 

appointment wait time standards, once 

implemented in PY 2024, can use the 

justification process to update HHS on 

the progress of their contracting efforts 

for the respective plan year. HHS will 

review such justifications to determine 

whether the variance(s) described is/are 

reasonable based on circumstances, 

such as the local availability of 

providers and variables reflected in 

local patterns of care, and whether 

offering the plan through the FFE would 

be in the interest of qualified 

individuals and employers. HHS 

understands that some issuers may not 

already collect appointment wait time 

data, which is one of the reasons we are 

delaying the implementation of this 

requirement until PY 2024. Issuers that 

are unable to meet the specified 

standards would be able to submit a 

justification to account for variances. 

Comment: Some commenters 

requested that SADPs either be exempt 

from compliance with appointment wait 

time standards or held to a lower 

compliance threshold than the 

threshold to which medical QHPs are 

held. 

Response: We appreciate the feedback 

suggesting that SADPs be exempt from 

appointment wait time standards or 

held to a lower compliance threshold. 

We do not agree that SADPs should be 

exempt from compliance with 

appointment wait time standards or 

have a lower threshold applied than for 

medical QHPs. HHS believes it is 

important that timely access to care is 

ensured, regardless of plan type. 

Additionally, medical QHPs that have 

embedded dental benefits will be held 

to the same appointment wait standards 

for dental providers as SADPs. The 

compliance threshold is detailed in the 

draft PY 2023 Letter to Issuers 317 and 

will be finalized in the final PY 2023 

Letter to Issuers. 

Comment: One commenter requested 

that HHS consider removing the 

requirement that providers have inperson services available to count 

towards these standards since some 

behavioral health providers only offer 

services via telehealth. 

Response: We are aware that some 

providers only offer services via 

telehealth. We acknowledge the growing 

importance of telehealth, and we want 

to ensure that telehealth services do not 

displace the availability of in-person 

care. Consequently, we are finalizing 

that, to count towards the standards, 

providers must have in-person services 

available. Providers that do not have inperson services available will not be 

counted when assessing appointment 

wait times. 

Comment: A commenter requested 

that appointment wait time standards 

should be overridden by provider 

assessment of when it would be 

appropriate for the enrollee to access 

care. 

Response: We appreciate the 

suggestion that appointment wait time 

standards should be overridden by 

provider assessment of when it would 

be appropriate for the enrollee to access 

care. We will further assess this idea 

prior to considering it for future 

rulemaking. 

Comment: A commenter requested 

that HHS allow issuers the opportunity 

to conduct outreach to providers and 

reassess appointment wait time 

measurement when they are not meeting 

the appointment wait time standards 

before any enforcement action would 

occur. 

Response: We acknowledge the 

commenter’s concern that issuers might 

be subject to enforcement action for not 

meeting appointment wait time 

standards without having the 

opportunity to come into compliance. 

HHS will work in partnership with 

issuers who are not yet meeting network 

adequacy standards and support their 

efforts to come into compliance as part 

of issuer compliance monitoring and 

workplans. 

Comment: Some commenters 

requested more clarity, such as what 

provider types are included in the 

behavioral health category for 

appointment wait time standards, and 

how appointment wait time standards 

apply to dental providers. Commenters 

also inquired as to whether the 

standards apply to appointments for 

existing patients, new patients, or both. 

Some commenters requested additional 

insight regarding methodological 

ambiguities related to the appointment 

wait time standards, including what 

period of time the standards will be 

based on, how the parameters of 

appointment wait time are defined, how 

to account for seasonality, and how to 

best validate this data. 

Response: The provider types that 

filter into the Behavioral Health 

category for appointment wait time 

standards will be detailed in the 

Taxonomy Codes tab of the ECP/NA 

template.318 For clarification on how 

appointment wait time standards apply 

to dental providers, all dental 

providers—general dentists and 

specialists—would be included in the 

Specialty Care category. Appointment 

wait time standards apply to both new 

and existing patients. In response to all 

other requests for additional clarity on 

the appointment wait time standards, 

including information on methodology, 

we will provide further information in 

the QHP Application Instructions, the 

ECP/NA template, Frequently Asked 

Questions, and the final PY 2023 Letter 

to Issuers. 

In the proposed rule, HHS solicited 

comments on other ideas to strengthen 

network adequacy policy in future years 

and other aspects of QHP certification 

that impact health equity. 

Comment: Several commenters 

suggested other ideas to strengthen and 

expand network adequacy policy in 

future years. Many commenters shared 

requests related to access to providers 

with certain competencies, skills, or 

specializations. Several commenters 

requested HHS consider standards that 

ensure a network provides an adequate 

supply of culturally and linguistically 

competent providers, and they 

requested that HHS have QHPs collect 

and display languages spoken by 

providers and their staff. Some 

commenters requested that HHS require 

that QHPs ensure access to providers 

who serve enrollees with rare, complex, 

or chronic health conditions, and 

providers who are culturally competent 

to serve LGBTQ+ individuals. 

We received several comments 

requesting that we consider a 

requirement for QHPs to track the 

number of providers accepting new 

patients throughout the year, and one 

request to have QHPs collect 

information on provider hours of 

operation. Some commenters requested 

that HHS collect and share data on 

provider demographics and report 

provider accessibility by public transit. 

Some commenters suggested 

provider-enrollee ratios as an additional 

network adequacy standard to consider 

for future rulemaking. Several 

commenters were in favor of HHS 

developing unique standards for 

pediatric specialty providers and 

implementing enrollee ratios by 

specialty, geographic accessibility, and 

population density. Some commenters 

also requested that HHS define 

minimum appropriate provider 

standards to meet the needs of children 

with special health care needs as well 

as of diverse cultural, ethnic, and 


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Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 27331 

319The Consolidated Appropriations Act, 2021 

(CAA) was enacted on December 27, 2020 and 

includes Title I (No Surprises Act) in Division BB. 

320Section 9818 of the Code, section 718 of 

ERISA, and sections 2799A–3 and 2799B–8 of the 

PHS Act, as added by section 113 of division BB 

of the Consolidated Appropriations Act, 2021 

(CAA) establish continuity of care protections in 

instances when terminations of certain contractual 

relationships result in changes in provider or 

facility network status. The Departments of HHS, 

Labor and Treasury have announced that until 

rulemaking is completed to fully implement these 

provisions, plans, issuers, providers, and facilities 

are expected to implement the requirements using 

a good faith, reasonable interpretation of the statute. 

See FAQs about Affordable Care Act and 

Consolidated Appropriations Act, 2021 

Implementation Part 49, https://www.cms.gov/ 

CCIIO/Resources/Fact-Sheets-and-FAQs/ 

Downloads/FAQs-Part-49.pdf. 

linguistic backgrounds. One commenter 

suggested HHS consider requiring 

issuers to report on the number of 

psychiatric providers and outpatient 

clinical behavioral health providers who 

have billed for services within a certain 

timeframe. Other commenters requested 

HHS measure the availability of 

integrated behavioral health in primary 

care. 

Commenters encouraged the 

consideration of requiring issuers to 

report data by race and ethnicity on the 

population living in geographic areas 

that do not have access to providers 

within travel time and distance 

standards. Another commenter 

requested that HHS include auxiliary 

aids and services for people with 

disabilities, as well as data on the 

accessibility of all providers and 

facilities, in future network adequacy 

standards. One commenter requested 

that quality rating system measures be 

tied to network adequacy standards. 

Another commenter requested that 

provider non-discrimination policies be 

included in future rulemaking. 

Response: HHS appreciates the 

suggestions on potential ways to 

enhance and grow network adequacy 

standards in the future. We will further 

assess these ideas prior to considering 

them for future rulemaking. 

Comment: HHS also received 

numerous comments regarding 

suggestions for future rulemaking 

related to consumer protections. Many 

commenters requested further clarity on 

how QHPs can ensure enrollees can 

access care when not available innetwork for their specific needs, which 

would include covering out-of-network 

providers at in-network cost sharing 

rates if a qualified provider is not 

available within the network or at the 

lowest cost-sharing tier. Some 

commenters also requested a clear 

complaint process for enrollees to report 

network adequacy issues. HHS received 

a comment requesting that QHP issuers 

be required to pay for interpretation 

services and auxiliary aids for 

contracted providers. Another 

commenter requested that HHS detail 

the actions that are taken when QHPs 

fail to meet network adequacy 

standards. Some comments received 

requested HHS consider the 

implications of MHPAEA on network 

adequacy standards. 

Response: HHS appreciates the 

suggestions on potential ways to 

strengthen consumer protection through 

enhanced network adequacy standards 

in the future. We will further assess 

these ideas prior to considering them for 

future rulemaking. 

Comment: HHS received some 

suggestions related to provider 

availability, such as requirements for 

issuers to provide reasonable notice of 

terminations of a provider’s in-network 

status and allowing the ability for 

enrollees to change plans when provider 

availability in a network changes 

significantly. 

Response: We acknowledge the 

suggestions related to provider 

availability, such as requirements for 

the issuer to provide reasonable notice 

of provider terminations. These 

recommendations also implicate 

provisions enacted in sections 113 and 

116 of the No Surprises Act.319 These 

provisions of No Surprises Act establish 

continuity of care protections 320 in 

instances when terminations of certain 

contractual relationships result in 

changes in provider or facility network 

status and establish standards intended 

to protect participants, beneficiaries, 

and enrollees, such as a protocol for 

responding to requests about a 

provider’s network participation status. 

HHS, along with the Departments of 

Labor and the Treasury, intends to issue 

future rulemaking or guidance to further 

implement those provisions, and will 

take these comments into account in 

developing such materials. 

Comment: Some commenters shared 

feedback regarding the network breadth 

pilot, including both concern and 

support. HHS received some comments 

expressing that the network breadth 

pilot should not be continued in its 

current State. One commenter shared 

that the network breadth pilot is made 

more useful to consumers by using the 

actual percent participation value, 

prohibiting issuers from marketing 

plans based on the breadth categories, 

and allowing issuers to submit network 

adequacy data on machine-readable 

files. Some comments suggested that the 

network breadth methodology and 

labels be clarified as they can be 

confusing to consumers. HHS received 

one comment asking that the 

methodology be modified so that 

providers are not excluded based on 

taxonomies in the National Plan & 

Provider Enumeration System (NPPES) 

and that special types of PCPs are more 

appropriately documented. Some 

comments expressed support for the 

continuation of the network breadth 

pilot with its current labels. 

Response: Although these comments 

were not within the scope of HHS’ 

proposals on network adequacy 

presented in the proposed rule, HHS 

appreciates the comments received 

regarding the network breadth pilot. We 

will consider the above suggestions for 

future rulemaking after further 

assessment. 

iv. Tiered Networks 

HHS proposed that, for plans that use 

tiered networks, to count toward the 

issuer’s satisfaction of the network 

adequacy standards, providers must be 

contracted within the network tier that 

results in the lowest cost -sharing 

obligation. For example, a QHP issuer 

cannot use providers contracted with 

their PPO network when certifying a 

plan using their HMO network, if the 

use of PPO network providers would 

result in higher cost-sharing obligations 

for the HMO plan enrollees. For plans 

with two network tiers (for example, 

participating providers and preferred 

providers), such as many PPOs, where 

cost sharing is lower for preferred 

providers, only preferred providers 

would be counted towards network 

adequacy standards. We proposed to 

codify the network tiering requirement 

for network adequacy in regulation at 

§ 156.230. 

Network adequacy standards are 

tailored to ensure QHP enrollees have 

reasonable access to a sufficient number 

and type of providers to meet their 

health care needs. HHS is aware of 

instances in which issuers have 

attempted to satisfy QHP certification 

requirements related to networks, such 

as ECP standards, using providers that 

would require enrollees to pay higher 

cost sharing. We sought to ensure that 

QHP enrollees have access to networks 

with sufficient numbers and types of 

providers without the imposition of a 

higher cost-sharing requirement. 

After considering commenter 

concerns that the policy could unduly 

restrict plan network designs and 

innovation, we have decided not to 

finalize this policy. While we continue 

to believe this proposal has potential 

consumer protection benefits and would 

promote greater cost-sharing 

affordability, further research is 

warranted to evaluate the potential 


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27332 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

benefits and drawbacks of requiring 

providers to be contracted within the 

network tier that results in the lowest 

cost-sharing obligation in order for those 

providers to be counted towards 

satisfaction of the network adequacy 

standards. 

We summarize and respond to public 

comments received on this policy 

below. 

Comment: HHS received numerous 

comments in support of the proposal 

that for plans that use tiered networks, 

to count towards network adequacy 

standards, providers must be contracted 

within the network tier that results in 

the lowest cost-sharing obligation. 

However, several commenters broadly 

opposed or cautioned against the lowest 

cost-sharing tier requirement, citing 

concerns that it would restrict the 

success of network innovation 

strategies, such as value-based steering 

and contracting arrangements, or 

encourage issuers to remove the lowest 

cost-sharing tier entirely. 

Response: We agree with commenters 

who supported the proposal as we 

concur that the proposal could help 

ensure that network adequacy standards 

provide reasonable access to care and 

help enhance health equity by enabling 

enrollees to access care at the lowest 

cost-sharing rate. Notwithstanding, we 

understand commenters’ concerns that 

finalization of this policy could 

inadvertently restrict innovation and the 

issuers’ ability to design and implement 

plan networks across all Exchange 

plans, which may result in decreased 

cost sharing for enrollees and decreases 

in overall health care costs. While we 

believe this proposal has potential 

benefits to consumer protection and 

affordability for cost sharing, we believe 

further research on the potential 

benefits and drawbacks is warranted 

prior to finalizing such a proposal. 

Comment: One commenter suggested 

that a lower-cost virtual primary care 

option should not be considered a 

‘‘lowest tier.’’ 

Response: While we are not finalizing 

this proposal regarding network tiering, 

we will consider this suggestion for 

future rulemaking. 

Comment: Another commenter 

expressed that the network tiering 

requirement would not be appropriate 

for SADPs as tiered networks are 

uncommon for this plan type. 

Response: We acknowledge that 

network tiers may be less common 

among SADPs. While we are not 

finalizing this proposal, we do not agree 

that any future network tiering 

requirements should not apply to 

SADPs—they simply would not be 

relevant for the particular QHPs 

(medical or SADPs) that do not use 

network tiers. 

v. Telehealth Services 

HHS proposed to require all issuers 

seeking certification of plans to be 

offered as QHPs through the FFEs to 

submit information about whether 

network providers offer telehealth 

services. HHS proposed that this 

requirement would be applicable 

beginning with the QHP certification 

cycle for PY 2023. We believe this 

information could be relevant to HHS’ 

analysis of whether a QHP meets 

network adequacy standards. For PY 

2023, this data would be for 

informational purposes; it would be 

intended to help inform the future 

development of telehealth standards 

and would not be displayed to 

consumers. Issuers should not construe 

this proposal to mean that telehealth 

services could be counted in place of inperson service access for the purpose of 

network adequacy standards. 

HHS sought comment on this 

proposal, including comments on how 

HHS might incorporate telehealth 

availability into network adequacy 

standards in future PYs. We specifically 

sought comment on whether HHS 

should consider aligning the FFE 

network adequacy standards with 

Medicare Advantage’s telehealth 

approach in which issuers are offered a 

credit for meeting time and distance 

standards. 

We are finalizing this policy as 

proposed. 

We summarize and respond to public 

comments received on this policy 

below. 

Comment: Commenters expressed 

widespread support regarding the 

proposal to require issuers to identify 

which of their in-network providers 

offer telehealth services. Commenters 

also suggested additional telehealth 

information to consider collecting, like 

the availability of tele-mental health 

services and audio-only services, as well 

as tracking prescription digital 

therapeutics. 

Response: HHS appreciates the 

comments received in support of the 

requirement for QHPs to report whether 

their in-network providers offer 

telehealth services. We agree that this 

data collection will be relevant to HHS’ 

analysis of whether a QHP meets 

network adequacy standards and will 

help inform the future development of 

telehealth standards. We appreciate the 

suggestions regarding additional 

telehealth-related information that HHS 

could collect and will consider this for 

future rulemaking. 

Comment: Some commenters 

requested that HHS either not require 

issuers to report telehealth service 

availability or delay the implementation 

of this requirement. These commenters 

expressed concern that collecting and 

reporting telehealth capability would be 

overly burdensome for issuers and 

premature given the evolving nature of 

telehealth. One commenter suggested 

that telehealth data collection be 

delayed until a Federal database of 

provider telehealth availability is 

created. Several commenters requested 

that HHS minimize the burden related 

to telehealth data collection as much as 

possible, including one who suggested 

that State-level efforts might be able to 

be repurposed to gather this 

information. Some commenters stated 

that telehealth data collection and 

reporting is not appropriate for SADPs 

since telehealth is a newer modality for 

dental providers and the data collection 

and reporting may not lead to helpful 

insights at this time. One commenter 

suggested that HHS should incentivize 

QHPs to increase telehealth availability 

among their contracted providers as a 

benefit design rather than through 

network adequacy requirements. 

Response: We understand some 

commenters are concerned about the 

implementation of telehealth data 

collection, including the timeline, due 

to the increased burden for issuers and 

that telehealth services are still 

evolving. HHS acknowledges that some 

commenters believe telehealth data 

collection is not appropriate for SADPs 

at this time due to the newness of teledentistry. We recognize that some QHPs 

may not have data available on whether 

their contracted providers offer 

telehealth and that for those QHPs, this 

data collection may result in an 

increased burden. Simultaneously, we 

understand that some QHPs may 

already have this information available 

through sources like provider surveys or 

claims data. While telehealth services 

continue to evolve for many specialties, 

including dental providers, we believe 

that collecting telehealth availability 

data at this point in time will provide 

key insights that can influence future 

policy development, and that these 

benefits outweigh the associated 

potential burden for some QHPs. We 

will work to minimize the burden where 

possible, like by providing technical 

assistance to issuers and allowing 

issuers flexibility with what methods 

they use to collect telehealth data. 

Comment: Many commenters 

expressed that more research is needed 

to understand whether and how to 

count telehealth providers towards 

network adequacy standards. Numerous 


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commenters identified additional 

considerations for incorporating 

telehealth into network adequacy 

standards, such as inequities for rural 

and low-income providers, health plan 

location, broadband access, and 

variation in types and requirements of 

telehealth between providers and States. 

These commenters also emphasized that 

the appropriateness of telehealth should 

be a decision made between the patient 

and provider and that telehealth should 

not expand at the expense of available 

in-person care. 

Several commenters shared 

suggestions with HHS regarding 

possible additional requirements related 

to telehealth services. Some commenters 

requested that we consider offering a 

telehealth credit for network adequacy 

standards, similar to Medicare 

Advantage. Some commenters stated 

telehealth standards and policies should 

ensure access to culturally, 

linguistically competent providers who 

can serve consumers with disabilities 

and should also increase access in lowincome and geographically remote 

regions. One commenter encouraged 

HHS to adopt a separate national 

network adequacy standard for 

telehealth providers. Some commenters 

requested that HHS ensure telehealth 

information is reported promptly and 

that telehealth information is included 

in provider directories. One commenter 

suggested that HHS consider requiring 

QHPs to contract with telehealth 

services in areas where there are 

shortages of in-person providers. 

Response: We concur with the 

recommendations from commenters that 

more research is needed before HHS 

could consider incorporating the 

availability of telehealth services into 

network adequacy policy for QHPs, 

such as a telehealth credit like Medicare 

Advantage. We also agree that telehealth 

services should be made available in 

addition to, rather than instead of, inperson care. HHS appreciates the 

suggestions received regarding 

additional requirements for telehealth 

services and other telehealth-related 

information that HHS could collect from 

QHPs. We will consider this 

information for future rulemaking. We 

thank commenters for their ideas about 

other ways to collect telehealth data, 

like a partnership with States, through 

a Federal database on telehealth or 

encouraging telehealth services through 

other means. We will consider these 

ideas for future rulemaking. 

vi. Solicitation of Comments— 

Unintended Impacts of Stronger 

Network Adequacy Standards 

HHS is of the view that the network 

adequacy standards we included in the 

proposed rule are reasonable, necessary, 

and appropriate to ensure that QHPs 

enrollees have the access to the innetwork providers the ACA requires. 

We acknowledge, however, that there is 

some risk that stronger network 

adequacy standards could be leveraged 

to create an uneven playing field in 

network agreement negotiations that 

could result in higher health care costs 

for consumers. We are also interested in 

exploring rules and policies that would 

promote competition, taking into 

consideration the interests of issuers, 

providers, and consumers by limiting 

the potential that network adequacy 

standards may be used by parties to 

network agreements as leverage to 

obtain more favorable contract terms, 

leading to higher health care costs for 

consumers. 

We sought comment on ways that 

HHS could help stem the use of all-ornothing contracts that may drive up 

health care costs for consumers; how 

issuers can use provider networks to 

drive costs down; and what impact allor-nothing contracting has on enrollees, 

plans, providers, and the market. 

We summarize and respond to the 

comments received below. 

Comment: Numerous commenters 

expressed diverse viewpoints regarding 

potential unintended impacts of 

stronger network adequacy standards. 

Several commenters expressed their 

belief that stronger network adequacy 

standards would not impact contracting 

negotiations between issuers and 

providers. Two commenters shared 

concerns that the proposed network 

adequacy standards could 

disproportionately harm smaller QHP 

issuers and reduce market competition. 

A commenter expressed apprehension 

that appointment wait time standards 

could be codified in provider 

contracting agreements and particularly 

harm providers that are in highest 

demand. Another commenter stated that 

the stronger network adequacy 

standards could help mitigate declining 

provider reimbursement rates. One 

commenter encouraged consideration of 

a requirement for issuers to offer at least 

one QHP Statewide for each metal level 

at which they offer coverage to mitigate 

the risk of network adequacy standards 

disincentivizing QHP issuers from 

offering plans in rural counties. HHS 

received another comment asking us to 

consider potential cost implications of 

including specialized cancer providers 

in network adequacy requirements. 

Some commenters requested that HHS 

not enact prohibitions against all-ornothing contract clauses or steerage 

prohibitions, sharing concerns that such 

policies could limit enrollee access to 

providers. Another commenter 

encouraged HHS to consider regulation 

to eliminate all-or-nothing contract 

clauses, while a separate commenter 

expressed that they did not anticipate 

prohibition of all-or-nothing contract 

clauses would sufficiently protect plans 

from unintended consequences of 

network adequacy standards. One 

commenter suggested that any future 

regulation regarding restrictions on 

contracting terms should only be 

applied to provider types that would 

benefit from the network adequacy 

standards. One commenter shared that 

they had experienced regional struggles 

with all-or-nothing contract clauses in 

the context of QHPs and offered a 

further discussion on what they learned. 

Response: HHS understands that 

stakeholders have a variety of opinions 

regarding the impact of stronger 

network adequacy standards, as well as 

all-or-nothing contracting clauses. We 

appreciate the feedback received and 

will consider it in future rulemaking. 

vii. Solicitation of Comments—Network 

Adequacy in State Exchanges 

HHS is interested in learning more 

about network adequacy in States with 

State Exchanges. HHS understands that 

State Exchanges have a mix of network 

adequacy policies in place, and that 

about 75 percent of those States have at 

least one quantitative standard for time 

and distance, appointment wait times, 

or both. While the new proposed 

network adequacy standards for QHP 

issuers in FFEs differ from those in State 

Exchanges, HHS was not inclined to 

propose additional regulations that 

specifically target network adequacy 

reviews for QHP issuers in State 

Exchanges, and we are not inclined to 

propose regulating network adequacy 

for State Exchanges at this time. 

However, we considered whether there 

is a need for greater alignment in FFE 

and State Exchange network adequacy 

standards. 

HHS sought comment on whether a 

more coordinated, national approach to 

network adequacy rules across all 

Exchanges that is suited to address 

contemporary conditions in the health 

care markets is needed. For example, we 

sought comment on whether in future 

PYs, HHS should consider imposing 

network adequacy rules in FFEs and 

State Exchanges that would be intended 

to increase the standardization of 


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network adequacy across the Exchanges. 

Moreover, we sought comment on 

specific measures to support such 

standardization to ensure that all 

Exchange enrollees can access the 

benefits and services under their plans 

as required by the ACA. We further 

sought comments that identify specific 

gaps in provider accessibility that exist 

under disparate State Exchange network 

adequacy standards that might be 

addressed through greater Federal 

regulation of network adequacy 

standards across all Exchanges. 

We summarize and respond to the 

comments received below. 

Comment: Commenters had mixed 

feedback on whether HHS should 

regulate network adequacy for all 

Exchanges, including setting standards 

and conducting reviews for QHPs in 

State Exchanges. Many commenters 

requested that regulators of State 

Exchanges be allowed to continue using 

their network adequacy standards and 

conducting their reviews. Some 

commenters suggested that HHS direct 

State network adequacy reviews, rather 

than conducting separate Federal 

reviews, to avoid duplication since 

some States have mandates to review 

network adequacy. Some commenters 

emphasized the importance of having 

only one applicable set of network 

adequacy standards per State. One 

commenter suggested that Federal 

network adequacy standards are not 

needed, as they stated was evidenced by 

high consumer satisfaction and 

consumer selection of narrow network 

plans. Many commenters requested that 

HHS extend Federal network adequacy 

standards to State Exchanges in future 

rulemaking. Several commenters 

suggested that State alignment with 

Federal standards would be ideal, and 

that Federal standards should offer a 

strong floor that all States must meet. 

Response: We appreciate the 

comments received and understand that 

there are diverse opinions regarding the 

appropriate regulator for network 

adequacy standards in State Exchanges. 

HHS will monitor existing network 

adequacy standards in State Exchanges 

relative to the Federal standards 

finalized in this rule and will consider 

whether application to State Exchanges 

in future PYs is warranted. 

12. Essential Community Providers 

(§ 156.235) 

Essential community providers (ECPs) 

include providers that serve 

predominantly low-income and 

medically underserved individuals, and 

specifically include providers described 

in section 340B(a)(4) of the PHS Act and 

section 1927(c)(1)(D)(i)(IV) of the Social 

Security Act. The ECP categories 

include family planning providers, 

Indian health care providers, Federally 

Qualified Health Centers, hospitals, 

Ryan White providers, and other ECP 

providers. QHP issuers must include a 

sufficient number and geographic 

distribution of ECPs in their networks, 

where available. Section 156.235 

establishes the requirements for the 

inclusion of ECPs in QHP provider 

networks and provides an alternate 

standard for issuers that provide a 

majority of their covered professional 

services through physicians employed 

directly by the issuer or a single 

contracted medical group. 

In assessing the appropriate PY 2023 

ECP standard for medical QHP and 

SADP QHP certification, HHS has 

considered multiple options for 

strengthening our ECP policy. After 

careful consideration, HHS proposed 

the approaches described below. States 

performing plan management functions 

in the FFEs would be permitted to use 

a similar approach. 

Section 156.235(a)(2)(i) provides that 

a plan has a sufficient number and 

geographic distribution of ECPs if it 

demonstrates, among other criteria, that 

the network includes as participating 

practitioners at least a minimum 

percentage, as specified by HHS, of 

available ECPs in the plan’s service area. 

HHS proposed that for PY 2023 and 

beyond, the required ECP provider 

participation standard be raised from 20 

percent to 35 percent of available ECPs 

based on the applicable PY HHS ECP 

list, including approved ECP write-ins 

that would also count toward a QHP 

issuer’s satisfaction of the 35 percent 

threshold. HHS would consider a plan 

to have satisfied the regulatory standard 

if the issuer contracts with at least 35 

percent of available ECPs in each plan’s 

service area to participate in the plan’s 

provider network, in addition to 

satisfying the contract offering 

requirements described in 

§ 156.235(a)(2)(ii) that require a plan to 

offer a contract to at least one ECP in 

each of the available ECP categories in 

each county in the plan’s service area 

and offer a contract to all available 

Indian health care providers in the 

plan’s service area. The calculation 

methodology outlined in the 2018 Letter 

to Issuers in the Federally-facilitated 

Marketplaces and 2018 Payment Notice 

would remain unchanged for issuers 

offering plans with a provider network. 

In developing this proposal, HHS 

considered that when the ECP threshold 

was 30 percent in PYs 2015–2017, all 

QHP issuers satisfied the 30 percent 

threshold with minimal reliance on ECP 

write-ins and justifications. HHS 

anticipates that any QHP issuers falling 

short of the 35 percent threshold for PY 

2023 could satisfy the standard by using 

ECP write-ins and justifications. As in 

previous years, if an issuer’s application 

does not satisfy the ECP standard, the 

issuer would be required to include as 

part of its application for QHP 

certification a satisfactory justification 

describing how the issuer’s provider 

networks, as presently constituted, 

provides an adequate level of service for 

low-income and medically underserved 

individuals and how the issuer plans to 

increase ECP participation in the 

issuer’s provider network(s) in future 

years. At a minimum, such justification 

must include the number of contracts 

offered to ECPs for PY 2023, the number 

of additional contracts an issuer expects 

to offer and the timeframe of those 

planned negotiations, the names of the 

specific ECPs to which the issuer has 

offered contracts that are still pending, 

and contingency plans for how the 

issuer’s provider network, as currently 

designed, will provide adequate care to 

enrollees who might otherwise be cared 

for by relevant ECP types that are 

missing from the issuer’s provider 

network. 

HHS also proposed that, for plans that 

use tiered networks, to count toward the 

issuer’s satisfaction of the ECP standard, 

ECPs must be contracted within the 

network tier that results in the lowest 

cost sharing obligation. For example, a 

QHP issuer cannot use the number of 

ECPs contracted with their PPO network 

when certifying a plan using their HMO 

network if the use of PPO network 

providers would result in higher cost 

sharing obligations for HMO plan 

enrollees. For plans with two network 

tiers (for example, participating 

providers and preferred providers), such 

as many PPOs, where cost sharing is 

lower for preferred providers, only the 

preferred network would be counted 

towards ECP standards. We proposed to 

codify the network tiering requirement 

for satisfying the ECP standard in 

regulation at § 156.235. 

Additionally, for PY 2023 and 

beyond, HHS proposed that issuers 

could comply with the requirement at 

§ 156.235(a)(2)(ii)(B) to offer contracts to 

at least one ECP in the category of 

‘‘other ECP providers’’ by offering a 

contract to a Substance Use Disorder 

Treatment Center. These facilities are 

critical to HHS’ efforts to ensure that 

low-income, medically underserved 

individuals have sufficient access to this 

EHB. We also considered making nonsubstantive revisions to § 156.235, 

which requires QHPs to offer contracts 

to at least one ECP in each of the ECP 

categories, to improve readability and 


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clarity, and to more closely reflect how 

Exchanges may operationalize this 

requirement. For example, the 

regulation text presently does not 

include language that specifically 

identifies which providers may fit the 

category of ‘Other ECP Providers.’ We 

solicited comments on whether 

clarifying revisions are necessary and on 

how best to clarify this requirement in 

the regulation text. 

In addition to these proposed 

changes, HHS sought comment on 

whether and how QHP issuers should 

increase the use of telehealth services as 

part of their contingency planning to 

ensure access to adequate care for 

enrollees who might otherwise be cared 

for by relevant ECP types that may be 

missing from the issuer’s provider 

network. We also sought comment on if 

we should consider adding newly 

Medicare-certified Rural Emergency 

Hospitals to our Hospitals ECP category. 

These proposed changes are 

consistent with the directive from E.O. 

13985. HHS anticipates positive health 

equity impact as we believe these 

changes will increase access to quality, 

relevant health care for low-income and 

medically underserved individuals. 

HHS sought comment on these 

proposals, including from ECPs and 

issuers serving low-income and 

medically underserved populations. 

HHS also sought comment on ideas for 

further strengthening ECP policy. 

After reviewing the public comments, 

we are finalizing all provisions as 

proposed. Additionally, in response to 

comments we solicited on whether and 

how to clarify the ‘‘Other ECP 

Providers’’ requirement, we have 

amended the regulatory text at 

§ 156.235(a)(2)(ii)(B) to clearly define 

the ‘‘Other ECP Providers’’ category, as 

follows: 

At least one ECP in each of the six (6) 

ECP categories 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. The 

ECP categories are Federally Qualified 

Health Centers, Ryan White Program 

Providers, Family Planning Providers, 

Indian Health Care Providers, Inpatient 

Hospitals, and Other ECP Providers. The 

Other ECP Providers category includes 

the following types of providers: 

Substance Use Disorder Treatment 

Centers, Community Mental Health 

Centers, Rural Health Clinics, Black 

Lung Clinics, Hemophilia Treatment 

Centers, Sexually Transmitted Disease 

Clinics, and Tuberculosis Clinics. 

We summarize and respond to public 

comments received on essential 

community providers (§ 156.235) below. 

Comment: The majority of 

commenters supported increasing the 

required ECP participation standard 

from 20 percent to 35 percent of 

available ECPs in the plan’s service area 

that are included within the applicable 

plan year HHS ECP list, citing expanded 

access to health care for vulnerable 

populations and improved health 

equity. Several of these commenters 

indicated that HHS should require 

QHPs to demonstrate that they can meet 

the 35 percent participation threshold in 

all ECP categories, or in specific 

categories such as Substance Use 

Disorder Treatment Centers, Ryan White 

providers, hospitals, and each 

subcategory of ‘‘Other ECP Providers’’; 

while other commenters suggested that 

HHS implement an ‘‘any willing 

provider’’ standard. 

Response: We are finalizing the 

required ECP participation standard at 

35 percent as proposed. Many 

commenters, including providers, 

provider associations, and consumer 

advocacy groups, supported the 

proposal to raise the ECP participation 

standard from 20 percent to 35 percent. 

In response to suggestions that HHS 

require QHPs to contract with 35 

percent of the ECPs as applied to each 

of the specific categories of ECPs, HHS 

continues to require QHPs to contract 

with at least one ECP within each of the 

six ECP categories in each county in the 

issuer’s service area and believes the 

current approach better ensures 

geographic distribution of such ECPs in 

each of the six ECP categories across the 

issuer’s service area than applying the 

35 percent threshold to each of the six 

ECP categories would achieve. 

Regarding commenters’ 

recommendations that HHS apply a 35 

percent threshold standard to each of 

the six ECP categories and/or implement 

an ‘‘any willing provider’’ standard, 

HHS recognizes that issuer network 

participation negotiations are a tool that 

issuers use to manage costs, which are 

generally reflected in lower premium 

rates. Reducing issuers’ ability to limit 

the scope of their networks could 

eliminate that cost management tool and 

potentially cause premiums to increase 

substantially; therefore, we do not 

support these recommendations at this 

time. 

Comment: While agreeing with the 

proposed increase to 35 percent, 

numerous commenters cautioned 

against a one-size-fits-all approach to 

ensure there are enough ECPs in all 

networks. Some commenters stated that 

a fixed percentage for all QHPs may not 

be sufficient to achieve the desired goal 

due to geographic areas varying in 

demographic composition, including 

the difficulty of meeting the 35 percent 

participation standard in rural areas. 

Some commenters stated that this 

standard could deter issuers from 

entering service areas with few ECPs. 

Response: In response to concerns 

raised about potential difficulties 

meeting the increased standard in rural 

areas and other geographic areas that 

vary in demographic composition that 

can lead to the presence of few ECPs, 

section 1311(c)(1)(C) of the Affordable 

Care Act requires that a QHP’s network 

include ECPs, where available, that 

serve predominantly low income and 

medically-underserved populations. We 

reflect this in our regulations by 

permitting issuers that cannot meet the 

contracting standards to satisfy the QHP 

certification standard by submitting a 

justification. Therefore, the standard 

does not penalize issuers that cannot 

meet the ECP standard because of a lack 

of certain types of ECPs within a service 

area. 

Comment: Several commenters 

opposed the increase of the required 

ECP provider participation standard 

from 20 percent to 35 percent of 

available ECPs in the plan’s service area 

included within the applicable plan 

year HHS ECP list. These commenters 

expressed concern about the increased 

administrative burden and cost that the 

raised threshold would place on issuers 

and providers. A few commenters 

pointed out unintended negative 

consequences that could arise from the 

increased standard, including price 

increases for consumers. Some 

commenters recommended delaying any 

threshold increase until the 2024 plan 

year or implementing a more moderate 

increase for the 2023 plan year, from 20 

to 25 percent, to account for this 

increased burden. 

Response: Regarding commenters’ 

concerns about the increase of the ECP 

threshold to 35 percent, we do not 

anticipate the majority of issuers having 

difficulty meeting the increased 

standard. For the plan year 2021, the 

percentage of medical and dental FFE 

issuers that could have satisfied a 35 

percent ECP threshold was 80 percent 

and 74 percent, respectively; while the 

mean and median ECP contracting 

percentage across all FFE issuers was 55 

percent and 54 percent, respectively. 

Given that during the 2015–2017 plan 

years, all issuers satisfied the 30 percent 

standard when permitted to supplement 

their QHP applications with ECP writeins and justifications, CMS anticipates 

that any issuers falling shy of the 35 

percent threshold for the 2023 plan year 

could satisfy the standard by relying on 

these same methods of compliance. 

Given issuers’ success with meeting the 


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30 percent standard in previous plan 

years, HHS believes that the 35 percent 

standard will provide both issuers and 

providers with sufficient flexibility to 

negotiate contract terms that do not lead 

to increased prices for consumers. 

Accordingly, as we do not anticipate 

that compliance with this increased 

threshold will be too large a burden for 

issuers to meet for plan year 2023, we 

decline to delay implementation. 

Comment: The majority of 

commenters supported the proposal to 

require QHPs with tiered networks to 

meet the ECP threshold in the lowest 

cost-sharing tier. One commenter noted 

that plans’ preferred tiers often have 

providers that agree to accept more 

favorable rates and provide additional 

services such as coordinating care. The 

commenter stated that such plans 

should not be placed at a disadvantage 

for placing ECPs on a second general 

tier with providers that do not offer 

additional services. 

Response: We are finalizing this 

provision as proposed. We intend to 

monitor consumer complaints regarding 

any potential disadvantages that could 

result from this requirement; however, 

we anticipate the benefit of the lowest 

cost-sharing tier requirement for lowincome, medically underserved 

consumers, such as ensuring that these 

consumers can access an ECP provider 

offering essential health benefits 

through more affordable cost-sharing, to 

outweigh any disadvantages incurred by 

plans due to their choice of tiering 

structure. 

Comment: In response to HHS’ 

solicitation for comments on clarifying 

which providers may fit the category of 

‘‘Other ECP Providers’’ in the regulatory 

text, two commenters recommended 

that HHS define the ECP category of 

‘‘Other ECP Providers’’ in the regulatory 

text. Numerous commenters supported 

the addition of ‘‘Substance Use Disorder 

Treatment Centers’’ to the ‘‘Other ECP 

Providers’’ ECP category, including 

provider associations and advocacy 

groups. One commenter opposed the 

addition of Substance Use Disorder 

Treatment Centers to the ‘‘Other ECP 

Providers’’ ECP category, citing 

variability in the quality, oversight and 

services provided at such centers; 

another commenter noted HHS should 

explore how it will define ‘‘substance 

use treatment centers’’ and allow 

stakeholders additional time to 

comment prior to adding to the ‘‘Other 

ECP Providers’’ ECP category. 

Response: In response to these 

comments recommending that we 

clarify the meaning of the ECP category 

of ‘‘Other ECP Providers,’’ we are 

amending § 156.235(a)(2)(ii)(B), as 

referenced in the preamble. The 

provider types that we have included in 

the ECP category of ‘‘Other ECP 

Providers’’ reflect, for the most part, 

those that have been listed within this 

ECP category in the Letter to Issuers in 

previous years and with whom many 

issuers have already been including in 

their provider networks. The only new 

provider type that we are adding to this 

ECP category of ‘‘Other ECP Providers’’ 

is Substance Use Disorder Treatment 

Centers. We are adding Substance Use 

Disorder Treatment Centers to the ECP 

category of ‘‘Other ECP Providers’’ as 

proposed. HHS will rely on the 

Substance Use Treatment Locator 

(https://findtreatment.gov/) made 

available by the Substance Abuse and 

Mental Health Services Administration 

(SAMHSA) to identify such treatment 

centers providing quality care to the 

consumers that they serve. This 

addition of Substance Use Disorder 

Treatment Centers effectively gives 

issuers an additional provider type by 

which they can satisfy the contract 

offering requirement for the ECP 

category of ‘‘Other ECP Providers’’ in 

each county in their service area. In 

some counties or service areas, 

depending on which types of ECPs are 

available, HHS acknowledges that this 

addition could decrease the chance that 

an issuer would choose to contract with 

another provider type grouped under 

the ‘‘Other ECP Providers’’ ECP 

category, but it is our opinion that 

adding this new category outweighs that 

potential effect because it is critically 

important to ensure access to SUD 

treatment to all consumers who require 

such treatment. Additionally, we note 

that issuers may increase access to a 

variety of providers by contracting with 

more than one available ECP per ECP 

category, including ‘‘Other ECP 

Providers,’’ in each county in their 

service area if they choose to do so. 

Comment: Several commenters 

suggested that we disaggregate 

hemophilia treatment centers and 

behavioral health providers from the 

‘‘Other ECP Providers’’ category and 

create new ECP categories for 

freestanding birth centers and for 

providers that are essential to 

specialized cancers such as brain 

tumors. 

Response: In previous years, we have 

considered such recommendations to 

disaggregate provider types included in 

the ‘‘Other ECP Providers’’ ECP category 

and creating a separate ECP category for 

each, in addition to creating a separate 

ECP category for freestanding birth 

centers; however, because our analysis 

of the available ECPs in each of these 

ECP subcategories continues to indicate 

that there are too few ECPs within each 

of these provider types appearing on our 

ECP list to afford issuers sufficient 

flexibility in their contracting, we will 

not be disaggregating these 

subcategories of providers or creating 

new ECP categories at this time. While 

we may revisit this consideration in the 

future, we encourage QHP issuers to 

include in their networks these 

additional providers to best meet the 

needs of the populations they serve. 

Comment: Two commenters 

recommended that HHS should improve 

the overall accuracy of the HHS ECP 

List. 

Response: HHS has recently launched 

a monthly provider outreach initiative 

that automatically notifies providers on 

the HHS ECP List that they should 

revisit the online ECP petition to verify 

the accuracy of their data if they have 

not refreshed their provider data in over 

12 months. Additionally, HHS has 

recently programmed additional 

validation checks within its online ECP 

petition to better ensure that only 

qualified providers can petition for 

inclusion on the HHS ECP List. 

Furthermore, HHS, through its operating 

divisions HRSA, SAMHSA, and along 

with other entities, continues to verify 

the operating status and qualifications 

of providers for inclusion on the HHS 

ECP List to help ensure that the number 

and types of providers to which issuers 

are held to contracting to satisfy the ECP 

standard reflect an accurate universe of 

qualified ECPs that are available within 

the issuer’s respective service area. 

Comment: One commenter suggested 

that HHS should require QHPs to 

comply with ECP standards throughout 

the coverage year and report any 

material change in their ECP contracts 

to ensure that at no time their network 

falls below the ECP participation 

standard. Several commenters suggested 

HRSA’s HIV/AIDS Bureau monitor and 

enforce contracting requirements for 

Ryan White HIV/AIDS Program 

Providers. 

Response: We appreciate commenters’ 

suggestions on how to better monitor 

issuers’ compliance with the ECP 

standard throughout the plan year and 

will consider different methods of 

enforcing compliance with the ECP 

standard in future plan years. 

Comment: One commenter suggested 

that HHS include regulatory language 

specifying that good faith contract terms 

must include all of the services the plan 

covers and that the provider offers and 

include reimbursement at generally 

applicable payment rates; another 

suggested that HHS require QHPs to 

contract with ECPs at a reimbursement 

level no lower than the established rate 


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321 45 CFR 156.235(d) and (e). 

322 2018 Letter to Issuers in the Federallyfacilitated Marketplaces (2017, February 17). CMS. 

https://www.cms.gov/CCIIO/Resources/Regulationsand-Guidance/Downloads/Final-2018-Letter-toIssuers-in-the-Federally-facilitated-marketplacesand-February-17-Addendum.pdf. 

at which they are compensated under 

Medicaid or Medicare to ensure that 

ECPs have a financial incentive to 

participate. Another commenter 

requested that HHS include in guidance 

that health systems contract with ECPs 

separately. 

Response: Comments on good faith 

contract terms and reimbursement rates 

are out of the scope of this rule. 

However, we expect issuers to comply 

with existing regulatory provisions 321

and sub-regulatory guidance 322 that 

may apply to these topics. 

Comment: One commenter 

recommended that HHS eliminate QHP 

issuers’ option to submit a narrative 

justification that describes why they 

could not meet the standard but still 

have a network that is sufficient to meet 

the needs of low-income and 

underserved enrollees. 

Response: We appreciate the 

commenter’s recommendation to 

eliminate the option for issuers to 

submit a narrative justification to satisfy 

the ECP standard. More information on 

changes to the ECP justification process 

for the plan year 2023, including the 

format of the justification and how and 

where it will be submitted, will be made 

available through forthcoming materials, 

including the QHP Application 

Instructions, the ECP/NA template, the 

ECP Tools, Frequently Asked Questions, 

and the Final Plan Year 2023 Letter to 

Issuers. 

Comment: Several commenters 

recommended that HHS should include 

information on which ECPs have 

telemedicine services available on the 

HHS ECP List. One State expressed 

support for ECPs offering telehealth 

services because consumers seeking care 

in their first language could benefit from 

telehealth services provided by ECPs. 

Several commenters urged that HHS 

monitor the use of telehealth services to 

ensure that they do not undermine 

access to care protections. Commenters 

cautioned that allowing issuers to meet 

the ECP participation standard with 

telehealth services in lieu of in-person 

care could improve health care access in 

some areas while jeopardizing care 

quality and exacerbating health 

inequities in other areas. 

Response: We appreciate commenters’ 

recommendations for integrating 

telehealth services into the ECP list. We 

acknowledge concerns that telehealth 

should not be used as a substitute for inperson care. We will consider these 

recommendations for adding telehealth 

services information to the ECP list in 

future rulemaking. 

13. Standards for Downstream and 

Delegated Entities (§ 156.340) 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 686), we proposed to 

amend and add language to § 156.340 to 

extend the existing downstream and 

delegated standards to QHP issuers on 

all Exchange models, including State 

Exchanges and State Exchange SHOPs, 

and Exchange models that use the 

Federal platform, including, FFEs, SBE– 

FPs, FF–SHOPs. We proposed to add a 

requirement that all agreements between 

QHP issuers and their downstream and 

delegated entities include language 

stating that the relevant Exchange 

authority, including State Exchanges, 

may demand and receive the 

downstream or delegated entity’s books, 

contracts, computers, or other electronic 

systems, including medical records and 

documentation, relating to the QHP 

issuer’s obligations in accordance with 

Federal standards under paragraph (a) of 

this section until 10 years from the final 

date of the agreement period. We refer 

readers to the proposed rule for a more 

detailed discussion of the proposal and 

its supporting rationale (87 FR 686 

through 687). 

After reviewing the public comments, 

and based on the rationale provided in 

the proposed rule and in this rule, we 

are finalizing the amendments to 

§ 156.340, as proposed, to clarify and 

strengthen requirements holding QHP 

issuers in all models of Exchange 

responsible for their downstream and 

delegated entities’ adherence to 

applicable Federal standards related to 

Exchanges, and to make their oversight 

obligations, and the obligations of their 

downstream and delegated entities, 

explicit in regulation and in the QHP 

issuers’ agreements with their 

downstream and delegated entities. We 

are also finalizing the proposal to 

amend the title of subpart D of 45 CFR 

part 156 from ‘‘Standards for Qualified 

Health Plan Issuers on Federallyfacilitated Exchanges and State-based 

Exchanges on the Federal platform’’ to 

‘‘Standards for Qualified Health Plan 

Issuers on Specific Types of 

Exchanges.’’ 

We summarize and respond to public 

comments received on standards for 

QHP issuer downstream and delegated 

entities (§ 156.340). 

Comment: The commenters expressed 

support for the proposed amendments 

to § 156.340 and lauded its clarification 

and its strengthening of oversight 

standards for QHP issuers toward their 

downstream and delegated entities with 

regard to relevant Exchange regulations. 

One commenter stated that they 

supported the changes proposed 

because they clarify that QHP issuers 

and their downstream and delegated 

entities remain responsible for 

complying with all Federal 

requirements, including QHP 

certification standards, Exchange 

processes and procedures, the 

maintenance of records, and enrollment 

rules for agents, brokers, and webbrokers. Another commenter stated the 

increased requirements for QHP issuers 

to hold their downstream and delegated 

entities accountable, including the 

increased record-keeping requirements, 

are essential to hold QHP issuers 

accountable for meeting applicable 

federally-defined performance standards 

and without that accountability, issuers 

could evade those standards by 

delegating duties to other entities which 

could avoid accountability by ‘‘neither 

maintaining records, nor reporting data 

showing compliance’’. 

Response: We appreciate the support 

for the proposed amendments to 

§ 156.340 and the accompanying 

clarification of the standards applicable 

to QHP issuers and their downstream 

and delegated entities in all Exchange 

models. These comments articulate the 

reasons behind the decision to make the 

amendments and clarifications to the 

156.340. Moreover, these supportive 

commenters describe the scenario the 

changes are intended to prevent or 

mitigate: Evasion by issuers of 

applicable Exchange requirements by 

the delegation of duties to entities 

otherwise capable of avoiding 

accountability. By codifying a regulatory 

requirement that holds QHP issuers in 

all Exchange models responsible for 

compliance with Exchange 

requirements by their downstream and 

delegated entities, the appropriate 

Exchange authority can ensure 

compliance with applicable 

requirements and hold issuers 

accountable for their actions and the 

actions of their downstream and 

delegated entities in situations of noncompliance. 

Comment: Several commenters were 

not supportive of the proposal and 

objected to the language as it pertains to 

the record retention requirement in the 

new paragraph (b)(5) as overly broad. 

These commenters expressed concern 

that the proposed new record retention 

requirement in § 156.340(b)(5) appeared 

to give HHS access to ‘‘virtually all data 

and information,’’ including consumer 

data maintained by the downstream and 

delegated entities, and that it would 


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323As noted above, the existing text at 

§ 156.340(b)(4) requires downstream and delegated 

entities of QHP issuers participating in FFEs or 

SBE–FPs to provide HHS access to the entity’s 

books, contracts, computers, or other electronic 

systems, including medical records and 

documentation, relating to the QHP issuer’s 

obligations with applicable Exchange standards. 

enable HHS to go on a ‘‘fishing 

expedition’’ for information unrelated to 

Exchange activity. One commenter 

suggested the proposed requirement in 

new paragraph (b)(5) would place 

‘‘undue burden’’ on downstream and 

delegated entities and also echoed the 

perception that it provides HHS with 

‘‘unyielding authority’’ to request 

information from them, but did not 

otherwise quantify or further define 

these concerns. Some commenters also 

requested additional guidance about the 

types of information downstream and 

delegated entities would have to 

provide, and generally requested 

modification of the regulatory language 

in new paragraph (b)(5) to be more 

specific and limited in scope. Several 

commenters made general requests that 

the documents and systems to which 

the relevant authority may request 

access pursuant to the downstream and 

delegated entity’s Exchange activities be 

limited without providing examples. 

One commenter requested an exception 

to permit downstream and delegated 

entities to challenge requests that would 

be ‘‘commercially impracticable.’’ The 

commenter also requested the language 

in paragraph (b)(5) be limited to 

requests and information that are of 

such vital importance to Exchange 

operations that the Exchange could not 

operate without the disclosure. The 

commenter did not include data or 

information to support these assertions, 

describe what constituted 

‘‘commercially impracticable’’ requests, 

or provide examples of what would 

constitute an instance that might be of 

such vital importance to Exchange 

operations. 

Response: We respectfully disagree 

with the comments suggesting the 

language required in Exchange 

agreements between QHP issuers and 

downstream and delegated entities by 

new paragraph (b)(5) expands HHS’ 

authority to demand information, 

making it unlimited in scope and 

imposing new risk and undue burden 

on both QHP issuers and their 

downstream and delegated entities. The 

amendments to § 156.340(b)(5) make 

clear and explicit in regulation 

downstream and delegated entity 

obligations to maintain Exchangerelated records and comply with the 

relevant Exchange authority’s demand 

to receive the entity’s books, contracts, 

computers or other electronic systems 

relating to the QHP issuer’s obligations 

in accordance with applicable Federal 

Exchange standards. Because the 

provision applies to all types of 

Exchange, including State Exchanges, 

HHS is not inclined to be overly 

prescriptive with regard to provision of 

more specific guidance. More 

descriptive details will be provided by 

the relevant Exchange authority. With 

regard to information that could be 

requested by HHS, as administrator of 

the FFE, more specificity is provided in 

§ 156.715, which describes the records 

and information requested of FFE and 

SBE–FP issuers during compliance 

reviews. By way of a further illustrative 

example, documents that are typically 

requested as part of compliance reviews 

under § 156.715 include, but are not 

limited to; issuers’ contracts with all 

downstream and delegated entities for 

Exchange-specific language, records of 

agent and broker registration and 

training, and records of the handling of 

complaints concerning affiliated agents, 

brokers, and web-brokers. While we 

generally anticipate requesting similar 

information from downstream and 

delegated entities under § 156.340(b)(5), 

we emphasize that the exact 

information, data, records, books, 

contracts, computers, and electronic 

systems that could be requested as part 

of a review under § 156.340(b)(5) will 

vary depending on the facts and 

circumstances at hand. We also affirm 

that, like the existing authority in 

§ 156.340(b)(4), the authority captured 

in § 156.340(b)(5) is specific to 

Exchange operations. 

We also disagree that the record 

retention requirement in new paragraph 

(b)(5) is overly broad or that it would 

allow HHS to request or access 

information unrelated to Exchange 

activity. This regulatory provision is 

narrowly drafted and codifies the 

relevant Exchange authority’s—that is, 

the State Exchange, the FFE, or the 

SBE–FP—right to access records that are 

related to the QHP issuer’s participation 

in the relevant Exchange to confirm 

compliance with applicable Federal 

Exchange standards. As such, under 

§ 156.340(b)(5), the relevant Exchange 

authority can demand and receive 

information on consumers enrolled in 

the Exchange from a downstream or 

delegated entity of a QHP issuer 

participating on its Exchange to ensure 

or otherwise confirm compliance with 

applicable Federal Exchange standards. 

Additionally, HHS has authority to 

access the records of downstream and 

delegated entities of QHP issuers 

participating in FFEs and Exchanges 

using the Federal platform under the 

existing requirements in 

§ 156.340(b)(4).323 Affirming HHS’ 

authority to access this information, as 

the relevant Exchange authority for 

FFEs, while codifying similar rights for 

State Exchanges when they are the 

relevant Exchange authority, in new 

paragraph (b)(5) does not represent an 

expansion of HHS authority or access to 

records. To that end, by affirming the 

relevant Exchange authority’s right to 

access information for purposes of 

ensuring all entities participating in or 

supporting another entity’s participation 

in the Exchange are compliant with 

applicable Federal Exchange standards, 

HHS declines to incorporate language in 

the regulation that would limit this 

authority to situations concerning issues 

of vital importance to the Exchange. We 

did not propose such a limitation and 

further note that the establishment of 

such a restriction would require further 

notice with comment rulemaking to 

define the phrase and identify 

parameters for what could constitute 

issuers of ‘‘vital importance’’ to the 

Exchange. The suggested limitation 

could also create unnecessary barriers to 

the relevant Exchange authority 

accessing information relevant to 

Exchange operations and compliance of 

regulated entities with applicable 

Federal Exchange standards. Finally, we 

note the adoption of a 10-year standard 

in § 156.340(b)(5) aligns with other 

Exchange record retention requirements. 

Therefore, it too, does not represent an 

expansion of record retention 

obligations for QHP issuers participating 

in Exchanges or their downstream and 

delegated entities pertaining to 

Exchange related records, data, 

information, or systems. We also did not 

propose and decline to adopt in this 

rule an exception or carve-out. The 

adoption of these amendments is 

intended to make clear the obligations 

and responsibilities of all QHP issuers 

participating in all Exchanges models, 

and all of their downstream and 

delegated entities with no exceptions. 

However, as the relevant Exchange 

authority for the FFEs, we welcome an 

open dialogue with QHP issuers and 

their downstream and delegated entities 

about the burdens and time associated 

with complying with any particular 

request for records under 

§ 156.340(b)(5). We encourage State 

Exchanges to similarly be open to such 

conversations. 

Comment: Additionally, several 

commenters expressed concern about 

the impact the changes could have on 

agreements and contract negotiations 


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324As noted above, we disagree with this 

assertion. Affirming HHS’ authority to access this 

information, as the relevant Exchange authority for 

FFEs, in new paragraph (b)(5) while codifying 

similar rights for State Exchanges when they are the 

relevant Exchange authority does not represent an 

expansion of HHS authority or access to records or 

otherwise allow HHS to request or access 

information unrelated to Exchange activity. 

between issuers and potential and 

existing downstream or delegated 

entities. One commenter suggested the 

language required by new paragraph 

(b)(5) could bring contract negotiations 

to a ‘‘stalemate’’ or considerably slow 

them down, because it requires both 

downstream and delegated entities and 

QHP issuers submit to the Exchange’s 

authority to ‘‘request any information 

they desire under the pretext of Federal 

standards.’’ The commenter did not 

provide further information or evidence 

to support the claim that the Federal 

standards have been used as a pretext to 

demand information unrelated to 

Exchange activity.324 Another 

commenter suggested the language in 

new paragraph (b)(5) would increase 

downstream and delegated entities’ 

responsibility and risk, potentially 

causing them to raise their rates, but did 

not specify what additional 

responsibility or risk the downstream 

and delegated entities would assume. 

That commenter also recommended that 

responses to inquiries pursuant to 

paragraph (b)(4) and new paragraph 

(b)(5) from the relevant Exchange 

authority come directly from the 

downstream or delegated entity, when 

applicable, and not flow through the 

QHP issuer. The commenter did not 

provide the rationale for this 

recommendation. 

Two commenters also expressed 

concern with respect to the proposed 

applicability date and the timing for 

implementation of any necessary 

change(s) to contract language. They 

indicated contracts will have to be 

modified, and 60 days from rule 

publication is not sufficient to come 

into compliance with the requirement. 

Additionally, a commenter requested a 

burden estimate for modification of 

contracts, pursuant to the comment, 

summarized above, that the inclusion of 

the contract language constitutes a 

significant change that would impose an 

‘‘undue burden’’ on QHP issuers and 

downstream and delegated entities. The 

commenters did not provide an 

explanation for why the contract 

modifications required more time, or 

describe the nature of the ‘‘undue 

burden’’ beyond the suggestion of HHS 

overreach due to language that it 

asserted was not sufficiently narrow or 

specific. No data or information beyond 

these general assertions was presented 

to substantiate the request for a new 

implementation date. 

One commenter indicated that while 

it agreed QHP issuers should retain full 

oversight over downstream and 

delegated entities, it objected to what it 

characterized as the imposition of 

required contract terms by new 

paragraph (b)(5), on the grounds that 

each organization should be free to 

contract in a manner governed by their 

own risk tolerance. The commenter 

offered several alternative options, 

including ‘‘required written delegation 

agreements with performance report 

expectations for content and frequency’’ 

and ‘‘documented and recorded annual 

audits of each delegated entity’s 

performance, which the issuer properly 

distributes for review and approval by 

the issuer’s governing body.’’ However, 

the commenter did not provide an 

explanation as to why these 

recommendations were preferable to 

inclusion of the issuer’s oversight 

obligations in its agreements with 

downstream and delegated entities. A 

different commenter expressed support 

for clarifying that the general obligations 

and requirements regarding downstream 

and delegated entities of QHP issuers 

are applicable across all Exchanges 

types, but requested an explanation as 

to the reason for the clarification. The 

commenter noted that if the reason for 

requiring explicit contract language in 

agreements between QHP issuers and 

their downstream and delegated entities 

is to align with MA requirements, such 

alignment would be inappropriate, 

given the ‘‘significant differences’’ 

between the two programs. The 

commenter further explained that the 

Federal government has financial 

obligations to MA programs and 

assumes some of the enrollees’ risk with 

regard to claims, whereas the QHP 

issuers on the Exchanges assume all risk 

with regard to enrollees’ claims. 

Response: As explained above and in 

the proposed rule, the proposed 

amendments to § 156.340 were drafted 

so QHP issuers on all Exchange types 

are subject to the same minimum 

downstream and delegated entity 

standards. HHS is finalizing these 

amendments as proposed to hold QHP 

issuers in all models of Exchange 

responsible for their downstream and 

delegated entities’ adherence to 

applicable Federal standards related to 

Exchanges, and to make their oversight 

obligations, and the obligations of their 

downstream and delegated entities, 

explicit in regulation and in the QHP 

issuers’ agreements with their 

downstream and delegated entities. 

HHS appreciates the comments about 

the burdens associated with 

implementation of the amendments; 

however, we are finalizing the 

implementation date and burden 

estimates as proposed and without 

changes, as we disagree that there is a 

significant or ‘‘undue’’ burden 

associated with these amendments. No 

evidence has been provided 

substantiating any added burden is 

placed on the downstream and 

delegated entities or on the QHP issuers, 

and while HHS appreciates the entities’ 

desire to contract with respect to their 

own risk tolerance, the requirement that 

issuers maintain oversight and 

accountability for their downstream and 

delegated entities’ actions is not a new 

requirement. The alternative methods 

proposed by the commenter, such as 

required written delegation agreements 

with performance report expectations 

for content and frequency, would likely 

be more onerous and inflexible for both 

the issuer and its downstream or 

delegated entity than modification of 

existing contracts to include language 

describing risk the issuer has already 

assumed by engaging the downstream or 

delegated entity’s assistance with 

Exchange related activities, because the 

suggested alternatives would also 

require drafting entirely new 

documents, follow-up, and evaluation of 

performance metrics. In addition, the 

commenters did not provide any 

evidence or information to support their 

general assertions about the ‘‘undue 

burden’’ and additional time needed to 

modify contracts. As explained in the 

proposed rule, we anticipate the 

amendments to § 156.340 will impose 

minimal burden on QHP issuers and 

Exchange authorities. We recognize that 

some QHP issuers may need to make 

changes to existing record retention 

policies and their agreements with 

delegated and downstream entities. But 

since issuers participating in FFEs and 

SBE–FPs were already subject to the 

existing downstream and delegated 

entity standards in § 156.340, and to 

HHS’ existing authority to request 

records under § 156.715, and 

commenters did not provide analysis or 

other information to substantiate the 

request for a new implementation date, 

that record requests should flow 

through the downstream or delegated 

entity and not the issuer, or support the 

claims of ‘‘undue burden,’’ HHS will 

finalize the amendments to § 156.340 as 

proposed. 

We recognize there are differences 

between the Medicare Advantage 

program and the Exchanges. For 

example, the populations served are 

different. Also, as noted in the comment 


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325See 78 FR 37056. Also see 78 FR 54120. 

326Payments to Issuers for Cost-Sharing 

Reductions (CSRs). (2017, October 12). HHS. 

https://www.hhs.gov/sites/default/files/csrpayment-memo.pdf. 

submitted, HHS subsidizes premiums 

for qualified individuals enrolled in 

Exchange coverage, but it is not 

responsible for or at risk for claims 

incurred by Exchange enrollee the way 

it does for Medicare Advantage 

coverage. Notwithstanding these 

differences, there are also similarities 

and the use of downstream and 

delegated entities by the regulated entity 

is one example of a similarity. As such, 

our intention is to learn from and 

leverage the experience from the 

Medicare Advantage program, where 

appropriate. As explained when we first 

established the QHP issuer downstream 

and delegated entity standards in 

§ 156.340, we believe the most legally 

effective way to ensure that a QHP 

issuer retains the necessary control and 

oversight over its downstream or 

delegated entities is to require that all 

agreements governing the relationships 

among a QHP issuer and its delegated 

and downstream entities contain 

provisions specifically describing each 

of the downstream and delegated 

entity’s obligations.325 We looked to the 

existing standards for entities that 

contract with Medicare Advantage 

organizations at 42 CFR 422.504(i)(3)– 

(4) as a guide because it was a 

framework familiar to HHS, regulated 

entities, other stakeholders, as well as 

the general public. It also met the goals 

of protecting consumers from harm and 

holding QHP issuers and their 

downstream and delegated entities 

accountable for compliance with 

applicable Federal Exchange 

requirements. 

In this final rule, we clarify and 

extend the requirements in § 156.340 to 

hold QHP issuers in all models of 

Exchange responsible for their 

downstream and delegated entities’ 

adherence to applicable Federal 

standards related to Exchanges, and to 

make their oversight obligations, and 

the obligations of their downstream and 

delegated entities, explicit in regulation 

and in the QHP issuers’ agreements with 

their downstream and delegated 

entities. 

14. Payment for Cost-Sharing 

Reductions—Clarification of CSR 

Payment and Data Collection Processes 

(§ 156.430) 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 687 through 688), we 

proposed to amend § 156.430 to clarify 

when CSR data submission is 

mandatory or voluntary. Section 

156.430 establishes parameters for the 

advance payment for CSRs, the 

associated data submission standards, 

and how final CSR payment and charges 

are reconciled. On October 11, 2017, the 

Attorney General issued a legal opinion 

that HHS did not have a valid 

Congressional appropriation with which 

to make CSR payments to issuers.326 As 

a result, CSR payments ceased as of 

October 12, 2017. Because issuers were 

not receiving CSR payments from HHS, 

beginning with the 2018 benefit year 

CSR Reconciliation Data Submission 

process, HHS made the CSR data 

submission process voluntary. To clarify 

the data submission requirements, we 

proposed to amend § 156.430 to state 

that this data submission is mandatory 

for those issuers that receive CSR 

payments from HHS for any part of the 

benefit year and voluntary for other 

issuers. 

To do this, we proposed several 

modifications to § 156.430. First, we 

proposed to amend § 156.430(b)(1) to 

clarify that when there is an HHS 

appropriation to make CSR payments to 

issuers, an issuer will receive periodic 

advance payments to the extent 

permitted by the appropriation and 

based on the advance payment amounts 

established in guidance. We believe that 

this change clarifies that the data 

submission requirements are mandatory 

for those issuers that receive CSR 

payments from HHS for any part of the 

benefit year. Further, and in line with 

the current practice, HHS will continue 

to provide those issuers that do not 

receive CSR payments from HHS the 

option to submit CSR data. 

Second, we proposed to amend 

§ 156.430(d) to reflect a change of focus 

from reconciliation of CSR amounts to 

the timing and nature of CSR data 

submissions, specifically when CSR 

payments are made. We proposed to 

amend § 156.430(d) to state that HHS 

will periodically provide a submission 

window for issuers to submit CSR data 

documenting CSR amounts issuers paid, 

as specified in § 156.430(d)(1) and (2), 

in a form and manner specified by HHS 

in guidance and calculated in 

accordance with § 156.430(c). When an 

appropriation is available for HHS to 

make CSR payments to QHP issuers, 

HHS will notify QHP issuers that the 

submission of the CSR data is 

mandatory for those issuers that 

received CSR payments from HHS for 

any part of the benefit year, and will use 

the data to reconcile advance CSR 

payments to issuers against the actual 

amounts of CSRs issuers provided, as 

determined by HHS based on amounts 

specified in § 156.430(d)(1) and (2), and 

calculated in accordance with 

§ 156.430(c). 

When CSR payments are not made, 

HHS will notify those QHP issuers that 

did not receive CSR payments from 

HHS for any part of the benefit year that 

the submission of the CSR data is 

voluntary. The CSR data that must be 

submitted in either a voluntary or 

mandatory submission includes the data 

elements listed in § 156.430(d)(1) and 

(2). The purpose of this change is to 

clarify when HHS will use CSR data to 

reconcile CSR payments. Specifically, 

we proposed that to the extent that CSR 

payments from HHS are made to issuers, 

the CSR data submission process would 

be mandatory for those issuers having 

received CSR payments for any part of 

the benefit year from HHS, and it would 

be voluntary for issuers that did not 

receive CSR payments from HHS for any 

part of the benefit year. This approach 

is consistent with how HHS has 

conducted these data submission 

processes since the 2018 benefit year 

CSR data submission process. 

Third, we proposed to amend the title 

of § 156.430(e) from ‘‘Payment of 

discrepancies’’ to ‘‘Cost-sharing 

Reductions Payments and Charges’’ to 

reflect that this section governs both 

payments to issuers for CSR and charges 

levied against issuers for CSR. 

Lastly, we proposed to amend 

§ 156.430(e)(1) to clarify that HHS will 

collect data regarding the CSRs actually 

provided by issuers to their enrollees as 

opposed to collecting data on the dollar 

value of CSRs HHS provided to the 

issuer, and to further clarify that HHS 

only pays reconciled CSR amounts 

when there is an appropriation to make 

CSR payments and to the extent 

permitted by such appropriation. 

We noted that, regardless of whether 

HHS makes CSR payments, issuers are 

required to provide CSRs to enrollees as 

specified at § 155.1030. We sought 

comment on these proposals. 

After reviewing the public comments, 

we are finalizing, as proposed, that CSR 

data submission is mandatory for those 

issuers that receive CSR payments from 

HHS for any part of the benefit year and 

voluntary for other issuers. 

We summarize and respond to public 

comments received on payment for costsharing reductions—clarification of CSR 

payment and data collection processes 

(§ 156.430) below. 

Comment: One commenter supported 

the proposals. 

Response: We appreciate the support 

and are finalizing, as proposed, that CSR 

data submission is mandatory for those 

issuers that receive CSR payments from 


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327 Ibid. 

328 Ibid. 

329 80 FR 10750, 10844 (2015, February 27). 

330 Ibid. 

331Lindenauer, P.K., Lagu, T., Rothberg, M.B., 

Avrunin, J., Pekow, P.S., Wang, Y., Krumholz, H., 

& Hines, H. (2013). Income Inequality and 30-Day 

Outcomes After Acute Myocardial Infarction, Heart 

Failure, and Pneumonia: Retrospective Cohort 

Study. British Medical Journal. 

332Trivedi, A.N., Nsa, W., Hausmann, L.R.M., 

Lee, J., Ma, A., Bratzler, D., Mor, M., Baus, K., Larbi, 

F., & Fine, M. (2014). Quality and Equity of Care 

in U.S. Hospitals. New England Journal of 

Medicine. 371(24):2298–2308. 

333Polyakova, M., Udalova, V., Kocks, G., 

Genadek, K., Finlay, K., & Finkelstein, A.N. (2021). 

Racial Disparities In Excess All-Cause Mortality 

During The Early COVID–19 Pandemic Varied 

Substantially Across States. Health affairs (Project 

Hope), 40(2), 307–316. https://doi.org/10.1377/ 

hlthaff.2020.02142. 

334Rural Communities: Age, Income, and Health 

Status. Rural Health Research Recap. (2018). Rural 

Health Research Gateway. https://

www.ruralhealthresearch.org/recaps/5. 

335 2020 Update on the Action Plan to Reduce 

Racial and Ethnic Health Disparities. (2020). HHS 

Office of Minority Health. https://

www.minorityhealth.hhs.gov/assets/PDF/Update_

HHS_Disparities_Dept-FY2020.pdf. 

336Sexual Orientation Disparities in Risk Factors 

for Adverse COVID–19–Related Outcomes, by Race/ 

Ethnicity. (2021, February 5). CDC. www.cdc.gov/ 

mmwr/volumes/70/wr/mm7005a1.htm. 

337Poteat, T.C., Reisner, S.L., Miller, M., & Wirtz, 

A.L. (2020). COVID–19 Vulnerability of 

Transgender Women With and Without HIV 

Infection in the Eastern and Southern U.S. 

medRxiv: The preprint server for health sciences, 

2020.07.21.20159327. https://doi.org/10.1101/ 

2020.07.21.20159327. 

338 Guth, M., Garfield, R., & Rudowitz, R. (2020). 

The Effects of Medicaid Expansion Under the ACA: 

Studies from January 2014 to January 2020. Kaiser 

Family Foundation. https://www.kff.org/medicaid/ 

report/the-effects-of-medicaid-expansion-under-theaca-updated-findings-from-a-literature-review/. 

HHS for any part of the benefit year and 

voluntary for other issuers. 

Comment: Another commenter 

requested additional clarification on 

how the proposals would impact the 

existing CSR reconciliation data 

submission process and schedule before 

HHS implements any changes. 

Response: These amendments are not 

intended to change the existing CSR 

data submission process or schedule. In 

October 2017, the Attorney General 

declared that the government could not 

make CSR payments in the absence of 

an appropriation, and that because there 

was no appropriation, CSR payments 

must stop.327 HHS then announced that 

CSR payments would be discontinued 

until an appropriation exists.328 HHS 

has not made advance CSR payments for 

any period since October 2017 due to a 

lack of an appropriation. Also, in the 

absence of an appropriation, HHS 

cannot make CSR reconciliation 

payments for any past period. Because 

of this, since the 2018 benefit year, HHS 

has made the CSR data submission 

process optional. To this effect, HHS has 

periodically provided issuers an annual 

optional window to submit CSR data 

and restatements in light of ongoing 

litigation. Under the amendments 

finalized in this rule, the CSR data 

submission process would continue in 

the same manner as it has been operated 

since the 2018 benefit year CSR data 

submission, and these amendments are 

merely aligning our regulations with 

existing operations. If HHS makes CSR 

payments to QHP issuers in the future, 

HHS will notify QHP issuers that a CSR 

data submission will be mandatory for 

any issuers receiving CSR payments for 

any part of the benefit year. 

Additionally, these amendments do 

not impact the CSR data submission 

schedule. Consistent with past benefit 

years, the timing of the CSR data 

submission process will continue to be 

announced annually in guidance. 

15. Quality Standards: Quality 

Improvement Strategy (§ 156.1130) 

In accordance with section 

1311(c)(1)(E) of the ACA, quality 

improvement strategies described in 

section 1311(g)(1) of the ACA must be 

implemented across Exchanges as a 

QHP certification requirement. Section 

1311(g)(1) of the ACA defines a QIS as 

a payment structure that provides 

increased reimbursement or other 

incentives for implementing activities 

related to five health care topic areas 

identified in statute: Improving health 

outcomes of plan enrollees, preventing 

hospital readmissions, improving 

patient safety and reducing medical 

errors, promoting wellness and health, 

and reducing health and health care 

disparities. Under § 156.1130(a), a QHP 

issuer participating in an Exchange for 

2 or more consecutive years must 

implement and report on a QIS, 

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 ACA, 

for each QHP offered in an Exchange, 

consistent with the guidelines 

developed by HHS under section 

1311(g) of the ACA. In the 2016 

Payment Notice (80 FR 10750), HHS 

established a phase-in approach for QIS 

implementation standards and reporting 

requirements to provide QHP issuers 

time to understand the populations 

enrolling in a QHP offered through the 

Exchange and to build quality 

performance data on their respective 

QHP enrollees.329 HHS noted 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.330

In line with this approach and under 

the same authorities, in the HHS Notice 

of Benefit and Payment Parameters for 

2023 proposed rule (87 FR 584, 688), 

HHS proposed to update the QIS 

standards and enter the next phase of 

implementation by adopting a new 

guideline that would apply to QHP 

issuers beginning in 2023. Specifically, 

we proposed a new guideline under 

which QHP issuers would be required to 

address health and health care 

disparities as a specific topic area 

within their QIS, in addition to at least 

one other topic area described in section 

1311(g)(1) of the ACA, beginning in 

2023. We proposed this expansion of 

the QIS standards, which aligns with 

health equity efforts across Federal 

government policies and programs; 

however, we did not propose 

amendments to the regulatory text 

outlined in § 156.1130. 

Persistent inequities in health care 

outcomes exist in the United States, 

including among populations enrolling 

in QHPs across Exchanges. Belonging to 

a racial or ethnic minority group, living 

with a disability, being a member of the 

LGBTQI+ community, having limited 

English proficiency, living in a rural 

area, or being near or below the poverty 

level, is often associated with worse 

health outcomes.331 332 333 334 335 336 337

Such disparities in health outcomes are 

the result of a number of factors and 

exist irrespective of health insurance 

coverage type. Although not the sole 

determinant, poor health care access 

and provision of lower quality health 

care contribute to health disparities. In 

fact, research has shown that the 

expansion of health insurance coverage, 

for example through Medicaid 

expansion under the ACA, and the 

resulting increased access to health care, 

is linked to reductions in disparities in 

health insurance coverage as well as 

reductions in disparities in health 

outcomes.338

We are specifically committed to 

achieving equity in health care 

outcomes for QHP enrollees by 

supporting QHP issuer quality 

improvement activities to reduce health 

and health care disparities, and 

promoting issuer accountability for 

improving equity in the health and 

health care of their enrollee 

populations. For the purposes of this 

final rule, we are using the definition of 

‘‘equity’’ established in Executive Order 

13985, issued on January 20, 2021, as 


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339 86 FR 7009 (2021, January 25). 

340Compare, for example, the statutory provisions 

that established the Quality Rating System and 

Enrollee Satisfaction Survey, which require 

Exchanges to publish information on their 

respective websites. See sections 1311(c)(3) and 

(c)(4) of the ACA. Also see 45 CFR 155.1400 and 

155.1405. 

‘‘the consistent and systematic fair, just, 

and impartial treatment of all 

individuals, including individuals who 

belong to underserved communities 

who have been denied such treatment, 

such as Black, Latino, and Indigenous 

and Native American persons, Asian 

Americans and Pacific Islanders and 

other persons of color; members of 

religious minorities; LGBTQI+ persons; 

persons with disabilities; persons who 

live in rural areas; and persons 

otherwise adversely affected by 

persistent poverty or inequality.’’ 339 In 

light of the COVID–19 PHE, which is 

having a disproportionate and severe 

impact on underserved populations, and 

in line with the goals of Executive Order 

13985, we are strengthening efforts 

across all programs to address 

disparities and advance health equity. 

In addition, this is a topic area that QHP 

issuers across the Exchanges have 

increasingly been focusing on in their 

QIS submissions. 

A CMS evaluation of QHP issuer QIS 

submissions in the FFEs in PY 2020 

found that an estimated 60 percent of 

QIS submissions addressed health care 

disparities. Building on the phase-in 

approach established in the 2016 

Payment Notice and our experiences 

evaluating QIS submissions over the 

years and during the COVID–19 PHE, 

we proposed to update the QIS 

standards. We proposed to require QHP 

issuers to address health and health care 

disparities as one topic area of their QIS 

in addition to at least one other topic 

area described in section 1311(g)(1) of 

the ACA beginning in 2023. However, 

we did not propose amendments to the 

regulatory text outlined in § 156.1130. 

We sought comment on this proposal. 

We summarize and respond to public 

comments received on the quality 

improvement strategy (§ 156.1130) 

proposal. After reviewing commenter 

responses, we are finalizing as 

proposed. 

Comment: Many commenters 

supported the proposal to expand QIS 

standards to require issuers to address 

health and health care disparities in 

addition to one other topic area 

identified in section 1311(g)(1) of the 

ACA as part of their QIS beginning in 

2023. Specifically, commenters 

expressed strong support for the 

increased focus on health and health 

care disparities within the QIS 

standards and achieving equity in 

health outcomes for QHP enrollees, as 

well as driving accountability for 

advancing health equity. 

Response: We appreciate commenters’ 

support to expand QIS standards to 

require QHP issuers address health and 

health care disparities which aligns 

with health equity efforts across Federal 

government policies and programs. QHP 

issuers in all Exchange model types will 

be required to address health and health 

care disparities in addition to one other 

topic area identified in section 

1311(g)(1) of the ACA as part of their 

QIS beginning in 2023. This new 

guideline will apply for the first time to 

the QIS submissions QHP issuers 

provide to Exchanges in the 2023 

calendar year, which would describe the 

issuer’s strategy for addressing health 

and health care disparities for the 2024 

Plan Year, beginning on January 1, 2024. 

Comment: Several commenters stated 

that although the proposed QIS policy 

ties effective performance on reducing 

health and health care inequities to 

financial reward, the current proposal 

does not go far enough to advance 

health equity. Some commenters urged 

CMS to require more public 

transparency and accountability about 

the process of selecting, implementing, 

evaluating, and reporting the outcomes 

of QIS interventions to ensure QHPs 

prioritize health equity work. These 

commenters noted that currently there 

are no public reporting requirements for 

QIS activities (for example no list of QIS 

topics selected, no public report on 

progress or successful outcomes). 

Response: We appreciate the 

comments on the proposals to expand 

QIS standards to address health and 

health care disparities and clarify that 

the QIS statutory provisions do not tie 

performance within a QIS to a financial 

reward for issuers. Instead, section 

1311(g)(1) of the ACA defines a QIS as 

a payment structure developed by 

issuers that provides increased 

reimbursement or other market-based 

incentives for improving health 

outcomes of plan enrollees (for example, 

through provider incentives such as 

increased reimbursement or bonus 

payments, or through enrollee financial 

incentives such as a monetary reduction 

of enrollee premiums and other out-ofpocket costs). Thus, consistent with the 

requirement in section 1311(c)(1)(E) of 

the ACA, QHP issuers must implement 

a QIS and they are required to 

incorporate market-based incentives 

within their respective QIS programs. 

We also acknowledge commenters’ 

requests for greater public transparency 

and interest in greater accountability 

regarding the process QHP issuers 

undertake to select, implement, 

evaluate, and report the outcomes of 

disparity-related QIS programs. Unlike 

other Exchange quality programs, 

section 1311(c)(1)(E) and (g) of the ACA 

do not provide for the public reporting 

of data on QHP issuer QIS programs.340

Instead, the QIS requirements focus on 

collection of information by Exchanges 

from issuers within QIS forms to 

demonstrate compliance with the QHP 

certification requirements in section 

1311(c)(1)(E) of the ACA. The collection 

of this information also facilitates the 

Exchange’s understanding of its QHP 

issuers’ payment structure frameworks 

that provide increased reimbursement 

or other market-based incentives for the 

implementation of activities related to 

the topics specified in section 1311(g) of 

the ACA. We recognize issuers use 

proprietary information in their QIS 

submissions they may not want 

published, and that their strategies may 

contain confidential information about 

their enrollee populations. Additionally, 

QIS requirements provide issuers 

flexibility in meeting this certification 

requirement by allowing diverse, 

qualitative, non-standardized 

information that would not be easily 

and clearly shared publicly. 

We further note that the policy 

adopted in this final rule seeks to align 

the QIS with other Federal quality 

standards related to data collection 

efforts and disclosure of information 

focused on quality improvement and 

advancing health equity, which 

includes balancing the desire to 

encourage transparency with the need to 

safeguard confidential and proprietary 

information. Some types of confidential 

and proprietary information include the 

tools, resources, and data sets issuers 

use in describing their quality 

improvement strategies within their QIS 

forms. For example, an issuer may have 

concerns disseminating a patient data 

collection tool they consider propriety 

that is described within their QIS to a 

wider audience. Furthermore, some 

issuers choose to report on their internal 

quality improvement progress using 

measures that are included within other 

performance programs, and that may not 

be fully validated at the time they 

submit their QIS during the applicable 

benefit year’s QHP Application Period. 

Finally, some issuers use internally 

developed measures they consider 

proprietary that are not intended for 

public reporting. At the same time, 

however, we understand the interest in 

the public reporting of QIS information, 

and HHS will continue to consider if 

there are ways or subsets of QIS 

information could be publicly released. 


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341More information about NCQA’s approach and 

timeline for stratification of select HEDIS measures 

can be found here: Data, Measurement and Equity. 

National Committee for Quality Assurance. https:// 

www.ncqa.org/about-ncqa/health-equity/data-andmeasurement/. 

Comment: Several commenters noted 

that QHPs should have to seek input 

from underserved enrollees or 

stakeholders who represent underserved 

communities to guide their QIS activity 

selection. 

Response: We appreciate the feedback 

related to QHP issuers seeking input 

from underserved enrollees or 

stakeholders who represent underserved 

communities to guide their QIS activity 

selection and to shape which activities 

they prioritize when addressing health 

or health care equity. HHS agrees that 

such feedback would help guide issuer 

development of QIS programs that target 

the needs of their specific populations, 

including those in underserved 

communities. HHS will consider 

including language further encouraging 

these outreach activities in the 2024 

Plan Year Technical Guidance, which 

will inform submissions in the 2023 

calendar year. However, we did not 

propose and decline to adopt a 

requirement mandating such outreach 

in this final rule. 

Comment: A few commenters noted 

that QHP issuers may face barriers when 

collecting race, ethnicity, language and 

other data on certain sub-populations, 

including consumers in underserved 

communities. Commenters expressed 

that these barriers may be due to a lack 

of standardization across State and 

Federal data collection requirements. 

Commenters also recommended HHS 

consider approaches to standardize data 

collection that includes collection of 

information that may be used to develop 

tailored quality improvement strategies. 

Two commenters urged HHS to address 

data collection barriers and delay 

finalizing the QIS proposal until issuers 

have more robust data to identify 

disparities. The commenters noted that 

when race and ethnicity or social 

determinant of health (SDOH) data is 

collected, relatively few individuals 

voluntarily provide this information to 

their health plans due to concerns about 

how the data will be used, and that the 

data available to issuers to identify 

health care disparities is limited and 

may vary by issuer due to State laws 

limiting the data issuers can collect. 

One commenter recommended that, for 

QIS standards, HHS should define 

disparities more broadly, beyond race, 

ethnicity, and language, which may not 

apply to every health plan, and 

reiterated that HHS should use a broad 

definition that encompasses other 

factors such as LGBTQI+ status, location 

(rural/urban), and physical and mental 

disabilities. 

Response: We recognize QHP issuers 

may experience barriers or other 

challenges when collecting certain data 

and that State and Federal data 

collection requirements for race, 

ethnicity, language, and other data on 

certain populations are currently not 

standardized. There are many reasons 

why the data collection requirements 

may not be standardized, including 

different statutory authorities and 

mandated data elements. The proposals 

being finalized in this rule are limited 

and specific to the QIS requirements 

under section 1311(c)(1)(E) of the ACA 

applicable to QHP issuers participating 

in Exchanges. The QIS statutory 

provisions do not provide HHS 

authority to standardize State and 

Federal data collection requirements or 

remove barriers that may exist with 

respect to collection of race, ethnicity, 

language and other data on certain subpopulations, including consumers in 

underserved communities. However, the 

QIS statute and the HHS implementing 

regulations provide a mechanism to 

encourage QHP issuers participating in 

Exchanges to focus more efforts on 

addressing health and health disparities. 

Section 1311(g)(1) of the ACA explicitly 

identifies the implementation of 

activities to reduce health and health 

care disparities, including through the 

use of language services, community 

outreach, and cultural competency 

trainings, as one of the topic areas for 

QHP issuer QIS programs. Issuers 

operating in States that have laws that 

limit the collection of certain data may 

have to rely on other data sources or 

indirect estimation (for example, 

geographic assignment, Bayesian 

indirect surname and geocoding) to 

incorporate activities to reduce health 

and health care disparities in their QIS 

programs. Similarly, issuers who do not 

have access to this type of data through 

existing data sources (for example, if 

enrollees decline to provide this 

information) will also have to identify 

other resources that can be used for this 

purpose. We are also aware of and 

intend to continue to monitor the 

development of industry standards, as 

well as State law activity, applicable to 

the collection and use of race and 

ethnicity data elements. As industry 

standards and state laws applicable to 

the collection and use of race and 

ethnicity data elements evolve, HHS 

will consider whether any changes to 

the QIS program requirements would be 

appropriate. 

Flexibility is one of the key 

foundational principles of the QIS, and 

we intend to continue to offer flexibility 

to encourage issuer innovation and to 

promote a culture of continuous quality 

improvement. This will include taking 

into consideration steps issuers take to 

expand their data collection efforts to 

support QIS activities that address 

health and health care disparities (along 

with the other QIS topics identified in 

section 1311(g)(1) of the ACA). With 

respect to the new QIS guideline 

finalized in this rule, as noted above, we 

anticipate that indirect estimation (for 

example, geographic assignment, 

Bayesian indirect surname and 

geocoding) may be used by issuers until 

such time in which issuers are able to 

directly collect data, such as race, 

ethnicity, and language, to analyze and 

address potential health and health care 

disparities. For example, NCQA 

introduced race and ethnicity 

stratifications for select Healthcare 

Effectiveness Data and Information Set 

(HEDIS®) measures,341 which allows an 

organization to report the stratification 

using their own directly collected 

member data as well as report directly 

collected data supplemented with 

indirect race and ethnicity data. QHP 

issuers would be permitted to take a 

similar approach for the development of 

their QIS programs and the 

incorporation of activities to reduce 

health and health care disparities. For 

this reason, we do not believe it is 

necessary to delay finalization of the 

QIS proposal until HHS has addressed 

data collection barriers or until issuers 

have more robust data to identify 

disparities. 

Additionally, we emphasize that the 

requirement adopted in this final rule 

that requires QHP issuers to address 

health and health care disparities as a 

specific topic area within their QIS 

beginning in 2023 is not limited to 

implementing strategies that solely 

focus on race and ethnicity health and 

health care disparities. Nor does it 

mandate the collection and submission 

of individual enrollee’s race and 

ethnicity data to HHS. QHP issuers will 

have flexibility in how they elect to 

address and define health and health 

care disparities in their QIS. For 

example, QHP issuers could focus on 

enrollee populations that belong to a 

racial or ethnic minority group, live 

with a disability, identify as a member 

of the LGBTQI+ community, have 

limited English proficiency, live in a 

rural area, or earn near or below the 

poverty level, which they have 

identified may be associated with worse 

health outcomes. Additionally, we 

affirm that QIS initiatives to address 

health and health care disparities may 


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342See 45 CFR 156.1130 and 80 FR 10844 through 

10848. Also see, for example, Section 4.2, QIS 

Technical Guidance and User Guide for the 2022 

Plan Year (2021) CMS. https://www.cms.gov/files/ 

document/qis-technical-guidance-and-user-guide2022-plan-year.pdf. 

include a broad range of activities such 

as language services, community 

outreach, cultural competency trainings, 

social needs-sensitive self-management 

recommendations, and increased 

collection and use of demographic and 

disparities-related data that will be used 

to develop QIS program activities 

designed to identify and reduce 

disparities. 

Comment: One commenter requested 

that CMS delay the implementation of 

the proposed expansion of the QIS 

standards until January 1, 2024, at the 

earliest, as this would align with the 

NCQA changes and the introduction of 

race and ethnicity stratification 

reporting requirements for certain select 

HEDIS® measures, which are lagging. 

The commenter stated that many health 

plans base their QIS on their HEDIS®

measurements, and noted that aligning 

applicability of the QIS update with the 

NQCA change would ease 

administrative burden and ensure 

continuity for health plans. Another 

commenter noted that given the 

diversity of QIS requirements across 

Federal and State-based Exchanges, 

HHS should create a standardized 

approach to advancing equity and 

incorporating reducing health and 

health care disparities into existing QIS 

requirements by adding stratification by 

race/ethnicity for any associated quality 

measures. 

Response: We clarify that we are 

finalizing the proposal to require QHP 

issuers to address health and health care 

disparities in addition to one other topic 

identified in section 1311(g)(1) of the 

ACA in the QIS submissions they 

provide to Exchanges beginning in the 

2023 calendar year, which would apply 

to the 2024 Plan Year. As such, issuers 

will be required to describe their 

strategy for addressing health and health 

care disparities beginning on January 1, 

2024. This aligns with the NCQA 

introduction and implementation of 

race and ethnicity stratification for 

select HEDIS® measures for the 2022 

Measurement Year, that will be 

collected in the 2023 calendar year. We 

appreciate and share the commenter’s 

commitment to advancing health equity 

by requiring QHP issuers to address 

potential disparities in their quality 

improvement strategies, but we also 

recognize the limitations issuers may 

face when collecting certain data in 

support of conducting their QIS 

activities. We further clarify and affirm 

that QHP issuers across all Exchange 

types must adhere to the same 

minimum QIS Federal standards 

established by HHS, but State 

Exchanges (both State Exchanges and 

SBE–FPs) have the flexibility to change 

certain details, such as the timeframe 

and format for submission of QIS 

information by their respective issuers, 

and they can establish standards that go 

beyond Federal QIS requirements.342

However, they cannot reduce a QHP 

issuer’s QIS obligations below the 

minimum QIS Federal standards 

established by HHS. 

We understand the request from some 

commenters to create a standardized 

approach to advance health equity 

which includes stratification of race and 

ethnicity data in relation to QIS 

requirements. We generally support and 

strive for standardized and coordinated 

approaches across HHS to advance 

health equity. We also support 

flexibility to ensure that QHP issuers 

can develop various strategies across 

their populations and across their 

provider contracts. Although we have 

established Federal minimum standards 

for QHP issuers to follow and address in 

their quality improvement strategies, the 

QIS program is intended to provide 

QHP issuers with flexibility in the 

design and implementation of their 

respective QIS initiatives and activities. 

For example, QHP issuers have 

flexibility in how they elect to address 

health and health care disparities in 

their QIS, such that their data collection 

efforts do not need to be limited to race 

and ethnicity information. In addition, 

and based on public comment, HHS 

believes that imposing specific 

performance measures on QHP issuers 

would limit their ability to target their 

strategies to their specific populations 

and possibly limit innovation. We 

further recognize that State laws may 

impact the ability to collect certain data, 

which could limit the ability to develop 

standardized collection standards. 

Finally, as we noted previously, the QIS 

statutory provisions do not provide HHS 

authority to standardize State and 

Federal data collection requirements or 

remove barriers that may exist with 

respect to collection of race, ethnicity, 

language and other data on certain subpopulations, including consumers in 

underserved communities. 

Comment: One commenter 

encouraged HHS to revise its proposal 

and allow issuers to embed a health 

equity strategy into their selected QIS 

topics instead of requiring QHP issuers 

to establish a separate QIS focused on 

addressing disparities. The commenter 

also urged HHS to provide detailed 

criteria to help issuers develop 

meaningful projects that fulfill the 

intent of addressing the health care 

needs of underserved populations, 

while also allowing issuers flexibilities 

to establish goals and metrics for 

success that accommodate the more 

limited data and longer timeframes to 

successfully address disparities, and in 

particular, the limitations for collecting 

data related to race and ethnicity. The 

commenter also requested HHS evaluate 

potential requirements to address 

disparities for populations other than 

the underserved communities and work 

to create QIS requirements that align 

with a more global population health 

approach to addressing disparities. 

Response: We agree QHP issuers 

should advance equity as a foundational 

aspect of quality rather than consider 

equity as a siloed aspect of performance, 

and we encourage QHP issuers to 

incorporate health equity into each of 

their quality improvement strategies. 

We further clarify that under the QIS 

guideline, as proposed and as finalized, 

QHP issuers have flexibility in the 

design and implementation of their 

respective QIS initiatives and activities. 

This includes the flexibility to establish 

two separate QIS initiatives—one that 

focuses only on addressing health and 

health care disparities and a second one 

that focuses only on wellness and health 

promotion (or another topic identified 

in section 1311(g)(1) of the ACA)—or 

the flexibility to establish one QIS 

initiative that focuses on addressing 

health and health care disparities in 

addition to wellness and health 

promotion (or another topic identified 

in section 1311(g)(1) of the ACA). Both 

approaches would be complaint with 

the new QIS guideline finalized in this 

rule. In other words, QHP issuers will 

not need to develop de novo strategies 

or create and submit multiple QIS 

programs, but can address health and 

health care disparities within an 

existing QIS. If an issuer elects this 

approach, they should select ‘‘reduce 

health and health care disparities’’ as a 

topic area in addition to at least one 

other topic area when submitting its 

plan year 2024 QIS submission in the 

2023 calendar year. We intend to 

address this, and other operational 

details related to this new guideline, as 

part of the Plan Year 2024 QIS 

Technical Guidance. We did not 

propose and generally decline to adopt 

detailed criteria to direct QHP issuer 

QIS programs that address health and 

health care disparities. 

As detailed above, QHP issuers have 

flexibility in how they elect to address 

health and health care disparities in 

their QIS, such that their data collection 

efforts do not need to be limited to race 


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Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 27345 

343Taylor EA, Carman KG, Lopez A, Muchow 

AN, Roshan P, & Eibner C. (2016) Consumer 

Decision-making in the Health Care Marketplace. 

RAND Corporation. https://www.rand.org/pubs/ 

research_reports/RR1567.html. 

344Facilitating Consumer Choice: Standardized 

Plans in Health Insurance Marketplaces. (2021, 

December 28). Office of the Assistant Secretary for 

Planning and Evaluation. https://aspe.hhs.gov/sites/ 

default/files/documents/ 

222751d8ae7f56738f2f4128d819846b/ 

Standardized-Plans-in-Health-InsuranceMarketplaces.pdf. 

and ethnicity information. For example, 

QHP issuers could focus on enrollee 

populations that belong to a racial or 

ethnic minority group, or those that live 

with a disability, identify as a member 

of the LGBTQI+ community, have 

limited English proficiency, live in a 

rural area, or earn near or below the 

poverty level, which may be associated 

with worse health outcomes. QHP 

issuers also have broad flexibility in 

terms of the goals they have identified, 

the activities they’ve employed to 

advance their QIS, and the measures 

they use. Within their QIS, issuers must 

report their initial baseline assessment 

results, and then must subsequently 

report their progress in relation to the 

baseline results they’ve provided. Since 

the QIS program promotes continuous 

quality improvement, issuers are asked 

to analyze their progress using their 

baseline data, but at this time they are 

not penalized for not meeting their 

progress targets or milestones. 

Additionally, QIS initiatives to address 

health and health care disparities may 

include a broad range of activities such 

as language services, community 

outreach, cultural competency trainings, 

social needs-sensitive self-management 

recommendations, and increased 

demographic and disparities-related 

data collection. 

16. Disbursement of Recouped HighCost Risk Pool Funds—Administrative 

Appeals of Issuers of Risk Adjustment 

Covered Plans (§ 156.1220) 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 689), we proposed that 

any funds recouped as a result of a 

successful high-cost risk pool 

administrative appeal under 

§ 156.1220(a)(1)(ii) would be used to 

reduce high cost-risk pool charges for 

that national high-cost risk pool for the 

current benefit year, if high-cost risk 

pool payments have not already been 

calculated for that benefit year. If highcost risk pool payments have already 

been calculated for that benefit year, we 

proposed to use any funds recouped as 

a result of a successful high-cost risk 

pool administrative appeal to reduce 

high-cost risk pool charges for that 

national high-cost risk pool for the next 

benefit year. As discussed earlier in this 

rule, we also proposed similar treatment 

of high-cost risk pool funds HHS 

recoups as a result of audits of risk 

adjustment covered plans under 

§ 153.620(c)(5)(ii) and as a result of 

actionable discrepancies under 

§ 153.710(d). 

In the proposed rule, we also clarified 

that when HHS recoups high-cost risk 

pool funds as a result of a successful 

administrative appeal, the issuer that 

filed the appeal would then be 

responsible for reporting that 

adjustment to its high-cost risk pool 

payments or charges in the next MLR 

reporting cycle consistent with the 

applicable instructions in 45 CFR 

153.710(h). Additionally, for any benefit 

year in which high-cost risk pool 

charges are reduced as a result of highcost risk pool funds recouped as a result 

of an administrative appeal, issuers 

whose charge amounts are reduced 

would report the high-cost risk pool 

charges paid for that benefit year net of 

recouped funds as a result of an 

administrative appeal in the next MLR 

reporting cycle consistent with 45 CFR 

153.710(h). This same framework would 

also apply to high-cost risk pool funds 

recouped as a result of audits under 

§ 153.620(c)(5)(ii) and actionable 

discrepancies under § 153.710(d). 

We sought comment on this proposal. 

After consideration of relevant 

comments, we are finalizing these 

policies, as proposed. We respond to the 

comments received on these policies. 

Comment: Several commenters 

expressed general support for these 

proposals. 

Response: After consideration of 

relevant comments, we are finalizing, as 

proposed, the policies related to 

disbursement of high-cost risk pool 

funds recouped as a result of audits of 

risk adjustment covered plans under 

§ 153.620(c), actionable high-cost risk 

pool-related discrepancies filed 

pursuant to § 153.710(d), and successful 

high-cost risk pool administrative 

appeals filed pursuant to § 156.1220. 

17. Direct Enrollment With the QHP 

Issuer in a Manner Considered To Be 

Through the Exchange (§ 156.1230) 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 689), we proposed to 

amend § 156.1230 such that its 

nondiscrimination protections would 

explicitly prohibit discrimination based 

on sexual orientation and gender 

identity. As we explain in the 

Supplemental Information section 

earlier in the preamble, HHS will 

address this policy, as well as public 

comments submitted in response to the 

proposal, in a future rulemaking. 

18. Solicitation of Comments—Choice 

Architecture and Preventing Plan 

Choice Overload 

One of the primary goals of the ACA 

is to provide consumers access to 

quality, comprehensive health coverage 

options, as well as the information and 

assistance they need to make coverage 

choices that are right for them. For this 

reason, both Federal and State 

Exchanges invest significant time and 

resources to build Exchanges that 

support consumer access to competitive 

health plan options that offer 

sufficiently diverse benefit options that 

give consumers a meaningful choice 

between Exchange coverage options. 

Exchanges also work to ensure that QHP 

information is presented to consumers 

in a manner that is clear and easy to 

understand and that allows consumers 

to accurately recognize the material 

differences between plan options. 

Although HHS continues to prioritize 

competition and choice on the 

Exchanges, we are concerned about plan 

choice overload which can result when 

consumers have too many choices in 

plan options on an Exchange. A 2016 

report by the RAND Corporation 

reviewing over 100 studies concluded 

that having too many health plan 

choices can lead to poor enrollment 

decisions due to the difficulty 

consumers face in processing complex 

health insurance information.343

Earlier in this section E of the 

preamble, we finalized the provision to 

require FFE and SBE–FP issuers to offer 

the standardized plan options finalized 

in this rule. Standardized plan options 

offer one solution to the problem of 

choice overload through standardizing 

cost-sharing structures and increasing 

plan comparability by allowing 

consumers to focus on plan premiums, 

provider networks, formularies, and 

quality ratings.344 In light of the 

proliferation of seemingly similar plans 

offered through the Exchanges over the 

last several years, HHS solicited 

comment regarding whether it should 

limit the total number of plans issuers 

may offer through the FFEs and SBE– 

FPs in future PYs in order to further 

streamline and optimize the plan 

selection process for consumers on the 

Exchanges. 

HHS’ desire to limit the number of 

plans that issuers can offer through the 

Exchanges arises following the sharp 

increase in plan offerings in recent 

years. For example, in the FFEs and 

SBE–FPs in PY 2019, there was an 

enrollee-weighted average of 1.2 

catastrophic plans, 7.9 bronze plans, 


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27346 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

345Zhou, C. & Zhang, Y. (2012). ‘‘The Vast 

Majority of Medicare Part D Beneficiaries Still Don’t 

Choose the Cheapest Plans That Meet Their 

Medication Needs.’’ Health Affairs, 31, no.10: 

2259–2265. 346 80 FR 75488, 75542 (2015, December 2). 

12.3 silver plans, 4.6 gold plans, and 1.1 

platinum plans available per enrollee, 

amounting to a total of 27.1 plans 

available per enrollee. In the FFEs and 

SBE–FPs during the open enrollment 

period for PY 2022, there was an 

enrollee-weighted average of 2.7 

catastrophic plans, 40.4 bronze plans, 

45.3 silver plans, 19.2 gold plans, and 

1.6 platinum plans available per 

enrollee, amounting to a total of 109.2 

plans available per enrollee. In PY 2022, 

several rating areas have more than 50 

silver plans, excluding CSR variations, 

available to consumers—a number we 

believe makes it difficult for consumers 

to make reasonably informed decisions. 

This proliferation of plans is only 

partially attributable to new market 

entrants, since in PY 2019, consumers 

could select QHPs from an enrolleeweighted average of 2.8 issuers per 

enrollee, while during the open 

enrollment period for PY 2022, 

consumers were able to select QHPs 

from an enrollee-weighted average of 6.3 

issuers per enrollee. The fact that the 

enrollee-weighted average number of 

plan offerings increased by a factor of 

four while the enrollee-weighted 

average number of issuers only 

increased by a factor of just over two 

between plan years 2019 and 2022 

suggests consideration of the need to 

limit the proliferation of seemingly 

similar plans in order to further 

streamline and optimize the plan 

selection process for consumers on the 

Exchanges. 

HHS remains concerned that having 

an excessive number of health plan 

options may make consumers less likely 

to complete any plan selection and more 

likely to select a plan that does not 

match their health needs. In studies of 

consumer behavior in Medicare Part D, 

Medicare Advantage, and Medigap, a 

choice of 15 or fewer plans was 

associated with higher enrollment rates, 

while a choice of 30 or more plans led 

to a decline in enrollment rates.345

These conclusions are supported by the 

comments received during both this 

rulemaking and prior rulemaking, in 

which a significant number of 

commenters raised concerns that 

removing tools that facilitate the plan 

selection process causes consumers to 

face choice paralysis and leads to a 

reduction in overall enrollment in 

QHPs, undermining the purpose of 

Exchanges—to allow people to compare 

and purchase QHPs. 

HHS’ experience during its annual 

open enrollment period also suggests 

that ‘‘many consumers, particularly 

those with a high number of health plan 

options, find the large variety of cost 

sharing structures available on the 

Exchanges difficult to navigate.’’ 346

Thus, in order to streamline and 

optimize the plan selection process for 

consumers on the Exchanges, HHS 

expressed interest in exploring possible 

methods of improving choice 

architecture and solicited comments on 

doing so. Several provisions finalized 

within this rule complement this goal, 

including the standardized plan options 

provision at § 156.201 and the 

provisions that modify the applicable 

AV de minimis ranges at §§ 156.140, 

156.200, and 156.400. 

Specifically, the standardized plan 

options provision at § 156.201 requires 

FFE and SBE–FP issuers to offer plans 

with standardized cost sharing 

parameters at every product network 

type, at every metal level, and 

throughout every service area that they 

offer non-standardized plan options. 

Though this provision does not limit the 

number of non-standardized plan 

options for PY 2023, HHS stated that it 

intends to consider and propose future 

rulemaking, as appropriate, to 

determine whether to limit the number 

of non-standardized plan options that 

FFE and SBE–FP issuers may offer 

through the Exchanges in PYs beginning 

on or after January 1, 2024. 

Additionally, the provisions at 

§§ 156.140, 156.200, and 156.400 

finalized modifications to the applicable 

AV de minimis ranges. HHS modified 

the de minimis ranges at § 156.140(c) 

beginning in PY 2023 to +2/¥2 

percentage points for all individual and 

small group market plans subject to the 

AV requirements under the EHB 

package, other than for expanded bronze 

plans, for which HHS finalized a de 

minimis range of +5/¥2. Under 

§ 156.200, HHS finalized, as a condition 

of certification as a QHP, to limit the de 

minimis range to +2/0 percentage points 

for individual market silver QHPs. HHS 

also finalized under § 156.400 to specify 

de minimis ranges of +1/0 percentage 

points for income-based silver CSR plan 

variations. HHS explained that it 

anticipates that these provisions would 

have the effect of decreasing the number 

of plan offerings due to more restricted 

AV de minimis ranges. 

HHS also solicited comment on 

resuming the meaningful difference 

standard (previously codified at 45 CFR 

156.298) and the best approach for 

doing so. The meaningful difference 

standard was first finalized in the 2015 

Payment Notice, revised in the 2017 

Payment Notice, and discontinued and 

removed from regulation in the 2019 

Payment Notice. The meaningful 

difference standard was originally 

intended to enhance consumer 

understanding of the differences 

between plans and enable optimal 

consumer choice. It was then 

considered to be no longer necessary 

given the decreased number of issuers 

and plans offered through the FFEs and 

SBE–FPs in PY 2019. Given that the 

number of plans offered through the 

Exchanges has increased sharply over 

the last several years, HHS explained 

that it continues to believe that 

resuming the meaningful difference 

standard could play a constructive role 

in limiting the proliferation of 

seemingly similar plans on the 

Exchanges, thus further streamlining 

and optimizing the plan selection 

process for consumers on the 

Exchanges. 

HHS also acknowledged that a 

number of State Exchanges have 

successfully employed an active 

purchaser model in which these 

Exchanges selectively negotiate 

contracts with issuers, limit the total 

number of issuers that can offer QHPs 

through the Exchange, require issuers to 

offer standardized plan options 

exclusively, and exclude plans that have 

not demonstrated the administrative 

capability, prices, networks or product 

designs that improve consumer value. 

HHS explained that it intends to 

consider whether such a model would 

be appropriate in future PYs to achieve 

the aforementioned goals of 

streamlining the plan selection process 

for consumers on the Exchanges and 

solicited comments accordingly. 

Altogether, we sought comment on 

the utility of limiting the number of 

plans that FFE and SBE–FP issuers can 

offer through the Exchanges in future 

PYs in order to avoid plan choice 

overload and to further streamline and 

optimize the plan selection process for 

consumers on the Exchanges. We also 

sought comment on the impact of 

limiting the number of plans that issuers 

can offer through the Exchanges and on 

effective methods to achieve this goal, 

the advantages, and disadvantages of 

these methods, and if there are 

alternative methods we have not 

considered. 

We also sought comments on other 

evidence-based approaches to improve 

choice architecture within the 

Exchanges. 

We summarize public comments on 

these topics below, but note that 

comments related to standardized plan 


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Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 27347 

options, changes to the AV de minimis 

ranges, and the meaningful difference 

standard are summarized and addressed 

in more detail earlier in their respective 

sections in the preamble: §§ 156.201, 

156.140, 156.200, and 156.400. We also 

acknowledge and appreciate comments 

on improving choice architecture within 

the Exchanges and on the benefits and 

potential drawbacks of adopting an 

active purchaser model and will take 

these comments into account as part of 

future research and decision-making 

processes. 

Comment: In response to a comment 

solicitation regarding how HHS might 

address choice overload in the 

Exchanges, many commenters 

supported improving choice 

architecture on HealthCare.gov to 

enhance the consumer shopping 

experience, in addition to requiring 

issuers to offer standardized plan 

options. Many commenters suggested 

that HHS provide educational resources 

and accessibility support for consumers, 

such as interactive graphics and videos 

explaining relevant health care and 

insurance terminology. These 

commenters noted that modifying 

choice architecture on HealthCare.gov 

to make it more intuitive and 

educational could greatly benefit 

consumers with low health literacy. 

Similarly, some commenters stated 

that Exchanges should prioritize 

decision support tools that direct 

consumers to consider total out-ofpocket costs instead of premiums. These 

commenters suggested using more plain 

language, utilizing hover text to define 

key terms and distinguishing features, 

improving accessibility for consumers 

with vision impairments, and 

developing tutorials. One commenter 

urged HHS to engage with issuers and 

stakeholders to identify tools and 

features that would be most meaningful 

for consumers. This commenter also 

suggested seeking consumer feedback to 

better identify, test, and launch changes 

to the HealthCare.gov shopping and 

plan selection user interface. 

Response: HHS shares commenters’ 

position that it is extremely important to 

make plan information accessible and 

actionable for all consumers, including 

those with visual, auditory or speech 

disabilities, those for whom English is a 

second language, or those who 

otherwise may have challenges with 

incorporating important but complex 

health insurance plan benefit design 

information into their decision-making 

process. HHS appreciates these 

comments and recommendations on 

additional educational resources to 

maximize consumers’ ability to select 

the best plan for themselves and their 

families, and we note that we will take 

these recommendations into 

consideration as we continue to work 

towards this goal. 

Comment: Many commenters also 

advocated for improving choice 

architecture and decision-support tools 

as an alternative to requiring 

standardized plan options or limiting 

plan offerings. These choice architecture 

suggestions included mandating 

decision-support tools, having shoppers 

‘‘opt-out’’ rather than ‘‘opt-in’’ to 

provide their expected health care 

service utilization, actively redirecting 

consumers to plans with higher AVs 

and lower total costs, displaying 

estimated out-of-pocket costs, and 

highlighting patient-friendly cost 

sharing parameters such as fixed-dollar 

copayments and pre-deductible services 

on plan cards. 

One commenter urged HHS to include 

pop-up alerts and to require consumers 

to click to confirm that they would like 

to enroll in plans with higher costs and 

lower actuarial values. These 

commenters also suggested improving 

the functionality of features such as 

filters and sort options by providers, 

facilities, formularies, quality ratings, 

and networks. One commenter 

encouraged HHS to collect consumer 

preferences and anticipated health care 

service utilization prior to displaying 

plans in order to ensure that plans are 

initially filtered and sorted for 

consumers. This commenter further 

recommended that HHS display the 

highest metal level plans first if the net 

premiums are $0 for multiple metal 

levels within a product. 

Some commenters suggested that HHS 

employ choice architecture 

improvements to direct eligible 

shoppers to CSR plan variations so they 

can utilize the savings available to them. 

Specifically, these commenters 

suggested that an out-of-pocket cost sort 

option could help customers understand 

the concept of total costs and show CSReligible consumers that the most 

generous CSR plan variations are 

guaranteed to have lower total out-ofpocket costs than those of plans at 

higher metal levels. Similarly, some 

commenters recommended 

preferentially displaying silver costsharing reduction variants while 

continuing to display plans from low to 

high total cost. 

Finally, one commenter stated that 

HHS should reform the choice 

architecture on the Exchanges. This 

commenter explained that both Federal 

and State Exchanges should be required 

to implement decision-support tools 

that direct consumers to contemplate 

total costs instead of just premiums. 

This commenter added that Exchanges 

should be required to actively redirect 

consumers to plans that provide the 

lowest cost for the highest actuarial 

value, such as a bronze to a silver plan 

with cost sharing reductions. This 

commenter cited several examples of 

State Exchanges that have implemented 

similar changes. 

Response: HHS appreciates the 

variety and detail of comments on 

methods of enhancing choice 

architecture to further streamline 

consumers’ decision-making process 

and empower individuals to select the 

best plan for themselves and their 

families. We note that we will take these 

comments into consideration as we 

continue to explore advancements in 

choice architecture on HealthCare.gov. 

Comment: A few commenters 

supported HHS adopting an active 

purchaser model in future years. Several 

commenters supported it as part of a 

larger strategy that they stated should 

also include both standardized plan 

options and a meaningful difference 

standard. Some of these commenters 

also stated that the State of California’s 

use of this approach illustrates the 

benefits of limiting the number of plan 

offerings, lowering costs for consumers, 

setting standards for plan quality, and 

fostering robust competition among 

plans seeking entry into the Exchange. 

However, multiple commenters 

opposed HHS adopting an active 

purchaser model for the Federal 

Exchanges, mainly due to concerns that 

doing so would put too much control 

over plan offerings in the hands of the 

Exchange, as opposed to allowing 

issuers the flexibility to design plans 

based on consumer preferences and 

needs. These commenters were also 

concerned that an active purchaser 

model could reduce the number of 

issuers willing to participate in 

Exchanges on the Federal platform by 

requiring issuers who are not selected 

for a given year to pause their 

individual market operations and later 

expend time and resources to apply in 

a future year. 

Response: As noted in the proposed 

rule, HHS acknowledges that a number 

of State Exchanges have successfully 

employed an active purchaser model 

and that we intend to consider whether 

such a model would be appropriate in 

future PYs to further streamline the plan 

selection process for consumers on the 

Exchanges. HHS appreciates comments 

considering the advantages and 

disadvantages of such a model, and we 

will take this feedback into 

consideration as part of future decisionmaking processes. 


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27348 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

F. Part 158—Issuer Use of Premium 

Revenue: Reporting and Rebate 

Requirements 

1. Reimbursement for Clinical Services 

Provided to Enrollees (§ 158.140) 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 691), we proposed to 

amend § 158.140(b)(2)(iii) to clarify that 

only provider incentives and bonuses 

that are tied to clearly-defined, 

objectively measurable, and welldocumented clinical or quality 

improvement standards that apply to 

providers may be included in incurred 

claims for MLR reporting and rebate 

calculation purposes. We are finalizing 

this proposal as proposed. 

Section 2718(a) of the PHS Act 

requires health insurance issuers 

offering group or individual health 

insurance coverage (including a 

grandfathered health plan) to separately 

report the percentage of total premium 

revenue (after certain adjustments) 

expended on reimbursement for clinical 

services provided to enrollees for 

activities that improve health care 

quality, as well as all other non-claim 

(administrative) costs. Section 2718(b) 

of the PHS Act requires a health 

insurance issuer to provide an annual 

rebate to each enrollee if the issuer’s 

MLR falls below the applicable MLR 

standard. Section 158.140 sets forth the 

MLR reporting requirements related to 

reimbursement for clinical services 

provided to enrollees, including a 

requirement in § 158.140(b)(2)(iii) that 

issuers must include the amount of 

incentive and bonus payments made to 

providers with incurred claims. Due to 

the lack of clarity and specificity in the 

regulations, some issuers include an 

overly broad variety of incentive and 

bonus payments made to providers. The 

inclusion of many types of provider 

incentives and bonuses in incurred 

claims is appropriate and consistent 

with the purpose of the statute, but only 

to the extent that such bonuses 

incentivize providers to deliver 

objectively measurable higher-quality 

care and value for enrollees. 

In the course of conducting MLR 

examinations pursuant to §§ 158.401 

and 158.402, we observed some issuers 

reporting incentive or bonus payments 

to providers that are not based on 

quality or performance metrics, but 

rather, involve transferring excess 

premium revenue to providers to 

circumvent MLR rebate requirements 

and avoid paying MLR rebates when 

issuers do not meet the applicable MLR 

standard. The incentive for such 

arrangements is particularly high for 

integrated medical systems where the 

issuer is the subsidiary, owner, or 

affiliate of a provider group or a hospital 

system. Further, in some cases, these 

‘‘incentives’’ or ‘‘bonuses’’ are not even 

paid to the clinical providers, but rather 

to the non-clinical parent holding 

company of the hospital or provider 

group and the issuer. 

We summarize and respond to public 

comments received on the proposal to 

clarify the inclusion of provider 

incentives and bonuses in incurred 

claims (§ 158.140) below. 

Comment: The overwhelming 

majority of commenters supported the 

proposed clarification and 

accompanying regulatory amendment. 

Commenters stated that this regulatory 

provision needs to be clarified and 

tightened to ensure the faithful 

execution of the MLR requirements. 

Commenters further stated that the 

proposed clarification is necessary to 

prevent issuers from evading 

compliance by inappropriately using the 

MLR standard itself to trigger 

‘‘incentive’’ or ‘‘bonus’’ payments and to 

prevent issuers from inflating their 

MLRs by including any such payments 

that are not based on quality or 

performance metrics. 

Response: We appreciate the 

supportive comments and agree that it 

is important to look beyond the labels 

used (for example, provider ‘‘incentive’’ 

or ‘‘bonus’’ payments) to confirm that 

the provider payments meet the 

applicable standards for inclusion in 

incurred claims for MLR reporting 

purposes. After considering public 

comments, we are finalizing the 

amendment to § 158.140(b)(2)(iii), as 

proposed, to explicitly clarify in 

regulation that to be included in 

incurred claims ‘‘incentive’’ or ‘‘bonus’’ 

payments to providers must be tied to 

clearly-defined, objectively measurable, 

and well-documented clinical or quality 

improvement standards that apply to 

providers. Any provider payment that is 

based on the financial condition or 

actions of the issuer may not be reported 

as incurred claims. For example, we 

generally believe that payment 

arrangements between issuers and 

providers that result in there being no 

scenario in which an MLR rebate would 

ever be paid to consumers or that are 

tied to the financial condition or actions 

of the issuer would violate both the 

letter and the spirit of the law. It is 

inappropriate to include such provider 

payments—even if labeled as 

‘‘incentive’’ or ‘‘bonus’’ payments—as 

incurred claims in issuers’ MLR 

calculations. This includes 

arrangements where the MLR standard 

itself is used as the threshold to 

determine whether such a payment is 

due, or because some other metric, such 

as issuer profit or surplus, is used, or if 

the arrangement is otherwise designed 

to substantially avoid compliance with 

the MLR rebate requirements. 

Comment: One commenter that 

supported the proposal recommended 

that HHS also clarify that provider 

incentives and bonuses are not required 

to be excluded from incurred claims 

solely because they incorporate shared 

savings elements or cost efficiency 

requirements in addition to clinical 

quality requirements. This commenter 

further recommended a safe harbor for 

provider incentives that do not exceed 

a specified cap (such as 20 percent), 

make the incentive contingent on 

meeting objective clinical 

measurements, and require disclosure to 

any beneficiary that requests it. 

Response: We confirm that under the 

proposal, the fact that a provider 

incentive or bonus program has a shared 

saving or other cost efficiency element 

does not disqualify the entire incentive 

or bonus from being classified as 

incurred claims, as long as the incentive 

or bonus is tied to clearly-defined, 

objectively measurable, and welldocumented clinical or quality 

improvement standards that apply to 

providers. We do not believe that a safe 

harbor proposed by the commenter is 

necessary and decline to adopt one at 

this time. 

Comment: Several commenters 

requested that HHS distinguish 

alternative payment models such as 

Accountable Care Organization (ACO) 

initiatives, arrangements where the 

issuer shares savings with providers, 

and value-based contracting (VBC) from 

the types of arrangements that were the 

cause for concern, and requested that 

HHS allow all bonuses and incentives 

paid under such alternative payment 

models to be reported as incurred 

claims. These commenters expressed 

concern that the proposal would inhibit 

issuers’ ability to pursue such cost 

containment strategies and suggested 

that the proposal is inconsistent with 

HHS’ support of value-based payment 

models. Some of these commenters 

asserted that purely financial savings 

that reduce the total cost of care are an 

appropriate basis for provider bonuses 

or incentives. Other commenters 

suggested that such alternative payment 

models reduce utilization needs and 

lead to better health outcomes, or at 

least lower costs while continuing to 

provide quality care. 

Response: HHS continues to support 

innovative alternative payment models 

that deliver efficient and high-quality 

care. We further note that the MLR 

statute and HHS implementing 


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347This included arrangements under which 

payments were made to providers any time the 

issuer’s MLR fell below a specified threshold, such 

as the applicable standard established in section 

2718(b)(1)(A)(i) and (ii) of the PHS Act. Other 

arrangements of this nature used a metric tied to 

when the issuer’s profitability exceeded a specified 

threshold. Payments were sometimes made to 

clinical providers or hospitals and other times were 

made to non-clinical parent holding companies. 

348See section 2718(a) of the PHS Act and 45 CFR 

158.110, et seq. 

349We further note that to the extent the issuer 

elects to impose documentation requirements on its 

providers under a value-based payment model or 

other arrangements, those types of requirements 

would fall outside of the MLR calculation and 

rebate framework under section 2718 of the PHS 

Act and the implementing regulations at 45 CFR 

part 158. 

regulations in 45 CFR part 158 do not 

prohibit issuers from adopting a wide 

range of value-based payment models, 

including ones that may not be tied to 

clinical or quality standards. The 

clarification and accompanying 

amendment to § 158.140(b)(2)(iii), 

which we are finalizing as proposed, is 

instead limited in applicability to the 

treatment and reporting of these 

amounts for MLR purposes. As 

explained in the proposed rule (87 FR 

691), in the course of conducting MLR 

audits, we uncovered several instances 

where provider payments labeled as 

‘‘incentive’’ or ‘‘bonus’’ that were 

triggered based on the financial 

condition or actions of the issuer 347

were included in the issuer’s incurred 

claims. This violates the spirit of the 

statute by artificially inflating the 

issuer’s MLR and depriving consumers 

of the rebates they would otherwise be 

owed under section 2718(b) of the PHS 

Act. It is also inconsistent with the 

requirements that dictate separate 

reporting and treatment of the 

percentage of total premium review 

(after certain adjustments) expended on 

reimbursement for clinical services and 

activities that improve health care 

quality, and on all other non-claims 

(administrative) costs.348 In order to 

increase compliance and improve 

program integrity, we are finalizing as 

proposed, the regulatory amendment to 

codify the agency’s existing policy and 

interpretation of the statute regarding 

the treatment of provider ‘‘incentives’’ 

and ‘‘bonuses’’ that are not tied to 

clinical or quality standards for MLR 

reporting and rebate purposes. This will 

further ensure that consumers receive 

value for their premium payments and 

the rebates they are owed under the 

statute. 

We agree with the commenter who 

suggested that value-based payment 

models can reduce utilization and lead 

to better outcomes, or lower costs, 

without compromising the quality of 

care. Issuers employing such models or 

arrangements should be able to 

demonstrate this through the use and 

documentation of appropriate clinical or 

quality metrics and thus such incentive 

or bonus payments would be eligible for 

inclusion in incurred claims. Further, 

we are not aware of any CMS valuebased payment initiatives (such as 

Medicare shared savings initiatives and 

alternative payment models) that do not 

include clinical or quality standard 

requirements and generally disagree the 

adoption of the amendment to 

§ 158.140(b)(2)(iii) is inconsistent HHS’ 

support of innovative, value-based 

payment models. 

Comment: One commenter expressed 

concern that the proposed clarification 

could potentially place (unspecified) 

burdens on physicians to earn the 

incentive and bonus money. 

Response: While we acknowledge the 

comment, as the commenter did not 

provide any specifics regarding 

potential burdens, the substance of the 

commenter’s concern is not clear. We 

note that this provision will not impact 

every provider incentive and bonus 

arrangement since, for example, it is 

unlikely to impact the majority of 

issuers that exceed MLR standards or 

existing arrangements, the majority of 

which are tied to clearly-defined, 

objectively measurable, and welldocumented clinical or quality 

improvement standards applicable to 

providers. In addition, as discussed 

above, this provision does not prohibit 

issuers from adopting value-based 

payment models that may not be tied to 

clinical or quality standards. Nor does 

this provision require issuers to add 

clinical or quality documentation 

requirements on providers to existing 

value-based payment models.349 Rather, 

the amendment to § 158.140(b)(2)(iii), 

which we are finalizing as proposed, is 

limited in applicability to the treatment 

and reporting of these amounts for MLR 

purposes. As explained above, the 

inclusion of provider incentives and 

bonuses in incurred claims when the 

incentives and bonuses fail to 

incorporate clinical or quality standards 

could create incentives to 

inappropriately reduce or even 

withhold medical care and would 

reduce the value consumers receive for 

their premium dollars. 

Comment: One commenter 

recommended that we adopt a narrow 

exception to the reporting requirement 

under § 158.140(b)(2)(iii) for issuer 

payments to providers at risk of 

becoming insolvent due to extraordinary 

circumstances, such as the COVID 

pandemic, subject to prior approval of 

the applicable State regulator. 

According to this commenter, such 

payments in extraordinary 

circumstances may be necessary to 

enable providers to continue providing 

medical care and to ensure that issuers 

were able to comply with network 

adequacy requirements. 

Response: We understand and 

commend issuers that made cash 

payments to help prevent at-risk 

providers from becoming insolvent due 

to the COVID pandemic in order to 

ensure that consumers had access to 

medical care. However, we did not 

propose and are not finalizing the 

exception suggested by the commenter. 

We intend to further consider the 

treatment of such payments in 

extraordinary circumstances under the 

MLR framework codified in 45 CFR part 

158, and would address any policies in 

this regard in future guidance or 

rulemaking, as applicable. 

Comment: One commenter urged HHS 

to exercise greater oversight of 

insurance companies that own or are 

owned by companies that also own 

networks of providers and other health 

care services. The commenter described 

a number of reporting or business 

practices made possible by vertical 

integration in health care that have the 

potential to erode the PHS Act MLR 

protections. According to the 

commenter, these include issuers 

channeling more health care dollars to 

their own provider groups, encouraging 

enrollment in an HDHP and 

contributing to an HSA offered by an 

affiliate, and reporting as QIA the 

expenses for utilization management 

programs that may not actually benefit 

enrollees or improve their health. 

Another commenter agreed that the 

examples of provider incentives 

described in the proposed rule are 

troubling but recommended that the 

more appropriate remedy is stronger 

enforcement rather than clarifying the 

regulations. 

Response: We understand the 

commenter’s concern regarding issuers 

that are integrated with health care 

providers and agree with the 

suggestions and will continue to focus 

our oversight and enforcement on 

ensuring issuer compliance with MLR 

reporting requirements for all of the 

different types of provider arrangements 

or payment models issuers may employ. 

As part of this effort, we intend to 

consider the impact of vertical 

integration on the reporting and 

treatment of provider payments under 

the MLR framework codified in 45 CFR 

part 158, including the impact on 

rebates owed to consumers. However, 

we note that our ability to identify nonVerDate Sep<11>2014 18:46 May 05, 2022 Jkt 256001 PO 00000 Frm 00143 Fmt 4701 Sfmt 4700 E:\FR\FM\06MYR2.SGM 06MYR2

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27350 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

350See 45 CFR 158.110(b). 

compliant reporting of provider 

incentives and bonuses for targeted 

enforcement is limited as the MLR rules 

require issuers to aggregate by State and 

market the amounts they incurred for 

any such incentives and bonuses. 

Additionally, the MLR reporting 

requirements require issuers to report 

only the amounts incurred for provider 

incentives and bonuses and do not 

require them to describe or provide 

details about the incentive or bonus 

program itself. Thus, the level of detail 

that is available does not support easily 

identifying errant practices. In addition, 

we believe that clarification of the 

requirements in regulation is necessary 

and appropriate to increase awareness 

and ensure broad and uniform 

compliance. We also emphasize our 

intention to combine this regulatory 

clarification with heightened oversight 

and monitoring of compliance with 

MLR reporting and rebate requirements 

with respect to these types of 

arrangements to ensure consumers 

receive value for their premium 

payments, consistent with the statute. 

Comment: A few commenters 

requested that the clarification be 

prospective to give issuers sufficient 

time to come into compliance. 

Response: As explained above and in 

the proposed rule, the clarification and 

amendment to § 158.140(b)(2)(iii), 

which we are finalizing as proposed, 

codifies the Department’s existing 

policy and interpretation of the statute. 

Including provider ‘‘incentive’’ or 

‘‘bonus’’ payments that are not based on 

clearly defined, objectively measurable, 

and well-documented clinical or quality 

improvement standards in incurred 

claims artificially inflates the issuer’s 

MLR and deprives consumers of the 

rebates they would otherwise be owed. 

This practice is also inconsistent with 

the statutory requirements that dictate 

separate reporting and treatment of the 

percentage of total premium review 

(after certain adjustments) expended on 

reimbursement for clinical services and 

activities that improve health care 

quality, and on all other non-claims 

(administrative) costs. We further note 

that the MLR requirements established 

under section 2718 of the PHS Act have 

generally been effective since 2011. 

Finally, as noted above, the adoption of 

this regulatory amendment does not 

require issuers to modify existing 

arrangements with providers. Instead, it 

is limited in applicability to the 

treatment and reporting of these 

amounts for MLR purposes. The next 

annual MLR report is not due until July 

31, 2022.350 For all of these reasons, we 

disagree that additional time is needed 

or should be provided for issuers to 

come into compliance. 

After consideration of the comments 

received on this proposal, we are 

finalizing the regulatory amendment to 

§ 158.140(b)(2)(iii) as proposed. 

2. Activities That Improve Health Care 

Quality (§ 158.150) 

In the HHS Notice of Benefit and 

Payment Parameters for 2023 proposed 

rule (87 FR 584, 691 through 692), we 

proposed to amend § 158.150(a) to 

specify that only expenditures directly 

related to activities that improve health 

care quality may be included in QIA 

expenses for MLR reporting and rebate 

calculation purposes. In order to ensure 

reporting consistency among issuers and 

ensure that QIA expenses included in 

the MLR numerator represent the actual 

value provided for consumers’ premium 

dollars, consistent with the purpose of 

section 2718 of the PHS Act, we are 

finalizing the proposal to amend 

§ 158.150(a) to specify that only 

expenditures directly related to 

activities that improve health care 

quality may be included in QIA 

expenses. 

As discussed in the proposed rule (87 

FR 691 through 692), section 2718(a) of 

the PHS Act requires health insurance 

issuers offering group or individual 

health insurance coverage (including a 

grandfathered health plan) to report the 

percentage of total premium revenue 

(after certain adjustments) expended on 

reimbursement for clinical services 

provided to enrollees under such 

coverage, for activities that improve 

health care quality, as well as all other 

non-claims costs. Section 158.221 

defines the numerator of an issuer’s 

MLR to include the issuer’s incurred 

claims plus the issuer’s expenditures for 

activities that improve health care 

quality, as defined in §§ 158.150 and 

158.151. Section 158.150 describes the 

types of activities that qualify as QIA, 

but does not specify the types of 

expenses that may be included as QIA 

expenses, or the extent to which such 

expenses must relate to the activity. The 

lack of clarity in existing regulations has 

caused wide discrepancies in the types 

of expenses that issuers include in QIA 

expenses and creates an unequal 

playing field among issuers. 

Some issuers appropriately include 

only direct expenses, such as the 

salaries of the staff performing actual 

QIA functions in QIA expenses. 

However, other issuers additionally 

allocate indirect expenses such as 

overhead, marketing, lobbying, 

corporate or holding group overhead, 

and vendor profits in QIA expenses. For 

example, some issuers allocate to QIA 

fixed costs—such as office space or IT 

infrastructure—that would, for the most 

part, exist even if the issuer did not 

engage in any QIA. Some issuers 

include in QIA expenses amounts 

exceeding the cost of providing the 

actual QIA service. In addition, some 

issuers include the promotion or 

marketing of their QIA services to group 

policyholders or enrollees as QIA 

expenses. Some issuers also include the 

cost of developing the prices of QIA 

services sold to group policyholders, or 

costs associated with calculating and 

reporting QIA expenses. Further, some 

issuers are not able to precisely 

determine what portion of indirect costs 

is tied to QIA, as many issuers do not 

have an accurate method to quantify the 

actual cost of each expense category as 

it relates to each QIA, and thus issuers 

are often arbitrarily reporting or 

apportioning indirect expenses without 

adequate documentation or support. 

We sought comment on this proposal. 

We summarize and respond to public 

comments received on the activities that 

improve health care quality proposal 

(§ 158.150). We note that we received a 

few comments and suggestions that 

were outside the scope of the proposed 

rule, which are not addressed in this 

final rule. 

Comment: The majority of 

commenters supported the proposal to 

amend § 158.150(a) to specify that only 

expenditures directly related to 

activities that improve health care 

quality may be included in QIA 

expenses. These commenters agreed that 

it is reasonable, appropriate, and 

necessary to prevent issuer MLRs from 

being inflated. 

Most commenters generally agreed 

that overhead costs should not be 

allowed to be reported as QIA. A few 

commenters requested that certain nonsalary expenses associated with 

employees performing QIA functions be 

allowed in QIA expenses. These 

commenters noted that employee 

benefits are part of compensation, and 

that expenses related to office space, 

equipment, and IT infrastructure are 

necessary for such employees to 

perform QIA. Several of these 

commenters stated that issuers should 

be allowed to allocate a portion of 

indirect costs to QIA on a pro rata basis. 

Several commenters requested that we 

provide a specific list of examples of 

expenses that are or are not permitted as 

direct expenses. Another commenter 

suggested that HHS should convene 

stakeholders to discuss an appropriate 

methodology for allocating indirect 

costs to QIA expenses rather than 

adopting the proposed amendment to 


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Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 27351 

351See 45 CFR 158.502. 

352Examples of other indirect expenses identified 

by commenters include costs related to office space, 

equipment, and IT infrastructure. 

353Consistent with 45 CFR 158.502, issuers must 

maintain all documents and other evidence 

necessary to enable HHS to verify that the data 

reported complied with the applicable definitions 

and criteria. 

§ 158.150(a) to specify that only 

expenditures directly related to 

activities that improve health care 

quality may be included in QIA 

expenses. 

Response: We appreciate the 

supportive comments on this proposal. 

We agree with commenters that nonsalary benefits of employees performing 

QIA functions that are part of 

compensation packages are directly tied 

to QIA, and we clarify that we consider 

the cost of such employee benefits to be 

a direct QIA expense. Thus, the issuer’s 

cost of health coverage, retirement 

contributions, life insurance, or similar 

benefits provided to employees actually 

performing QIA may be included in QIA 

expenses under § 158.150(a), as 

amended. However, similar to salary 

costs, such costs may only be included 

up to the percentage that reflects the 

percentage of the employees’ time 

actually spent on QIA. Issuers that 

report such costs as QIA should take 

care to both document and retain 

records supporting the amount(s) 

reported and the determination of what 

portion of these costs are a direct QIA 

expense.351

However, as explained in the 

proposed rule, many of the other 

indirect expenses identified by these 

commenters 352 would be incurred even 

if issuers did not engage in QIA. For 

example, it is unlikely that an issuer’s 

cost of purchasing, renting, and 

maintaining an office building or 

equipment is meaningfully impacted by 

the engagement of some of its 

employees in QIA. Therefore, we 

disagree that expenses for items such as 

office space, equipment, and IT 

infrastructure are directly or in some 

cases even indirectly related to QIA, or 

that they are incurred in the furtherance 

of quality improvement. As such, for 

MLR reporting and rebate purposes, 

these expenses are classified as nonclaims, administrative costs and should 

not be included in the MLR numerator. 

Allowing issuers to report these same 

expenses as expenditures on QIA is 

inappropriate. It would undermine the 

purpose and intent of section 2718 of 

the PHS Act and would allow issuers to 

inflate QIA costs (and the MLR 

numerator) by including fixed costs that 

would be incurred regardless of whether 

the issuer engages in QIA. We also do 

not believe that there is a compelling 

policy rationale to allow issuers to 

automatically shift a pro rata portion of 

such costs to consumers. For the same 

reasons, we do not believe that 

convening stakeholders to discuss an 

appropriate methodology for allocating 

such expenses is necessary. 

We provided multiple examples of the 

types of expenses that we consider to be 

indirect expense that should not be 

reported as QIA in both the proposed 

rule and this rule. Examples include: 

Office space (including rent or 

depreciation, facility maintenance, 

janitorial, utilities, property taxes, 

insurance, wall art), human resources, 

salaries of counsel and executives, 

computer and telephone usage, travel 

and entertainment, company parties and 

retreats, IT systems, and marketing of 

issuers’ products. This list, however, is 

not intended to be exhaustive or allinclusive. As a general matter, expenses 

for items or services that have no direct 

or quantifiable relationship to health 

care quality cannot reported as QIA and 

will not be considered direct QIA 

expenses. Conversely, expenses for 

items or services that primarily or 

exclusively support QIA as opposed to 

regular business or other functions, 

when reasonable and quantifiable, 353

are likely to constitute direct expenses 

that are properly included in QIA 

expenses. We intend to continue to 

monitor issuer QIA reporting and will 

issue further guidance, as may be 

necessary, and welcome stakeholder 

feedback on which other types of 

expenses they would like us to address 

in technical guidance on direct versus 

indirect expenses. 

Comment: Two commenters 

expressed concern that, under the 

proposal, HHS appears to take the 

position that health information 

technology (HIT) expenses, which are 

specifically allowed by §§ 158.150 and 

158.151, cannot be reported as QIA if 

they are determined to be indirect. 

Response: We do not believe that the 

amendment to § 158.150(a) to specify 

that only direct expenses related to 

activities that improve health care 

quality can be included in QIA expenses 

for MLR reporting and rebate purposes 

conflicts with the definition of HIT at 

§ 158.151. Section 158.151 defines HIT 

as specifically being ‘‘designed for use 

by health plans, health care providers, 

or enrollees for the electronic creation, 

maintenance, access, or exchange of 

health information, as well as those 

consistent with Medicare and/or 

Medicaid meaningful use 

requirements.’’ This definition 

recognizes that some information 

technology is HIT; while also 

recognizing that not all information 

technology is HIT. We affirm and clarify 

that HIT expenses that meet the 

applicable requirements in §§ 158.150 

and 158.151 are permissible costs that 

can be included as QIA expenses. For 

example, the cost of software designed 

and used primarily for QIA purposes, 

such as HEDIS reporting, constitutes a 

direct expense related to activities that 

improve health care quality and can be 

included in QIA expenses for MLR 

reporting and rebate purposes. In 

contrast, as explained above and in the 

proposed rule, the costs of IT 

infrastructure that primarily supports 

regular business functions such as 

billing, enrollment, claims processing, 

financial analysis, and cost 

containment, even when the same IT 

infrastructure also happens to support 

QIA activities in addition to regular 

business functions, do not constitute a 

direct expense related to activities that 

improve health care quality and cannot 

be included in QIA expenses for MLR 

reporting and rebate purposes. As a 

simple example, the cost of the 

computer software license for an 

employee that works part of the time on 

QIA should not be allocated to QIA 

expenses for MLR reporting purposes. 

The fact that the employee uses this 

software to write QIA documents in 

addition to other documents does not 

convert this otherwise general nonclaims, administrative cost into one of 

the types of expenses eligible to be 

included in the MLR numerator as QIA 

expenses. 

Comment: A few commenters that 

opposed the proposal disagreed with the 

classification of the administrative 

expenses and profits of issuers’ QIA 

vendors as indirect expenses. These 

commenters stated that this approach 

will disincentivize issuers from 

engaging vendors with appropriate 

expertise. Some commenters stated that 

vendors’ administrative expenses and 

profits should be treated in the same 

manner regardless of whether vendors 

perform clinical services or QIA. 

Response: We disagree that clinical 

providers’ administrative costs and 

profits are analogous to non-clinical 

providers’ administrative costs and 

profits. Clinical services are a provider 

function. QIA, on the other hand, is an 

issuer function. Where an issuer 

performs its own QIA without engaging 

a vendor, any ‘‘profit’’ that it makes on 

such QIA cannot be included in the 

MLR calculation. Accordingly, where an 

issuer chooses to outsource its QIA to a 

third party, rather than developing the 

necessary skills in-house, as it does for 

other issuer functions such as claims 


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27352 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

354See 45 CFR 158.140(3)(ii) and CCIIO Technical 

Guidance (CCIIO 2011–002): Questions and Answer 

Regarding the Medical Loss Ratio Interim Final 

Rule, May 13, 2011, Q&As 10–14, at https://

wayback.archive-it.org/2744/20200125161941/ 

https://www.cms.gov/CCIIO/Resources/Files/ 

Downloads/mlr-guidance-20110513.pdf. 355 86 FR 24140. 

processing, network development, 

clinical policies, and case and 

utilization management, for example, 

for MLR reporting and rebate purposes 

that vendor stands in the shoes of the 

issuer. Consequently, the vendor’s 

indirect costs, as well as any profit, 

cannot be reported as a QIA expense 

that is included in the MLR 

calculation.354 We also disagree with 

the assertion that disallowing issuers to 

include QIA vendor administrative 

expenses and profits in QIA will 

disincentivize issuers from engaging 

with vendors with the appropriate 

expertise because, as noted, if the issuer 

were to perform the QIA itself, those 

same administrative expenses and 

profits would still not be a permissible 

inclusion in QIA. Further, many issuers 

have not been dissuaded from 

outsourcing claims processing, network 

development, clinical policies, and case 

and utilization management (UM) to 

vendors who have the respective, 

requisite expertise even though they 

cannot include the vendor’s 

administrative expenses and profits in 

their MLR calculations. 

Comment: A commenter urged us to 

review how insurers are categorizing 

their UM expenses and set clear 

guardrails around when, if ever, such 

activities can be categorized as QIA. 

Response: We agree with the 

commenter that certain UM activities 

are designed to target cost-containment 

rather than quality improvement. To 

that end, under current regulations at 

§ 158.150(c), issuers cannot include in 

QIA any prospective or concurrent UM 

costs or any retrospective UM costs that 

do not meet the definition of a QIA. 

Additionally, in the course of 

performing MLR examinations, HHS 

routinely reviews the UM program 

expenses that issuers report as QIA to 

ensure they comply with the regulatory 

requirements. We believe the current 

regulations provide sufficient guardrails 

on the reporting of UM expenses and 

therefore did not propose, and are not 

finalizing, any such changes at this 

time. 

Comment: One commenter requested 

that we allow health equity 

accreditation costs in QIA. 

Response: Issuers are currently 

permitted by § 158.150(b)(2)(i)(A)(5) to 

include in QIA expenses the costs 

associated with accreditation fees that 

are directly related to the quality of care 

activities. Therefore, to the extent, a 

health equity activity requiring 

accreditation meets the definition of a 

QIA at § 158.150, such accreditation fees 

can be reported as QIA expenses. 

Comment: One commenter requested 

that the definition of QIA be revised to 

explicitly include issuer payments to 

providers for quality or clinical 

improvements directed at people with 

disabilities, such as the purchase of 

accessible medical and examination 

equipment. 

Response: We did not propose and are 

not finalizing regulatory changes to 

address issuer payments to providers for 

quality or clinical improvements 

directed at people with disabilities. As 

such, modifying the regulation to 

specifically allow issuers to include 

expenses such as payments to clinical 

providers to purchase accessible 

medical office equipment for people 

with disabilities is out of the scope of 

this rulemaking. However, we note that 

to the extent such equipment purchases 

meet the requirements of § 158.150, 

§ 158.151, or § 158.162(c), they may be 

included as QIA expenses in issuers’ 

MLR calculations. 

Comment: A few commenters 

requested that we clarify in which MLR 

reporting year the clarification is 

effective and requested that the effective 

date be prospective, suggesting that it 

should be effective beginning with the 

2023 MLR reporting year to allow for 

contract renegotiation. 

Response: We note that in the course 

of conducting MLR examinations, we 

have consistently disallowed some of 

the more egregious types of indirect 

expenses that issuers have reported and 

which we believe are unambiguously 

inconsistent with the spirit and intent of 

the law. Therefore, we are clarifying that 

this change is effective beginning with 

the 2021 MLR reporting year (reports 

due July 31, 2022). However, to allow 

issuers additional time to revise their 

reporting processes or undergo contract 

negotiations (and renegotiations), we 

intend to maintain the existing 

enforcement posture with respect to the 

MLR reports filed for the 2021 MLR 

reporting year, and will otherwise 

exercise enforcement discretion to not 

penalize issuers who make good faith 

efforts to comply and report QIA 

consistent with the clarifications in this 

rule until the 2022 MLR reporting year 

(reports due July 31, 2023). Issuers 

should not interpret this enforcement 

approach to justify reporting any and all 

indirect QIA expenses on their 2021 

Annual MLR Reporting Forms; instead 

it is intended to provide a transition in 

the limited situations, such as those 

identified by the commenter, that 

present barriers to adjusting the issuer’s 

reporting practices for the 2021 MLR 

reporting year. 

After consideration of the comments 

received on this proposal, we are 

finalizing the amendment to 

§ 158.150(a) to specify that only 

expenditures directly related to 

activities that improve health care 

quality may be included in QIA 

expenses, as proposed. 

3. Allocation of Expenses (§ 158.170) 

As noted in part 2 of the 2022 

Payment Notice final rule, on March 4, 

2021, the United States District Court 

for the District of Maryland decided City 

of Columbus, et al. v. Cochran, 523 F. 

Supp. 3d 731 (D. Md. 2021). Among 

other things, the court vacated 

§ 158.221(b)(8), which provided that 

beginning with the 2017 MLR reporting 

year, an issuer had the option of 

reporting an amount equal to 0.8 

percent of earned premium in the 

relevant State and market in lieu of 

reporting the issuer’s actual 

expenditures for activities that improve 

health care quality, as defined in 

§§ 158.150 and 158.151.355 Accordingly, 

in part 2 of the 2022 Payment Notice 

final rule, we finalized the deletion of 

§ 158.221(b)(8) and removed the option 

allowing issuers to report the fixed, 

standardized amount of QIA and 

reverted to requiring issuers to itemize 

QIA expenditures, beginning with the 

2020 MLR reporting year (MLR reports 

that were due by July 31, 2021). 

However, we inadvertently failed to 

make a conforming amendment to 

§ 158.170(b). Section 158.170 addresses 

allocation of expenses in relation to 

MLR reporting in general. Section 

158.170(b) requires issuers to describe 

the methods used to allocate expenses. 

Specifically, § 158.170(b) requires the 

report required in § 158.110 to include 

a detailed description of the methods 

used to allocate, among other things, 

‘‘quality improvement expenses (unless 

the report utilizes the percentage of the 

premium option described in 

§ 158.221(b)(8), in which case the 

allocation method description should 

state so),’’ to each health insurance 

market in each State. Given the deletion 

of § 158.221(b)(8) in part 2 of the 2022 

Payment Notice final rule, the reference 

in § 158.170(b) to the percentage of 

premium QIA reporting option 

described in § 158.221(b)(8) is no longer 

applicable. Accordingly, we proposed to 

make a technical amendment to 

§ 158.170(b) to correct this oversight and 

remove the reference to the percentage 


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356Health Equity. National Committee for Quality 

Assurance. https://store.ncqa.org/accreditation/ 

health-equity-he.html. 

of premium QIA reporting option 

described in § 158.221(b)(8). 

We summarize and respond to public 

comments received on the allocation of 

expenses proposed technical 

amendment (§ 158.170). 

Comment: No commenters 

commented on this technical correction, 

but a commenter requested we 

reconsider and permit the previous 

allowance for plans to report 0.8 percent 

of earned premium as QIA in the MLR 

numerator to reduce the effort required 

of issuers to identify, track, and report 

QIA. 

Response: While we appreciate the 

comment, as stated above, this change 

aligns § 158.170(b) with the vacatur of 

§ 158.221(b)(8) by the United States 

District Court for the District of 

Maryland in City of Columbus. We are 

therefore finalizing this technical 

correction as proposed. 

G. Solicitation of Comments on Health 

Equity, Climate Health, and Qualified 

Health Plans 

To further HHS’ aims to proactively 

advance health equity and improve the 

health of all Americans, including racial 

and ethnic minorities, sexual and 

gender minorities, people with 

disabilities, individuals with limited 

English proficiency, rural populations, 

and historically underserved 

communities, HHS is considering other 

ways to incorporate health equity 

standards through HHS’ authority to 

enhance criteria for the certification of 

QHPs or by leveraging existing QHP 

requirements such as the Network 

Adequacy Standards at § 156.230 and 

Accreditation of QHP Issuers at 

§ 156.275. We also sought input on 

additional ways to incentivize QHP 

issuers to improve health equity and 

improve conditions in enrollees’ 

environments, as well as to address 

other SDOH outside of the QHP 

certification process. 

We also sought comment on ways 

HHS might improve its understanding 

of the existing landscape of issuer 

collection of health equity data, 

including demographic information, as 

well as comment on how HHS might 

assess data sources that focus on 

population-level factors made available 

by governments, quasi-governmental 

entities, data vendors and other 

organizations. Specifically, we sought 

input on, among other things, health 

equity assessment tools, the challenges 

QHP issuers could face implementing a 

new accreditation product on health 

equity; 356 and information on the 

demographic or SDOH data QHP issuers 

currently collect from enrollees. We 

summarize and respond to public 

comments received on HHS’ solicitation 

of comments on health equity and 

climate health. 

Comment: Commenters supported 

CMS’ suggestion for QHP issuers to 

obtain a health equity accreditation, and 

some specified support for the National 

Committee for Quality Assurance 

(NCQA) Health Equity Accreditation to 

encourage issuers to take meaningful 

steps to advance health equity. Some 

commenters expressed concerns that the 

scope of the NCQA’s Heath Equity 

Accreditation was too narrow, noting 

that the NCQA does not explicitly 

discuss disability status in their 

accreditation language and that the 

accreditation is still new while other 

commenters found the NCQA’s Health 

Equity Accreditation requirements too 

broad. In addition, commenters noted 

that NCQA may have not collaborated 

with the historically marginalized 

groups that are disproportionately 

impacted by health disparities when 

they developed the parameters of the 

accreditation. Furthermore, some 

commenters expressed concern with 

CMS sourcing a health equity 

accreditation from one accrediting body, 

suggesting that other organizations’ 

accreditations may also provide useful 

parameters and requirements. A few 

commenters expressed that requiring 

any additional QHP accreditations 

would create significant cost and 

burdens for issuers. 

Response: We appreciate commenters’ 

input on potentially requiring issuers to 

obtain a health equity accreditation and 

the challenges QHP issuers could face 

implementing a new accreditation 

product. We will consider the feedback 

as we continue to explore options for 

advancing health equity in the 

Exchanges. 

Comment: Commenters supported the 

idea of collecting demographic or SDOH 

data, including information on 

enrollees’ race, ethnicity, gender, sexual 

orientation, primary language, and 

disabilities, while also acknowledging 

the challenges of collecting data. 

Commenters encouraged HHS to set 

standards for how issuers and other 

stakeholders should collect 

demographic data and suggested that 

recommendations from the Institute of 

Medicine, the Williams Institute at the 

University of California, Los Angeles, 

and forthcoming recommendations from 

the National Academies of Sciences, 

Engineering, and Medicine could offer 

foundational guidance. Commenters 

also suggested that HHS set an example 

for improving data collection. 

While noting the importance of 

collecting accurate demographic data, 

some commenters identified data 

sharing and use agreements, Federal 

privacy and data protection laws, State 

laws, and a lack of formal standards for 

collecting data as barriers that may 

impede issuers’ abilities to meaningfully 

collect and use SDOH and demographic 

data. 

Response: We appreciate the 

commenters’ insight into the current 

landscape of demographic data and 

SDOH. We will take these comments 

into consideration when considering 

ways to advance health equity through 

QHPs. 

Comment: Commenters provided 

examples of datasets related to 

population factors that CMS could 

leverage to analyze whether QHP 

networks are providing adequate access 

to health care services for members 

within specific geographic areas, such 

as social vulnerability index scores, 

provider and consumer data, Provider 

Master Index/Shared Provider Profile 

(PMI/SPP), and census data. 

Response: We will consider the use of 

these data sources to analyze and 

evaluate QHPs’ performance related to 

providing equitable access to health care 

services. 

Comment: Some commenters 

commented on the ability of QHP 

issuers to tailor provider networks based 

on the health needs of enrollees in 

specific geographic areas. Commenters 

were supportive of tailored provider 

networks, noting that issuers could 

contract with and develop networks 

based on the health needs of their 

enrollees, which issuers could identify 

through improved data collection. 

Commenters suggested QHP issuers 

could conduct this work in concert with 

CMS’ ECP requirements. 

Response: We appreciate the input 

and will consider the feedback as we 

continue to explore ways to promote 

health equity. 

Comment: Commenters discussed 

health conditions and outcomes 

variables for which analysis and 

measurement may help CMS promote 

health equity. While many of these 

commenters encouraged CMS to use 

appropriate variables to promote health 

equity without providing specific 

feedback, some commenters identified 

populations that were vulnerable and 

may require target interventions to 

improve health outcomes. Some 

examples of the populations identified 


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were minority mothers, individuals 

with diagnosed opioid use disorder or 

substance use disorders, individuals 

with special immigrant juvenile status, 

and individuals with behavioral health 

conditions. 

Some commenters also suggested 

options that CMS could consider to 

effectively use outcome variables for 

analysis and measurement, which 

included relying on network adequacy 

standards to ensure that adequate health 

care services are available and provided, 

adding Value-Based Insurance Designs 

into the Exchanges, increasing the ratio 

of required Essential Community 

Provider contracts, and educating 

providers on the use of ICD–10 z-codes. 

Response: We appreciate the 

suggestions for the use of health 

conditions and outcomes variables for 

which analysis and measurement may 

help CMS promote health equity. HHS 

understands the importance of 

addressing vulnerable populations as it 

continues to explore ways to promote 

health equity. 

Comment: Several commenters 

offered feedback on ways in which CMS 

could encourage QHP issuers to be 

accountable for improving health 

outcomes across all populations 

equitably. Commenters suggested that 

CMS encourage QHP issuers to engage 

with local organizations and become 

more integrated with providers and 

other community partners. Commenters 

also suggested that CMS could hold 

QHP issuers financially accountable for 

integrating with the communities they 

serve or for a small number of clinical 

measures. 

Response: We will consider these 

suggestions as ways to advance health 

equity through QHPs. 

Comment: Some commenters 

suggested that CMS could incentivize 

QHP issuers to advance health equity 

outside of the QHP certification 

requirement by considering activities 

that promote health equity as a QIA 

within MLR calculations or tie equity to 

plans’ quality ratings. Several 

commenters recommended that we 

define QIA to explicitly include 

expenses related to coverage of SDOH 

and interventions that address social 

barriers to care or other health 

disparities. One commenter requested 

that we specify what types of SDOH 

expenses qualify as QIA. 

Response: We appreciate these 

comments and supports issuers’ efforts 

to design plans that improve health 

equity and address SDOH and will 

consider these suggestions as ways to 

promote health equity. While modifying 

the MLR regulation and framework to 

explicitly allow issuers to include 

investments in SDOH is outside the 

scope of this rulemaking, we will 

consider these comments for future 

rulemaking or guidance. We note that 

under the current MLR regulation at 

§ 158.140, issuers can include SDOH 

costs in incurred claims if the SDOH 

expenses are for a covered policy 

benefit. Issuers can also include SDOH 

expenses that do not relate to covered 

benefits in QIA if the underlying 

activity meets the definition and 

applicable criteria for QIA at § 158.150. 

Additionally, issuers exempt from 

Federal income tax or not subject to 

State premium taxes can, pursuant to 

§§ 158.162(b)(1)(vii) or 

158.162(b)(1)(viii), respectively, deduct 

the expense from earned premium to the 

extent their SDOH expenses meet the 

regulatory definition of Community 

Benefit Expenditures under 

§ 158.162(c). 

Comment: Commenters discussed 

challenges that QHP issuers face in 

promoting and advancing health equity, 

but did not specify strategies that could 

overcome these challenges. Challenges 

included lack of Federal guidance and 

standardization for data collection. 

Response: We appreciate the feedback 

and will consider these suggestions as 

we explore ways to promote health 

equity. 

Comment: Commenters suggested 

several health equity tools that may help 

CMS address health disparities within 

QHPs, for example, Area Deprivation 

Index, Population Health Assessment, 

Consumer Assessment of Healthcare 

Providers and Systems (CAHPS) Survey, 

additional NCQA resources, and 

updated HEDIS health equity measures. 

In addition, commenters noted the 

Institute of Medicine, the Williams 

Institute at UCLA, and the National 

Academies on race, ethnicity, and 

language (REL) could offer models for 

health equity tools that CMS may want 

to consider. 

Response: We will consider these 

health equity tools as a way to advance 

health equity through QHPs. 

HHS also sought comment on how 

Exchanges and related health care 

system organizations can more readily 

prepare for the impacts of climate 

change. HHS believes that it is critical 

to study and prepare for these impacts 

given mounting evidence linking 

climate change to catastrophic natural 

events and chronic disease 

disproportionately harming at-risk 

populations including groups already 

suffering serious health disparities. 

Comment: Of the 52 total comments 

received by HHS, all commenters 

acknowledged the threats climate 

change presents to human health and 

supported health care stakeholders 

considering the impact of climate 

change on their enrollees, providers, 

and employees. Twenty-five 

commenters supported the collection 

and public reporting of greenhouse gas 

emissions data by providers and, in 

fewer cases, issuers. Thirteen 

commenters noted the importance of 

preparing health care systems for 

climate health threats by identifying atrisk enrollees prior to climate change 

events to better assist them with access 

to cooling and clean air resources. 

Twelve commenters suggested tying 

health care system and provider 

reimbursement to action on climate 

change and emissions reduction. Some 

commenters suggested incentives tied to 

action, and others suggested fines due to 

lack of commitment. Twelve 

commenters discussed the relationship 

between climate change and social 

determinants of health, noting the 

importance of anticipating and 

managing climate change’s impact on 

the health of certain marginalized and 

high-risk populations. Nine commenters 

suggested that issuers or health care 

systems should further educate 

providers and enrollees about the health 

effects of climate change. Three 

commenters noted the importance of 

creating or updating measures sensitive 

to climate health impacts. Two 

commenters noted the strong 

connection between climate change and 

respiratory health problems. Additional 

commenters noted the impact of climate 

change on maternal and child health; 

women’s health; skin cancers; and 

maintaining care quality. Commenters 

also mentioned the need to develop 

better forecasting tools to anticipate 

climate disasters and threats; 

maintaining care quality, and consider 

supply chain contributions to overall 

health care sector emissions. 

Specific insight was shared on 

possible actions health care systems and 

issuers could take to better support 

preparedness for climate disasters and 

related impacts, especially for at-risk 

populations, and the opportunity for 

issuers to provide education and 

technical assistance on climate 

resilience and emissions reduction to 

providers and enrollees. 

Response: These comments will 

inform HHS in determining how best to 

support the health care system and 

benefit delivery changes in response to 

climate change. These comments also 

will inform HHS through its Office of 

Climate Change and Health Equity, as 

well as other Federal agencies pursuing 

policies on climate change. 


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357May 2021 National Occupational Employment 

and Wage Estimates. Available at Occupational 

Employment Statistics. (2022, March 31). Bureau of Labor Statistics. https://www.bls.gov/oes/current/ 

oes_stru.htm. 

We will consider these comments as 

we consider ways QHPs can be more 

effective in addressing climate health. 

IV. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995 (PRA), 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 OMB for 

review and approval. This final rule 

contains information collection 

requirements 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 Tables 

18 and 19. To fairly evaluate whether an 

information collection should be 

approved by OMB, section 3506(c)(2)(A) 

of the PRA requires that we solicit 

comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

We solicited public comment on each 

of the required issues under section 

3506(c)(2)(A) of the PRA for the 

following information collection 

requirements. 

We summarize general comments on 

the Collection of Information 

Requirements (ICR) below: 

Comment: A few commenters 

provided general comments regarding 

the ICR section of the proposed rule. 

These commenters urged HHS to 

consider the impact of the various data 

collection requirements on impacted 

entities. One commenter noted that the 

burden estimates contained in the ICR 

compound, and urged HHS to consider 

their total impact on the affected 

entities. Another commenter requested 

that HHS suspend new data collection 

on the proposed policies during the 

COVID–19 PHE to relieve the 

operational burden on impacted 

entities. 

Response: We have carefully 

considered the burden of the 

information collection requirements 

associated with the proposed policies, 

including their combined impact, which 

is quantified in the Final Annual 

Recordkeeping and Reporting 

Requirements Tables, and the 

Accounting Table. While we appreciate 

the burden placed on all systems during 

the COVID–19 PHE, we believe that the 

new information collections for the 

finalized policies are necessary to carry 

out the proper functions of the agency. 

A. Wage Estimates 

To derive wage estimates, we 

generally used data from the Bureau of 

Labor Statistics to derive average labor 

costs (including a 100 percent increase 

for fringe benefits and overhead) for 

estimating the burden associated with 

the ICRs.357 Table 17 in this final rule 

presents the mean hourly wage, the cost 

of fringe benefits and overhead, and the 

adjusted hourly wage. As indicated, 

employee hourly wage estimates have 

been adjusted by a factor of 100 percent. 

This is necessarily a rough adjustment, 

both because fringe benefits and 

overhead costs vary significantly across 

employers, and because methods of 

estimating these costs vary widely 

across studies. Nonetheless, there is no 

practical alternative, and we believe that 

doubling the hourly wage to estimate 

total cost is a reasonably accurate 

estimation method. 

B. ICRs Regarding State Flexibility for 

Risk Adjustment (§ 153.320) 

We are finalizing the proposal to 

repeal the risk adjustment State 

flexibility to request reductions to risk 

adjustment State transfer payments for 

the 2024 benefit year and beyond, as 

proposed. We are also finalizing, as 

proposed, to provide an exception for 

the States that previously submitted 

State flexibility requests under 

§ 153.320(d) to allow those States to 

continue to request this flexibility in the 

2024 benefit year and beyond. As part 

of this policy, we are also finalizing, as 

proposed, the removal of the option for 

States applying under this exception in 

the 2024 benefit year and beyond to 

demonstrate the State-specific factors 

that warrant an adjustment to more 

precisely account for relative risk 

differences in the State individual 

catastrophic, individual noncatastrophic, small group, or merged 

market risk pool as a justification for the 

State’s request and the criteria for HHS 


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358 82 FR 51118. 

359HHS will collect these data elements in a 

format that is consistent with the 2011 HHS Data 

Standards. We also will provide a value for the race 

or ethnicity data elements that allows issuers to 

indicate that race or ethnicity are not known for a 

specific enrollee in recognition of situations where 

the enrollee declines to provide the information and 

situations where the issuer does not have an 

available data source to populate the fields. 

360After the transitional approach ends 

(beginning in the 2025 benefit year), the option to 

select the value to indicate race or ethnicity are not 

known for a specific enrollee will be available to 

issuers who comply with the good faith standard 

but are unable to populate the race or ethnicity 

EDGE data field for one or more enrollees. 

approval. This retains the de minimis 

standard as the only option for prior 

participants to justify the reduction and 

for HHS to approve a request and is 

designed to help ensure that consumers 

would not experience an increase in 

premiums greater than 1 percent as the 

result of a State requested reduction in 

transfers. Further, we are finalizing this 

policy as proposed with the intention to 

propose in future rulemaking to repeal 

the exception for prior participants 

beginning with the 2025 benefit year to 

provide impacted stakeholders 

additional time to prepare for this 

proposed change and the potential 

elimination of this flexibility. Consistent 

with these policies, we finalized various 

amendments to the risk adjustment 

State flexibility regulations at 

§ 153.320(d) to reflect the general repeal 

of this flexibility, with the exception of 

prior participants, and to remove one of 

the criteria for State justification and 

HHS approval beginning with the 

benefit year 2024 requests. 

The burden associated with this 

requirement is the time and effort for 

the State regulator to submit its request 

and supporting evidence and analysis to 

HHS. Since publishing the proposed 

rule, we have updated the burden 

associated with this requirement based 

on the most recent available national 

occupational employment and wage 

estimates statistics. We estimate that 

submitting the request and supporting 

evidence and analysis will take a 

business operations specialist 40 hours 

(at a rate of $76.20 per hour) to prepare 

the request and 20 hours for a senior 

operations manager (at a rate of $110.82 

per hour) to review the request and 

transmit it electronically to HHS. We 

estimated that each State seeking a 

reduction will incur a burden of 60 

hours at a cost of approximately 

$5,264.40 per State to comply with this 

reporting requirement (40 hours for the 

insurance operations analyst and 20 

hours for the senior manager). We have 

updated the estimated burden related to 

the submission of these requests 

because only one State, will continue to 

have this ability to make this request on 

the policy being finalized in this rule. In 

the 2019 Payment Notice,358 we 

estimated that 25 States would submit 

requests and provided a total burden of 

approximately 1,500 hours across all 

States, which would total $131,610 

based on current wage estimates. Since 

we estimate that only one State will 

continue to request reductions, we 

estimate that this burden will be 

reduced by $126,345.60 to a total annual 

cost of $5,264.40, reflecting the burden 

associated with one State’s submission. 

We are finalizing this proposal to 

account for the burden associated with 

this revision, HHS submitted a 

reinstatement request to OMB for 

approval of the previously expired 

information collection request (OMB 

control number 0938–1155/CMS– 

10401). As noted in previous sections of 

this rule, HHS intends to propose in 

future rulemaking to fully repeal the 

State flexibility framework and 

eliminate the ability of prior 

participants to request reductions in risk 

adjustment transfers starting with the 

2025 benefit year. 

We did not receive any comments in 

response to the information collection 

requirements related to the proposed 

policy. 

C. ICRs Regarding Distributed Data and 

Risk Adjustment Data Submission 

Requirements (§§ 153.610, 153.700, and 

153.710) 

We are finalizing the proposal to 

collect and extract five new data 

elements from issuers’ EDGE servers: 

ZIP Code, race, ethnicity, ICHRA 

indicator, and subsidy indicator 

beginning with the 2023 benefit year. 

Specifically, we are finalizing that 

starting with the 2023 benefit year, 

issuers will be required to populate the 

ZIP Code data field, using the five-digit 

level based on the enrollee’s mailing 

address, and the subsidy indicator data 

field, which is intended to indicate 

whether a particular enrollee is (or is 

not) receiving APTC. For the 2023 and 

2024 benefit years, we are adopting a 

transitional period during which issuers 

are required to populate the fields for 

race and ethnicity using only data they 

already collect or have accessible 

regarding their enrollees.359 For 

example, for the 2023 and 2024 benefit 

years, for race and ethnicity data, 

issuers will be deemed in compliance if 

they submit these data elements using 

data they already have or collect 

through existing means, including, for 

example, through enrollee data captured 

and reported to the issuer by the FFE, 

SBE–FPs, and State Exchanges at the 

time of enrollment. Then, beginning 

with the 2025 benefit year, the 

transitional approach will end, and 

issuers will be required to populate the 

fields using available sources and, in the 

absence of such an existing source for 

particular enrollees, to make a good 

faith effort to ensure collection and 

submission of the race and ethnicity 

data for these enrollees. 

We are also finalizing, with slight 

modification, collection of the ICHRA 

indicator. For the 2023 and 2024 benefit 

year, similar to the transitional 

approach for race and ethnicity data, 

issuers are required to populate the field 

for the ICHRA indicator using only data 

they already collect or have accessible 

regarding their enrollees. Then, 

beginning with the 2025 benefit year, 

the transitional approach will end, and 

issuers will be required to populate the 

field using available sources (for 

example, information from Exchanges 

and small employers, and requesting 

information directly from enrollees) 

and, in the absence of an existing source 

for particular enrollees, to make a good 

faith effort to ensure collection and 

submission of the ICHRA indicator for 

these enrollees. HHS will provide 

additional details on what constitutes a 

good faith effort to ensure collection and 

submission of the race, ethnicity, and 

ICHRA indicator data elements 

beginning with 2025 benefit year data 

submissions in the future.360

In addition, as detailed earlier, we are 

finalizing the extraction of the three 

data elements that issuers already make 

accessible to HHS as part of the required 

risk adjustment data—plan ID, rating 

area, and subscriber indicator—but will 

extract plan ID and rating area 

beginning with the 2021 benefit year, 

and the subscriber indicator beginning 

with the 2022 benefit year. We 

concluded the proposals to extract these 

data elements will not pose an 

additional operational burden to issuers, 

since the creation and storage of the 

extract—which issuers do not receive— 

is mainly handled by HHS. Therefore, 

we did not propose to change the 

existing burden for the proposal to 

extract plan ID, rating area, and 

subscriber indicator. 

For the five new data elements we 

proposed to collect beginning with the 

2023 benefit year, we estimated that 

approximately 600 issuers would be 

subject to this new data collection. We 

proposed to collect these new data 

elements via issuers’ ESES files and risk 

adjustment recalibration enrollment 

files. In the proposed rule (87 FR 584 

and 695), we estimated a cost of 


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361 Issuers that elect a risk adjustment default 

charge are not required to submit EDGE data. See 

45 CFR 153.740(b) and 81 FR at 12237–12238. Also 

see, for example, Summary Report on Permanent 

Risk Adjustment Transfers for the 2020 Benefit Year 

(2021, June 30). CMS. https://www.cms.gov/CCIIO/ 

Programs-and-Initiatives/Premium-StabilizationPrograms/Downloads/RA-Report-BY2020.pdf. 

362While the preamble in the proposed rule 

referred to amendments to add new 

§ 155.220(c)(3)(i)(A)(1) through (c)(3)(i)(A)(5), the 

discussion of the proposal and the proposed 

regulations made clear that the proposal would add 

new § 155.220(c)(3)(i)(A)(1) through (c)(3)(i)(A)(6). 

See, for example, 87 FR 641 through 642 and 721 

through 722. 

approximately $375.28 in total labor 

costs for each issuer, which reflects 4 

hours of work by a management analyst 

per issuer at an average hourly rate of 

$93.82 per hour. The cumulative 

additional cost estimate as a result of 

this proposal was $225,168 for 600 

issuers (2,400 total hours per year for all 

issuers). We explained the proposals to 

extract these data elements would not 

pose an additional operational burden 

to issuers, since the creation and storage 

of the extract are mainly handled by 

HHS. We are finalizing the proposed 

collection and extraction of ZIP Code, 

race, ethnicity, the ICHRA indicator, 

and the subsidy indicator. HHS 

submitted a reinstatement request to 

OMB for approval of the previously 

expired information collection request 

(OMB control number 0938–1155/CMS– 

10401). Once reinstated, HHS will 

revise the information collection request 

to account for the burden associated 

with this policy, and will provide the 

applicable comment periods. 

After a review of the comments 

received, and after incorporating the 

most recently updated wage estimate 

data, we are updating the burden 

estimates for this policy as described 

below. 

We summarize and respond to public 

comments received on ICRs related to 

Distributed Data and Risk Adjustment 

Data Submission Requirements 

(§§ 153.610, 153.700, and 153.710) 

below. 

Comment: One commenter disagreed 

with the estimated 4 hours of work per 

issuer to collect and submit additional 

data elements estimated in this section 

of the proposed rule and reflected in the 

regulatory impact analysis of the 

proposed rule. The commenter stated 

that the cost associated with these 

collection and extraction proposals 

would be 500 hours of work per issuer. 

The commenter did not provide further 

detail regarding the methodology used 

to calculate its burden estimate of 500 

hours. 

Response: We are finalizing the 

proposal to require issuers of risk 

adjustment covered plans to submit and 

make accessible five new data elements 

(ZIP Code, race, ethnicity, the ICHRA 

indicator, and the subsidy indicator) as 

part of the enrollee-level EDGE data to 

HHS in States where HHS operates the 

risk adjustment program beginning with 

the 2023 benefit year. We are also 

finalizing the accompanying proposal 

for HHS to extract these data elements 

once available. To better reflect the most 

current agency estimates, we have 

modified the estimates from our 

proposed rule. Currently, all issuers that 

submit data to their EDGE servers 361

have automated the creation of data files 

that are submitted to their EDGE servers. 

For successful EDGE server data 

submission, each issuer will need to 

update their file creation process to 

include the five new data elements, 

which will require a one-time 

administrative cost. After incorporating 

the most recently updated wage 

estimate data, we estimate this cost at 

$2,899.80 (reflecting 30 hours of work 

by a management analyst at an average 

hourly rate of $96.66 per hour). In 

addition, rather than 4 hours of work, 

we now estimate, based on the most 

current agency estimates, that the new 

data collection will require 5 hours of 

work by a management analyst (one 

hour of work per new data element 

collected), at an average hourly rate of 

$96.66 per hour. We have limited this 

estimate to the incremental information 

collection associated with the 

requirements of the new data collection. 

As such, although the new data 

collection requires that issuers 

transform and submit additional data 

elements, it does not require changes to 

the process or distributed data 

collection approach currently used by 

an issuer to submit and make risk 

adjustment data accessible to HHS, 

which is via issuers’ ESES files and risk 

adjustment recalibration enrollment 

files on their EDGE servers. We also 

estimate that approximately 650 issuers, 

rather than 600 issuers as initially 

estimated, will be subject to this new 

data collection. Based on these 

modifications, we estimate 

approximately $483.30 in total labor 

costs per year for each issuer. In 

addition, the cumulative one-time cost 

to update issuers’ file creation process is 

$1,884,870 for 650 issuers (19,500 total 

hours for all issuers). The cumulative 

additional annual cost estimate as a 

result of this proposal is $314,145 for 

650 issuers (3,250 total hours per year 

for all issuers). 

In addition, we are finalizing the 

proposed extraction of the three data 

elements that issuers already make 

accessible to HHS as part of the required 

risk adjustment data—plan ID, rating 

area, and subscriber indicator—but will 

extract plan ID and rating area 

beginning with the 2021 benefit year, 

and the subscriber indicator beginning 

with the 2022 benefit year. As explained 

previously in this rule and in the 

proposed rule, extracting these data 

elements will not pose an additional 

operational burden to issuers since the 

creation and storage of the extract are 

not received by issuers and is primarily 

handled by HHS. Therefore, there is no 

additional issuer burden associated with 

extracting any of the new data elements 

that will be collected (ZIP Code, race, 

ethnicity, the ICHRA indicator, and the 

subsidy indicator), or with extracting 

the data elements that are already being 

collected (plan ID, rating area, and 

subscriber indicator). 

D. ICRs Regarding Ability of States To 

Permit Agents and Brokers and WebBrokers To Assist Qualified Individuals, 

Qualified Employers, or Qualified 

Employees Enrolling in QHPs 

(§ 155.220) 

In this final rule, we are finalizing the 

proposal to revise § 155.220(c)(3)(i)(A) 

to include at proposed new 

§§ 155.220(c)(3)(i)(A)(1) through (6) 362 a 

list of the QHP comparative information 

web-broker non-Exchange websites are 

required to display consistent with 

§ 155.205(b)(1). We are also finalizing 

the proposal to revise the disclaimer 

requirement in § 155.220(c)(3)(i)(A) so 

that web-broker non-Exchange websites 

would be required to prominently 

display a standardized disclaimer 

provided by HHS stating that 

enrollment support is available on the 

Exchange website and provide a web 

link to the Exchange website where 

enrollment support for a QHP is not 

available using the web-broker’s nonExchange website. We are finalizing as 

proposed. 

The revised disclaimer policy should 

result in a very limited new burden for 

web-brokers. The new standardized 

disclaimer requires web-brokers to make 

minor updates to their non-Exchange 

websites in cases where they do not 

support enrollment in all available 

QHPs. However, in those cases, webbrokers will be displaying a disclaimer 

much like the plan detail disclaimer 

that they have historically been required 

to display. 

We estimated the revised disclaimer 

policy will affect approximately 20 webbrokers based on the number of webbrokers currently approved by CMS and 

our internal knowledge of entities that 

have expressed interest in becoming 


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27358 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

363 82 FR 18346. 

364Essential Health Benefits in Alternative 

Benefit Plans, Eligibility Notices, Fair Hearing and 

Appeal Processes, and Premiums and Cost Sharing; 

web-brokers. Given the minor 

modifications necessary to implement 

the revised disclaimer, we estimated a 

cost of $411 in total labor costs for each 

web-broker, which reflects 5 hours of 

work by Web Developers and Digital 

Interface Designers (15–1257) per webbroker (100 hours across all web-brokers 

annually) at an average hourly rate of 

$82.20. The cumulative additional cost 

estimate as a result of this policy is 

$8,220 for 20 web-brokers in the 2022 

benefit year. We have updated these 

estimates based on the most recent 

available national occupational 

employment and wage estimates. We 

estimate a cost of $459 in total labor 

costs for each web-broker, which 

reflects 5 hours of work by Web and 

Digital Interface Designers (15–1255) per 

web-broker (100 hours across all webbrokers annually) at an average hourly 

rate of $91.80. The cumulative 

additional cost estimate as a result of 

the revised disclaimer policy is $9,180 

for 20 web-brokers in the 2022 benefit 

year. We are finalizing this proposal and 

will revise the information collection 

under OMB control number 0938–1349 

accordingly and provide the applicable 

comment periods. 

We are also finalizing the proposal to 

amend § 155.220 to add a new 

paragraph (c)(3)(i)(M) that would 

require web-broker websites to 

prominently display a clear explanation 

of the rationale for explicit QHP 

recommendations and the methodology 

for the default display of QHPs on their 

websites (for example, alphabetically 

based on the plan name, from lowest to 

highest premium, etc.). We are 

finalizing as proposed. 

This policy should result in very 

limited new costs for web-brokers, since 

the information it requires they display 

on their websites is limited to text-based 

changes that are relatively easy to 

implement. Some web-brokers are 

already providing the information, and 

therefore, will not have to make any 

website updates. Other web-broker 

websites do not explicitly recommend 

QHPs, and therefore, the impact is 

limited to providing similar information 

about the methodology for their default 

display of QHPs (for example, 

explaining QHPs are sorted from lowest 

to highest premium, etc.), assuming they 

do not already provide that information. 

Furthermore, the extent of those textual 

updates should be relatively minor in 

most cases. We expect explanations to 

be short and easy for consumers to 

understand. Generally, we believe that a 

single phrase or a few sentences will 

suffice. 

We estimated this policy will affect 

approximately 20 web-brokers. Given 

the minor text-based changes necessary 

to implement the informational text 

detailing the rationale for QHP 

recommendations and the methodology 

for a default display of QHPs, we 

estimated a cost of $411 in total labor 

costs for each web-broker, which 

reflects 5 hours of work by Web 

Developers and Digital Interface 

Designers (15–1257) per web-broker 

(100 hours across all web-brokers 

annually) at an average hourly rate of 

$82.20. The cumulative additional cost 

estimate as a result of this policy is 

$8,220 for 20 web-brokers in the 2022 

benefit year. We have updated these 

estimates based on the most recently 

available national occupational 

employment and wage estimates. We 

estimate a cost of $459 in total labor 

costs for each web-broker, which 

reflects 5 hours of work by Web and 

Digital Interface Designers (15–1255) per 

web-broker (100 hours across all webbrokers annually) at an average hourly 

rate of $91.80. The cumulative 

additional cost estimate as a result of 

this policy is $9,180 for 20 web-brokers 

in the 2022 benefit year. We are 

finalizing this proposal and will revise 

the information collection under OMB 

control number 0938–1349 accordingly 

and provide the applicable comment 

periods. 

E. ICRs Regarding Verification of 

Eligibility for Special Enrollment 

Periods (§ 155.420) 

Since 2017, the Exchanges on the 

Federal platform have implemented preenrollment special enrollment period 

verification for special enrollment 

period types commonly used by 

consumers to enroll in coverage. We 

proposed to amend § 155.420 to add a 

new paragraph (g) to State that 

Exchanges may conduct pre-enrollment 

eligibility verification for special 

enrollment periods at the option of the 

Exchange. The Exchanges on the 

Federal platform would verify special 

enrollment period eligibility for the 

most common special enrollment period 

type, loss of minimum essential 

coverage. This special enrollment 

period type comprises the majority of all 

special enrollment period enrollments 

on the Exchanges on the Federal 

platform. 

Since consumers on Exchanges on the 

Federal platform currently must provide 

eligibility verification documentation 

for more special enrollment period 

types, the provision would decrease the 

burden on consumers applying for 

special enrollment period types that no 

longer require pre-enrollment 

verification. We expected that it takes 

an individual, on average, about 1 hour 

to gather and submit the relevant 

documentation needed for preenrollment special enrollment period 

eligibility verification. This estimate is 

based on the assumption that each 

individual required to submit 

documentation will submit, on average, 

two documents for review. It could take 

significantly less time if an individual 

already has the documents on hand, or 

more time if the individual needs to 

procure documentation from a 

government agency or other source. 

Based on enrollment data for 

Exchanges on the Federal platform, we 

estimate that HHS eligibility support 

staff members would conduct preenrollment verification for 194,000 

fewer individuals compared to a total of 

970,000 individuals in 2019. We 

estimated that once individuals have 

submitted the required verification 

documents, it would take an Eligibility 

Interviewer approximately 12 minutes 

(at an hourly cost of $46.14) to review 

and verify submitted verification 

documents. We have updated these 

estimates to reflect the most recent wage 

estimates based on the most recent 

national occupational employment and 

wage estimates. We anticipate that it 

will take an Eligibility Interviewer 

approximately 12 minutes (at an hourly 

cost of $46.70) to review and verify 

submitted verification documents. In 

2017, the Exchanges on the Federal 

platform expanded pre-enrollment 

special enrollment period verification to 

include five special enrollment period 

types and estimated an annual 

additional administrative burden of 

130,000 hours at a cost of $5,306,600.363

Limiting pre-enrollment verification to 

one special enrollment period type 

would decrease the annual 

administrative burden of special 

enrollment period verification. The 

proposed change would result in a 

decrease in the annual burden for the 

Federal Government of 38,800 hours at 

a cost of $1,811,960. It would also result 

in a decrease in the annual burden for 

consumers attesting to special 

enrollment period types that no longer 

require document verification of 

194,000 hours. 

We are finalizing this requirement 

and the related burden decrease 

discussed in this section will be 

submitted for OMB review and approval 

as part of a revision of the information 

collection currently approved under 

OMB control number 0938–1207 

(Expiration date: February 29, 2024).364


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Exchanges: Eligibility and Enrollment (CMS– 

10468). 

We did not receive any comments in 

response to the information collection 

requirements related to the proposed 

policy. 

F. ICRs Regarding General Program 

Integrity and Oversight Requirements 

(§ 155.1200) 

1. Programmatic Audit Requirement 

(§ 155.1200(c)) 

We proposed to add § 155.1200(e) to 

permit a State Exchange to meet the 

requirement to conduct an annual 

independent external programmatic 

audit, as described at § 155.1200(c), by 

completing an audit that year under the 

SEIPM audit process we proposed under 

part 155, subpart P. We estimated that 

there would be a burden reduction for 

State Exchanges related to the 

programmatic audit requirement under 

§ 155.1200(c). Based on industry 

estimates of the average cost of 

contracting an auditor to conduct an 

independent external programmatic 

audit, HHS estimated that the cessation 

of contracting such audit entities would 

result in an annual cost reduction of 

approximately $90,000 for each State 

Exchange, which is described in detail 

in the RIA section of this rule. 

Additionally, staff resources would no 

longer be needed to submit the results 

of the programmatic audit as a 

component the SMART. This proposal 

would remove the burden associated 

with reporting requirements, which 

includes the burden for a management 

analyst taking 3 hours (at $93.82 an 

hour) to pull data into a report, the time 

and effort necessary for a policy analyst 

taking 2 hours (at $93.82) to prepare the 

report of the audit results, and the time 

for a senior manager taking 1 hour (at 

$155.52 an hour) to review and submit 

to CMS. We estimated the burden of 6 

hours at a cost of $624.62 for each State 

Exchange. Therefore, the aggregate 

burden for the 18 State Exchanges that 

manage their own eligibility and 

enrollment platforms is 108 hours at a 

cost of $11,243.16. 

Based on these estimates, we expected 

the cost reduction associated with 

compiling and reporting audit data to 

total $11,243.16 across all 18 State 

Exchanges beginning in the 2024 benefit 

year. 

We requested comment on the 

reduction in burden proposed, and 

specifically sought feedback from State 

Exchanges regarding the annual cost of 

the programmatic audit process. 

We did not receive any comments in 

response to the information collection 

requirements related to the proposed 

policy. We are not finalizing this 

provision at this time. Since we are not 

finalizing this provision, we have not 

provided updated burden estimates 

based on the most recently published 

wage estimate date. We provide further 

details in the preamble section of this 

final rule. 

2. Reporting on APTC Calculation 

Methodology (§ 155.1200(b)(2)) 

We are finalizing to codify the 

proposed APTC proration methodology 

to be used by the Exchanges on the 

Federal platform, but we are not 

finalizing the requirement to prorate 

premium or APTC amounts for State 

Exchanges. Rather, beginning in PY 

2024 we will require State Exchanges to 

implement a methodology to ensure that 

the total monthly APTC amount does 

not exceed an enrollee’s monthly PTC 

eligibility to maintain compliance with 

HHS and IRS regulations. We are also 

finalizing the requirement that State 

Exchanges must prospectively report to 

HHS through existing State Exchange 

oversight mechanisms described at 

§ 155.1200(b)(2) the methodology the 

State Exchange plans to use in PY 2024. 

The requirement to report this 

methodology to HHS will be fulfilled 

through the SMART and will impose 

minimal burden on State Exchanges, 

who already report on eligibility and 

enrollment and compliance with other 

Exchange program requirements 

through this tool. This information 

collection is currently approved under 

OMB control number: 0938–1244 

(Expiration date July 31, 2022/CMS– 

10507). 

G. ICRs Regarding State Exchange 

Improper Payment Measurement 

Program (§§ 155.1500–155.1540) 

1. Data Collection (§ 155.1510) 

As described in the preamble to 

§ 155.1510, we explain the sampling 

process for each SEIPM review cycle. In 

§ 155.1510(a)(1), we proposed that HHS 

will provide State Exchanges with the 

pre-sampling data request, which State 

Exchanges will complete and return to 

HHS. Both the pre-sampling data 

request and the requested source data 

are in an electronic format. The burden 

associated with completion and return 

of the pre-sampling data request would 

be the time it would take each State 

Exchange to interpret the requirements, 

analyze and design the database queries 

based on the data elements identified in 

the SEIPM data request form, develop 

the database queries, test the data, 

perform verification and validation of 

the data, and return the form to HHS. 

Once the pre-sampling data request is 

returned to HHS, HHS will draw the 

sample for each State Exchange. In 

§ 155.1510(a)(2), we proposed that HHS 

will provide the sampled unit data 

request to the State Exchange for 

completion and return to HHS. The 

sampled unit data request will include 

the sampled units specific to each State 

Exchange. Both the sampled unit data 

request and the requested source data 

are in an electronic format. The burden 

associated with the completion and 

return of the sampled unit data request 

would be the time it would take each 

State Exchange to interpret the 

requirements, analyze and design the 

database queries based on the data 

elements identified in the SEIPM data 

request form, develop the database 

queries, test the data, perform 

verification and validation of the data, 

and return the form to HHS. 

We expected respondent costs will 

not substantially vary since the data 

being collected is largely in a digitized 

format and that each State Exchange 

will be providing information for 

approximately 100 sampled units. We 

did not expect reporting costs to vary 

considerably based on sample size. We 

sought comment on these assumptions. 

We estimated completion of the presampling data request would take 12 

hours per respondent at an estimated 

$1,364 per respondent. We estimate 

completion of the sampled unit data 

request would take 707 hours per 

respondent at an estimated cost of 

$73,054 per respondent. To compile our 

estimates, we referenced our experience 

in collecting data in our FFE pilot 

initiative. We identified specific 

personnel and the number of hours that 

would be involved in collecting the 

sampled unit data broken down by 

specific area (for example, eligibility 

verification, auto re-enrollment, 

periodic data matching, enrollment 

reconciliation, plan management, and 

manual reviews including document 

retrieval). Additionally, to account for 

the time needed for any State Exchanges 

to convert hard copies to a digitized 

format, we added 20 hours for each 

State Exchange into the burden 

estimates. 

HHS estimated based on May 2020 

Bureau of Labor Statistics Occupational 

Codes and vary from $45.98 (adjusted to 

$91.96 to account for overhead) to 

$77.76 (adjusted to $155.52 to account 

for overhead) depending on occupation 

code and function. With a mean hourly 

rate of $103.50 for the respective 

occupation codes, the burden across the 

18 State Exchanges equals 12,942 hours 

for a total cost of up to $1,339,523. 


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27360 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

365See 85 FR 29164, 29244. 366 86 FR 24140. 

2. Determination of Error Findings 

Decision and Appeal Redetermination 

(§§ 155.1525 and 155.1530) 

As described in the preamble to 

§ 155.1525, Redetermination of Error 

Findings Decision, a State Exchange 

may file a request with HHS to resolve 

issues with HHS’ findings within the 

deadline prescribed in the annual 

program schedule. 

The burden associated with the 

information collection requirements 

contained in §§ 155.1525 and 155.1530 

is the time and effort necessary to draft 

and submit a request for a 

redetermination of an error findings 

decision and, if requested, an appeal of 

a redetermination decision. In 

accordance with 5 CFR 1320.4, 

information collected during the 

conduct of an administrative action is 

not subject to the PRA. As a result, we 

believed the burden associated with 

these requirements is exempt from the 

PRA under 44 U.S.C. 3502(3)(A)(i). 

3. Corrective Action Plan (§ 155.1535) 

As described in the preamble to 

§ 155.1535, we proposed that State 

Exchanges may be required to develop 

and implement corrective action plans 

following a completed SEIPM 

measurement designed to reduce 

improper payments as a result of 

eligibility determination errors. The 

burden associated with this requirement 

is the time and effort put forth by State 

Exchanges to develop and submit a 

corrective action plan to HHS. We 

estimated that it would take each 

selected State Exchange up to 1,000 

hours to develop a CAP. We estimated 

that the total annual burden associated 

with this requirement for up to 18 State 

Exchange respondents would be up to 

18,000 hours. Assuming the 

management analyst average hourly rate 

of $93.82 per hour, we estimated that 

the cost of a corrective action plan per 

State Exchange could be up to $93,820, 

and for all 18 State Exchanges, up to 

$1,688,760. 

After reviewing the public comments 

received for the SEIPM program 

proposal, we will not finalize this 

provision at this time. We have not 

provided updated burden estimates for 

any of the elements associated with the 

SEIPM program policy to reflect the 

most recent wage estimate data, as we 

are not finalizing this provision and the 

final estimated burden will not be 

included in the Accounting Table (Table 

20). We summarize and respond to 

public comments received on ICRs 

Regarding State Exchange Improper 

Payment Measurement program 

(§§ 155.1500 through 155.1540) below. 

Comment: One commenter stated 

their State Exchange currently expends 

approximately $280,000 annually on 

other audit requirements. The 

commenter noted the SEIPM program 

will require significant changes to their 

reporting systems, as well as providing 

access to certain data. The commenter 

noted that CMS’ estimated annual cost 

of the SEIPM program at $3 million is 

over 10 times what their State Exchange 

spends on all of its current audits. Other 

commenters did not estimate the dollar 

amount of the burden cost to their State 

Exchanges but expressed concern about 

duplicative data collection and needed 

IT investments. 

Response: After considering the 

public comments received, we will not 

finalize the SEIPM program proposal at 

this time. We will solicit public 

comments on the SEIPM program in 

future rulemaking. 

H. ICRs Regarding State Selection of 

EHB-Benchmark Plan for Plan Years 

Beginning on or After January 1, 2020 

(§ 156.111) 

We proposed to eliminate the 

requirement at § 156.111(d) and (f) to 

require States to annually notify HHS in 

a form and manner specified by HHS, 

and by a date determined by HHS, of 

any State-required benefits applicable to 

QHPs in the individual or small group 

market that are considered to be in 

addition to EHB in accordance with 

§ 155.170(a)(3) and any benefits the 

State has identified as not in addition to 

EHB and not subject to defrayal, 

describing the basis for the State’s 

determination. 

Under this proposal, States would no 

longer be required to submit an annual 

report that complies with each 

requirement listed at § 156.111(f)(1) 

through (6), nor would HHS identify 

which benefits are in addition to EHB 

for the applicable PY in the State if a 

State does not submit an annual 

reporting package. 

As States are already required under 

§ 155.170 to identify which Staterequired benefits are in addition to EHB 

and to defray the cost of QHP coverage 

of those benefits, the 2021 Payment 

Notice estimated that a majority of 

States, approximately 41, would submit 

annual reports and that 10 States would 

not submit annual reports.365

The 2021 Payment Notice estimated 

that the burden for each State to meet 

this reporting requirement in the first 

year would be 30 hours, with an 

equivalent cost of approximately $2,459, 

with a total first year burden for all 41 

States of 1,230 hours and an associated 

total first year cost of approximately 

$100,829. Because the first year of 

annual reporting was intended to set the 

baseline list of State-required benefits 

which States would update as necessary 

in future annual reporting cycles, the 

2021 Payment Notice explained that the 

burden associated with each annual 

reporting thereafter would be lower than 

the first year. The 2021 Payment Notice 

therefore estimated that for each annual 

reporting cycle after the first year the 

burden for each State to meet the annual 

reporting requirement would be 13 

hours with an equivalent cost of 

approximately $1,117, with a total 

annual burden for all 41 States of 533 

hours and an associated total annual 

cost of approximately $45,817. The 

average annual burden over 3 years was 

estimated at approximately 765 hours 

with an equivalent average annual cost 

of approximately $64,154. 

Given that we did not require States 

to submit annual reports in 2021 

pursuant to our enforcement posture in 

part 2 of the 2022 Payment Notice final 

rule,366 repealing the annual reporting 

requirement will also remove the 

associated ICRs and the anticipated 

burden on States submitting such 

reports. Thus, as we are finalizing as 

proposed, we will request 

discontinuation of the ICRs associated 

with the repealed annual reporting 

requirement (OMB control number: 

0938–1174 Essential Health Benefits 

Benchmark Plans (CMS–10448)/ 

Expiration date: February 29, 2024). 

After reviewing the public comments, 

we are finalizing the repeal of the 

annual reporting policy at § 156.111(d) 

and (f), including revising the section 

heading to § 156.111 to instead read, 

‘‘State selection of EHB-benchmark plan 

for PYs beginning on or after January 1, 

2020.’’ 

I. ICRs Regarding Differential Display of 

Standardized Plan Options on the 

Websites of Web-Brokers (§ 155.220) and 

QHP Issuers (§ 156.265) 

As detailed above, we are resuming 

enforcement of the standardized plan 

option differential display requirements 

for approved web-brokers and QHP 

issuers using a direct enrollment 

pathway to facilitate enrollment through 

an FFE or SBE–FP—including both the 

Classic DE and EDE Pathways—at 

§§ 155.220(c)(3)(i)(H) and 

156.265(b)(3)(iv), respectively, 

beginning with the PY 2023 open 

enrollment period. 

We estimated that a total of 110 webbrokers and QHP issuers participating in 

the FFEs and SBE–FPs would be 


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Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 27361 

367 81 FR 94118. 

368The ECP/NA template requires QHP issuers to 

report only that number of providers sufficient to 

demonstrate compliance with relevant 

requirements. 

required to comply with these 

requirements. We estimated that it 

would take a web developer/digital 

interface designer (OES occupational 

code 15–1257) 2 hours annually, at an 

average hourly cost of $82.20 per hour, 

to implement these changes, at a total 

annual cost of $164.40 per entity. 

Therefore, we estimated a total annual 

burden of 220 hours at a cost of $18,804 

for all applicable web-brokers and QHP 

issuers. Since the proposed rule, we 

have updated these estimates to reflect 

the most recently available national 

occupational employment and wage 

data. We estimated that it would take a 

web digital interface designer (OES 

occupational code 15–1255) 2 hours 

annually, at an average hourly cost of 

$91.80 per hour, to implement these 

changes, at a total annual cost of 

$183.60 per entity. Therefore, we 

estimated a total annual burden of 220 

hours at a cost of $20,196 for all 

applicable web-brokers and QHP 

issuers. 

Consistent with the approach 

finalized in the 2018 Payment Notice,367

we continue to recognize that system 

constraints may prevent web-broker and 

QHP issuers from mirroring the 

HealthCare.gov display. We therefore 

will continue to permit web-brokers and 

QHP issuers that use a direct enrollment 

pathway to facilitate enrollment through 

an FFE or SBE–FP to submit a request 

to deviate from the display on 

HealthCare.gov, with approval from 

HHS. Any requests from web-brokers 

and QHP issuers seeking approval for an 

alternate differentiation format would 

be reviewed based on whether the same 

level of differentiation and clarity is 

being provided under the requested 

deviation as is provided on 

HealthCare.gov. 

We estimated that 55 of the above 

web-brokers and QHP issuers would 

submit a request to deviate from the 

manner in which standardized plan 

options are differentially displayed on 

HealthCare.gov. We estimated it would 

take a compliance officer (OES 

occupational code 13–1041) 

approximately 1 hour annually, at a rate 

of $72.70 per hour, to complete the 

request to deviate from the display on 

HealthCare.gov, as well as the 

justification for the request. Therefore, 

we estimated a total annual burden for 

all web-brokers and issuers subject to 

the differential display requirements 

submitting a request to deviate of 

approximately $3,998.50 beginning in 

2023. Since the proposed rule, we have 

updated these estimates to reflect the 

most recently available national 

occupational employment and wage 

estimates. We estimate it would take a 

compliance officer (OES occupational 

code 13–1041) approximately 1 hour 

annually, at a rate of $72.90 per hour, 

to complete the request to deviate from 

the display on HealthCare.gov, as well 

as the justification for the request. 

Therefore, we estimated a total annual 

burden for all web-brokers and issuers 

subject to the differential display 

requirements submitting a request to 

deviate of approximately $4009.50 

beginning in 2023. 

To account for the burden associated 

with this ICR, (Non-Exchange Entities— 

OMB control number 0938–1329 (CMS– 

10666)) HHS submitted a reinstatement 

request to OMB for approval to restore 

the previously discontinued request. 

We did not receive any comments in 

response to the information collection 

requirements related to the proposed 

policies. 

J. ICRs Regarding Network Adequacy 

and Essential Community Providers 

(§§ 156.230 and 156.235) 

We are finalizing amendments to 

§ 156.230, including the adoption of 

standards related to time and distance 

and appointment wait time to assess 

QHP issuers’ fulfillment of the 

reasonable access network adequacy 

standard. HHS finalized raising the ECP 

provider participation standard from 20 

percent to 35 percent. Issuers will 

continue to submit provider facility 

information and geographic location of 

participating ECPs participating in an 

issuer’s provider network or other 

documentation necessary to 

demonstrate that an issuer has a 

sufficient number and geographic 

distribution of ECPs for the intended 

service areas. This is done to ensure 

QHP enrollees have reasonable and 

timely access to providers that serve 

predominantly low-income, medically 

underserved individuals in accordance 

with ECP inclusion requirements found 

at § 156.235. 

Additionally, issuers must collect and 

submit provider information necessary 

to demonstrate satisfaction of time and 

distance standards and appointment 

wait time standards to ensure that an 

issuer’s network has fulfilled the 

network adequacy reasonable access 

standard found at § 156.230. Reviews of 

appointment wait time standards will 

begin in the QHP certification cycle for 

PY 2024. Lastly, an issuer must report 

the offering of telehealth services for 

each provider to help inform the future 

development of telehealth standards. 

We provided the definition of telehealth 

in the draft PY 2023 Letter to Issuers. 

Issuers will be required to respond yes 

or no as to whether each network 

provider offers telehealth. As described 

in the preamble, issuers who do not 

have the information available by the 

time of the QHP certification process 

can respond that they have requested 

the information from the provider and 

are awaiting the response. 

HHS anticipates burden for 

completing the ECP/NA template will 

increase based on the changes in this 

final rule to an estimated 20 hours in 

total for each medical QHP submitted by 

issuers and 4 hours in total for each 

SADP submitted by issuers. This 

estimate is inclusive of the requirement 

to report provider facility information 

and the geographic location of ECPs in 

an issuer’s provider network. Since we 

are finalizing raising the ECP threshold 

from 20 percent to 35 percent, QHP 

issuers will need to submit information 

on a sufficient number of their 

contracted ECPs to meet the higher 

threshold.368 Some issuers have 

previously only included enough 

contracted ECPs on the template in 

order to meet the current threshold for 

that year’s certification process. For 

those issuers, the increase in the ECP 

threshold would somewhat increase the 

burden in completing the ECP/NA 

template as they would need to include 

more contracted ECPs on the template to 

meet the standard. Notwithstanding, 

HHS estimates that the burden 

associated with showing compliance 

with the increased ECP threshold will 

account for 3 hours of the total 20 hours 

we estimate for completing the ECP/NA 

template for medical QHPs and 1 hour 

of the total 4 hours we estimate for 

SADPs. 

The 20-hour burden estimate for the 

ECP/NA template also includes the 

burden resulting from the requirement 

that QHP issuers report information 

relevant to compliance with time and 

distance standards and appointment 

wait time standards. For PYs 2018– 

2022, HHS deferred reviews of network 

adequacy for QHPs to States that HHS 

determined to have a sufficient network 

adequacy review process, which was all 

FFE States for that time period. As HHS 

resumes network adequacy reviews, we 

finalized a broader provider specialty 

list for time and distance standards than 

was evaluated for PYs 2015–2017. We 

also added appointment wait time 

standards and will begin implementing 

network adequacy reviews of 

appointment wait time standards in PY 

2024. HHS estimates that the burden 


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27362 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

369Occupational Employment and Wages, May 

2021. (2022, March 31). Bureau of Labor Statistics. 

https://www.bls.gov/oes/current/oes131041.htm. 

associated with the requirement that 

QHPs report information sufficient to 

show compliance with the proposed 

network adequacy standards would 

account for 12 of the total 20 hours we 

estimate for completing the ECP/NA 

template for medical QHPs, and 1 hour 

of the total 4 hours we estimate for 

SADPs. 

The 20-hour estimate also includes 

the burden associated with the 

requirement that issuers report whether 

network providers provide telehealth 

services. HHS believes that many QHP 

issuers already collect and maintain 

information on whether network 

providers furnish telehealth services. 

Approximately half of the parent 

companies of issuers on the FFEs also 

offer Medicare Advantage plans. Since 

Medicare Advantage offers a telehealth 

credit for network adequacy, we expect 

those issuers would already have 

telehealth information available for their 

providers. HHS further is of the view 

that those QHP issuers that do not 

currently collect this information may 

do so using the same means and 

methods by which they already collect 

information from their network 

providers relevant to time and distance 

standards and provider directory 

information. For these reasons, HHS 

estimates that any additional burden 

relative to the requirement that QHP 

issuers report whether each network 

provider is furnishing telehealth 

services would lead to a minimal 

increase in burden for many issuers. 

The requirement to report whether 

providers offer telehealth services 

would account for 4 of the total 20 

hours we estimate for completing the 

ECP/NA template for medical QHPs and 

1 of the total 4 hours we estimate for 

SADPs. Finally, we estimate it will take 

1 hour for issuers, including both 

medical QHPs and SADPs, to submit the 

ECP/NA template and complete the 

portions of the Issuer Module that are 

relevant to these reviews. 

We estimated that the total annual 

burden associated with completing the 

additional requirements proposed 

within the ECP/NA template for medical 

QHPs for up to 215 issuers would be up 

to 4,300 hours. Assuming the 

compliance officer’s average hourly rate 

of $36.35 per hour, plus a 100% fringe 

benefit rate of $36.45, we estimated that 

the cost of completing the ECP/NA 

template for an individual medical QHP 

could be up to $1,454, and for all 215 

issuers, up to $312,610. We estimated 

that the total annual burden associated 

with this requirement for SADPs for up 

to 270 issuers would be up to 1,080 

hours. Assuming the compliance 

officer’s average hourly rate of $36.35 

per hour, plus a 100 percent fringe 

benefit rate of $36.35, we estimated that 

the cost of completing the ECP/NA 

template for an individual SADP could 

be up to $290.80, and for all 270 issuers, 

up to $78,516. The total estimated cost 

for the annual burden associated with 

completing the ECP/NA template across 

both medical QHP and SADP issuers is 

$391,126. 

Since publishing the proposed rule, 

we have updated these estimates to 

reflect the most recently available 

national occupational employment and 

wage estimates. We currently estimate 

that the total annual burden associated 

with completing the additional 

requirements proposed within the ECP/ 

NA template for medical QHPs for up to 

215 issuers would be up to 4,300 hours. 

Assuming the compliance officer’s 

average adjusted hourly rate of $72.90 

per hour, we estimate that the cost of 

completing the ECP/NA template for an 

individual medical QHP could be up to 

$1,458 and for all 215 issuers, up to 

$313,470. We estimate that the total 

annual burden associated with this 

requirement for SADPs for up to 270 

issuers would be up to 1,080 hours. 

Assuming the compliance officer’s 

average adjusted hourly rate of $72.90 

per hour, we estimate that the cost of 

completing the ECP/NA template for an 

individual SADP could be up to 

$291.60, and for all 270 issuers, up to 

$78,732. The total estimated cost for the 

annual burden associated with 

completing the ECP/NA template across 

both medical QHP and SADP issuers is 

$392,202. 

HHS submitted the Essential 

Community Provider-Network 

Adequacy (ECP/NA) Data Collection to 

Support QHP Certification information 

collection request (OMB control number 

0938–NEW/CMS–10803) to OMB to 

request approval for data collections 

related to essential community provider 

and network adequacy requirements, 

which includes the changes finalized in 

this final rule. The existing information 

collection for QHP certification (OMB 

control number: 0938–1187 (CMS– 

10433)/Expiration date: June 30, 2022) 

includes the data collection and burden 

information for the ECP/NA template, 

outside of what is in this rule. 

We summarize and respond to public 

comments received on ICR regarding 

network adequacy and essential 

community providers (§§ 156.230 and 

156.235) below. 

Comment: Commenters submitted two 

remarks regarding the burden estimates 

associated with the addition of 

telehealth data collection reporting for 

SADPs. Commenters expressed concern 

that the burden was underestimated for 

SADPs and should be reassessed. The 

commenters shared that they believe the 

burden is underestimated because: 

SADPs do not currently collect data on 

telehealth; the estimate does not include 

costs for a second reviewer; and the 

hourly rate and total estimated hours are 

too low. 

Response: We appreciate the feedback 

received on the burden estimates for 

SADPs. HHS is aware that the actual 

burden will vary for each QHP based on 

a variety of factors. We acknowledge 

that telehealth data collection may 

increase the burden for some QHPs, 

including SADPs. We are also aware 

that some QHPs already have telehealth 

data available, from sources like claims 

data or provider surveys. We have 

reflected the telehealth data collection 

requirement in our burden estimates 

and believe these estimates are 

reasonable. For issuers that have not yet 

received responses from providers 

regarding telehealth availability and do 

not have that information available from 

other sources, like claims data, they can 

select the response on the template that 

they are awaiting a response from that 

provider. 

For QHP certification data collection 

and reporting, we use the mean hourly 

wages for a compliance officer to 

estimate costs. This data was retrieved 

from the Bureau of Labor Statistics 

website.369 HHS believes that this job 

title and associated hourly wage provide 

a reasonable basis for our estimates. We 

understand that multiple staff at 

different levels may be involved and the 

total number of anticipated hours 

reflects that. It is up to each issuer to 

determine their process for collecting 

and reporting ECP/NA data and how 

many staff are involved. We will collect 

user experience data regarding the 

information collection requirements 

related to network adequacy and will 

reassess burden estimates for future 

years as needed. 

Comment: Two commenters 

expressed concern that the burden 

estimate was too low. 

Response: HHS believes the burden 

estimates accurately reflect the time it 

takes for an issuer to complete the 

activities described in this package and 

bases its estimates on extrapolation from 

experience in prior plan years. 

Comment: One commenter stated that 

updates made to ECP/NA data 

collection are necessary and should be 

approved. 

Response: HHS agrees that the ECP/ 

NA data collection is necessary to 


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370OMB control number 0938–1266 (CostSharing Reduction Reconciliation (CMS–10526)/ 

Expiration date: July 31, 2024). 

support the ECP/NA portions of the 

QHP certification review process. 

Comment: Some commenters 

recommended that HHS defer to States 

that have similar network adequacy 

standards as the Federal network 

adequacy standards, and coordinate 

with States and NAIC where possible. 

Response: As described in the 

preamble of this rule, HHS will defer to 

States performing plan management that 

elect to perform their own reviews 

during QHP certification, provided that 

the State applies and enforces network 

adequacy standards that are at least as 

stringent as the Federal standards. HHS 

will continue to coordinate with States 

and NAIC. 

Comment: A commenter encouraged 

HHS to identify plans that use very 

narrow networks as a discriminatory 

enrollment selection process rather than 

to control costs. 

Response: HHS appreciates this 

suggestion and will consider the 

possibility of identifying plans that use 

narrow networks as a method to deter 

consumers with greater health needs 

from enrollment. 

Comment: Some commenters 

recommended that HHS align network 

adequacy standards with NCQA and 

Utilization Review Accreditation 

Commission (URAC) standards. 

Response: HHS reviewed the NCQA 

and URAC standards regarding network 

adequacy. We believe it is appropriate 

to align with NCQA in its use of 

business days to measure appointment 

wait time standards, which will be 

finalized in the final PY 2023 Letter to 

Issuers. We will also finalize that the 

appointment wait time standard for the 

behavioral health category will align 

with NCQA’s standards. NCQA and 

URAC do not have quantitative 

parameters for the other categories we 

are finalizing for appointment wait 

times nor do they have quantitative 

standards for time and distance. 

Comment: One commenter requested 

HHS allow providers from multiple 

network tiers to be considered when 

assessing network adequacy. 

Response: HHS is not finalizing the 

network tiering policy for network 

adequacy. 

Comment: Some commenters 

requested that HHS defer network 

adequacy standards until PY 2024 and 

defer appointment wait time standards 

until COVID-related provider staffing 

issues are addressed. 

Response: HHS is finalizing 

appointment wait time standards and 

delaying implementation until PY 2024. 

Comment: Some commenters shared 

concerns that plans will not have 

enough time to implement changes 

required by the proposed network 

adequacy policies and that plans do not 

have sufficient details on the 

implementation plans for these policies. 

Some commenters offered feedback on 

specific provider types and requested 

more detail on how provider types are 

defined. One commenter requested 

clarification about aspects of the ECP/ 

NA template, such as telehealth data 

collection, provider specialty codes, and 

time and distance parameters. 

Response: HHS included details on 

the implementation of network 

adequacy policies in the draft 2023 

Letter to Issuers and believes issuers 

will have sufficient time to comply with 

time and distance standards for PY 2023 

and appointment wait time standards 

beginning in PY 2024. Further 

information, including detail on 

definitions of provider types and 

clarification requested regarding aspects 

of the ECP/NA template, will be 

included in the ECP/NA template, 

FAQs, QHP Application Instructions, 

and other related documents. 

Comment: One commenter requested 

deferral of telehealth data collection. 

Response: HHS will collect data from 

issuers on which providers offer 

telehealth as many issuers already have 

this information, can gather it during 

the required timeframe, or can select 

that they have requested information 

from the provider and are awaiting their 

response. 

Comment: Two commenters 

recommended a clear network adequacy 

justification process. 

Response: HHS has developed 

streamlined justification processes for 

network adequacy and ECP that are 

described in the preamble. 

Comment: Some commenters 

requested that HHS use a phased-in 

approach to increasing the ECP 

threshold or that HHS defer raising the 

ECP threshold until PY 2024. 

Response: HHS is finalizing the ECP 

threshold for PY 2023 as proposed as we 

anticipate the majority of issuers will be 

able to meet the standard and the 

justification process can be used by 

issuers that are working to come into 

compliance with the ECP standards. 

Comment: One commenter requested 

HHS consider a different approach to 

assess network adequacy in rural areas. 

Response: HHS believes the time and 

distance standards for rural areas are 

reasonable based on our review of 

industry standards. We will assess time 

and distance standards at the county 

level. Rural counties and counties with 

extreme access considerations will have 

time and distance parameters that are 

longer than more metropolitan areas. 

Comment: A commenter asked HHS 

to exclude SADPs from appointment 

wait time standards requirement. 

Response: HHS does not agree that 

SADPs should be exempt from 

compliance with appointment wait time 

standards. HHS believes it is important 

that timely access to care is ensured, 

regardless of plan type. HHS will 

evaluate all plans seeking QHP 

certification, including SADPs, for 

compliance with appointment wait 

times beginning in PY 2024. 

Comment: One commenter 

recommended that HHS provide 

additional opportunities for stakeholder 

feedback on the implementation of 

network adequacy policies. 

Response: HHS will continue seeking 

stakeholder feedback on network 

adequacy policies on an ongoing basis. 

HHS received one out-of-scope 

comment to which we have not 

responded in this final rule. 

K. ICRs Regarding Payment for CostSharing Reductions (§ 156.430) 

We proposed several amendments to 

§ 156.430 to clarify that CSR data 

submission is mandatory for those 

issuers that received CSR payments 

from HHS for any part of the benefit 

year and voluntary for other issuers. The 

currently approved burden estimate is a 

total cost of $235,683 (2,362.50 hours) 

across 150 issuers ($1,571.22 per issuer), 

which accounts for 0.75 hours per issuer 

to complete and submit the Issuer 

Summary Report to HHS each year and 

15 hours per issuer to complete and 

submit the Standard Methodology Plan 

and Policy Report to HHS each year.370

We expected that these proposals will 

reduce the burden associated with the 

CSR data submission process when HHS 

is not making CSR payments to QHP 

issuers, as we expect that the number of 

issuers submitting CSR data each year 

will decrease due to these proposals. We 

have revised the information collection 

currently approved under OMB control 

number: 0938–1266 (Cost-Sharing 

Reduction Reconciliation (CMS–10526)/ 

Expiration date: July 31, 2024) to 

account for this decreased burden when 

HHS is not making CSR payments to 

QHP issuers. 

We did not receive any comments in 

response to the information collection 

requirements related to the proposed 

policy. 

L. ICRs Regarding Quality Improvement 

Strategy (§ 156.1130) 

We did not propose and are not 

finalizing any amendments to the 


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371 80 FR 10750, 10844 through 10848. 372 86 FR 24261. 

regulatory text in 45 CFR 156.1130, 

which outlines QIS data collection and 

submission framework established in 

the 2016 Payment Notice.371 The 

information collections associated with 

QIS data collection and submission 

requirements are currently approved 

under OMB control number 0938–1286 

(Quality Improvement Strategy 

Implementation Plan and Progress 

Report (CMS–10540)/Expiration date: 

February 25, 2024) and encompasses the 

estimated burden and costs associated 

with a QIS submission that may include 

several QIS topic areas. In this rule, we 

are finalizing, as proposed, that 

beginning with QIS submissions in 

calendar year 2023 (for the PY 2024 

coverage), a QHP issuer would be 

required to address reducing health and 

health care disparities as one of the QIS 

topic areas in addition to at least one 

other topic area outlined in section 

1311(g)(1) of the ACA, including: 

Improving health outcomes of plan 

enrollees, preventing hospital 

readmissions, improving patient safety 

and reducing medical errors, and 

promoting wellness and health. We did 

not estimate additional burden to be 

accounted for since the current QIS 

submission form already encompasses 

the estimated burden and costs 

associated with a QIS submission that 

may include several QIS topic areas. 

We did not receive any comments in 

response to the information collection 

requirements related to the proposed 

policy. 

M. ICRs Regarding Medical Loss Ratio 

(§§ 158.140, 158.150, 158.170) 

We are finalizing the proposed 

amendments to § 158.140 to codify in 

regulation that only those provider 

incentives and bonuses that are tied to 

clearly defined, objectively measurable, 

and well-documented clinical or quality 

improvement standards that apply to 

providers may be included in incurred 

claims for MLR reporting and rebate 

calculation purposes. We are also 

finalizing amendments to § 158.150 to 

specify that only expenditures directly 

related to activities that improve health 

care quality may be included in QIA 

expenses for MLR reporting and rebate 

calculation purposes. We are also 

finalizing the proposed technical 

amendment to § 158.170(b) to correct an 

oversight and remove the reference to 

the percentage of premium QIA 

reporting option described in 

§ 158.221(b)(8), which was deleted in 

part 2 of the 2022 Payment Notice final 

rule.372 We anticipate that 

implementing these provisions will 

require minor changes to the MLR 

Annual Reporting Form Instructions but 

will not significantly increase the 

associated reporting burden. The burden 

related to this information collection is 

currently approved under OMB control 

number: 0938–1164 (Medical Loss Ratio 

Annual Reports, MLR Notices, and 

Recordkeeping Requirements (CMS– 

10418)). The control number is 

currently set to expire on July 31, 2024. 

We did not receive any comments in 

response to the information collection 

requirements related to the proposed 

policies. 

N. Summary of Annual Burden 

Estimates for Proposed Requirements 


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Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 27365 

This final rule includes several 

policies with information collection 

requirements for which we use this 

rulemaking as the Federal Register 

notice through which to receive 

comment on their proposed revisions to 

or submissions of ICRs. These proposals 

include Verification of Eligibility for 

Special Enrollment Periods (§ 155.420), 

and the proposals on Network 

Adequacy and Essential Community 

Providers (§§ 156.230 and 156.235) and 

the proposal regarding Differential 

Display of Standardized Plan Options 

(§§ 155.220) and 156.265). 

The following policies with 

associated information collection 

requests that require revision to align 

with policies in this rule, including 

State Flexibility for Risk Adjustment 

(§ 153.320), Risk Adjustment Distributed 

Data and Risk Adjustment Data 

Submission Requirements (§§ 153.610, 

153.700 and 153.710), and the Ability of 

States To Permit Agents and Brokers 

and Web-Brokers To Assist Qualified 

Individuals, Qualified Employers, or 

Qualified Employees Enrolling in QHPs 

(§ 155.220) will be submitted for OMB 

approval outside of this rulemaking, 

through a separate Federal Register 

notice. 

The policies for Quality Improvement 

Strategy (§ 156.1130), Medical Loss 

Ratio (§§ 158.140, 158.150, 158.170), 

Payment for Cost-Sharing Reductions 

(§ 156.430), and Reporting APTC 

Calculation Methodology 

(§ 155.1200(b)(2)) contain information 

collections which are currently 

approved by OMB that do not require 

revision. One policy, the State Selection 

of EHB-Benchmark Plan for Plan Years 

Beginning on or After January 1, 2020 

(§ 156.111), as finalized, will 

discontinue the associated information 

collections and remove them from the 

ICRs, and the information collected in 

the Determination of Error Findings 

Decision and Appeal Redetermination 

(§§ 155.1525 and 155.1530) policy is 

exempt from the PRA. 

We have submitted a copy of this final 

rule to OMB for its review of the rule’s 

information collection requirements. 

These requirements are not effective 

until they have been approved by OMB. 

V. Regulatory Impact Analysis 

A. Statement of Need 

This rule finalizes standards related to 

the risk adjustment program for the 

2023 benefit year and beyond, as well as 

standards for the HHS–RADV program 

beginning with the 2021 benefit year. 

This rule finalizes additional standards 

related to eligibility redetermination, 

special enrollment periods, 

requirements for agents, brokers, webbrokers, and issuers assisting consumers 

with enrollment through Exchanges that 

use the Federal platform; State selection 

of EHB-benchmark plan and annual 

reporting of State-required benefits, 

termination of coverage, the MLR 

program, and 2023 FFE and SBE–FP 

user fees. This rule also finalizes to 

remove the annual reporting 

requirement on States to report Staterequired benefits to HHS. The rule also 

finalizes refinements to the EHB 

nondiscrimination framework by 

including examples of presumptively 

discriminatory benefit designs. The rule 

also finalizes the requirement that 

issuers in FFEs and SBE–FPs offer 

standardized plan options. This rule 

finalizes to expand QIS standards and 

requires QHP issuers to address health 

and health care disparities in their QIS 

submissions in addition to at least one 

other topic area outlined in section 

1311(g)(1) of the ACA. Finally, this final 

rule would implement the PIIA 

requirements for State Exchanges. 

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) and 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, 

reducing costs, 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 one 

year). 

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 

one 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 


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373As noted previously in this final rule, no State 

has elected to operate the risk adjustment program 

for the 2023 benefit year; therefore, HHS will 

operate the program for all 50 States and the District 

of Columbia. 

President’s priorities, or the principles 

set forth in the Executive Order. An RIA 

must be prepared for major rules with 

economically significant effects ($100 

million or more in any one year), and 

a ‘‘significant’’ regulatory action is 

subject to review by OMB. HHS has 

concluded that this rule is likely to have 

economic impacts of $100 million or 

more in at least 1 year. Based on HHS 

estimates, OMB’s Office of Information 

and Regulatory Affairs has determined 

this rulemaking is ‘‘economically 

significant’’ as measured by the $100 

million threshold, and hence also a 

major rule under Subtitle E of the Small 

Business Regulatory Enforcement 

Fairness Act of 1996 (also known as the 

Congressional Review Act). In 

accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

The provisions in this final rule aim 

to ensure that consumers continue to 

have access to affordable coverage and 

quality health care. Although there is 

still some uncertainty regarding the net 

effect on premiums, we anticipated that 

the provisions of this final rule would 

help further HHS’ goal of ensuring that 

all consumers have access to quality and 

affordable health care and are able to 

make informed choices. In accordance 

with Executive Order 12866, HHS 

believed 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 20 depicts an accounting 

statement summarizing HHS’ 

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 access to 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 

all benefits and costs of this final rule. 

The effects in Table 20 reflect the 

qualitative assessment of impacts and 

estimated direct monetary costs and 

transfers resulting from the provisions 

of this final rule for health insurance 

issuers and consumers. The annual 

monetized transfers described in Table 

20 include changes to costs associated 

with the risk adjustment user fee paid 

to HHS by issuers and the potential 

increase in rebates from issuers to 

consumers due to amendments to MLR 

requirements. 

We are finalizing the risk adjustment 

user fee of $0.22 PMPM for the 2023 

benefit year to operate the risk 

adjustment program on behalf of States, 

which we estimated to cost 

approximately $60 million in the benefit 

year 2023.373 We expect risk adjustment 

user fee transfers from issuers to the 

Federal Government to remain steady at 

$60 million, the same as estimated for 

the 2022 benefit year; this is included in 

Table 20. 

Additionally, for 2023, we are 

maintaining the FFE and the SBE–FP 

user fee rates at current levels, 2.75 and 

2.25 percent of premiums, respectively. 


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1Healthy People 2030 defines health equity as 

‘‘the attainment of the highest level of health for all 

people.’’ Healthy People 2030 Questions & 

Answers. (2022, March 9). Office of Disease 

Prevention and Health Promotion. https:// 

health.gov/our-work/national-health-initiatives/ 

healthy-people/healthy-people-2030/questionsanswers. 

This RIA expands upon the impact 

analyses of previous rules and utilizes 

the Congressional Budget Office’s (CBO) 

analysis of the ACA’s impact on Federal 

spending, revenue collection, and 

insurance enrollment. Table 21 

summarizes the effects of the risk 

adjustment program on the Federal 

budget from fiscal years 2023 through 

2027, with the additional, societal 

effects of this final rule discussed in this 

RIA. We did not expect the provisions 

of this final rule to significantly alter 

CBO’s estimates of the budget impact of 

the premium stabilization programs that 

are described in Table 21. 


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375 86 FR 6166 through 6173 and 24270 through 

24282. 

376Reinsurance collections ended in FY 2018 and 

outlays is subsequent years reflect remaining 

payments, refunds, and allowable activities. 

377Section 156.270(d) requires issuers to observe 

a 3-consecutive month grace period before 

terminating coverage for those enrollees who upon 

failing to timely pay their premiums are receiving 

APTC. Section 155.430(d)(4) requires that when 

coverage is terminated following this grace period, 

the last day of enrollment in a QHP through the 

Exchange is the last day of the first month of the 

grace period. Therefore, individuals whose coverage 

is terminated at the conclusion of a grace period 

would owe at most 1 month of premiums, net of 

any APTC paid on their behalf to the issuer. 

Individuals who attempt to enroll in new coverage 

while in a grace period (and whose coverage has not 

yet been terminated) could owe up to 3 months of 

premiums, net of any APTC paid on their behalf to 

the issuer. 378 Kirzinger, A., Kearney, A., Quasem, M., 

Stokes, M., Hamel, L., & Brodie, M. (2022). ‘‘KFF 

Health Tracking Poll—March 2022: Economic 

Concerns and Health Policy, The ACA, and Views 

of Long-term Care Facilities.’’ KFF, https:// 

www.kff.org/health-costs/poll-finding/kff-healthtracking-poll-march-2022/. 379 Data Note: Kearney, A., Hamel, L., Stokes, M., 

& Brodie, M. (2021). Americans’ Challenges with 

Health Care Costs. KFF, https://www.kff.org/healthcosts/issue-brief/data-note-americans-challengeshealth-care-costs/. 

380Tolbert, J., Orgera, K., & Damico, A. (2020). 

Key Facts about the Uninsured Population. KFF. 

https://www.kff.org/uninsured/issue-brief/key-factsabout-the-uninsured-population/. 

381The annual figures presented in this section 

should not necessarily be interpreted as trends, as 

some States moved from Exchanges using the 

Federal platform to State Exchanges and the overall 

composition of the dataset may have changed. 

382As we reported in the April 18, 2017 Federal 

Register (82 FR 18346), that figure was 

approximately 16 percent in 2016. 

383Of the 936,637 enrollees who had their 

coverage terminated in 2019 and lived in an area 

where their issuer (or a different issuer in the same 

controlled group) was available the next year, 

24,784 (or 2.6 percent) had incomes below the 

Federal poverty level. Many, but not all, of these 

enrollees lived in States that did not expand 

Medicaid eligibility following the implementation 

of the ACA. 

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 anticipated 

that, quantitatively, the effects of the 

provisions proposed in this rule are 

consistent with our previous estimates 

in the 2022 Payment Notice 375 for the 

impacts associated with the APTC, the 

premium stabilization programs, and 

FFE (including SBE–FP) user fee 

requirements. 

1. Guaranteed Availability of Coverage 

(§ 147.104(i)) 

This rule finalizes amendments to 

§ 147.104(i), which reverse the current 

policy allowing an issuer to attribute a 

premium payment made for new 

coverage to any past-due premiums 

owed for coverage from the same issuer 

or another issuer in the same controlled 

group within the prior 12-month period 

preceding the effective date of coverage 

before effectuating enrollment in new 

coverage. Under the current policy, 

individuals may have had to pay up to 

3 months of past-due premiums plus a 

binder payment before enrolling in 

coverage.377 HHS lacks information on 

the frequency with which consumers 

miss payments or the frequency with 

which binder payments are made, and 

sought data or information related to 

past-due premiums in the proposed rule 

(87 FR 584 and 706). HHS was also 

interested in learning more about the 

population and characteristics of 

individuals with past-due premiums. 

Individuals often stop making 

premium payments or forgo health 

insurance because they are unable to 

afford the premium payments. In a 2022 

survey, 36 percent of insured adults 

reported being worried about being able 

to afford their monthly health insurance 

premium, with 12 percent being ‘‘very 

worried’’ and 23 percent being 

‘‘somewhat worried.’’ 378 In a 2021 

survey, 27 percent of insured adults 

reported having a difficult time covering 

the cost of health insurance each 

month.379 In 2019, 73.7 percent of 

uninsured adults pointed to the high 

cost of coverage as the reason for being 

uninsured.380

Based on internal analysis, we 

estimate that approximately 7.8 percent 

of enrollees in Exchanges using the 

Federal platform had their coverage 

terminated in 2020 for non-payment of 

premiums. That figure was 10.7 percent 

in 2019, 12.4 percent in 2018, and 17.3 

percent in 2017.381 Among those 

enrollees who had their coverage 

terminated in 2019 and lived in an area 

where their issuer (or a different issuer 

in the same controlled group) had plans 

available the next year, we estimated 

that 16.9 percent enrolled with the same 

issuer (or a different issuer in the same 

controlled group) the following year. 

That figure was 16.5 percent in 2018 

and 16.8 percent in 2017.382 For those 

enrollees with household incomes 

below the Federal poverty level, 15.3 

percent of enrollees who had their 

coverage terminated in 2019 and lived 

in an area where their issuer (or a 

different issuer in the same controlled 

group) was available the next year 

enrolled with the same issuer (or a 

different issuer in the same controlled 

group) the following year. 383 That 

figure was 13.5 percent in 2018 and 13.2 

percent in 2017. Our analysis also 

suggested that those enrollees with 

lower household incomes (specifically, 

household incomes below the Federal 

poverty level) were less likely to enroll 

in coverage from the same issuer or 

another issuer in the same controlled 

group the following year. In 2017, 2018, 

and 2019, those enrollees who were less 

than 35 years old were also less likely 

to enroll in coverage from the same 

issuer or another issuer in the same 

controlled group the following year than 

those aged 35 to 54. 

Due to data limitations, we are unable 

to directly attribute any changes in 

enrollment behavior in the Exchanges 

using the Federal platform to the 


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384We requested comment on whether there 

would be any impact on premiums, affordability, 

and access for the individuals who reliably pay. We 

solicited comments regarding whether issuers who 

implemented policies requiring payment of past 

due premiums prior to reenrollment experienced 

declines in administrative costs related to the 

collection of past-due premiums. 

385According to recent figures from KFF, in 2021, 

there were only two issuers participating in the 

ACA Exchanges in 44 percent of counties, and there 

was only one issuer participating in the ACA 

Exchanges in 10 percent of counties. Source: 

McDermott, D. & Cox, C. (2020). Insurer 

Participation on the ACA Marketplaces, 2014–2021. 

KFF. https://www.kff.org/private-insurance/issuebrief/insurer-participation-on-the-acamarketplaces-2014-2021/ This was noted by Sandy 

Ahn and JoAnn Volk in their analysis of the current 

interpretation of the guaranteed availability 

requirement. Source: Ahn, S. & Volk, J. (2017). 

Relaxing the Affordable Care Act’s Guaranteed 

Issue Protection: Issues for Consumers and State 

Options. CHIRblog. http://chirblog.org/relaxing-theaffordable-care-acts-guaranteed-issue-protectionissues-for-consumers-and-state-options/. 

interpretation of the guaranteed 

availability requirement stated in the 

Market Stabilization final rule. 

However, this final rule will increase 

access to health insurance coverage for 

individuals who stop paying premiums 

due to reasons such as financial 

hardship or affordability and who are 

currently unable to enroll in coverage 

because they cannot afford to pay pastdue premiums. This increased access 

may lead to better health outcomes, if 

these individuals are able to maintain 

coverage.384 This final rule will also 

increase the ability for enrollees to 

access coverage with the same issuer or 

another issuer in the same controlled 

group in the next year. This will be of 

particular benefit to those Exchange 

enrollees living in counties with only 

one or two participating issuers.385 It 

may also reduce the costs and burden to 

enrollees related to searching for a new 

plan from another issuer or an issuer in 

a different controlled group when 

seeking to enroll in health care 

coverage. Being able to enroll with the 

same issuer will support access to the 

same network of services and providers, 

which could improve continuity of care. 

This final rule may result in transfers 

from issuers who would have been able 

to recoup unpaid premiums from 

enrollees to those enrollees who will 

now be able to enroll in coverage from 

the same issuer or another issuer in the 

same controlled group without having 

to pay past-due premiums. However, we 

anticipate that these transfers will be 

minimal, as issuers generally are not 

permitted to waive past-due premiums 

and would be expected to pursue other 

means of collecting them. 

We sought comment on the potential 

costs, benefits, and transfers associated 

with this provision. We also sought data 

related to past-due premiums, missed 

binder payments, and information on 

the population and characteristics of 

individuals with past-due premiums. 

We summarize and respond to public 

comments received regarding the impact 

of the proposed change to the 

guaranteed availability of coverage 

(§ 147.104(i)) requirement below. 

Comment: Many commenters stated 

that this provision will increase access 

to health insurance coverage and care 

for individuals who stop paying 

premiums and are currently unable to 

enroll in coverage because they cannot 

afford to pay past-due premiums. 

Commenters provided a number of 

reasons why individuals stop paying 

premiums, such as financial hardship or 

affordability, not receiving a notice of 

past-due premiums, or mistakenly 

forgetting to cancel coverage when 

becoming eligible for other forms of 

coverage. Commenters also provided 

various reasons for financial hardship 

such as periodic unemployment, 

chronic conditions, serious illnesses, 

addiction, domestic violence, crime, 

environmental disaster, and medical 

emergencies. Commenters mentioned 

high rates of being uninsured among 

individuals in minority and 

underserved communities and women 

and children and the risks associated 

with being uninsured. One commenter 

cited studies that found a correlation 

between the lack of health insurance 

coverage and preventable deaths. 

Many commenters stated that the 

current policy creates a barrier to 

coverage for and has a negative impact 

on low- or middle-income individuals 

and individuals experiencing financial 

hardship. Several commenters also 

stated that the current policy has a 

disproportionate impact on underserved 

populations, such as immigrants, people 

of color, disabled women, and the 

LGBTQI+ community, that continue to 

face cultural and financial barriers to 

coverage and care. 

A few commenters also stated that if 

individuals are better able to maintain 

coverage because of this provision, it 

will improve continuity of care and lead 

to better health outcomes. One of these 

commenters noted in particular that 

enabling individuals to enroll with the 

same issuer the next plan year increases 

the likelihood that they will maintain 

relationships with their providers. 

Several commenters also highlighted the 

importance of continuous coverage 

during the COVID–19 pandemic. 

Response: We agree with the 

commenters that this change improves 

health equity by removing a barrier to 

health insurance coverage and health 

care that disproportionately affects lowincome, minority and underserved 

communities. 

Comment: A few commenters stated 

that this provision will have a negative 

impact on consumers. Some 

commenters suggested that the 

provision will lead to higher costs for 

issuers and result in higher premiums 

for consumers. One commenter 

speculated that the increase in 

premiums could range from 0.3 percent 

to more than 3 percent. A few 

commenters also stated that the 

proposed rule will reduce access to 

coverage if issuers exit the market. A 

few commenters stated that the 

proposed rule could negatively affect 

risk pools. A commenter also expressed 

concern about the potential financial 

impact on providers who may not 

receive payments when individuals fail 

to pay their premiums. One commenter 

also stated that it may negatively affect 

MLRs. 

On the other hand, some commenters 

suggested that the proposed rule could 

improve the stability of risk pools, for 

instance, by reducing adverse selection. 

One of these commenters noted that the 

current policy may have deterred 

enrollment among younger, healthier 

individuals. A few commenters stated 

that the current policy worsened the 

risk pool and led to higher premiums, 

since individuals with significant health 

care costs are more likely to pay pastdue premiums. One commenter noted 

that restrictions on enrollment outside 

of open enrollment periods limit 

adverse selection. In addition, one 

commenter stated that few issuers chose 

to implement the current policy because 

the implementation costs outweighed 

the premium losses. A commenter also 

speculated that the change would lead 

to reduced administrative costs for 

issuers. Several commenters stated that 

the amount of past-due premiums is 

minimal relative to issuers’ profits. 

Several commenters also stated that 

issuers would be able to recoup pastdue premiums by other means. One 

commenter noted that the financial risk 

to the individual from not having 

continuous coverage outweighs the cost 

to the risk pool from individuals not 

paying premiums (which could be 

recouped by issuers). 

Response: We disagree that this rule 

is likely to result in an increase in 

premiums, have a negative financial 

impact on issuers or providers, or cause 

issuers to exit the market. There is no 

evidence that suggests that premiums 

would noticeably change because of a 

shift in how the guaranteed availability 

requirement is interpreted. As one 

commentator stated, few issuers have 

implemented the current policy of 


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attributing payment made for new 

coverage to past-due premiums before 

effectuating new enrollment. In 

addition, as another commenter stated, 

issuers that did adopt the current policy 

are likely to experience a reduction in 

administrative costs due to this change. 

Issuers also have other means to recoup 

past-due premiums. We also agree with 

commenters that stated that this change 

may result in an improved risk pool by 

removing barriers to enrollment for 

young and relatively healthy 

individuals. 

2. Nondiscrimination Based on Sexual 

Orientation and Gender Identity 

(§§ 147.104(e), 155.120(c), 155.220(j), 

156.125(b), 156.200(e), and 

156.1230(b)), and EHB 

Nondiscrimination Policy for Health 

Plan Designs (§ 156.125) 

In the 2023 Payment Notice proposed 

rule, HHS proposed amendments to 

certain regulations prohibiting 

discrimination in health insurance 

coverage, including discrimination in 

the design and implementation of health 

plan designs, under §§ 147.104(e), 

155.120(c), 155.220(j), 156.125(b), 

156.200(e), 156.1230(b), and 156.125. 

HHS proposed to amend these 

regulations so that they explicitly 

identify and recognize sexual 

orientation and gender identity as 

prohibited forms of discrimination 

based on sex consistent with pre-2020 

HHS discrimination policy. HHS also 

proposed refinements to its EHB 

nondiscrimination policy for health 

plan benefit designs through proposed 

amendments to § 156.125 regulation text 

that would require that a 

nondiscriminatory health plan design 

that provides EHB to be clinically based, 

incorporate evidence-based guidelines 

into coverage and programmatic 

decisions, and rely on a current and 

relevant peer-reviewed medical journal 

articles, practice guidelines, or 

recommendations from reputable 

governing bodies, or similar sources. We 

provided examples of presumptively 

discriminatory benefit designs to 

provide further clarity on our refined 

EHB nondiscrimination policy. HHS 

proposed that its refined EHB 

nondiscrimination policy under 

§ 156.125, as reflected in the examples 

of presumptively discriminatory health 

plan designs, would be applicable 

starting on the earlier of PY 2023 or 

upon renewal of any plan subject to the 

EHB requirements. 

We sought comment on the potential 

costs, benefits, and transfers associated 

with the proposals in these provisions. 

As explained in the Supplementary 

Information section earlier in this 

preamble, HHS will address in future 

rulemaking the proposed amendments 

to §§ 147.104(e), 155.120(c), 155.220(j), 

156.125(b), 156.200(e), and 156.1230(b) 

that would have explicitly identified 

and recognized sexual orientation and 

gender identity as prohibited forms of 

sex discrimination. 

HHS is finalizing the proposed 

revisions to § 156.125(a) to state that a 

nondiscriminatory benefit design that 

provides EHB is one that is clinically 

based. However, HHS does not finalize 

the proposed revisions to § 156.125(a) 

that would have provided that a 

nondiscriminatory benefit design is one 

that incorporates evidence-based 

guidelines into coverage and 

programmatic decisions and relies on a 

current and relevant peer-reviewed 

medical journal articles, practice 

guidelines, or recommendations from 

reputable governing bodies, or similar 

sources. 

HHS finalizes all but one of the 

examples of presumptively 

discriminatory benefit designs. 

Specifically, consistent with the 

explanation in the Supplementary 

Information section earlier in this 

preamble, HHS will address in future 

rulemaking the example related to 

gender-affirming care that illustrated a 

benefit design that presumptively 

discriminates against enrollees based on 

gender identity under § 156.125. 

We summarize and respond to public 

comments received on the regulatory 

impact and burden analysis relevant to 

our proposals under § 156.125 that we 

finalize in this final rule. Accordingly, 

we do not respond to comments that 

relate to the proposal to specifically 

identify sexual orientation and gender 

identity as prohibited forms of sex 

discrimination, nor do we respond to 

comments that relate to the genderaffirming care example in the 2023 

Payment Notice proposed rule. 

Comment: One commenter questioned 

what the regulatory impact and burden 

would be on issuers and enrollees to 

declare a class of treatment based on 

‘‘presumptive nondiscrimination.’’ 

Another commenter stated the policy 

refining the nondiscrimination standard 

would unintentionally impose costs that 

far exceed any benefits by limiting the 

ability of issuers to develop costeffective formulary plan designs and by 

compelling plans to ignore the standard 

use of clinical evidence as a factor in 

determining the appropriate tier for 

drugs. 

A commenter also asserted that the 

lack of a cost-benefit analysis makes the 

rule arbitrary and capricious (noting 

CMS does not cite how many plans 

already cover the procedures, how many 

individuals will seek them, their cost, 

and increased costs to issuers and 

insured). Other commenters expressed 

concern that health plans may see 

increased utilization and higher costs 

due to an unintended adverse impact on 

issuers’ ability to administer packages of 

benefits under the refined framework. 

Yet another commenter recommended 

that HHS should conduct and publish 

the results of a detailed cost study 

demonstrating premium impacts of 

refining the nondiscrimination standard 

for consumers prior to finalizing the 

proposal. 

Response: With regards to the EHB 

nondiscrimination policy we are 

finalizing at § 156.125, we reiterate that 

the nondiscrimination requirements at 

§ 156.125 apply only to benefit designs 

or implementation of a benefit designs 

to the extent that those benefits are EHB. 

The policy at § 156.125 does not apply 

to benefits that are not EHB. As 

mentioned in the proposed rule, the 

clarifications and changes we are 

finalizing to § 156.125 will most likely 

affect the vast majority of State EHBbenchmark plans. Because some current 

EHB-benchmark plans continue to be 

based on plan year 2014 plans, some of 

the EHB-benchmark plan designs may 

not comply with current Federal 

requirements such as nondiscrimination 

requirements at § 156.125. Therefore, 

when designing plans that are 

substantially equal to the EHBbenchmark plan, issuers may need to 

further conform plan benefits covered as 

EHB, including coverage and 

limitations, to comply with current 

Federal requirements, such as the 

nondiscrimination requirement of 

§ 156.125. 

If a State EHB-benchmark plan has a 

discriminatory benefit design, the State 

may prohibit plans providing benefits 

that are substantially equal to the EHBbenchmark plan from replicating that 

discriminatory benefit design. However, 

we clarify that we will not consider 

State EHB-benchmark plan designs to be 

out of compliance with EHB-benchmark 

plan requirements at § 156.110(d) or 

§ 156.111(b)(2)(v) if the State provides 

such guidance or otherwise directs 

issuers to comply with these refined 

nondiscrimination standards 

notwithstanding any aspects of the EHBbenchmark plan that are not otherwise 

consistent with these refined 

nondiscrimination standards. Therefore, 

under this approach, States are not 

required at this time to go through the 

formal process at § 156.111 to update 

their EHB-benchmark plans solely for 

the purpose of removing any such 

discriminatory benefit designs on EHBs, 

but States that do elect to update their 


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386Section 156.111(b). https://www.ecfr.gov/ 

current/title-45/subtitle-A/subchapter-B/part-156. 

387See current burden estimates in the 

Supporting Statement of OMB control number 

0938–1155 (Standards Related to Reinsurance, Risk 

Corridors, and Risk Adjustment (CMS–10401)), 

which is currently being updated. The previous 

version of the Supporting Statement is Supporting 

Statement A. (2017, December 22). OIRA. https://

www.reginfo.gov/public/do/ 

PRAViewDocument?ref_nbr=201712-0938-015. 

388See the 2021 HHS-Operated Risk Adjustment 

Technical Paper on Possible Model Changes. (2021, 

October 26). CMS. https://www.cms.gov/files/ 

document/2021-ra-technical-paper.pdf and the 

HHS-Operated Risk Adjustment Technical Paper on 

Possible Model Changes: Summary Results for 

Transfer Simulations. (2021, December 28). CMS. 

https://www.cms.gov/files/document/reportsummary-results-transfer-simulations.pdf. Issuers 

that participated in the simulation also received 

detailed issuer-specific data, including risk score 

and transfer estimates for the simulated results. 

389See 81 FR 94075. 

390The same concerns were not present for the 

2017 enrollee-level EDGE data because 

hydroxychloroquine sulfate was not included in the 

RXC crosswalk until 2018. 

EHB-benchmark plans at any point 

going forward will be expected to 

ensure their new EHB-benchmark plans 

are compliant. 

To the extent that States take actions 

necessary to come into compliance with 

the refined EHB nondiscrimination 

policy such actions may have a small 

impact on premiums. States making 

changes to their EHB-benchmark plans 

for plan years after 2020 have the 

flexibility to design their EHBbenchmark plans consistent with 

§ 156.111, which provides more options 

in plan designs. Several States have 

already used this flexibility to update 

their EHB-benchmark plans. CMS 

provides States with greater flexibility 

to select their EHB-benchmark plans by 

providing three new options for 

selection in PY 2020 and beyond, 

including: (1) Selecting the EHBbenchmark plan that another State used 

for PY 2017, (2) replacing one or more 

categories of EHBs under its EHBbenchmark plan used for PY 2017 with 

the same category or categories of EHB 

from the EHB-benchmark plan that 

another State used for PY 2017, or (3) 

otherwise selecting a set of benefits that 

would become the State’s EHBbenchmark plan. Under each of these 

three options, the new EHB-benchmark 

also must comply with additional 

requirements, including the scope of 

benefits requirements, under 

§ 156.111(b).386

Plans subject to the EHB requirement 

have always been required to comply 

with the nondiscrimination 

requirements in § 156.125 regardless of 

the presence of any noncompliant 

discriminatory language in the relevant 

EHB-benchmark plan. We therefore 

further recognize that issuers subject to 

§ 156.125 requirements may choose to 

carefully review the refined EHB 

nondiscrimination final rule to ensure 

compliance. We also recognize that such 

reviews may take time and that issuers 

may experience added burden to the 

extent that issuers make additional 

changes to their plans designs for 

benefits covered as EHB in response to 

those reviews. Although we expect that 

issuers are already compliant with 

current § 156.125 requirements, we also 

believe that finalizing the refined EHB 

nondiscrimination policy at § 156.125 to 

be applicable on the earlier of PY 2023 

or upon renewal of any plan subject to 

the EHB requirements will lessen any 

burden on issuers to make any 

necessary conforming changes than if 

we had finalized a mid-year effect date 

as proposed. 

Further, we are declining to finalize 

that a nondiscriminatory benefit design 

that provides EHB must incorporate 

evidence-based guidelines into coverage 

and programmatic decisions, and rely 

on current and relevant peer-reviewed 

medical journal articles, practice 

guidelines, recommendations from 

reputable governing bodies, or similar 

sources. By instead finalizing only that 

plan designs providing EHB must be 

clinically based, we believe we are 

better balancing the need to protect 

consumers from discriminatory benefit 

designs without unreasonably limiting 

the sources that may be relied upon to 

assess whether a benefit design or its 

implementation are discriminatory. We 

will continually assess this policy to 

evaluate whether changes or further 

refinements are warranted. 

3. Risk Adjustment (§§ 153.320, 

153.610, 153.620, 153.700, 153.710, and 

153.730) 

We are finalizing two of the three 

proposed model specifications. 

Beginning with the 2023 benefit year, 

we are finalizing, as proposed, to 

remove the existing severity illness 

factors in the adult models and add 

interacted HCC counts factors to the 

adult and child risk adjustment models 

and to revise the enrollment duration 

factors for the adult models. However, 

we are not finalizing the proposed 

addition of a two-stage weighted model 

specification to the adult and child 

models. By prioritizing simplicity and 

limiting the number of changes to the 

current model structure, we minimize 

administrative burden for HHS, and as 

HHS runs risk adjustment in all 50 

States and the District of Columbia, we 

do not expect these policies to place an 

additional burden on State 

governments. The model specifications 

finalized in this rule result in limited 

changes to the number and type of risk 

adjustment model factors; therefore, we 

do not expect these changes to impact 

issuer burden beyond the current 

burden for the HHS-operated risk 

adjustment program.387 To further assist 

issuers in understanding the potential 

impact of these changes on risk 

adjustment transfers, we released the 

2021 RA Technical Paper and 

conducted an EDGE transfer simulation 

that estimated the impact on risk scores 

and transfers with and without the 

proposed changes using 2020 benefit 

year risk adjustment data.388

Additionally, we are finalizing, as 

proposed, the use of the 2017, 2018, and 

2019 enrollee-level EDGE data to 

recalibrate the HHS risk adjustment 

models for the 2023 benefit year. We 

believe that the approach of blending (or 

averaging) 3 years of separately solved 

coefficients will provide stability within 

the risk adjustment program and 

minimize volatility in changes to risk 

scores from the 2022 benefit year to the 

2023 benefit year. We are also finalizing, 

as proposed, to continue applying a 

market pricing adjustment to the plan 

liability associated with Hepatitis C 

drugs in the risk adjustment models, 

consistent with the approach adopted 

beginning with the 2020 models. For the 

2023 benefit year, we are finalizing, as 

proposed, to recalibrate the models 

using the final, fourth quarter (Q4) RXC 

mapping document that was applicable 

for the 2018 and 2019 benefit year, with 

the exception of the 2017 enrollee-level 

EDGE data year, for which we will use 

the most recent RXC mapping document 

that was available when we first 

processed the 2017 enrollee-level EDGE 

data (that is, Q2 2018) for consistency 

with prior model year recalibrations, as 

we did not include RXCs in the adult 

risk adjustment models until 2018.389

For the 2024 benefit year and beyond, 

we will recalibrate the models using the 

final, fourth quarter (Q4) RXC mapping 

document that was applicable for each 

benefit year of data that is included in 

the current year’s model recalibration 

(except under the extenuating 

circumstances that are described 

previously in this rule). We removed the 

mapping of hydroxychloroquine sulfate 

to RXC 09 (Immune Suppressants and 

Immunomodulators) and the related 

RXC 09 interactions for the 2018 and 

2019 benefit years’ enrollee-level EDGE 

data used for model recalibration.390 For 

the 2023 benefit year, we are finalizing, 

as proposed, to maintain the CSR 

adjustment factors finalized in the 


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391 83 FR 16953; 84 FR 17479; 85 FR 29190; and 

86 FR 24181. 

392HHS will collect these data elements in a 

format that is consistent with the 2011 HHS Data 

Standards. We also will provide a value for the race 

or ethnicity data elements that allows issuers to 

indicate that race or ethnicity are not known for a 

specific enrollee in recognition of situations where 

the enrollee declines to provide the information and 

situations where the issuer does not have an 

available data source to populate the fields. 

393After the transitional approach ends 

(beginning in the 2025 benefit year), the option to 

select the value to indicate race or ethnicity are not 

known for a specific enrollee will be available to 

issuers who comply with the good faith standard 

but are unable to populate the race or ethnicity 

EDGE data field for one or more enrollees. 

2019–2022 Payment Notices.391 Overall, 

we do not estimate that these policies 

will impact issuer burden beyond the 

current burden for the HHS-operated 

risk adjustment program. 

For the 2023 benefit year, HHS will 

operate a risk adjustment program in 

every State and the District of Columbia. 

For the 2023 benefit year, we are 

finalizing, as proposed, to use the same 

methodology that we finalized in the 

2022 Payment Notice to estimate our 

administrative expenses to operate the 

program. We estimate that the total cost 

for HHS to operate the risk adjustment 

program on behalf of States for 2023 

will be approximately $60 million, and 

therefore, the 2023 risk adjustment user 

fee will be $0.22 PMPM. Because overall 

risk adjustment costs estimated for the 

2023 benefit year are similar to 2022 

costs, we do not expect the risk 

adjustment user fee for the 2023 benefit 

year to materially impact the transfer 

amounts collected or paid by issuers of 

risk adjustment covered plans. 

We will also repeal, as proposed, the 

ability for States to request a reduction 

in risk adjustment State transfers of up 

to 50 percent in all State market risk 

pools beginning with the 2024 benefit 

year, with an exception for prior 

participants. We provide an exception 

for States that have previously 

submitted risk adjustment State 

flexibility requests, so only such States 

may continue to request this flexibility 

beginning with the 2024 benefit year. 

We also removed, as proposed, as a 

criterion for State justification and HHS 

review and approval of these requests 

the demonstration of State-specific 

factors that warrant an adjustment to 

more precisely account for relative risk 

differences in the State individual 

catastrophic, individual noncatastrophic, small group, or merged 

market risk pool. We will retain as the 

sole requirement for State justification 

and criterion for HHS review and 

approval the demonstration that the 

requested reduction would have a de 

minimis impact on the necessary 

premium increase to cover the transfers 

for issuers that would receive reduced 

transfer payments beginning with the 

2024 benefit year. 

We anticipate that the changes to risk 

adjustment State flexibility request 

framework will have a minimal impact 

on States and other interested parties. 

Only one State, Alabama, has requested 

a reduction in risk adjustment State 

transfers since this flexibility was first 

made available beginning in the 2020 

benefit year, and under this policy, 

Alabama would be considered a prior 

participant and could continue to 

request such reductions. However, we 

note that we intend to propose in future 

rulemaking to repeal the exception for 

prior participants beginning with the 

2025 benefit year to provide impacted 

stakeholders additional time to prepare 

for this proposed change and the 

potential elimination of this flexibility. 

We did not anticipate any new burden 

or costs as a result of this policy. 

We finalize the collection and 

extraction of five new data elements 

from issuers’ EDGE servers through 

issuers’ ESES files and risk adjustment 

recalibration enrollment files: ZIP Code, 

race, ethnicity, subsidy indicator, and 

ICHRA indicator beginning with the 

2023 benefit year. Specifically, we are 

finalizing that starting with the 2023 

benefit year, issuers will be required to 

populate the ZIP Code data field, using 

the five-digit level based on the 

enrollee’s mailing address, and the 

subsidy indicator data field, which is 

intended to indicate whether a 

particular enrollee is (or is not) 

receiving APTC. For the 2023 and 2024 

benefit years, we are adopting a 

transitional period during which issuers 

are required to populate the fields for 

race and ethnicity using only data they 

already collect or have accessible 

regarding their enrollees.392 For 

example, for the 2023 and 2024 benefit 

years, for race and ethnicity data, 

issuers will be deemed in compliance if 

they submit these data elements using 

data they already have or collect 

through existing means, including, for 

example, through enrollee data captured 

and reported to the issuer by the FFE, 

SBE–FPs, and State Exchanges at the 

time of enrollment. Then, beginning 

with the 2025 benefit year, the 

transitional approach will end, and 

issuers will be required to populate the 

fields using available sources and, in the 

absence of such an existing source for 

particular enrollees, to make a good 

faith effort to ensure collection and 

submission of the race and ethnicity 

data for these enrollees. 

We are also finalizing, with slight 

modification, collection of the ICHRA 

indicator. For the 2023 and 2024 benefit 

year, similar to the transitional 

approach for race and ethnicity data, 

issuers are required to populate the field 

for the ICHRA indicator using only data 

they already collect or have accessible 

regarding their enrollees. Then, 

beginning with the 2025 benefit year, 

the transitional approach will end, and 

issuers will be required to populate the 

field using available sources (for 

example, information from Exchanges 

and small employers, and requesting 

information directly from enrollees) 

and, in the absence of an existing source 

for particular enrollees, to make a good 

faith effort to ensure collection and 

submission of the ICHRA indicator for 

these enrollees. HHS will provide 

additional details on what constitutes a 

good faith effort to ensure collection and 

submission of the race, ethnicity, and 

ICHRA indicator data elements 

beginning with 2025 benefit year data 

submissions in the future.393

In addition, we will begin extracting 

three data elements issuers already 

report to their EDGE servers—plan ID, 

rating area, and subscriber indicator—as 

part of the enrollee-level EDGE data. We 

will extract plan ID and rating area 

beginning with the 2021 benefit year, 

and the subscriber indicator beginning 

with the 2022 benefit year. The 

extraction of plan ID, rating area, and 

subscriber indicator will pose a minimal 

burden on issuers (only the burden 

associated with the running of a 

command) since the creation and 

storage of the extract—which issuers do 

not receive—is mainly handled by HHS. 

For the collection of the five new data 

elements, we estimated in the proposed 

rule that the cumulative additional cost 

estimate would be $225,168 for 600 

issuers (87 FR 584, 695). However, to 

reflect the most current agency 

estimates, we have modified the 

estimates from the proposed rule to 

reflect new wage data, and estimate that 

the cumulative additional cost estimate 

will be $314,145 for 650 issuers, and 

that the addition of these five new data 

elements to the risk adjustment data 

submission requirements will be 

$483.30 per issuer. In addition, we 

estimate a cumulative one-time 

administrative cost estimate to update 

the issuer’s file creation process of 

$1,884,870 for 650 issuers, reflecting a 

one-time cost of $2,8992 per issuer, 

which is further explained in the 

Collection of Information section of this 

final rule. The extraction of these data 

elements will pose a minimal burden on 

issuers (only the burden associated with 


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the running of a command) since the 

creation and storage of the extract— 

which issuers do not receive—is mainly 

handled by HHS. We expected minimal 

costs to HHS as a result of these new 

collections and extractions. 

We are also finalizing, as proposed, to 

amend § 153.730 to clarify that in 

situations where the April 30 deadline 

for issuers to submit risk adjustment 

data to HHS in States where HHS is 

operating the risk adjustment program 

falls on a non-business day, the 

deadline for issuers to submit the 

required data would be the next 

applicable business day. We believe this 

proposal will not pose an additional 

burden since it does not change any of 

the data submission requirements and 

only clarifies the deadline when April 

30 falls on a non-business day. 

We sought comment on estimated 

costs and transfers and potential 

benefits associated with these 

provisions. 

We received one comment related to 

the burden associated with the 

requirement that issuers of risk 

adjustment covered plans to submit and 

make accessible the five new data 

elements as part of the enrollee-level 

EDGE data to HHS in States where HHS 

operates the risk adjustment program 

beginning with the 2023 benefit year, 

which we summarized and responded 

to in the Information Collection 

Requirements section of the rule. 

4. Risk Adjustment Data Validation 

(§§ 153.350 and 153.630) 

In this final rule, we finalize updates 

to the HHS–RADV error rate calculation 

methodology beginning with the 2021 

benefit year to (1) extend the application 

of Super HCCs from their current 

application only in the sorting step that 

assigns HCCs to failure rate groups to 

broader application throughout the 

HHS–RADV error rate calculation 

processes, (2) specify that Super HCCs 

will be defined separately according to 

the age group model to which an 

enrollee is subject, and (3) constrain to 

zero any negative failure rate outlier in 

a failure rate group, regardless of 

whether the outlier issuer has a negative 

or positive error rate. Although we 

anticipate the changes will have a small 

impact on issuers’ HHS–RADV risk 

adjustment transfer adjustments, risk 

adjustment is a budget neutral program 

and we expect these policies to refine 

the HHS–RADV error rate calculation 

methodology will not have an impact on 

the administrative burden to issuers 

subject to the current HHS–RADV 

process because HHS is responsible for 

calculating error rates and applying 

error rates to adjust risk scores and State 

market risk pool transfers. Furthermore, 

we expect these changes will have 

minimal impacts on administrative 

costs to the Federal Government as the 

described changes do not impact the 

underlying HHS–RADV data, the 

amount of data HHS collects, or the 

SVA, which is conducted by an entity 

HHS retains. 

We sought comment on these burden 

estimates. We did not receive any 

comments in response to the burden 

estimates for the HHS–RADV policies in 

this rule. 

5. Agents, Brokers, and Web-Brokers 

(§ 155.220) 

a. Required QHP Comparative 

Information on Web-Broker Websites 

and Related Disclaimer 

In this final rule, we are finalizing the 

proposal to amend § 155.220(c)(3)(i)(A) 

to include at proposed new 

§§ 155.220(c)(3)(i)(A)(1) through 

(c)(3)(i)(A)(6) a list of the QHP 

comparative information web-broker 

non-Exchange websites are required to 

display consistent with § 155.205(b)(1). 

We are also finalizing the proposal to 

revise the disclaimer requirement in 

§ 155.220(c)(3)(i)(A) so that web-broker 

non-Exchange websites would be 

required to prominently display a 

standardized disclaimer provided by 

HHS stating that enrollment support is 

available on the Exchange website and 

provide a web link to the Exchange 

website where enrollment support for a 

QHP is not available using the webbroker’s non-Exchange website. We are 

finalizing as proposed. 

This policy should result in very 

limited new burden for web-brokers. As 

we explained in the proposed rule (87 

FR 584, 709), given CMS’ current 

enforcement policies relative to these 

requirements, the QHP comparative 

information we are requiring web-broker 

websites to display is consistent with 

previously established requirements. As 

a result, these requirements would not 

present a new burden to web-brokers. 

The new disclaimer will require webbrokers to make minor updates to their 

websites in cases when they do not 

support enrollment in all available 

QHPs. However, in those cases, they 

will be displaying a standardized 

disclaimer much like the plan detail 

disclaimer that they have historically 

been required to display. 

We estimated this policy will affect 

approximately 20 web-brokers. Given 

the minor modifications necessary to 

implement the revised disclaimer, we 

estimated a cost of $411 in total labor 

costs for each web-broker, which 

reflects 5 hours of work by Web 

Developers and Digital Interface 

Designers (15–1257) per web-broker 

(100 hours across all web-brokers 

annually) at an average hourly rate of 

$82.20. The cumulative additional cost 

estimated as a result of this policy is 

$8,220 for 20 web-brokers in the 2022 

benefit year. We have updated these 

estimates based on the most recently 

available national occupational 

employment and wage estimates. We 

estimate a cost of $459 in total labor 

costs for each web-broker, which 

reflects 5 hours of work by Web and 

Digital Interface Designers (15–1255) per 

web-broker (100 hours across all webbrokers annually) at an average hourly 

rate of $91.80. The cumulative 

additional cost estimate as a result of 

this policy is $9,180 for 20 web-brokers 

in the 2022 benefit year. 

We sought comment on the estimated 

burden associated with these proposals. 

We did not receive any comments 

specific to the potential costs, benefits, 

and transfers associated with this 

provision. 

b. Prohibition of QHP Advertising on 

Web-Broker Websites 

Section 155.220(c)(3)(i)(L) prohibits 

web-broker non-Exchange websites from 

displaying QHP recommendations based 

on compensation an agent, broker, or 

web-broker receives from QHP issuers. 

We are finalizing the proposal to amend 

§ 155.220(c)(3)(i)(L) to make clear that 

web-broker non-Exchange websites are 

also prohibited from displaying QHP 

advertisements, or otherwise providing 

favored or preferred placement in the 

display of QHPs, based on 

compensation agents, brokers, or webbrokers receive from QHP issuers. We 

are finalizing this proposal as proposed. 

This policy should impose no new 

costs on web-brokers so long as they are 

not displaying QHP advertisements on 

their websites. We believe that very few 

web-brokers are currently doing so. 

However, for those few web-brokers that 

are displaying QHP advertisements on 

their websites, they must update their 

websites to remove those 

advertisements and will lose any 

advertising revenue associated with 

such placements. Since advertisements 

on websites are inherently subject to 

change, even for those web-brokers that 

are required to make updates to their 

websites, the costs may be very limited, 

although we acknowledge that there 

may be loss of advertising revenue. We 

also realized, to the extent advertising 

revenue is lost, web-brokers may seek to 

recoup the lost revenue from other 

sources resulting in a transfer of costs. 

For example, web-brokers may seek to 

increase fees received from agents and 


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brokers using their websites or may 

pursue increased commissions from 

QHP issuers. 

We sought comment on the potential 

costs, benefits, and transfers associated 

with this proposal. We did not receive 

any comments specific to the potential 

costs, benefits, and transfers associated 

with this provision. 

c. Explanation of Rationale for QHP 

Recommendations on Web-Broker 

Websites 

We are finalizing the proposal to 

amend § 155.220 to add a proposed new 

paragraph (c)(3)(i)(M) that would 

require web-broker websites to 

prominently display a clear explanation 

of the rationale for explicit QHP 

recommendations and the methodology 

for the default display of QHPs on their 

websites (for example, alphabetically 

based on plan name, from lowest to 

highest premium, etc.). We are 

finalizing this proposal as proposed. 

This policy should result in very 

limited new costs for web-brokers, since 

the information it requires they display 

on their websites is limited to text-based 

changes that are relatively easy to 

implement. Furthermore, the extent of 

those textual updates should be 

relatively minor in most cases. We 

expect explanations to be short and easy 

for consumers to understand. Generally, 

we believe that a single phrase or a few 

sentences will suffice. Some webbrokers are already providing the 

required information, and therefore, will 

not have to make any website updates. 

Other web-broker websites do not 

explicitly recommend QHPs, and 

therefore, the impact of this policy is 

limited to providing similar information 

about the methodology for their default 

display of QHPs (for example, 

explaining QHPs are sorted from lowest 

to highest premium, etc.), assuming they 

do not already provide that information. 

We estimated this policy will affect 

approximately 20 web-brokers. Given 

the minor text-based changes necessary 

to implement the informational text 

detailing the rationale for QHP 

recommendations and the methodology 

for a default display of QHPs, we 

estimated a cost of $411 in total labor 

costs for each web-broker, which 

reflects 5 hours of work by Web 

Developers and Digital Interface 

Designers (15–1257) per web-broker 

(100 hours across all web-brokers 

annually) at an average hourly rate of 

$82.20. The cumulative additional cost 

estimate as a result of this policy is 

$8,220 for 20 web-brokers in the 2022 

benefit year. We have updated these 

estimates based on the most recently 

available national occupational 

employment and wage estimates. We 

estimate a cost of $459 in total labor 

costs for each web-broker, which 

reflects 5 hours of work by Web and 

Digital Interface Designers (15–1255) per 

web-broker (100 hours across all webbrokers annually) at an average hourly 

rate of $91.80. The cumulative 

additional cost estimate as a result of 

this policy is $9,180 for 20 web-brokers 

in the 2022 benefit year. 

We sought comment on the potential 

costs and benefits associated with this 

proposal. We did not receive any 

comments specific to the potential costs, 

benefits, and transfers associated with 

this provision. 

d. Providing Correct Information to the 

FFEs and Prohibited Business Practices 

The proposed revisions to 

§ 155.220(j)(2) are focused on addressing 

various areas where HHS has thus far 

identified a need for more direct and 

clear guidance, including ensuring that 

correct consumer information is entered 

onto Exchange applications. This 

includes contact information, such as 

the consumer’s email address, telephone 

number, and mailing address, as well as 

information related to projected 

consumer household income. They also 

set forth prohibited business practices, 

such as using automation when 

interacting with CMS Systems or the DE 

Pathways without CMS’ advance 

written approval and failing to properly 

identity proof Exchange applicants. 

These proposed changes will clarify 

HHS’ expectations in these areas, and 

create clear, enforceable standards and 

bases for taking enforcement action for 

violations of these requirements. 

HHS believed these proposals would 

not impose any burden on any of the 

parties the proposals would impact, 

including agents, brokers, and webbrokers. None of these proposals sought 

to impose new requirements. Rather, 

these proposals are intended to address 

common problems that HHS has 

observed, and provide clear, enforceable 

standards intended to protect 

consumers and support the efficient 

operation of Exchanges by substantially 

reducing the occurrence of those 

problems. 

We sought comment on any potential 

costs or benefits associated with these 

proposals. We did not receive any 

comments specific to the potential costs, 

benefits, and transfers associated with 

this provision. 

6. Verification Process Related to 

Eligibility for Insurance Affordability 

Programs (§ 155.320) 

We proposed to amend 

§ 155.320(d)(4) to remove the 

requirement that Exchanges that do not 

reasonably expect to obtain sufficient 

verification data related to enrollment in 

or eligibility for employer sponsored 

coverage conduct random sampling to 

verify whether an applicant is eligible 

for or enrolled in an eligible employer 

sponsored plan in favor of a verification 

process that is based on risk for 

inappropriate APTC/CSRs. We believed 

this proposal would benefit employers, 

employees, Exchanges using the Federal 

platform, and State Exchanges that 

operate their own eligibility and 

enrollment platform, as this proposal 

would relieve them from the burden of 

investing resources to conduct and 

respond to random sampling, as 

applicable. 

In the 2019 Payment Notice final rule 

(82 FR 51128), we discussed a study 

that HHS conducted in 2016 and the 

burden associated with sampling based 

in part on the alternative process used 

for the Exchanges. HHS incurred 

approximately $750,000 in costs to 

design and operationalize this study, 

and the study indicated that $353,581 of 

APTC was potentially incorrectly 

granted to individuals in the sampled 

population who inaccurately attested to 

their enrollment in or eligibility for a 

qualifying eligible employer sponsored 

plan. We placed calls to employers to 

verify 15,125 cases but were only able 

to verify 1,948 cases. A large number of 

employers either could not be reached 

or were unable to verify a consumer’s 

information, resulting in a verification 

rate of approximately 13 percent. The 

sample size involved in the 2016 study 

did not represent a random sample of 

the target population and did not fulfill 

all regulatory requirements for sampling 

under § 155.320(d)(4)(i). 

Taking additional costs into 

account—namely, the cost of sending 

notices to employees as required under 

§ 155.320(d)(4)(i)(A), the cost of 

building the infrastructure and 

implementing the first year of 

operationalizing this process, and the 

cost of expanding the number of cases 

to a random sample size of 

approximately 1 million cases—we 

estimated that the overall one-time cost 

of implementing sampling would have 

been approximately $8 million for the 

Exchanges using the Federal platform, 

and between $2 million and $7 million 

for other Exchanges, depending on their 

enrollment volume and existing 

infrastructure. Therefore, we estimated 

that the average per-Exchange cost of 

implementing sampling that resembles 

the approach taken by the Exchanges 

using the Federal platform would have 

been approximately $4.5 million for 

State Exchanges that operate their own 


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eligibility and enrollment platform, for 

a total cost of $67.5 million for the 15 

State Exchanges that operate their own 

eligibility and enrollment platform 

(operating in 14 States and the District 

of Columbia). However, we are aware 

that 4 State Exchanges that operate their 

own eligibility and enrollment platform 

have already incurred costs to 

implement sampling and estimate that 

they have incurred one-time costs of 

approximately $4.5 million per 

Exchange with a total of $18 million and 

will only experience savings related to 

recurring costs. Therefore, the one-time 

savings for Exchanges using the Federal 

platform and the remaining State 

Exchanges that operate their own 

eligibility and enrollment platform will 

be approximately $49.5 million. 

We estimated the annual costs to 

conduct sampling on a random sample 

size of approximately 1 million cases to 

be approximately $8 million for the 

Exchanges using the Federal platform 

and $7 million on average for each State 

Exchange that operates its own 

eligibility and enrollment platform. This 

estimate includes operational activities 

such as noticing, inbound and outbound 

calls to the Marketplace call center, and 

adjudicating consumer appeals. The 

total annual cost to conduct sampling 

would have been $105 million for 15 

State Exchanges. Therefore, the total 

annual cost for the Exchanges using the 

Federal platform and the 15 State 

Exchanges that operate their own 

eligibility and enrollment platform 

would have been $113 million in 2022 

and onward. 

Eliminating these estimated costs 

would be offset by the costs of designing 

and implementing an appropriate 

verification process. We estimated that 

the cost to conduct research for 

Exchanges using the Federal platform to 

be approximately $295,000 and for the 

15 State Exchanges that operate their 

own eligibility and enrollment platform 

to be approximately $4.4 million. In 

addition to significant cost savings, this 

proposal would provide more flexibility 

for States to design and implement a 

verification process for employer 

sponsored coverage that is tailored to 

their unique populations and would 

protect the integrity of States’ respective 

individual markets. Furthermore, we 

believe that this proposal would reduce 

the burden on employers and 

employees, as compliance with the 

current random sampling, notification, 

and information gathering processes 

require significant time and resources, 

which likely would be reduced if this 

proposal is finalized. 

HHS requested a comment on the 

estimated and potential costs and 

impacts of this proposal. 

We summarize and respond to public 

comments received on the verification 

process related to eligibility for 

insurance affordability programs 

(§ 155.320) below. 

HHS wishes to note that since the 

publication of the proposed rule, three 

States have transitioned from having 

State Exchanges using the Federal 

eligibility and enrollment platform to 

operating as State Exchanges that 

operate their own eligibility and 

enrollment platform, therefore, we are 

revising our previous estimated cost and 

saving estimates. We revise the perExchange cost of implementing 

sampling that resembles the approach 

taken by the Exchanges using the 

Federal platform would have been 

approximately $4.5 million for State 

Exchanges that operate their own 

eligibility and enrollment platform, for 

a total cost of $81 million for the 18 

State Exchanges that operate their own 

eligibility and enrollment platform 

(operating in 17 States and the District 

of Columbia). We are still aware that 4 

State Exchanges that operate their own 

eligibility and enrollment platform have 

already incurred costs to implement 

sampling and estimate that they have 

incurred one-time costs of 

approximately $4.5 million per 

Exchange with a total of $18 million and 

will only experience savings related to 

recurring costs. Therefore, the one-time 

savings for Exchanges using the Federal 

platform and the remaining State 

Exchanges that operate their own 

eligibility and enrollment platform will 

be approximately $63 million. The total 

annual cost to conduct sampling has 

been revised to $126 million for the 18 

State Exchanges. Therefore, the total 

annual cost for the Exchanges using the 

Federal platform and the 18 State 

Exchanges that operate their own 

eligibility and enrollment platform has 

been revised to $134 million in 2023 

and onward. Finally, we revised the 

estimated cost to conduct research for 

Exchanges using the Federal platform to 

be approximately $295,000 and for the 

18 State Exchanges that operate their 

own eligibility and enrollment platform 

to be approximately $5.3 million. 

Comment: While not directly related 

to the cost estimates, one commenter 

expressed concern with the proposed 

risk-based approach for designing and 

developing processes for employer 

sponsored coverage verification as it 

could lead to increased APTC/CSR 

improper payments. The commenter 

noted that the Congressional Budget 

Office estimated that approximately $83 

billion will be spent on APTC/CSR in 

2022. The commenter stated that based 

on HHS’ own analysis that about two 

percent of consumers may have an 

incentive to enroll in Exchange coverage 

rather than coverage offered through an 

employer, this could result in about $1.7 

billion in APTC/CSR payments, which 

is larger than HHS’ estimates to 

operationalize the random sampling 

requirement. 

Response: HHS disagrees with the 

commenter’s estimate because there are 

many other factors to take into 

consideration when estimating potential 

inappropriate payments of APTC/CSR, 

such as the average number of months 

an enrollee would have received APTC/ 

CSR after HHS took action to end APTC/ 

CSR. HHS believes using a flat estimate 

based on CBO projections, which 

doesn’t take these factors into 

consideration, is misleading. 

After reviewing the public comments, 

we are finalizing as proposed. 

7. Proration of Advance Premium Tax 

Credit and Premium (§§ 155.240(e), 

155.305(f)(5), and 155.340) 

HHS proposed amendments to part 

155, specifically at §§ 155.240(e), 

155.305(f)(5), and 155.340 to establish 

the requirement that all Exchanges 

prorate both premiums and APTC for 

enrollees enrolled in a particular policy 

for less than the full coverage month, 

including when the enrollee is enrolled 

in multiple policies within a month, 

each lasting less than the full coverage 

month, using a specified methodology. 

This method of administering APTC 

would reduce instances of payments of 

APTC in excess of an applicable 

taxpayer’s monthly PTC eligibility for a 

month in which an enrollee is enrolled 

in multiple policies within a month, 

each lasting less than the full calendar 

month, and thus would protect the 

applicable taxpayer from incurring 

income tax liability due to excess APTC. 

HHS noted that this would benefit 

both issuers and enrollees by reducing 

instances of APTC over-payment and 

eliminating wasted resources dedicated 

to resolving over-payment issues. While 

the FFEs and SBE–FPs already prorate 

APTC and premium amounts, some 

State Exchanges do not currently prorate 

consistently the amount of applied 

APTC administered to issuers in their 

applicable States. 

HHS acknowledged that those State 

Exchanges that do not currently prorate 

APTC or premium amounts would be 

financially impacted by the proposed 

requirement to implement this 

methodology, and this proposal would 

likely require operational systems 


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builds to support this new proration 

requirement. 

Based on historical cost data for State 

Exchanges to implement changes to 

their IT systems and operations related 

to premium processing functionality 

and similar functionality, such as 

functionality for processing consumer 

failures to reconcile APTC received for 

a previous plan year, HHS estimated 

that State Exchanges that currently do 

not implement proration of APTC or 

premium amounts according to the 

proposed methodology could expect to 

incur one-time implementation costs. 

HHS anticipated that each affected State 

Exchange that does not already prorate 

APTC or premium amounts according to 

the proposed methodology would 

expect an estimated $1 million one-time 

burden to account for the IT build to 

support the new calculation and 

reporting systems associated with this 

requirement. 

HHS estimated that 8 State Exchanges 

currently prorate premium amounts but 

do not prorate APTC amounts. HHS 

anticipated that those State Exchanges 

which already prorate premium 

amounts would have the operational 

and systems capacity to calculate the 

prorated premium and APTC amounts 

as required in the proposed policy. 

Currently, State Exchanges vary in 

their approaches to implementing the 

proposed APTC and premium proration. 

In order to provide an upper bound 

estimate of this proposal’s burden, HHS 

assumed that 10 State Exchanges, 

including State Exchanges that newly 

transitioned to being State Exchanges by 

the time of this rulemaking, would incur 

the highest level of implementation cost 

detailed earlier in this final rule ($1 

million in one-time implementation 

burden per State Exchange) for a total 

estimated impact of $10,000,000 in the 

2024 benefit year across all State 

Exchanges. HHS sought comment on the 

estimated costs and benefits described 

in this section. 

We summarize and respond to public 

comments received on the proration of 

APTC and premium (§§ 155.240(e), 

155.305(f)(5), and 155.340) below. 

Comment: We received several 

comments on the estimated costs for a 

State Exchange to implement the 

proposed APTC and premium proration 

methodology. A few commenters stated 

that the estimated one-time 

implementation cost of $1 million 

dollars per State Exchange was 

unreasonably burdensome, particularly 

considering competing programmatic 

demands and the ongoing COVID–19 

PHE. Another commenter noted that 

HHS severely underestimated the 

implementation cost and estimated that 

it would cost approximately four times 

the burden estimate detailed in the 

proposed rule to implement the 

proposed proration methodology within 

their Exchange. 

Response: HHS appreciates the 

comments on the estimated burden 

associated with the proposed policy. 

The estimates in the proposed rule were 

made using the best available 

information that HHS could access, and 

the comments received helped to clarify 

the impact that the proposed policy 

could have State Exchanges. In an effort 

to be responsive to comments regarding 

implementation costs, HHS is finalizing 

this policy with modifications that will 

significantly reduce the burden on State 

Exchanges. We are not finalizing the 

requirement to prorate premium or 

APTC amounts for State Exchanges. 

Rather, we are finalizing a requirement 

that, beginning in PY 2024, State 

Exchanges must implement a 

methodology to ensure that APTC 

calculations do not cause an enrollee’s 

total monthly APTC amount from 

exceeding their PTC, in compliance 

with HHS and IRS regulations. Further, 

State Exchanges must prospectively 

report to HHS through existing State 

Exchange oversight mechanisms the 

methodology the State intends to use in 

PY 2024. 

While many State Exchanges already 

have a methodology that meets the 

requirement of preventing an enrollee’s 

monthly APTC amount from exceeding 

their monthly PTC eligibility, we note 

that some States will likely require 

operational IT systems changes to 

implement a compliant methodology. 

HHS estimates that 8 State Exchanges 

will require some form of operational 

investment to comply with this policy. 

The cost of a systems builds may vary 

among State Exchanges depending on 

their elected methodology, but we 

estimate $500,000 in one-time contact 

labor cost per State Exchange. This cost 

estimate is lower than that in the 

proposed rule to reflect that State 

Exchanges will have the flexibility to 

implement any methodology that 

ensures an enrollee’s monthly APTC 

does not exceed their PTC eligibility. 

We estimate that the one-time financial 

impact of this requirement to be 

approximately $500,000 for 8 State 

Exchanges, or $4 million in PY 2024. 

The burden to report this information 

to HHS will be negligible, as State 

Exchanges will use existing oversight 

mechanisms. This reporting 

requirement will be included within the 

reporting requirements described at 

§ 155.1200(b)(2) and the information 

collected will be addressed by the State 

Based Marketplace Annual Report Tool 

(SMART) PRA (OMB Control Number 

0938–1244) which we explain earlier in 

the ICR section of this rule. 

After reviewing the public comments, 

we are finalizing with modifications. 

10. Special Enrollment Periods—Special 

Enrollment Period Verification 

(§ 155.420) 

We proposed to amend § 155.420 to 

add a new paragraph (g) to state that 

Exchanges may conduct pre-enrollment 

verification of eligibility for special 

enrollment periods, at the option of the 

Exchange, and that Exchanges may 

provide an exception to pre-enrollment 

special enrollment period verification 

for special circumstances. Exchanges on 

the Federal platform would conduct 

pre-enrollment special enrollment 

period eligibility verification for new 

consumers who attest to losing 

minimum essential coverage. 

We did not anticipate that revisions to 

§ 155.420 would impose regulatory 

burden or costs on the Exchanges on the 

Federal platform because these 

Exchanges will decrease the number of 

special enrollment period types that 

require pre-enrollment verification to 

only include special enrollment periods 

for new consumers who attest to losing 

minimum essential coverage. The 

provisions proposed in this rule would 

decrease the scope of pre-enrollment 

special enrollment period verification in 

all States with Exchanges served by the 

Federal platform. We anticipated that 

this would result in 194,000 fewer 

individuals having their enrollment 

delayed or ‘‘pended’’ annually until 

eligibility verification is completed, 

which would result in a $5,150,700 (or 

20 percent) decrease in annual ongoing 

costs to the Federal Government. 

There may be State Exchanges that 

also decide to reduce the scope of their 

current pre-enrollment special 

enrollment period verification, which 

would also decrease annual ongoing 

costs for State Exchanges. State 

Exchanges that are currently conducting 

pre-enrollment verification of eligibility 

for more special enrollment period 

types than those that the Exchanges on 

the Federal platform would be verifying 

under this proposal could experience a 

decrease in burden and costs if they 

choose to align their approaches with 

the Exchanges on the Federal platform. 

State Exchanges that are currently 

conducting pre-enrollment verification 

of eligibility for fewer types of special 

enrollment periods than the proposed 

special enrollment period that the 

Exchanges on the Federal platform 

would be verifying under this proposal 

could experience an increase in burden 

and costs if they choose to align with 


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394 86 FR 53412, 53445. 

395 Ibid. 

396 Ibid. 397 85 FR 29164, 29252. 

the Exchanges on the Federal platform, 

but State Exchanges will not be required 

to align with the Exchanges on the 

Federal platform. 

We did not anticipate that this would 

increase administrative costs on QHP 

issuers. Additionally, our data suggest 

that SEP documentation deters younger, 

likely healthier individuals from 

enrolling, but there could be an increase 

in claims costs to QHP issuers since the 

Exchanges on the Federal platform will 

be requiring document submission prior 

to enrollment for fewer special 

enrollment period types. 

We sought comment on the potential 

costs, benefits, and transfers associated 

with this proposal. 

We did not receive any comments 

specific to the potential costs, benefits, 

and transfers associated with this 

provision. Therefore, we are finalizing 

these provisions as proposed. 

11. General Program Integrity and 

Oversight Requirements (§ 155.1200) 

As explained earlier in this preamble, 

we are not finalizing this provision 

related to general program integrity and 

oversight requirements at this time. We 

estimated that there would be a general 

reduction in reporting and contracting 

costs to State Exchanges related to 

meeting auditing requirements under 

§ 155.1200. We anticipated the 

combined cost in contracting and 

reporting would result in an average 

annual reduction of approximately 

$90,624.62 for each State Exchange 

beginning in the benefit year 2024. The 

total cost annual reduction across 18 

State Exchanges would be 

approximately $1,631,243.16. 

We sought comment on the potential 

costs, benefits, and transfers associated 

with this provision. 

Comment: A few commenters 

expressed general concern regarding the 

estimated burden reduction associated 

with this proposal. 

Response: We address these 

comments in the General Program 

Integrity and Oversight 155.1200 

preamble discussion earlier in this rule. 

Based on public comments received, we 

are not finalizing this provision at this 

time. 

12. State Exchange Improper Payment 

Measurement Program (§§ 155.1500 

Through 155.1540) 

As we explained earlier in section III. 

of the preamble, HHS is not finalizing 

the regulations we proposed to govern 

implementation of the SEIPM program 

could have the direct effect of reducing 

improper payments. We sought 

comment on the estimated costs and 

benefits and potential transfers 

associated with these provisions but did 

not receive any responsive comments. 

13. FFE and SBE–FP User Fees 

(§ 156.50) 

We are finalizing an FFE user fee rate 

of 2.75 percent of monthly premiums 

charged by the FFE issuer for the 2023 

benefit year, which is the same as the 

2.75 percent FFE user fee rate finalized 

in part 3 of the 2022 Payment Notice.394

We are finalizing an SBE–FP user fee 

rate of 2.25 percent of monthly 

premiums charged by the SBE–FP issuer 

for the 2023 benefit year, which is the 

same as the 2.25 percent SBE–FP user 

fee rate finalized in part 3 of the 2022 

Payment Notice.395 Therefore, we do not 

believe that these user fee rates will 

have any additional impact on 

premiums compared to the 2022 benefit 

year. We also finalize an amendment to 

§ 156.50 to conform the user fee 

regulations with the repeal of the 

Exchange DE option finalized in part 3 

of the 2022 Payment Notice.396 We do 

not expect that it will have any 

additional regulatory impact 

We sought comment on the potential 

costs, benefits, and transfers associated 

with this provision. We did not receive 

any comments specific to the potential 

costs, benefits, and transfers associated 

with this provision. 

14. State Selection of EHB-Benchmark 

Plan for Plan Years Beginning on or 

After January 1, 2020 (§ 156.111) 

We proposed to eliminate the 

requirement at § 156.111(d) and (f) to 

require States to annually notify HHS in 

a form and manner specified by HHS, 

and by a date determined by HHS, of 

any State-required benefits applicable to 

QHPs in the individual or small group 

market that are considered to be in 

addition to EHB in accordance with 

§ 155.170(a)(3) and any benefits the 

State has identified as not in addition to 

EHB and not subject to defrayal, 

describing the basis for the State’s 

determination. 

Under this proposal, States would no 

longer be required to submit an annual 

report that complies with each 

requirement listed at § 156.111(f)(1) 

through (6), nor would HHS identify 

which benefits are in addition to EHB 

for the applicable PY in the State if a 

State does not submit an annual 

reporting package. 

The 2021 Payment Notice 

acknowledged that requiring States to 

annually report to HHS would require 

that States submit additional paperwork 

to HHS on an annual basis but noted 

that, as States are already required 

under § 155.170 to identify which Staterequired benefits are in addition to EHB 

and to defray the cost of those benefits, 

any such burden experienced by States 

would be minimal.397 The 2021 

Payment Notice also stated that this 

reporting requirement would be 

complementary to the process the State 

should already have in place for 

tracking and analyzing State-required 

benefits. The 2021 Payment Notice 

further explained that States may opt 

not to report this information and 

instead let HHS make this 

determination for them. In the 2021 

Payment Notice, we also discussed that 

any State burden associated with this 

policy would be limited to the 

completion of the HHS templates, 

validation of that information, and 

submission of the templates to HHS. 

Repealing the annual reporting 

requirement would remove the burden 

associated with that policy, detailed in 

2021 Payment Notice and summarized 

previously in the Collection of 

Information Requirements section in 

this final rule. 

Although this proposal would relieve 

States of the annual reporting 

requirements and any associated burden 

with submission and validation of the 

information on the annual reporting 

templates, it would not pend or 

otherwise impact the defrayal 

requirements under section 

1311(d)(3)(B) of the ACA, as 

implemented at § 155.170. Under this 

proposal, States remain responsible for 

making payments to defray the cost of 

additional required benefits and issuers 

are still responsible for quantifying the 

cost of these benefits and reporting the 

cost to the State. We also noted that the 

obligation for a State to defray the cost 

of QHP coverage of State-required 

benefits in addition to EHB is an 

independent statutory requirement from 

the annual reporting policy finalized at 

§ 156.111(d) and (f). 

We sought comment on the potential 

costs, benefits, and transfers associated 

with this provision. 

After reviewing the public comments, 

we are finalizing repeal of the annual 

reporting policy at § 156.111(d) and (f), 

including revising the section heading 

to § 156.111 to instead read, ‘‘State 

selection of EHB-benchmark plan for 

PYs beginning on or after January 1, 

2020.’’ 

We summarize and respond to public 

comments received repealing the annual 

reporting of State-required benefits 

below. 


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398There are no enrollees in bronze plans below 

58% AV. 

Comment: Many commenters 

supported the repeal of the annual 

reporting policy and noted that the 

policy is an unnecessary new 

administrative burden on States without 

adequate justification. One commenter 

explained that the reporting structure 

would have required State officials to 

either procure consultants or divert 

existing staff from other work to comply 

with an entirely new reporting process. 

Commenters stated that the elimination 

of this reporting requirement would 

remove a needless administrative 

burden while maintaining States’ 

responsibility to comply with the 

defrayal rule. 

Other commenters objected to the 

repeal of the annual reporting policy 

and challenged the claims that the 

policy was overly burdensome. Such 

commenters noted that States should 

already have determined the status and 

cost of State-required benefits and that 

the reporting requirement should not 

place a burden on States of conducting 

new analyses. Commenters further 

noted that, after the initial reporting 

cycle, the administrative burden on 

States would be even more minimal. 

Response: We maintain that the 

annual reporting policy would have 

imposed a minimal burden on States as 

the information that States would have 

been required to report to HHS should 

already be readily accessible to States, 

as every State should already be 

identifying which State-required 

benefits are in addition to EHB and 

should be defraying any such costs. 

States should already have ready access 

to the information the annual reports 

would have required as States should 

already have in place a process for 

tracking and analyzing State-required 

benefits. However, even if the State 

burden would have been minimal, we 

still believe that taking a more targeted 

approach of engaging with individual 

States on questions of compliance with 

the defrayal requirement will yield 

similar results to the annual reporting 

policy without requiring all States, 

including even compliant States, to 

expend additional time and resources 

submitting a report with this detailed 

information. 

15. Levels of Coverage (Actuarial Value) 

(§ 156.140, 156.200, 156.400) 

We proposed to change the de 

minimis range for levels of coverage at 

§ 156.140(c) to a variation of +2/¥2 

percentage points for all standard 

bronze plans, gold plans, platinum 

plans, individual market off-Exchange 

silver plans, and all small group market 

silver plans (on- and off-Exchange), as 

well as proposed to change the de 

minimis for expanded bronze plans to 

+5/¥2, that are required to comply with 

AV standards for PYs beginning in 2023. 

In addition, we proposed to change the 

de minimis under § 156.200 to +2/0 

percentage points for individual market 

silver QHPs and for the income-based 

silver CSR plan variations under 

§ 156.400 to +1/0. 

In the 2017 Market Stabilization rule 

(82 FR 18346), we acknowledged that in 

the short run, expanding the standard 

de minimis range to +2/¥4 would 

generate a transfer of costs from 

consumers to issuers in the form of 

decreased APTC and increased 

premiums, but stated our belief that the 

additional flexibility for issuers would 

have positive effects for consumers over 

the long term as premiums stabilized, 

issuer participation increased, and 

coverage options at the silver level and 

above increased, which would attract 

more young and healthy enrollees into 

such plans. As discussed above, since 

we finalized the expanded de minimis 

ranges, we have observed decreased 

enrollment in silver plans (from 963,241 

enrollees in PY 2018 to 424,345 

enrollees in PY 2021), despite the 

number of standard silver plans 

available on HealthCare.gov steadily 

increasing from 811 silver plans in PY 

2018 to 1,386 silver plans in PY 2021. 

Thus, we cannot justify the decreased 

APTC with evidence of increased 

enrollment of younger and healthier 

enrollees in silver plans. 

Changing the de minimis ranges for 

standard metal level plans would 

generate a transfer of costs from the 

government and issuers to consumers in 

the form of increased APTC and 

decreased premiums, because narrowing 

the de minimis range for silver plans 

can affect the generosity of the SLCSP. 

The SLCSP is the benchmark plan used 

to determine an individual’s PTC. A 

subsidized enrollee in any county that 

has an SLCSP that is currently below 70 

percent AV would see the generosity of 

their current SLCSP increase, resulting 

in an increase in PTC. Not all counties 

would see the SLCSP change as a result 

of this proposal. In States using 

HealthCare.gov, approximately 87 

percent of counties across 23 States 

have an SLCSP that is below 70 percent 

AV. 

For this proposal, the CMS Office of 

the Actuary estimates a nationwide 

increase in PTCs through PY 2032, as 

shown in Table 22. 

This proposal would impact those 

consumers currently enrolled in 

standard silver plans that are currently 

in the ¥4 to ¥0.01 percent de minimis 

range that would be out of compliance 

under this proposal, as well as 

consumers currently enrolled in 

individual market silver QHPs that are 

currently in the ¥4 to ¥0.01 percent de 

minimis range and associated incomebased CSR silver plan variations 

currently enrolled in the ¥1 to ¥0.01 

percent de minimis range. Of the plans 

on HealthCare.gov, we estimate that 

there are approximately 150,000 

enrollees in gold plans below 78 percent 

AV, and 3,500 enrollees in platinum 

plans below 88 percent AV.398

Additionally, we estimate there are 

approximately 248,000 enrollees in 

HealthCare.gov silver QHPs below 70 

percent AV, with approximately 4.2 

million enrollees in corresponding 

income-based CSR plan variations. 

Under these proposals, those enrollees 

would need to select a different plan for 

PY 2023 if the issuer chooses to 

discontinue the plan rather than revise 

the plan’s cost sharing. Additionally, 

these proposals would similarly affect 

enrollees in such plans that are not 

available on HealthCare.gov, such as 

plans sold on State Exchanges, for 


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399See section 4980H of the Code; 26 CFR 

54.4980H–1–26 CFR 54.4980H–6. 

which we do not have data to make an 

informed estimate. 

We estimated the premiums for these 

plans would increase approximately 2 

percent on average because of benefit 

changes required for plans to meet a 

+2/0 de minimis threshold. However, 

for Exchange enrollees, we stated that 

we expect this premium increase to be 

substantially offset by the corresponding 

increase in PTC because of the 

proposal’s impact on the SLCSP. 

Similarly, the proposal to change the de 

minimis range for CSR variants to +1/0 

would lead to improved cost sharing 

due to the higher relative AV compared 

to the current +1/¥1 range, along with 

increased gross premiums that would be 

substantially offset by increased PTC 

payments. After implementation of the 

ARP enhanced financial subsidies, 

subsidized enrollees make up the 

majority of HealthCare.gov silver QHP 

enrollees—only 91,000 of approximately 

248,000 individual market silver QHP 

enrollees in plans with AV between 

66.00 and 69.99 percent plan AV remain 

unsubsidized. By comparison, 

enrollment within the corresponding 

income-based silver CSR variations of 

the above silver QHPs has increased to 

approximately 4.2 million. We stated 

that we expect the increased PTC 

payments due to the premium increase 

to incentivize healthier subsidy-eligible 

enrollees to participate in the 

Marketplace, and that the improved risk 

pool as a result of increased healthier 

enrollees would mitigate the net cost 

burden of covering a decreasing 

population of unsubsidized enrollees. 

In addition, changing the de minimis 

range for standard silver plans would 

impact ICHRAs, which use the Lowest 

Cost Silver Plan (LCSP) as the 

benchmark to determine whether an 

ICHRA is considered affordable to an 

employee. Under this proposal, as silver 

plans become more generous and 

premiums increase, an employer would 

have to contribute more to an ICHRA to 

have it be considered affordable. This 

change could discourage large employer 

use of ICHRAs because large employers 

need to offer affordable coverage to 

satisfy the employer shared 

responsibility provisions.399

Additionally, if coverage is considered 

unaffordable to the employee, the 

employee can opt out of the ICHRA and 

instead purchase coverage on the 

Exchange with APTC, if otherwise 

eligible; and increasing the LCSP 

premiums could make employersponsored coverage unaffordable to 

more employees. We estimated silver 

plans with an AV below 70 percent will 

see premiums increase by 

approximately 2 percent on average due 

to more generous benefits. We stated 

that we do not believe this would have 

a significant impact on the number of 

employers willing to offer ICHRAs or 

whether an ICHRA is considered 

affordable to most employees, but we 

invited comments to refute or refine this 

understanding on these issues in 

particular. 

We sought comment on the estimated 

costs, benefits, and transfers associated 

with this provision. However, we did 

not receive comments that specifically 

addressed the accuracy of the burden 

estimates included in the proposed rule; 

instead, the comments received 

addressed the merits of the proposal 

itself, which we have addressed in the 

preamble. Thus, we are finalizing these 

burden estimates as proposed. 

16. Standardized Plan Options 

(§ 156.201) 

Section 156.201 finalizes the 

provision to require QHP issuers to offer 

standardized QHP options. Though 

these requirements necessitate the 

creation of new plans, HHS explained 

that it believes the burden imposed on 

issuers would be minimal because these 

new plans’ benefits, networks, and 

formularies would not differ 

substantially from the benefits, 

networks, and formularies of a majority 

of plans that issuers currently offer and 

because HHS designed the cost-sharing 

parameters, MOOPs, and deductibles for 

these new plans. Additionally, HHS 

designed these standardized plan 

options to resemble the most popular 

QHPs in the individual market FFEs and 

SBE–FPs in PY 2021, making these 

standardized plan options comparable 

to plans that the majority of issuers 

already offer. Furthermore, since HHS is 

requiring QHP issuers to offer 

standardized plan options at every 

product network type, at every metal 

level, and throughout every service area 

they also offer non-standardized QHPs 

(but not at different product network 

types, metal levels, and service areas 

that they do not also offer nonstandardized QHPs), issuers are not 

required to extend plan offerings 

beyond their existing service areas. 

Additionally, since HHS did not 

finalize any provision to limit the 

number of non-standardized QHP 

options that issuers can offer in PY 

2023, HHS explained that it believes the 

majority of enrollees will remain 

enrolled in their current nonstandardized plan options. Moreover, 

since HHS did not finalize any 

provisions to require issuers to offer a 

higher number of QHPs than what they 

currently offer, issuers would still be 

able to determine how many QHPs they 

wish to offer. As a result, HHS 

explained that it does not expect the 

total number of plans that issuers are 

offering to change substantially 

subsequent to the imposition of the 

requirement. Thus, though these new 

plans will have to be submitted for 

approval, certification, and display, we 

expected that the overall burden for 

issuers and States alike would not 

substantially increase because we do not 

expect the number of overall plan 

offerings to substantially increase—due 

in part to issuers discontinuing some 

old non-standardized offerings. 

As noted earlier in the preamble, HHS 

noted that it is resuming the differential 

display of standardized plan options per 

the existing authority at § 155.205(b)(1). 

HHS is assuming burden for the 

differential display of standardized plan 

options on HealthCare.gov, meaning 

FFE and SBE–FP issuers are not subject 

to this burden. 

In addition, as noted in the preamble, 

HHS noted that it is resuming 

enforcement of the standardized plan 

option display requirements for 

approved web-brokers and QHP issuers 

using a direct enrollment pathway to 

facilitate enrollment through an FFE or 

SBE–FP—including both the Classic DE 

and EDE Pathways—at 

§§ 155.220(c)(3)(i)(H) and 

156.265(b)(3)(iv), respectively. HHS 

explained that it believes that resuming 

enforcement of these differential display 

requirements will not require significant 

modification of these entities’ platforms 

and non-Exchange websites. Further, 

since HHS is allowing these entities to 

submit requests to deviate from the 

manner in which standardized plan 

options are differentially displayed on 

HealthCare.gov, the potential burden for 

these for these entities is further 

reduced. HHS also noted that it intends 

to provide access to information on 

standardized plan options to webbrokers through the Health Insurance 

Marketplace PUFs and QHP Landscape 

file to further minimize the burden. The 

specific burden estimates for these 

requirements can be found in the 

corresponding ICR sections for 

§§ 155.220 and 156.265. 

We sought comment on the potential 

costs, benefits, and transfers associated 

with this provision. We did not receive 

any comments specific to the potential 

costs, benefits, and transfers associated 

with this provision. We are finalizing 

these burden estimates as proposed. 


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17. Network Adequacy (§ 156.230) 

Section 156.230(a)(2) currently 

requires a QHP issuer to maintain a 

network that is sufficient in number and 

types of providers, including providers 

that specialize in mental health and 

substance use disorders, to ensure that 

all services will be accessible without 

unreasonable delay. In this final rule, 

HHS is finalizing that for PY 2023 and 

future PYs that all QHPs or QHP 

candidates that use a provider network 

must comply with network adequacy 

standards. 

HHS finalized the proposal to conduct 

prospective quantitative network 

adequacy reviews for all FFEs in all FFE 

States except in States performing plan 

management functions that adhere to a 

standard as stringent as the Federal 

standard, conduct reviews 

prospectively, and choose to conduct 

their own reviews. HHS finalized for PY 

2023 and future PYs to adopt time and 

distance standards to assess whether 

FFE QHPs or QHP candidates fulfill 

network standards based on numbers 

and types of providers and providers’ 

geographic locations. Time and distance 

standards will be calculated at the 

county level using information from the 

ECP/NA template. HHS also proposed to 

adopt appointment wait time standards 

to assess whether FFE QHPs or QHP 

candidates fulfill network adequacy 

standards. HHS will begin 

implementation of reviews for 

appointment wait time standards in PY 

2024. Issuers that are unable to meet the 

specified standards for time and 

distance or appointment wait times 

must submit a justification to account 

for such variances. 

HHS did not finalize the proposal 

that, for plans that use tiered networks 

to count toward the issuer’s satisfaction 

of the network adequacy standards, 

providers must be contracted within the 

network tier that results in the lowest 

cost-sharing obligation. 

Finally, HHS finalized the proposal to 

collect information about providers who 

offer telehealth services via the ECP/NA 

template to inform network adequacy 

and provider access standards for future 

PYs. As discussed previously in the 

Collection of Information Requirements 

section, this may increase related 

administrative costs for issuers who do 

not already possess this data, though 

many issuers already collect and submit 

this information for network adequacy 

submissions in other markets. While we 

anticipate that the increased burden 

related to telehealth data collection 

would be minimal for many issuers, the 

increased burden could ultimately lead 

to an increase in premiums for 

consumers. As noted previously, we 

believe that the potential benefits of 

obtaining telehealth information and 

using it to inform future network 

adequacy standards are in the best 

interests of both QHP enrollees and 

QHP issuers. As such, we anticipate that 

the additional burden would be 

mitigated by the expected benefits. 

We sought comment on the potential 

costs, benefits, and transfers associated 

with this provision. We did not receive 

any comments specific to the potential 

costs, benefits, and transfers associated 

with this provision. 

18. Essential Community Providers 

(§ 156.235) 

Section 156.235(a)(2)(i) provides that 

a plan has a sufficient number and 

geographic distribution of ECPs if the 

issuer demonstrates, among other 

things, that a QHP or QHP candidate 

provides access to a network of 

providers that includes at least a 

minimum percentage of ECPs, as 

specified by HHS. 

For PY 2023 and future PYs, HHS 

proposes to raise the ECP threshold 

applicable to QHPs and QHP candidates 

from 20 percent to 35 percent. For this 

increased threshold, HHS would 

consider issuers to have satisfied the 

regulatory threshold requirement if the 

issuer contracts with at least 35 percent 

of available ECPs in each plan’s service 

area to participate in the plan’s provider 

network. 

We noted that in PYs 2015–2017, all 

FFE QHP issuers satisfied the 30 percent 

threshold with minimal reliance on ECP 

write-ins and justifications. In PYs 2018 

through 2021, when the ECP threshold 

was 20 percent, all QHP issuers satisfied 

the lower threshold with ease and very 

little reliance on ECP write-ins and 

justifications. 

Consequently, HHS anticipates that 

issuers can meet the proposed 35 

percent threshold using ECP write-ins 

and justifications as needed. We 

believed that increasing the ECP 

threshold would lead to greater ECP 

access for low-income and medically 

underserved individuals. HHS 

anticipates that costs may not increase 

since HHS’ data analysis shows most 

issuers could easily meet this standard 

or use the justification process. HHS 

expected that administrative cost 

changes would likely be minimal for 

most issuers. 

HHS proposed that, for plans that use 

tiered networks to count toward the 

issuer’s satisfaction of ECP standards, 

providers must be contracted within the 

network tier that results in the lowest 

cost-sharing obligation. For plans with 

two network tiers (for example, 

participating providers and preferred 

providers), such as many PPOs, where 

cost sharing is lower for preferred 

providers, only preferred providers 

would be counted towards ECP 

standards. 

We sought comment on the potential 

costs, benefits, and transfers associated 

with this provision. We did not receive 

any comments specific to the potential 

costs, benefits, and transfers associated 

with this provision. 

19. Standards for Delegated and 

Downstream Entities (§ 156.340) 

In this final rule, we are finalizing the 

proposal to amend and add language to 

§ 156.340, to extend its applicability to 

QHP issuers on all Exchange models. 

We are finalizing changes to capture the 

delegated and downstream entity 

standards that would apply to QHP 

issuers on State Exchanges and State 

Exchange SHOPs, as well as QHP 

issuers providing coverage on Exchange 

models that use the Federal platform, 

including, but not limited to, FFEs, FF– 

SHOPs, SBE–FPs, and SBE–FP–SHOPs. 

HHS is also finalizing the proposal to 

add a requirement that all agreements 

between QHP issuers and their 

downstream and delegated entities 

include language stating that the 

relevant Exchange authority, including 

State Exchanges, may demand and 

receive a delegated and downstream 

entity’s records related to the QHP 

issuer’s obligations in accordance with 

the minimum Federal standards related 

to Exchanges. These amendments are 

intended to hold QHP issuers in all 

Exchange models responsible for their 

downstream and delegated entities’ 

compliance with applicable Exchange 

standards, and to make their oversight 

obligations, and the obligations of their 

downstream and delegated entities, 

explicit. We are also finalizing 

conforming amendments to the title of 

subpart D of 45 CFR part 156 from 

‘‘Standards for Qualified Health Plan 

Issuers on Federally Facilitated 

Exchanges and State-Based Exchanges 

on the Federal platform’’ to ‘‘Standards 

for Qualified Health Plan Issuers on 

Specific Types of Exchanges’’. 

We anticipated these policies will 

impose a minimal burden on QHP 

issuers and Exchange authorities 

impacted by them. HHS expects some 

QHP issuers may need to make changes 

to existing record retention policies and 

their agreements with delegated and 

downstream entities. The conforming 

amendments will become applicable to 

all books, contracts, computers, or other 

electronic systems, including medical 

records and documentation relating to 

the QHP issuer’s obligations in 


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400 523 F. Supp. 3d 731 (D. Md. 2021). 

401 86 FR 24261. 

accordance with Federal standards 

under paragraph (a) of this section until 

10 years from the final date of the 

agreement period, as of the effective 

date of the final rule. State Exchange 

authorities will retain primary 

enforcement authority and would be 

responsible for ensuring QHP issuers in 

State Exchanges and State Exchange 

SHOPs maintain oversight over 

downstream and delegated entities. 

We sought comment on the potential 

costs, benefits, and transfers associated 

with this provision. 

After reviewing the public comments 

and the general nature of the assertions 

that are unsupported by data, HHS will 

finalize our burden estimate and 

implementation date as proposed. 

We summarize and respond to public 

comments received for standards for 

delegated and downstream entities. 

Comment: A few commenters 

expressed concern that the addition of 

contract language proposed in 

paragraph (b)(5) would place a burden 

on downstream and delegated entities. 

Other commenters supported the 

benefits the proposed language in 

paragraph (b)(5) would confer by 

clarifying § 156.340 and its 

applicability. 

Response: As acknowledged in our 

analysis, we anticipate this policy 

change will impose a minimal burden 

(that is, a limited additional burden). 

For example, some QHP issuers in State 

Exchanges may need to make changes to 

existing record retention policies and 

their agreements with delegated and 

downstream entities. Relatedly, some 

delegated and downstream entities may 

need to revise their record retention 

policies. However, we believe such 

changes will be relatively easy to make 

and implement (for example, changing a 

record retention policy and related 

agreements to retain records for 10 years 

instead of 7 years). We note that none 

of the commenters provided any data or 

specificity concerning the actual 

burdens, costs, or transfers they 

expected the changes to impose. We 

believe our analysis accounts for all 

burden. 

20. Payment for Cost-Sharing 

Reductions (§ 156.430) 

We are amending § 156.430 to clarify 

that the CSR data submission process is 

mandatory only for those issuers that 

received CSR payments from HHS for 

any part of the benefit year as a result 

of an appropriation to make CSR 

payments and voluntary for all other 

issuers. In the event HHS has not made 

CSR payments to issuers because there 

is no appropriation to do so, HHS will 

continue to provide those issuers that 

have not received CSR payments from 

HHS for any part of the benefit year the 

option to submit CSR data, but issuers 

will not be required to do so. We did not 

expect any of these provisions to 

increase the burden on issuers, as this 

amendment would codify existing 

practices. 

We sought comment on any potential 

costs, benefits, and transfers associated 

with this provision. We did not receive 

any comments specific to the potential 

costs, benefits, and transfers associated 

with this provision. 

21. Quality Improvement Strategy 

(§ 156.1130) 

We proposed that beginning in 2023, 

a QHP issuer would be required to 

address reducing health and health care 

disparities as one of their QIS topic 

areas in addition to at least one other 

topic area outlined in section 1311(g)(1) 

of the ACA, including improving health 

outcomes of plan enrollees, preventing 

hospital readmissions, improving 

patient safety and reducing medical 

errors, and promoting wellness and 

health. We did not propose any changes 

to the regulatory text. We did not 

estimate additional costs or burdens as 

a result of this proposal. 

We sought comment on any potential 

costs, benefits, and transfers associated 

with this proposal. We did not receive 

any comments specific to the potential 

costs, benefits, and transfers associated 

with this provision. 

22. Medical Loss Ratio (§§ 158.140, 

158.150, 158.170) 

We are finalizing the proposal to 

amend § 158.140(b)(2)(iii) to clarify that 

only those provider incentives and 

bonuses that are tied to clearly defined, 

objectively measurable, and welldocumented clinical or quality 

improvement standards that apply to 

providers may be included in incurred 

claims for MLR reporting and rebate 

calculation purposes. To the extent 

some issuers currently include in 

incurred claims payments to providers 

that significantly reduce or eliminate 

rebates while providing no value to 

consumers, the proposed clarification 

would result in transfers from such 

issuers to enrollees in the form of higher 

rebates or lower premiums. Although 

we do not know how many issuers 

currently engage in such reporting 

practices or the amounts improperly 

included in MLR calculations, we 

estimate the impact of the proposed 

clarification by assuming that provider 

incentive and bonus payments of 1.06 

percent or more of paid claims (the top 

5 percent of such observations) may 

represent incentives based on MLR or 

similar metrics. Based on this 

assumption and the MLR data for 2019, 

the proposed clarification would 

increase rebates paid by issuers to 

consumers or reduce premiums 

collected by issuers from consumers by 

approximately $12 million per year. 

We are also finalizing the proposal to 

amend § 158.150(a) to specify that only 

expenditures directly related to 

activities that improve health care 

quality may be included in QIA 

expenses for MLR reporting and rebate 

calculation purposes. The proposed 

change would result in transfers from 

issuers that currently include indirect 

expenses in QIA to enrollees in the form 

of higher rebates or lower premiums. 

Although we do not know how many 

issuers include indirect expenses in 

QIA, we estimated the impact of the 

proposed change by assuming that 

indirect expenses inflate QIA by 41.5 

percent (the midpoint of the 33 percent 

to 50 percent range we have observed 

during MLR examinations) for half of 

the issuers that report QIA expenses 

(based on the frequency of QIA-related 

findings in MLR examinations). Based 

on these assumptions and the MLR data 

for 2019, the proposed clarification 

would increase rebates paid by issuers 

to consumers or reduce premiums 

collected by issuers from consumers by 

approximately $49.8 million per year. 

We are also finalizing the proposal to 

make a technical amendment to 

§ 158.170(b) to correct an oversight and 

remove the reference to the percentage 

of premium QIA reporting option 

described in § 158.221(b)(8), a provision 

that was vacated by the United States 

District Court for the District of 

Maryland in City of Columbus, et al. v. 

Cochran,400 and thus deleted in part 2 

of the 2022 Payment Notice final 

rule.401 We did not anticipate any 

impact on rebates or premiums as a 

result of this change. 

We sought comment on any potential 

costs, benefits, and transfers associated 

with this provision. We did not receive 

any comments specific to the potential 

costs, benefits, and transfers associated 

with this provision. 

D. Regulatory Alternatives Considered 

In developing the policies contained 

in this final rule, we considered 

numerous alternatives to the presented 

proposals. Below we discuss the key 

regulatory alternatives that we 

considered. 

As described in prior rulemakings and 

the 2021 RA Technical Paper, we 

considered a variety of alternatives to 


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402 85 FR 78572 at 78583–78586; See the 2021 

HHS-Operated Risk Adjustment Technical Paper on 

Possible Model Changes. (2021, October 26). CMS. 

https://www.cms.gov/files/document/2021-ratechnical-paper.pdf. 

403 Ibid. 

404See, for example, 85 FR 78572 at 78585–78586 

and Sections 3.3.1 and 3.3.2, 2021 HHS-Operated 

Risk Adjustment Technical Paper on Possible 

Model Changes. (2021, October 26). CMS. https:// 

www.cms.gov/files/document/2021-ra-technicalpaper.pdf. 

405As detailed above, these new factors, which 

we are finalizing as proposed, will only apply to 

partial-year adult enrollees with up to 6 months of 

enrollment and at least one payment HCC. 

406Executive Order 14009; 86 FR 7793 (2021, 

February 2). 

the proposed model specifications and 

updated enrollment duration factors for 

the HHS risk adjustment models.402 For 

example, we considered adding a nonlinear term or HCC counts terms for all 

enrollees in the adult and child risk 

adjustment models. As detailed in the 

proposed 2022 Payment Notice and the 

2021 RA Technical Paper,403 we found 

that non-linear model specifications 

often failed to converge. In addition, the 

non-linear model specifications would 

significantly overhaul the current linear 

models, increasing the administrative 

burden on issuers and HHS. We also 

found that the aforementioned HCC 

counts terms approach posed gaming 

concerns, which would violate principle 

six of the HHS-operated risk adjustment 

program by rewarding coding 

proliferation. 

In addition to the non-linear and HCC 

counts model specifications, we also 

considered variations to the interacted 

HCC counts factors and the two-stage 

weighted model specifications. 

Specifically, we tested various 

alternative caps for the weights based on 

the distribution of costs, but found the 

proposed caps resulted in better 

prediction on average. For the 

prediction weights, we tested various 

alternative forms of weights, including 

reciprocals of the square root of 

prediction, log of prediction, and 

residuals from the first-step estimation, 

but the reciprocal of the capped 

predictions resulted in better PRs for 

low-cost enrollees compared to any of 

the other weights. 

For the interacted HCC counts factors, 

we tested several HCCs and considered 

adding and removing certain HCCs from 

the proposed list in Table 3 of the 

proposed rule (87 FR 584, 620) (shown 

in Table 1 of this rule). We chose the list 

of HCCs in Table 3 of the proposed rule 

(shown in Table 1 of this rule) because 

including these HCCs most improved 

prediction for enrollees with the highest 

costs, multiple HCCs, and with these 

specific HCCs. We also considered 

various alternatives to structure the 

interacted HCC counts, such as applying 

individual interacted HCC count factors 

(between 1–10 based on the number of 

HCCs an enrollee has) to each of the 

selected HCCs included in the models, 

instead of combining all of the selected 

HCCs into two severe and transplant 

indicator groups. We chose the 

proposed model specification because it 

would add fewer additional factors to 

the models, which minimizes the 

increased burden on issuers and HHS 

without sacrificing overall predictive 

accuracy. 

For the enrollment duration factors in 

the adult models, we are finalizing the 

replacement of the enrollment duration 

factors with monthly duration factors of 

up to 6 months for enrollees with HCCs. 

The purpose for changing the 

enrollment duration factors was to 

address the underprediction of plan 

liability for partial-year adult enrollees 

with HCCs. As part of this assessment, 

we considered whether enrollment 

duration factors by type of partial-year 

enrollment (enrolling through a special 

enrollment period versus enrolling 

during the annual open enrollment 

period and dropping enrollment 

partway through the year), by market 

type (individual versus small group 

market), or by specific HCC (as well as 

by type of HCC—acute versus chronic) 

may be warranted. As previously noted, 

varying enrollment duration factors by 

partial-year enrollment type or by 

market produced factors that were 

generally very similar between partialand full-year enrollees, which indicates 

they would add little value to the 

models while increasing complexity.404

We chose the enrollment duration 

factors, contingent on the presence of at 

least one HCC, because these factors 

improve predictive accuracy for partialyear enrollees and simplify the adult 

risk adjustment models compared to the 

current models.405

With respect to the changes to the 

recalibration of the RXC mappings for 

the adult risk adjustment models, we 

considered using the latest RXC 

mapping document available at the time 

that we recalibrate the adult risk 

adjustment models and applying it to all 

three underlying EDGE data years used 

to recalibrate the models for the benefit 

year. We chose the approach of 

recalibrating the adult risk adjustment 

models using each final, Q4 RXC 

mapping document that was developed 

using the benefit year of data 

corresponding to that benefit year. We 

believe that the benefits of this 

approach, which include limiting the 

volatility of some coefficients from yearto-year, ensuring that we are capturing 

the utilization and costs observed for 

the underlying drugs in use during the 

data year, and improving issuers’ ability 

to plan for downstream implications of 

changes to RXC mapping, outweigh the 

benefits of the alternative approach of 

using the latest RXC mapping available 

at the time of recalibration, which 

would more closely align costs between 

recalibration data and current benefit 

year data. 

With respect to the changes to 

§ 153.320(d), we considered repealing 

risk adjustment State flexibility for the 

individual catastrophic and noncatastrophic market risk pools, while 

retaining risk adjustment State 

flexibility for the small group market 

risk pool. Consistent with the directive 

in E.O. 14009 406 to prioritize protecting 

and strengthening the ACA and making 

high-quality health care accessible and 

affordable for all individuals, we 

considered whether this approach is 

inconsistent with policies described in 

Sections 1 and 3 of E.O. 14009. In prior 

rulemakings, we received comments 

stating that risk adjustment State 

flexibility in any market may result in 

risk selection, market destabilization, 

increased premiums, smaller networks, 

and worse plan options. Therefore, we 

also considered whether to adopt a 

complete repeal of the flexibility to 

request reductions risk adjustment State 

transfers. 

With regard to the proposed changes 

to § 155.320, we considered taking no 

action to modify the requirement that 

when an Exchange does not reasonably 

expect to obtain sufficient verification 

data related to enrollment in or 

eligibility for employer sponsored 

coverage, the Exchange must select a 

random sample of applicants and 

attempt to verify their attestation with 

the employer listed on their Exchange 

application. However, based on HHS’ 

experience conducting sampling, this 

manual verification process requires 

significant resources for a low return on 

investment, as using this method HHS 

identified only a small population of 

applicants who received APTC/CSR 

payments inappropriately. We believed 

the proposed change discussed earlier 

in the preamble to design a process to 

verify enrollment in or eligibility for an 

employer sponsored plan, informed by 

a risk assessment, is reasonably 

designed to ensure the accuracy of data, 

and is based on the activities or 

methods used by an Exchange such as 

studies, research, and analysis of an 

Exchange’s own enrollment data. We 

also believed the proposed change 

would protect the integrity of the 


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407Under the SBE–FP agreement, the same 

method also applies in the SBE–FPs, as they rely 

on the Federal platform, which calculates 

applicable premiums in those Exchanges. 

individual market by allowing all 

Exchanges to proactively identify 

applicants with the greatest incentive to 

forego enrolling in an employer 

sponsored plan in favor of Exchange 

coverage with APTC/CSRs before which 

they may not be eligible, thereby 

potentially adding high health risk to 

the individual market risk pool that 

should be covered by the group health 

market, for example. 

We considered several alternatives to 

specifying in § 155.420 that Exchanges 

may conduct pre-enrollment verification 

of eligibility for special enrollment 

periods, at the option of the Exchange, 

including requiring Exchanges to verify 

a certain percentage of special 

enrollment period enrollments and 

designating specific special enrollment 

period types for which eligibility must 

be verified by the Exchange. However, 

we believed that imposing any 

requirements for pre-enrollment special 

enrollment period verification would 

increase burden on consumers and 

Exchanges and decrease implementation 

flexibility to decide the best way to 

conduct special enrollment period 

verification based on Exchange type, 

population characteristics, and trends. 

HHS considered multiple options for 

measuring the improper payment 

amounts and rates for State Exchanges 

to comply with its statutory mandate in 

the PIIA. HHS developed and pilot 

tested the proposed methodology with 

extensive collaboration from 

participating Exchanges during a multiyear research and demonstration period. 

HHS considered the following 

alternatives while developing this final 

rule: 

1. Conducting No Reviews 

HHS might take no preventive efforts 

to detect improper payments. We would 

wait passively until third-party 

investigators, private whistleblowers, 

qui tam relators, disgruntled relatives, 

or others report speculation through 

Inspector General channels. Advanced 

statistical analysis could estimate the 

odds of third-party prosecution and 

project the improper payment amount 

and rate for each State Exchange (with 

wide confidence intervals). This low 

intervention strategy may not fully 

comply with statutory intent. 

2. Placing More Responsibility on State 

Exchanges To Conduct Reviews 

HHS could require that each State 

Exchange determine its own improper 

payment rate with broad discretion on 

the methodology. This option would 

maximize regulatory flexibility while 

still complying with PIIA 2019 

requirements. However, diverse 

methodology would make the State 

Exchanges’ results difficult to compare 

and of variable validity. In addition, the 

costs resulting from higher error rates 

are borne by the Federal Government in 

the form of increased APTC and CSRs, 

giving State Exchanges’ minimal 

incentive to aggressively reduce 

improper payments. 

3. Placing More Responsibility on State 

Exchanges To Engage Third-Party 

Reviewers 

HHS could require that State 

Exchanges engage third-party reviewers 

to determine the improper payment rate. 

As with financial reporting, the State 

Exchange could select among competing 

vendors to obtain its preferred 

combination of methodology, service, 

quality, and price. However, this 

approach would require more work and 

resources from both State Exchanges 

and HHS than the proposed 

methodology would require. The third 

party would need to obtain personally 

identifiable information from both State 

and Federal data systems. These 

processes suffer from potential record 

matching and data security issues. In 

addition, competing vendors might offer 

incompatible methodologies, producing 

non-comparable improper payment 

rates. 

4. Conducting a Random Sample Across 

All State Exchanges 

HHS could annually sample from the 

population of all State Exchange 

enrollees, rather than within each State 

Exchange. Thus, more cases would 

come from larger State Exchanges. This 

design would increase the efficiency 

and decrease the variance for the 

national estimate, but it would not 

provide an estimate for each State 

Exchange. It also would not reduce the 

burden on each State Exchange and may 

not comply with statutory intent. 

With respect to standardized plan 

options, we considered a range of 

options for the proposed policy 

approach at § 156.201. On one end of 

this range, we considered resuming 

standardized plan options as reflected 

in the 2017 and 2018 Payment Notices. 

This approach would have allowed 

issuers to voluntarily offer standardized 

plan options and have the Exchanges on 

the Federal platform, web-brokers, and 

Classic DE and EDE Pathways 

differentially display these plans. We 

also considered gradually limiting the 

number of non- standardized plan 

options per issuer, product network 

type, metal level, and service area over 

the course of several PYs. We also 

considered preferentially displaying 

standardized plan options over nonstandardized plan options. We also 

considered requiring issuers to offer 

exclusively standardized plan options 

in FFEs and SBE–FPs. We explained 

that we believe that the approach we 

have chosen for standardized plan 

options in which we finalized the 

provision to require issuers to offer 

standardized plan options but did not 

finalize any provision to limit the 

number of non-standardized offerings in 

PY 2023 strikes the greatest balance 

between simplifying the plan selection 

process, combatting discriminatory 

benefit designs, and advancing health 

equity, all while promoting a smooth 

transition to the introduction of 

standardized plan options. 

For the proposal in §§ 155.240(e), 

155.305(f)(5), and 155.340 on prorating 

the calculation and administration of 

premium and APTC, HHS considered an 

alternative form of implementation in 

which HHS would perform the 

proration on behalf of each State 

Exchange which does not already 

implement proration according to the 

proposed methodology. This approach 

would lessen concern regarding the 

burden of implementing a new 

proration methodology among State 

Exchanges. HHS already has the 

structures in place to prorate APTC and 

premium amounts in accordance with 

the proposed methodology and has 

already implemented proration in the 

FFEs and SBE–FPs.407 Under this 

alternative, HHS would assume 

responsibility for prorating the amount 

of APTC due to each State Exchange 

based on the methodology HHS 

proposed in § 155.340 which states that 

when an enrollee is enrolled in a 

particular policy for less than the full 

coverage month (including when the 

enrollee is enrolled in multiple policies 

within a month, each lasting less than 

the full coverage month) the amount of 

APTC paid to the issuer of the policy 

will be calculated as the product of (1) 

the APTC applied on the policy for one 

month of coverage divided by the 

number of days in the month, and (2) 

the number of days for which coverage 

is provided during the applicable 

month. However, this alternative would 

require State Exchanges to agree to 

allow HHS to use the data on the 

monthly SBMI to calculate the prorated 

amount. This would require State 

Exchanges to review payment reports to 

ensure the correct calculation of APTC 

and premium is reflected on each 

applicable State Exchanges’ Form 1095– 


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408Table of Size Standards. (2019, August 19). 

U.S. Small Business Administration. https://

www.sba.gov/document/support—table-sizestandards. 

409 Medical Loss Ratio Data and System 

Resources. (2020). CMS. https://www.cms.gov/ 

CCIIO/Resources/Data-Resources/mlr.html. 

A. HHS expected that this alternative 

would produce additional burden of 

$4,500 in contract labor to update each 

State Exchange’s SBMI and would 

necessitate increased data sharing and 

coordination back and forth between 

HHS and the applicable State 

Exchanges. In order to streamline the 

process of proration and allow State 

Exchanges greater control in the 

administration of APTC, HHS 

determined that it would propose that 

each State Exchange would prorate their 

own APTC and premium amounts for 

the applicable enrollees in their State. 

HHS sought comment on the alternative 

proposals considered. 

Additionally, for the proposal to 

prorate APTC amounts with 

amendments to §§ 155.240, 

155.305(f)(5), and 155.340, we 

considered proposing to implement this 

requirement for the 2023 benefit year. 

However, after analyzing the potential 

burden on State Exchanges to achieve 

operational readiness, we concluded 

that 2023 may not provide sufficient 

time. Therefore, we proposed 2024 

benefit year implementation and request 

comments on the feasibility of 2023 

benefit year implementation. 

We did not receive any comments in 

response to the proposals in our general 

discussion regarding regulatory 

alternatives. 

E. Regulatory Flexibility Act 

The Regulatory Flexibility Act, (5 

U.S.C. 601, et seq.), 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 finalize 

standards for the risk adjustment and 

HHS–RADV programs, which are 

intended to stabilize premiums and 

reduce incentives for issuers to avoid 

higher-risk enrollees. Because we 

believed that insurance firms offering 

comprehensive health insurance 

policies generally exceed the size 

thresholds for ‘‘small entities’’ 

established by the SBA, we did not 

believe that an initial regulatory 

flexibility analysis is required for such 

firms. 

We believed 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 $41.5 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 $35 

million or less.408 We believed that few, 

if any, insurance companies 

underwriting comprehensive health 

insurance policies (in contrast, for 

example, to travel insurance policies or 

dental discount policies) fall below 

these size thresholds. Based on data 

from MLR annual report submissions for 

the 2019 MLR reporting year, 

approximately 77 out of 479 issuers of 

health insurance coverage nationwide 

had total premium revenue of $41.5 

million or less.409 This estimate may 

overstate the actual number of small 

health insurance issuers that may be 

affected, since over 72 percent of these 

small issuers belong to larger holding 

groups, and many, if not all, of these 

small companies, are likely to have nonhealth lines of business that will result 

in their revenues exceeding $41.5 

million. Only 10 of these 90 potentially 

small entities, three of them part of 

larger holding groups, are estimated to 

experience a change in rebates under 

the proposed amendments to the MLR 

provisions of this final rule in part 158. 

Therefore, we do not expect the MLR 

provisions finalized in this rule to affect 

a substantial number of small entities. 

The proposals related to SEIPM at 

§§ 155.1500–155.1540 were proposed to 

affect only State Exchanges, and HHS is 

not finalizing these proposals at this 

time. 

In addition, section 1102(b) of the 

Social Security Act requires us to 

prepare a regulatory impact analysis if 

a rule under title XVIII, title XIX, or part 

B of title 42 of the Social Security Act 

may have a significant impact on the 

operations of a substantial number of 

small rural hospitals. This analysis must 

conform to the provisions of section 604 

of the RFA. 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. While this rule is not subject to 

section 1102 of the Act, we have 

determined that this final rule will not 

affect small rural hospitals. Therefore, 

the Secretary has determined that this 

final rule will not have a significant 

impact on the operations of a substantial 

number of small rural hospitals. 

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 proposed 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 2022, that 

threshold is approximately $165 

million. Although we have not been 

able to quantify all costs, we expect the 

combined impact on State, local, or 

Tribal governments and the private 

sector does not meet the UMRA 

definition of an unfunded mandate. 

G. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it issues a proposed 

rule that imposes substantial direct 

costs on State and local governments, 

preempts State law, or otherwise has 

federalism implications. 

In compliance with the requirement 

of E.O. 13132 that agencies examine 

closely any policies that may have 

federalism implications or limit the 

policy making discretion of the States, 

we have engaged in efforts to consult 

with and work cooperatively with 

affected States, including participating 

in conference calls with and attending 

conferences of the NAIC, and consulting 

with State insurance officials on an 

individual basis. 

While developing this rule, we 

attempted to balance the States’ 

interests in regulating health insurance 

issuers with the need to ensure market 

stability. By doing so, we complied with 

the requirements of E.O. 13132. 

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 program. 

For States that were elected previously 

to operate an Exchange, those States had 


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27386 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

the opportunity to use funds under 

Exchange Planning and Establishment 

Grants to fund the development of data. 

Accordingly, some of the initial cost of 

creating programs was funded by 

Exchange Planning and Establishment 

Grants. After establishment, Exchanges 

must be financially self-sustaining, with 

revenue sources at the discretion of the 

State. Current State Exchanges charge 

user fees to issuers. 

In our view, while this final rule will 

not impose substantial direct 

requirement costs on State and local 

governments, this regulation has 

federalism implications due to potential 

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. For 

example, the repeal of the risk 

adjustment State flexibility policy (with 

an exception for prior participants) may 

have federalism implications, but they 

are mitigated because States have the 

option to operate their own Exchange 

and risk adjustment program if they 

believe the HHS risk adjustment 

methodology does not account for Statespecific factors unique to the State’s 

markets. 

In addition, we believed this 

regulation has federalism implications 

due to the proposal for Exchanges to 

design a new risk-based verification 

process for enrollment in or eligibility 

for employer sponsored plan coverage 

that meets minimum value standards, 

that is based on the Exchange’s 

assessment of risk for inappropriate 

APTC/CSR payments. However, the 

federalism implications are mitigated 

because the proposed requirement 

provides Exchanges with the flexibility 

to determine the best process to verify 

employer sponsored coverage and may 

choose not to implement such a riskbased verification process. 

As previously noted, the proposals in 

this rule related to SEIPM are not being 

finalized. Accordingly, E.O. 13132 does 

not apply to this section of the final 

rule. 

H. Congressional Review Act 

This final 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 the Congress and 

the Comptroller for review. This final 

rule is a ‘‘major rule’’ as that term is 

defined in, because it is likely to result 

in an annual effect on the economy of 

$100 million or more. 

Chiquita Brooks-LaSure, 

Administrator of the Centers for 

Medicare & Medicaid Services, 

approved this document on April 26, 

2022. 

List of Subjects 

45 CFR Part 144 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements. 

45 CFR Part 147 

Aged, Citizenship and naturalization, 

Civil rights, Health care, Health 

insurance, Individuals with disabilities, 

Intergovernmental relations, Reporting 

and recordkeeping requirements, Sex 

discrimination. 

45 CFR Part 153 

Administrative practice and 

procedure, Health care, Health 

insurance, Health records, 

Intergovernmental relations, 

Organization and functions 

(Government agencies), Reporting and 

recordkeeping requirements. 

45 CFR Part 155 

Administrative practice and 

procedure, Advertising, Aged, Brokers, 

Citizenship and naturalization, Civil 

rights, Conflict of interests, Consumer 

protection, Grant programs-health, 

Grants administration, Health care, 

Health insurance, Health maintenance 

organizations (HMO), Health records, 

Hospitals, Indians, Individuals with 

disabilities, Intergovernmental relations, 

Loan programs-health, Medicaid, 

Organization and functions 

(Government agencies), Public 

assistance programs, Reporting and 

recordkeeping requirements, Sex 

discrimination, State and local 

governments, Taxes, Technical 

assistance, Women, Youth. 

45 CFR Part 156 

Administrative practice and 

procedure, Advertising, Advisory 

committees, Brokers, Conflict of 

interests, Consumer protection, Grant 

programs-health, Grants administration, 

Health care, Health insurance, Health 

maintenance organization (HMO), 

Health records, Hospitals, Indians, 

Individuals with disabilities, Loan 

programs-health, Medicaid, 

Organization and functions 

(Government agencies), Public 

assistance programs, Reporting and 

recordkeeping requirements, State and 

local governments, Sunshine Act, 

Technical assistance, Women, Youth. 

45 CFR Part 158 

Administrative practice and 

procedure, Claims, Health care, Health 

insurance, Penalties, Reporting and 

recordkeeping requirements. 

For the reasons set forth in the 

preamble, under the authority at 5 

U.S.C. 301, the Department of Health 

and Human Services amends 45 CFR 

subtitle A, subchapter B, 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: 42 U.S.C. 300gg through 300gg– 

63, 300gg–91, 300gg–92, and 300gg–111 

through 300gg–139, as amended. 

§ 144.103 [Amended] 

■ 2. Amend § 144.103 in the definition 

of ‘‘large group market’’ by removing the 

phrase ‘‘, unless otherwise provided 

under State law.’’ 

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: 42 U.S.C. 300gg through 300gg– 

63, 300gg–91, and 300gg–92, as amended, 

and section 3203, Pub. L. 116–136, 134 Stat. 

281. 

■ 4. Amend § 147.104 by— 

■ a. Redesignating paragraph (i) as 

paragraph (j); and 

■ b. Adding a new paragraph (i). 

The addition reads as follows: 

§ 147.104 Guaranteed availability of 

coverage. 

* * * * * 

(i) Coverage denials for failure to pay 

premiums for prior coverage. A health 

insurance issuer that denies coverage to 

an individual or employer due to the 

individual’s or employer’s failure to pay 

premium owed under a prior policy, 

certificate, or contract of insurance, 

including by attributing payment of 

premium for a new policy, certificate, or 

contract of insurance to the prior policy, 

certificate, or contract of insurance, 

violates paragraph (a) of this section. 

* * * * * 


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Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 27387 

PART 153—STANDARDS RELATED TO 

REINSURANCE, RISK CORRIDORS, 

AND RISK ADJUSTMENT UNDER THE 

AFFORDABLE CARE ACT 

■ 5. The authority citation for part 153 

continues to read as follows: 

Authority: 42 U.S.C. 18031, 18041, and 

18061 through 18063. 

■ 6. Amend § 153.320 by— 

■ a. Revising paragraphs (d) 

introductory text and (d)(1)(iii); 

■ b. Adding paragraph (d)(1)(iv); 

■ c. Revising paragraphs (d)(4)(i)(A) and 

(B); and 

■ d. Adding paragraph (d)(5). 

The revisions and additions read as 

follows: 

§ 153.320 Federally certified risk 

adjustment methodology. 

* * * * * 

(d) State flexibility to request 

reductions to transfers. For the 2020 

through 2023 benefit years, States can 

request to reduce risk adjustment 

transfers in the State’s individual 

catastrophic, individual noncatastrophic, small group, or merged 

market risk pool by up to 50 percent in 

States where HHS operates the risk 

adjustment program. Beginning with the 

2024 benefit year, only prior 

participants, as defined in paragraph 

(d)(5) of this section, may request to 

reduce risk adjustment transfers in the 

State’s individual catastrophic, 

individual non-catastrophic, small 

group, or merged market risk pool by up 

to 50 percent in States where HHS 

operates the risk adjustment program. 

(1) * * * 

(iii) For the 2020 through 2023 benefit 

years, a justification for the reduction 

requested demonstrating the Statespecific factors that warrant an 

adjustment to more precisely account 

for relative risk differences in the State 

individual catastrophic, individual noncatastrophic, small group, or merged 

market risk pool, or demonstrating the 

requested reduction would have de 

minimis impact on the necessary 

premium increase to cover the transfers 

for issuers that would receive reduced 

transfer payments; or 

(iv) Beginning with the 2024 benefit 

year, a justification for the reduction 

requested demonstrating the requested 

reduction would have de minimis 

impact on the necessary premium 

increase to cover the transfers for issuers 

that would receive reduced transfer 

payments. 

* * * * * 

(4) * * * 

(i) * * * 

(A) For the 2020 through 2023 benefit 

years, that State-specific rules or other 

relevant factors warrant an adjustment 

to more precisely account for relative 

risk differences in the State’s individual 

catastrophic, individual noncatastrophic, small group, or merged 

market risk pool and support the 

percentage reduction to risk adjustment 

transfers requested; or State-specific 

rules or other relevant factors warrant 

an adjustment to more precisely account 

for relative risk differences in the State’s 

individual catastrophic, individual noncatastrophic, small group, or merged 

market risk pool and the requested 

reduction would have de minimis 

impact on the necessary premium 

increase to cover the transfers for issuers 

that would receive reduced transfer 

payments. 

(B) Beginning with the 2024 benefit 

year, that the requested reduction would 

have de minimis impact on the 

necessary premium increase to cover the 

transfers for issuers that would receive 

reduced transfer payments. 

* * * * * 

(5) Exception for prior participants. 

As used in paragraph (d) of this section, 

prior participants mean States that 

submitted a State reduction request in 

the State’s individual catastrophic, 

individual non-catastrophic, small 

group, or merged market risk pool in the 

2020, 2021, 2022, or 2023 benefit year. 

■ 7. Amend § 153.710 by— 

■ a. Revising paragraphs (h)(1) 

introductory text and (h)(1)(iii) and (iv); 

■ b. Adding paragraph (h)(1)(v); and 

■ c. Revising paragraphs (h)(2) and (3). 

The revisions and addition read as 

follows: 

§ 153.710 Data requirements. 

* * * * * 

(h) * * * 

(1) Notwithstanding any discrepancy 

report made under paragraph (d)(2) of 

this section, any discrepancy filed 

under § 153.630(d)(2), or any request for 

reconsideration under § 156.1220(a) of 

this subchapter with respect to any risk 

adjustment payment or charge, 

including an assessment of risk 

adjustment user fees and risk 

adjustment data validation adjustments; 

reinsurance payment; cost-sharing 

reduction payment or charge; or risk 

corridors payment or charge, unless the 

dispute has been resolved, an issuer 

must report, for purposes of the risk 

corridors and MLR programs: 

* * * * * 

(iii) A cost-sharing reduction amount 

equal to the actual amount of costsharing reductions for the benefit year 

as calculated under § 156.430(c) of this 

subchapter, to the extent not reimbursed 

to the provider furnishing the item or 

service; 

(iv) For medical loss ratio reporting 

only, the risk corridors payment to be 

made or charge assessed by HHS under 

§ 153.510; and 

(v) The risk adjustment data 

validation adjustment calculated by 

HHS in the applicable benefit year’s 

Summary Report of Benefit Year Risk 

Adjustment Data Validation 

Adjustments to Risk Adjustment 

Transfers. 

(2) An issuer must report during the 

current MLR and risk corridors 

reporting year any adjustment made or 

approved by HHS for any risk 

adjustment payment or charge, 

including an assessment of risk 

adjustment user fees and risk 

adjustment data validation adjustments; 

any reinsurance payment; any costsharing reduction payment or charge; or 

any risk corridors payment or charge 

before August 15, or the next applicable 

business day, of the current MLR and 

risk corridors reporting year unless 

instructed otherwise by HHS. An issuer 

must report any adjustment made or 

approved by HHS for any risk 

adjustment payment or charge, 

including an assessment of risk 

adjustment user fees and risk 

adjustment data validation adjustments; 

any reinsurance payment; any costsharing reduction payment or charge; or 

any risk corridors payment or charge 

where such adjustment has not been 

accounted for in a prior MLR and Risk 

Corridors Annual Reporting Form, in 

the MLR and Risk Corridors Annual 

Reporting Form for the following 

reporting year. 

(3) In cases where HHS reasonably 

determines that the reporting 

instructions in paragraph (h)(1) or (2) of 

this section would lead to unfair or 

misleading financial reporting, issuers 

must correct their data submissions in a 

form and manner to be specified by 

HHS. 

■ 8. Revise § 153.730 to read as follows: 

§ 153.730 Deadline for submission of data. 

A risk adjustment covered plan or a 

reinsurance-eligible plan in a State in 

which HHS is operating the risk 

adjustment or reinsurance program, as 

applicable, must submit data to be 

considered for risk adjustment 

payments and charges and reinsurance 

payments for the applicable benefit year 

by April 30 of the year following the 

applicable benefit year or, if such date 

is not a business day, the next 

applicable business day. 


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27388 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

PART 155—EXCHANGE 

ESTABLISHMENT STANDARDS AND 

OTHER RELATED STANDARDS 

UNDER THE AFFORDABLE CARE ACT 

■ 9. The authority citation for part 155 

continues to read as follows: 

Authority: 42 U.S.C. 18021–18024, 18031– 

18033, 18041–18042, 18051, 18054, 18071, 

and 18081–18083. 

§ 155.206 [Amended] 

■ 10. Amend § 155.206 in paragraph (i) 

by removing the phrase ‘‘$100 for each 

day for each’’ and adding in its place the 

phrase ‘‘$100 for each day, as adjusted 

annually under 45 CFR part 102, for 

each’’. 

■ 11. Amend § 155.220 by— 

■ a. Revising paragraphs (c)(3)(i)(A) and 

(L); 

■ b. Adding paragraph (c)(3)(i)(M); 

■ c. Revising paragraph (j)(2)(ii); 

■ d. In paragraph (j)(2)(iv), removing the 

phrase ‘‘described in § 155.260(b)(2); 

and’’ and adding in its place the phrase 

‘‘described in § 155.260(b)(2);’’; and 

■ e. Adding paragraphs (j)(2)(vi) through 

(viii). 

The revisions and additions read as 

follows: 

§ 155.220 Ability of States to permit agents 

and brokers and web-brokers to assist 

qualified individuals, qualified employers, 

or qualified employees enrolling in QHPs. 

* * * * * 

(c) * * * 

(3) * * * 

(i) * * * 

(A) Disclose and display the following 

QHP information provided by the 

Exchange or directly by QHP issuers 

consistent with the requirements of 

§ 155.205(c), and to the extent that 

enrollment support for a QHP is not 

available using the web-broker’s 

website, prominently display a 

standardized disclaimer provided by 

HHS stating that enrollment support for 

the QHP is available on the Exchange 

website, and provide a Web link to the 

Exchange website: 

(1) Premium and cost-sharing 

information; 

(2) The summary of benefits and 

coverage established under section 2715 

of the PHS Act; 

(3) Identification of whether the QHP 

is a bronze, silver, gold, or platinum 

level plan as defined by section 1302(d) 

of the Affordable Care Act, or a 

catastrophic plan as defined by section 

1302(e) of the Affordable Care Act; 

(4) The results of the enrollee 

satisfaction survey, as described in 

section 1311(c)(4) of the Affordable Care 

Act; 

(5) Quality ratings assigned in 

accordance with section 1311(c)(3) of 

the Affordable Care Act; and 

(6) The provider directory made 

available to the Exchange in accordance 

with § 156.230 of this subchapter. 

* * * * * 

(L) Not display QHP advertisements 

or recommendations, or otherwise 

provide favored or preferred placement 

in the display of QHPs, based on 

compensation the agent, broker, or webbroker receives from QHP issuers; and 

(M) Prominently display a clear 

explanation of the rationale for QHP 

recommendations and the methodology 

for its default display of QHPs. 

* * * * * 

(j) * * * 

(2) * * * 

(ii) Provide the Federally-facilitated 

Exchanges with correct information 

under section 1411(b) of the Affordable 

Care Act, including, but not limited to: 

(A) Entering only an email address on 

an application for Exchange coverage or 

an application for advance payments of 

the premium tax credit and cost-sharing 

reductions for QHPs that belongs to the 

consumer or the consumer’s authorized 

representative designated in compliance 

with § 155.227. A consumer’s email 

address may only be entered with the 

consent of the consumer or the 

consumer’s authorized representative. 

Properly entered email addresses must 

adhere to the following guidelines: 

(1) The email address must be 

accessible by the consumer, or the 

consumer’s authorized representative 

designated in compliance with 

§ 155.227, and may not be accessible by 

the agent, broker, or web-broker 

assisting the consumer; and 

(2) The email address may not have 

domains that belong to the agent, 

broker, or web-broker or their business 

or agency. 

(B) Entering only a telephone number 

on an application for Exchange coverage 

or an application for advance payments 

of the premium tax credit and costsharing reductions for QHPs that 

belongs to the consumer or their 

authorized representative designated in 

compliance with § 155.227. Telephone 

numbers may not be the personal 

number or business number of the 

agent, broker, or web-broker assisting 

the consumer, or their business or 

agency, unless the telephone number is 

actually that of the consumer or their 

authorized representative. 

(C) Entering only a mailing address on 

an application for Exchange coverage or 

an application for advance payments of 

the premium tax credit and cost-sharing 

reductions for QHPs that belongs to, or 

is primarily accessible by, the consumer 

or their authorized representative 

designated in compliance with 

§ 155.227, is not for the exclusive or 

convenient use of the agent, broker, or 

web-broker, and is an actual residence 

or a secure location where the consumer 

or their authorized representative may 

receive correspondence, such as a P.O. 

Box or homeless shelter. Mailing 

addresses may not be that of the agent, 

broker, or web-broker assisting the 

consumer, or their business or agency, 

unless the address is the actual 

residence of the consumer or their 

authorized representative. 

(D) When submitting household 

income projections used by the 

Exchange to determine a tax filer’s 

eligibility for advance payments of the 

premium tax credit in accordance with 

§ 155.305(f) or cost-sharing reductions 

in accordance with § 155.305(g), 

entering only a consumer’s household 

income projection that the consumer or 

the consumer’s authorized 

representative designated in compliance 

with § 155.227 has knowingly 

authorized and confirmed as accurate. 

Household income projections must be 

calculated and attested to by the 

consumer. The agent, broker, or webbroker assisting the consumer may 

answer questions posed by the 

consumer related to household income 

projection, such as helping the 

consumer determine what qualifies as 

income. 

* * * * * 

(vi) Not engage in scripting and other 

automation of interactions with CMS 

Systems or the Direct Enrollment 

Pathways, unless approved in advance 

in writing by CMS. 

(vii) Only use an identity that belongs 

to the consumer when identity proofing 

the consumer’s account on 

HealthCare.gov. 

(viii) When providing information to 

Federally-facilitated Exchanges that may 

result in a determination of eligibility 

for a special enrollment period in 

accordance with § 155.420, obtain 

authorization from the consumer to 

submit the request for a determination 

of eligibility for a special enrollment 

period and make the consumer aware of 

the specific triggering event and special 

enrollment period for which the agent, 

broker, or web-broker will be submitting 

an eligibility determination request on 

the consumer’s behalf. 

* * * * * 

■ 12. Amend § 155.305 by revising 

paragraphs (f)(1)(i) and (5) to read as 

follows: 


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Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 27389 

§ 155.305 Eligibility standards. 

* * * * * 

(f) * * * 

(1) * * * 

(i) He or she is expected to have a 

household income that will qualify the 

tax filer as an applicable taxpayer 

according to 26 CFR 1.36B–2(b) for the 

benefit year for which coverage is 

requested; and 

* * * * * 

(5) Calculation of advance payments 

of the premium tax credit. The 

Exchange must calculate advance 

payments of the premium tax credit in 

accordance with 26 CFR 1.36B–3 and 

§ 155.340(i) of this subpart. 

* * * * * 

■ 13. Amend § 155.320 by— 

■ a. Revising paragraphs (d)(4) 

introductory text, (d)(4)(i) introductory 

text, and (d)(4)(i)(A); 

■ b. Removing paragraph (d)(4)(i)(D). 

■ c. Redesignating paragraph (d)(4)(i)(E) 

as paragraph (d)(4)(i)(D). 

■ d. Removing paragraph (d)(4)(i)(F); 

■ e. Redesignating paragraph (d)(4)(i)(G) 

as paragraph (d)(4)(i)(E) and revising 

newly redesignated paragraph 

(d)(4)(i)(E); and 

■ f. Removing and reserving paragraph 

(d)(4)(ii). 

The revisions read as follows: 

§ 155.320 Verification process related to 

eligibility for insurance affordability 

programs. 

* * * * * 

(d) * * * 

(4) Alternate procedures. For any 

benefit year for which it does not 

reasonably expect to obtain sufficient 

verification data as described in 

paragraphs (d)(2)(i) through (iii) of this 

section, the Exchange may follow the 

procedures specified in paragraph 

(d)(4)(i) of this section. For purposes of 

this paragraph (d)(4), the Exchange 

reasonably expects to obtain sufficient 

verification data for the benefit year 

when the Exchange is able to obtain 

data about enrollment in or eligibility 

for qualifying coverage in an eligible 

employer sponsored plan from at least 

one electronic data source that is 

available to the Exchange and that has 

been approved by HHS, based on 

evidence showing that the data source is 

sufficiently current, accurate, and 

minimizes administrative burden, as 

described under paragraphs (d)(2)(i) of 

this section. 

(i) Based on the Exchange’s 

assessment of risk for inappropriate 

payment of advance payments of the 

premium tax credit or cost-sharing 

reductions, implement a verification 

process that is reasonably designed to 

ensure the accuracy of the data and is 

based on the activities or methods used 

by an Exchange such as studies, 

research, and analysis of an Exchange’s 

own enrollment data, for enrollment in 

or eligibility for qualifying coverage in 

an eligible employer sponsored plan, as 

appropriate. 

(A) The Exchange must provide notice 

to the applicant if, as part of the 

verification process described under 

paragraph (d)(4)(i) of this section, the 

Exchange will be contacting any 

employer identified on the application 

for the applicant and the members of his 

or her family, as defined in 26 CFR 

1.36B–1(d), to verify whether the 

applicant is enrolled in an eligible 

employer sponsored plan or is eligible 

for qualifying coverage in an eligible 

employer sponsored plan for the benefit 

year for which coverage is requested; 

* * * * * 

(E) To carry out the process described 

in paragraph (d)(4)(iii) of this section, 

the Exchange must only disclose an 

individual’s information to an employer 

to the extent necessary for the employer 

to identify the employee. 

* * * * * 

■ 14. Amend § 155.340 by adding 

paragraph (i) to read as follows: 

§ 155.340 Administration of advance 

payments of the premium tax credit and 

cost-sharing reductions. 

* * * * * 

(i) Calculation of advance payments 

of the premium tax credit when policy 

coverage lasts less than the full coverage 

month. (1) For plan years beginning 

with 2024 and beyond, when an 

Exchange determines that an individual 

is eligible for advance payments of the 

premium tax credit and the enrollee is 

enrolled in a policy for less than the full 

coverage month, including when the 

enrollee is enrolled in multiple policies 

within a month, each lasting less than 

the full coverage month— 

(i) In an Exchange using the Federal 

eligibility and enrollment platform, the 

amount of the advance payment of the 

premium tax credit paid to the issuer of 

the policy must equal the product of— 

(A) The advance payments of the 

premium tax credit applied to the policy 

for one month of coverage divided by 

the number of days in the month; and 

(B) The number of days for which 

coverage is being provided in the month 

under the policy described in paragraph 

(i)(1)(i) of this section. 

(ii) [Reserved] 

(2) For plan years beginning with 

2024 and beyond, a State Exchange 

operating its own platform will be 

required to calculate advance payments 

of the premium tax credit in accordance 

with a methodology that does not cause 

the amount of advance payments of the 

premium tax credit applied to an 

enrollee’s monthly premium to exceed 

their expected monthly premium 

assistance credit amount when the 

enrollee is enrolled in a policy for less 

than the full coverage month, including 

when the enrollee is enrolled in 

multiple policies within a month, each 

lasting less than the full coverage 

month, and to prospectively report the 

methodology it intends to implement in 

the subsequent plan year to HHS under 

§ 155.1200(b)(2). 

■ 15. Amend § 155.420 by adding 

paragraph (g) to read as follows: 

§ 155.420 Special enrollment periods. 

* * * * * 

(g) Pre-enrollment special enrollment 

period verification. At the option of the 

Exchange, an Exchange may verify prior 

to processing a qualified individual’s 

plan selection that the qualified 

individual is eligible for a special 

enrollment period under this section. In 

circumstances where the Exchange 

determines that such pre-enrollment 

special enrollment period verification 

may cause undue burden on qualified 

individuals, the Exchange may provide 

an exception to the pre-enrollment 

special enrollment period verification 

process, provided it does so in a manner 

consistent with the non-discrimination 

requirements under § 155.120(c). 

Exchanges on the Federal platform will 

conduct pre-enrollment special 

enrollment verification of eligibility 

only for special enrollment periods 

under paragraph (d)(1) of this section. 

PART 156—HEALTH INSURANCE 

ISSUER STANDARDS UNDER THE 

AFFORDABLE CARE ACT, INCLUDING 

STANDARDS RELATED TO 

EXCHANGES 

■ 16. The authority citation for part 156 

is revised to read as follows: 

Authority: 42 U.S.C. 18021–18024, 18031– 

18032, 18041–18042, 18044, 18054, 18061, 

18063, 18071, 18082, and 26 U.S.C. 36B. 

■ 17. Amend § 156.50 by: 

■ a. Removing paragraph (c)(3); and 

■ b. Revising paragraphs (d)(1) 

introductory text, (d)(2)(i)(A) and (B), 

(d)(2)(ii), (d)(2)(iii)(B), (d)(3) 

introductory text, (d)(4) and (6), and 

(d)(7) introductory text. 

The revisions read as follows: 

§ 156.50 Financial support. 

* * * * * 

(d) * * * 

(1) A participating issuer offering a 

plan through a Federally-facilitated 


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27390 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

Exchange or State Exchange on the 

Federal platform may qualify for an 

adjustment of the Federally-facilitated 

Exchange user fee specified in 

paragraph (c)(1) of this section or the 

State Exchange on the Federal platform 

user fee specified in paragraph (c)(2) of 

this section, to the extent that the 

participating issuer— 

* * * * * 

(2) * * * 

(i) * * * 

(A) Identifying information for the 

participating issuer and each third party 

administrator that received a copy of the 

self-certification referenced in 26 CFR 

54.9815–2713A(a)(4) or 29 CFR 

2590.715–2713A(a)(4) or with respect to 

which the participating issuer seeks an 

adjustment of the user fee specified in 

paragraph (c)(1) or (2) of this section, as 

applicable, whether or not the 

participating issuer was the entity that 

made the payments for contraceptive 

services; 

(B) Identifying information for each 

self-insured group health plan with 

respect to which a copy of the selfcertification referenced in 26 CFR 

54.9815–2713A(a)(4) or 29 CFR 

2590.715–2713A(a)(4) was received by a 

third party administrator and with 

respect to which the participating issuer 

seeks an adjustment of the user fee 

specified in paragraph (c)(1) or (2) of 

this section, as applicable; and 

* * * * * 

(ii) Each third party administrator that 

intends to seek an adjustment on behalf 

of a participating issuer of the Federallyfacilitated Exchange user fee or the 

State-based Exchange on the Federal 

platform user fee based on payments for 

contraceptive services, must submit to 

HHS a notification of such intent, in a 

manner specified by HHS, by the 60th 

calendar day following the date on 

which the third party administrator 

receives the applicable copy of the selfcertification referenced in 26 CFR 

54.9815–2713A(a)(4) or 29 CFR 

2590.715–2713A(a)(4). 

(iii) * * * 

(B) Identifying information for each 

self-insured group health plan with 

respect to which a copy of the selfcertification referenced in 26 CFR 

54.9815–2713A(a)(4) or 29 CFR 

2590.715–2713A(a)(4) was received by 

the third party administrator and with 

respect to which the participating issuer 

seeks an adjustment of the user fee 

specified in paragraph (c)(1) or (2) of 

this section, as applicable; 

* * * * * 

(3) If the requirements set forth in 

paragraph (d)(2) of this section are met, 

the participating issuer will be provided 

a reduction in its obligation to pay the 

user fee specified in paragraph (c)(1) or 

(2) of this section, as applicable, equal 

in value to the sum of the following: 

* * * * * 

(4) If the amount of the adjustment 

under paragraph (d)(3) of this section is 

greater than the amount of the 

participating issuer’s obligation to pay 

the user fee specified in paragraph (c)(1) 

or (2) of this section, as applicable, in 

a particular month, the participating 

issuer will be provided a credit in 

succeeding months in the amount of the 

excess. 

* * * * * 

(6) A participating issuer that receives 

an adjustment in the user fee specified 

in paragraph (c)(1) or (2) of this section 

for a particular calendar year must 

maintain for 10 years following that 

year, and make available upon request 

to HHS, the Office of the Inspector 

General, the Comptroller General, and 

their designees, documentation 

demonstrating that it timely paid each 

third party administrator with respect to 

which it received any such adjustment 

any amount required to be paid to the 

third party administrator under 

paragraph (d)(5) of this section. 

(7) A third party administrator of a 

plan with respect to which an 

adjustment of the user fee specified in 

paragraph (c)(1) or (2) of this section is 

received under this section for a 

particular calendar year must maintain 

for 10 years following that year, and 

make available upon request to HHS, 

the Office of the Inspector General, the 

Comptroller General, and their 

designees, all of the following 

documentation: 

* * * * * 

■ 18. Amend § 156.111 by— 

■ a. Revising the section heading; 

■ b. Revising paragraph (d) and 

paragraph (e) introductory text; and 

■ c. Removing paragraph (f). 

The revisions read as follows: 

§ 156.111 State selection of EHBbenchmark plan for plan years beginning 

on or after January 1, 2020. 

* * * * * 

(d) A State must notify HHS of the 

selection of a new EHB-benchmark plan 

by the first Wednesday in May of the 

year that is 2 years before the effective 

date of the new EHB-benchmark plan. 

(1) If the State does not make a 

selection by the first Wednesday in May 

of the year that is 2 years before the 

effective date of the new EHBbenchmark plan, or its benchmark plan 

selection does not meet the 

requirements of this section and section 

1302 of the ACA, the State’s EHBbenchmark plan for the applicable plan 

year will be that State’s EHB-benchmark 

plan applicable for the prior year. 

(2) [Reserved] 

(e) A State changing its EHBbenchmark plan under this section must 

submit documents in a format and 

manner specified by HHS by the first 

Wednesday in May of the year that is 2 

years before the effective date of the 

new EHB-benchmark plan. These must 

include: 

* * * * * 

■ 19. Amend § 156.115 by revising 

paragraph (b)(2) to read as follows: 

§ 156.115 Provision of EHB. 

* * * * * 

(b) * * * 

(2) An issuer may substitute a benefit 

within the same EHB category, unless 

prohibited by applicable State 

requirements. Substitution of benefits 

between EHB categories is not 

permitted. 

* * * * * 

■ 20. Amend § 156.125 by revising 

paragraph (a) to read as follows: 

§ 156.125 Prohibition on discrimination. 

(a) 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. 

Beginning on the earlier of January 1, 

2023 (the start of the 2023 plan year) or 

upon renewal of any plan subject to this 

rule, a non-discriminatory benefit 

design that provides EHB is one that is 

clinically-based. 

* * * * * 

■ 21. Amend § 156.140 by revising 

paragraph (c) to read as follows: 

§ 156.140 Levels of coverage. 

* * * * * 

(c) De minimis variation. (1) For plan 

years beginning on or after January 1, 

2018 through December 31, 2022, the 

allowable variation in the AV of a health 

plan that does not result in a material 

difference in the true dollar value of the 

health plan is ¥4 percentage points and 

+2 percentage points, except if a health 

plan under paragraph (b)(1) of this 

section (a bronze health plan) either 

covers and pays for at least one major 

service, other than preventive services, 

before the deductible or meets the 

requirements to be a high deductible 

health plan within the meaning of 

section 223(c)(2) of the Internal Revenue 

Code, in which case the allowable 

variation in AV for such plan is ¥4 


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percentage points and +5 percentage 

points. 

(2) For plan years beginning on or 

after January 1, 2023, the allowable 

variation in the AV of a health plan that 

does not result in a material difference 

in the true dollar value of the health 

plan is ¥2 percentage points and +2 

percentage points, except if a health 

plan under paragraph (b)(1) of this 

section (a bronze health plan) either 

covers and pays for at least one major 

service, other than preventive services, 

before the deductible or meets the 

requirements to be a high deductible 

health plan within the meaning of 

section 223(c)(2) of the Internal Revenue 

Code, in which case the allowable 

variation in AV for such plan is ¥2 

percentage points and +5 percentage 

points. 

■ 22. Amend § 156.200 by revising 

paragraph (b)(3) to read as follows: 

§ 156.200 QHP issuer participation 

standards. 

* * * * * 

(b) * * * 

(3) Ensure that each QHP complies 

with benefit design standards, as 

defined in § 156.20, except that 

individual market silver QHPs must 

have an AV of 70 percent, with a de 

minimis allowable AV variation of ¥0 

percentage points and +2 percentage 

points; 

* * * * * 

■ 23. Add § 156.201 to read as follows: 

§ 156.201 Standardized plan options. 

For the plan year 2023 and 

subsequent plan years, a QHP issuer in 

a Federally-facilitated Exchange or a 

State-based Exchange on the Federal 

platform, other than an issuer that is 

already required to offer standardized 

plan options under State action taking 

place on or before January 1, 2020, must 

offer in the individual market at least 

one standardized QHP option, defined 

at § 155.20 of this subchapter, at every 

product network type, as the term is 

described in the definition of ‘‘product’’ 

at § 144.103 of this subchapter, at every 

metal level, and throughout every 

service area that it also offers nonstandardized QHP options, including, 

for silver plans, for the income-based 

cost-sharing reduction plan variations, 

as provided for at § 156.420(a), but not 

for the zero and limited cost-sharing 

plan variations, as provided for at 

§ 156.420(b). 

■ 24. Amend § 156.230 by revising 

paragraph (a) to read as follows: 

§ 156.230 Network adequacy standards. 

(a) General requirement. (1) 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: 

(i) Includes essential community 

providers in accordance with § 156.235; 

(ii) Maintains a network that is 

sufficient in number and types of 

providers, including providers that 

specialize in mental health and 

substance use disorder services, to 

ensure that all services will be 

accessible without unreasonable delay; 

and 

(iii) Is consistent with the rules for 

network plans of section 2702(c) of the 

PHS Act. 

(2)(i) Standards. A QHP issuer on a 

Federally-facilitated Exchange must 

comply with the requirement in 

paragraph (a)(1)(ii) of this section by: 

(A) For plan years beginning on or 

after January 1, 2023, meeting time and 

distance standards established by the 

Federally-facilitated Exchange. Such 

time and distance standards will be 

developed for consistency with industry 

standards and published in guidance. 

Quantitative reviews of compliance 

with time and distance standards will 

be conducted using issuer-submitted 

data; and 

(B) For plan years beginning on or 

after January 1, 2024, meeting 

appointment wait time standards 

established by the Federally-facilitated 

Exchange. Such appointment wait time 

standards will be developed for 

consistency with industry standards and 

published in guidance. 

(ii) Written justification. If a plan 

applying for QHP certification to be 

offered through a Federally-facilitated 

Exchanges does not satisfy the network 

adequacy standards described in 

paragraphs (a)(2)(i)(A) and (B) of this 

section, the issuer must include it as 

part of its QHP application a 

justification describing how the plan’s 

provider network provides an adequate 

level of service for enrollees and how 

the plan’s provider network will be 

strengthened and brought closer to 

compliance with the network adequacy 

standards prior to the start of the plan 

year. The issuer must provide 

information as requested by the FFE to 

support this justification. 

(3) The Federally-facilitated Exchange 

may grant an exception to the 

requirements in paragraphs (a)(2)(i)(A) 

and (B) of this section if the Exchange 

determines that making such health 

plan available through such Exchange is 

in the interests of qualified individuals 

in the State or States in which such 

Exchange operates. 

* * * * * 

■ 25. Amend § 156.235 by revising 

paragraphs (a)(2)(i), (a)(2)(ii)(B), and 

(b)(2)(i) to read as follows: 

§ 156.235 Essential community providers. 

(a) * * * 

(2) * * * 

(i) The network includes as 

participating providers at least a 

minimum percentage, as specified by 

HHS, of available essential community 

providers in each plan’s service area. 

Multiple providers at a single location 

will count as a single essential 

community provider toward both the 

available essential community providers 

in the plan’s service area and the 

issuer’s satisfaction of the essential 

community provider participation 

standard. For plans that use tiered 

networks, to count toward the issuer’s 

satisfaction of the essential community 

provider standards, providers must be 

contracted within the network tier that 

results in the lowest cost-sharing 

obligation. For plans with two network 

tiers (for example, participating 

providers and preferred providers), such 

as many PPOs, where cost sharing is 

lower for preferred providers, only 

preferred providers will be counted 

towards essential community provider 

standards; and 

(ii) * * * 

(B) At least one ECP in each of the six 

(6) ECP categories 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. The 

ECP categories are: Federally Qualified 

Health Centers, Ryan White Program 

Providers, Family Planning Providers, 

Indian Health Care Providers, Inpatient 

Hospitals, and Other ECP Providers. The 

Other ECP Providers category includes 

the following types of providers: 

Substance Use Disorder Treatment 

Centers, Community Mental Health 

Centers, Rural Health Clinics, Black 

Lung Clinics, Hemophilia Treatment 

Centers, Sexually Transmitted Disease 

Clinics, and Tuberculosis Clinics. 

* * * * * 

(b) * * * 

(2) * * * 

(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 level satisfies a 

minimum percentage, specified by HHS, 

of available essential community 

providers in the plan’s service area. 

Multiple providers at a single location 

will count as a single essential 

community provider toward both the 

available essential community providers 


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27392 Federal Register / Vol. 87, No. 88 / Friday, May 6, 2022 / Rules and Regulations 

in the plan’s service area and the 

issuer’s satisfaction of the essential 

community provider participation 

standard. For plans that use tiered 

networks, to count toward the issuer’s 

satisfaction of the essential community 

provider standards, providers must be 

contracted within the network tier that 

results in the lowest cost-sharing 

obligation. For plans with two network 

tiers (for example, participating 

providers and preferred providers), such 

as many PPOs, where cost sharing is 

lower for preferred providers, only 

preferred providers would be counted 

towards essential community provider 

standards; and 

* * * * * 

Subpart D—Standards for Qualified 

Health Plan Issuers for Specific Types 

of Exchanges 

■ 26. Revise the subpart D heading to 

read as set forth above. 

■ 27. Amend § 156.340 by revising 

paragraphs (a) and (b)(4) and (5) to read 

as follows: 

§ 156.340 Standards for downstream and 

delegated entities. 

(a) General requirement. Effective 

October 1, 2013, 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 with all applicable 

Federal standards related to Exchanges. 

The applicable standards depend on the 

Exchange model type in which the QHP 

is offered, as described in paragraphs 

(a)(1) and (2) of this section. 

(1) QHP issuers participating in 

Exchange models that do not use the 

Federal platform, including State 

Exchanges and State Exchange SHOPs. 

QHP issuers maintain responsibility for 

ensuring their downstream and 

delegated entities comply with the 

Federal standards related to Exchanges, 

including the standards in subpart C of 

this part with respect to each of its 

QHPs on an ongoing basis, as well as the 

Exchange processes, procedures, and 

standards in accordance with subparts 

H and K of part 155 and, in the small 

group market, §§ 155.705 and 155.706 of 

this subchapter, unless the standard is 

specifically applicable to a Federallyfacilitated Exchange or FF–SHOP; 

(2) QHP issuers participating in 

Exchanges that use the Federal platform, 

including Federally-facilitated 

Exchanges, FF–SHOPs, SBE–FPs, and 

SBE–FP–SHOPs. QHP issuers maintain 

responsibility for ensuring their 

downstream and delegated entities 

comply with Federal standards related 

to Exchanges, including the standards in 

subpart C of part 156 with respect to 

each of its QHPs on an ongoing basis, as 

well as the Exchange processes, 

procedures, and standards in 

accordance with subparts H and K of 

part 155 of this subchapter and, in the 

small group market, §§ 155.705 and 

155.706 of this subchapter if applicable 

to the Exchange type in which the QHP 

issuer is operating. QHP issuers are also 

responsible for their downstream and 

delegated entities’ compliance with the 

standards of § 155.220 of this 

subchapter with respect to assisting 

with enrollment in QHPs, and the 

standards of §§ 156.705 and 156.715 of 

this subchapter for maintenance of 

records and compliance reviews if 

applicable to the Exchange type in 

which the QHP issuer is operating. 

(b) * * * 

(4) Specify that the delegated or 

downstream entity must permit access 

by the Secretary and the OIG or their 

designees in connection with their right 

to evaluate through an audit, inspection, 

or other means, to the delegated or 

downstream entity’s books, contracts, 

computers, or other electronic systems, 

including medical records and 

documentation, relating to the QHP 

issuer’s obligations in accordance with 

Federal standards under paragraph (a) of 

this section until 10 years from the final 

date of the agreement period; 

(5) All agreements between issuers 

offering QHPs through an Exchange and 

delegated or downstream entities the 

issuers engage to support the issuer’s 

activities on an Exchange must include 

language stating that the relevant 

Exchange authority may demand and 

receive the delegated or downstream 

entity’s books, contracts, computers, or 

other electronic systems, including 

medical records and documentation, 

relating to the QHP issuer’s obligations 

in accordance with Federal standards 

under paragraph (a) of this section until 

10 years from the final date of the 

agreement period. 

■ 28. Amend § 156.400 by revising the 

definition of ‘‘De minimis variation for 

a silver plan variation’’ to read as 

follows: 

§ 156.400 Definitions. 

* * * * * 

De minimis variation for a silver plan 

variation means a ¥0 percentage point 

and +1 percentage point allowable AV 

variation. 

* * * * * 

■ 29. Amend § 156.430 by revising 

paragraphs (b)(1), (d) introductory text, 

(e) introductory text, and (e)(1) to read 

as follows: 

§ 156.430 Payment for cost-sharing 

reductions. 

* * * * * 

(b) * * * (1) When there is an 

appropriation to make cost-sharing 

reduction payments to QHP issuers, a 

QHP issuer will receive periodic 

advance payments from HHS to the 

extent permitted by the appropriation 

and calculated in accordance with 

§ 155.1030(b)(3) of this subchapter. 

* * * * * 

(d) Cost-sharing reductions data 

submissions. HHS will periodically 

provide a submission window for 

issuers to submit cost-sharing reduction 

data documenting cost-sharing 

reduction amounts issuers paid, as 

specified in paragraphs (d)(1) and (2) of 

this section, in a form and manner 

specified by HHS in guidance, 

calculated in accordance with paragraph 

(c) of this section. When HHS makes 

cost-sharing reduction payments to QHP 

issuers, HHS will notify QHP issuers 

that the submission of the cost-sharing 

data is mandatory for those issuers 

having received cost-sharing reduction 

payments for any part of the benefit year 

and voluntary for other issuers, and 

HHS will use the data to reconcile 

advance cost-sharing reduction 

payments to issuers against the actual 

amounts of cost-sharing reductions QHP 

issuers provided, as determined by HHS 

based on amounts specified in 

paragraphs (d)(1) and (2) of this section, 

as calculated in accordance with 

paragraph (c) of this section. In the 

absence of an appropriation to make 

cost-sharing reduction payments to 

issuers, HHS will notify QHP issuers 

that the submission of the cost-sharing 

data is voluntary. The cost-sharing data 

that must be submitted in either a 

voluntary or mandatory submission 

includes: 

* * * * * 

(e) Cost-sharing reductions payments 

and charges. If the actual amounts of 

cost-sharing reductions determined by 

HHS based on amounts described in 

paragraphs (d)(1) and (2) of this section 

are— 

(1) More than the amount of advance 

payments HHS provided, and the QHP 

issuer has timely provided the data of 

actual amounts of cost-sharing 

reductions as required under paragraph 

(c) of this section, if an appropriation is 

available to make cost-sharing payments 

to QHP issuers, HHS will make a 

payment to the QHP issuer for the 

difference; or 

* * * * * 


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PART 158—ISSUER USE OF PREMIUM 

REVENUE: REPORTING AND REBATE 

REQUIREMENTS 

■ 30. The authority citation for part 158 

continues to read as follows: 

Authority: 42 U.S.C. 300gg–18. 

■ 31. Amend § 158.140 by revising 

paragraph (b)(2)(iii) to read as follows: 

§ 158.140 Reimbursement for clinical 

services provided to enrollees. 

* * * * * 

(b) * * * 

(2) * * * 

(iii) The amount of incentive and 

bonus payments made to providers that 

are tied to clearly-defined, objectively 

measurable, and well-documented 

clinical or quality improvement 

standards that apply to providers. 

* * * * * 

■ 32. Amend § 158.150 by revising 

paragraph (a) to read as follows: 

§ 158.150 Activities that improve health 

care quality. 

(a) General requirements. The report 

required in § 158.110 must include 

expenditures directly related to 

activities that improve health care 

quality, as such activities are described 

in this section. 

* * * * * 

■ 33. Amend § 158.170 by revising 

paragraph (b) introductory text to read 

as follows: 

§ 158.170 Allocation of expenses. 

* * * * * 

(b) Description of the methods used to 

allocate expenses. The report required 

in § 158.110 must include a detailed 

description of the methods used to 

allocate expenses, including incurred 

claims, quality improvement expenses, 

Federal and State taxes and licensing or 

regulatory fees, and other non-claims 

costs, to each health insurance market 

in each State. A detailed description of 

each expense element must be provided, 

including how each specific expense 

meets the criteria for the type of expense 

in which it is categorized, as well as the 

method by which it was aggregated. 

* * * * * 

Dated: April 28, 2022. 

Xavier Becerra, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2022–09438 Filed 5–2–22; 4:15 pm] 

BILLING CODE 4120–01–P 


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