24450 Federal Register / Vol. 75, No. 86 / Wednesday, May 5, 2010 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Office of the Secretary 

45 CFR Part 149 

RIN 0991–AB64 

Early Retiree Reinsurance Program 

AGENCY: Office of the Secretary, HHS. 

ACTION: Interim final rule with comment 

period. 

SUMMARY: This interim final rule with 

comment period (IFC) implements the 

Early Retiree Reinsurance Program, 

which was established by section 1102 

of the Patient Protection and Affordable 

Care Act (the Affordable Care Act). The 

Congress appropriated funding of $5 

billion for the temporary program. 

Section 1102(a)(1) requires the Secretary 

to establish this temporary program not 

later than 90 days after enactment of the 

statute, which is June 21, 2010. The 

program ends no later than January 1, 

2014. The program provides 

reimbursement to participating 

employment-based plans for a portion of 

the cost of health benefits for early 

retirees and their spouses, surviving 

spouses and dependents. The Secretary 

will reimburse plans for certain claims 

between $15,000 and $90,000 (with 

those amounts being indexed for plan 

years starting on or after October 1, 

2011). The purpose of the 

reimbursement is to make health 

benefits more affordable for plan 

participants and sponsors so that health 

benefits are accessible to more 

Americans than they would otherwise 

be without this program. 

DATES: Effective Date: These regulations 

are effective on June 1, 2010. 

Comment date: To be assured 

consideration, comments must be 

received at one of the addresses 

provided below, no later than 5 p.m. 

EST on June 4, 2010. 

ADDRESSES: In commenting, please refer 

to file code DHHS–9996–IFC. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed). 

• Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. Follow 

the instructions on the home page. 

• By regular mail. You may mail 

written comments to the following 

address only: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

DHHS–9996–IFC, P.O. Box 8014, 

Baltimore, MD 21244–8014. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

• By express or overnight mail. You 

may send written comments to the 

following address only: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: DHHS–9996–IFC, 

Mail Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

• By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments before the close 

of the comment period to either of the 

following addresses: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue, SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786– 

9994 in advance to schedule your 

arrival with one of our staff members. 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

Submission of comments on 

paperwork requirements. You may 

submit comments on this document’s 

paperwork requirements by following 

the instructions at the end of the 

‘‘Collection of Information 

Requirements’’ section in this document. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

James Slade, (410) 786–1073, for 

information regarding the Purpose and 

Basis, Requirements for Eligible 

Employment-Based Plans, Use of 

Reimbursement Amounts, Appeals, and 

Disclosure of Data Inaccuracies. 

David Mlawsky, (410) 786–6851, for 

information regarding the Definitions, 

Reinsurance Amounts, Reimbursement 

Methods, Including Provision of 

Necessary Information, and Change of 

Ownership Requirements. 

SUPPLEMENTARY INFORMATION: Inspection 

of Public Comments. All comments 

received before the close of the 

comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all electronic 

comments received before the close of 

the comment period on the following 

public Web site as soon as possible after 

they have been received: http:// 

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will be 

available for public inspection as they 

are received, generally beginning 

approximately 3 weeks after publication 

of a document, at Room 445–G, 

Department of Health and Human 

Services, Hubert H. Humphrey Building, 

200 Independence Avenue, SW., 

Washington, DC 20201, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

call 1–800–743–3951. 

I. Background 

A. Overview of the Early Retiree 

Reinsurance Program Enacted as Part of 

the Patient Protection and Affordable 

Care Act 

On March 21, 2010, the Congress 

passed the Patient Protection and 

Affordable Care Act (the Affordable Care 

Act) (Pub. L. 111–148), which was 

signed into law on March 23, 2010. 

Included in this health insurance reform 

law is a provision that establishes the 

temporary Early Retiree Reinsurance 

Program. This provision addresses the 

recent erosion in the number of 

employers providing health coverage to 

early retirees. People in the early retiree 

age group often face difficulties 

obtaining insurance in the individual 

market because of advanced age or 

chronic conditions that make coverage 

unaffordable and inaccessible. The Early 

Retiree Reinsurance Program provides 

needed financial help for employerbased plans to continue to provide 

valuable coverage to plan participants, 

and provides financial relief to plan 

participants. 

The Early Retiree Reinsurance 

Program provides reimbursement to 

participating sponsors for a portion of 

the costs of providing health coverage to 

early retirees (and eligible spouses, 

surviving spouses, and dependents of 

such retirees). Section 1102(a)(2)(B) of 


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the Affordable Care Act defines 

‘‘employment-based plan’’ to include a 

group benefits plan providing health 

benefits that is maintained by private 

employers, State or local governments, 

employee organizations, voluntary 

employees’ beneficiary association, a 

committee or board of individuals 

appointed to administer such plan, or a 

multiemployer plan (as defined by 

Employee Retirement Income Security 

Act or ERISA). Section 1102 does not 

differentiate between health benefits 

provided by self-funded plans or 

through the purchase of insurance. 

Section 1102(a)(1) requires the 

Secretary of HHS (the Secretary) to 

establish the program within 90 days of 

enactment of the law, which is June 21, 

2010. We expect this program to be 

established by June 1, 2010. By law, the 

program will expire on January 1, 2014. 

Funding for the program is limited to $5 

billion. 

II. Provisions of the Interim Final Rule 

This regulation establishes 45 CFR 

part 149, ‘‘Requirements for the Early 

Retiree Reinsurance Program.’’ This part 

implements section 1102 of the 

Affordable Care Act, which requires the 

Secretary to provide reimbursement to 

sponsors with certified plans for a 

portion of the cost of health benefits for 

early retirees and their spouses, 

surviving spouses and dependents, 

provided funds remain available. In part 

149, we established new subparts A 

through H. These new subparts set forth 

the framework for implementing the 

Early Retiree Reinsurance Program 

effective June 1, 2010 through January 1, 

2014. We are implementing the 

statutory requirements of the program as 

follows: 

A. General Provisions (Subpart A) 

1. Purpose and Basis (§ 149.1) 

In this section, we provide the 

statutory authority for promulgating the 

regulation. 

2. Definitions (§ 149.2) 

Section 1102(a) of the Affordable Care 

Act (also referred to as the ‘‘statute’’) 

provides definitions for three specific 

terms. One of these terms is the term 

‘‘employment-based plan’’, which the 

statute defines as a ‘‘group benefits plan 

providing health benefits’’ that satisfies 

certain conditions. The statute at section 

1102(a)(1) also specifies that under the 

program, the Secretary shall provide 

reimbursement to participating 

employment-based plans. However, a 

plan typically constitutes merely an 

arrangement to provide benefits, as 

opposed to a discrete entity to which 

payments can be directly made or sent. 

Thus, the regulation interprets this 

provision to require reimbursement 

under the program to a ‘‘sponsor,’’ and 

defines sponsor as that term is defined 

in regulations promulgated for the 

Retiree Drug Subsidy (RDS) Program at 

42 CFR 423.882. That definition defines 

sponsor as a plan sponsor as defined in 

section 3(16)(B) of ERISA, 29 U.S.C. 

1002(16)(B), except that, in the case of 

a plan maintained jointly by one 

employer and an employee organization 

and for which the employer is the 

primary source of financing, the term 

means the employer. By defining the 

term sponsor in the regulation, and by 

specifying that sponsors are the entities 

that apply for and get reimbursed under 

the program, we believe we are 

achieving two important objectives: (1) 

We are ensuring that program 

reimbursements can be made to actual 

existing entities, and (2) We are 

promoting consistency with the RDS 

Program. This second objective is 

critical, as we believe that many of the 

entities that will apply for the Early 

Retiree Reinsurance Program are entities 

that participate in the RDS Program, as 

these two programs have many 

similarities. Thus, the common use of 

terms across the two programs will 

minimize confusion, and we believe 

will help to maximize program 

participation. 

Although we drafted the regulation to 

specify that a sponsor is the entity that 

would be directly paid under the 

program, there is still a need to use the 

term ‘‘employment-based plan’’ in the 

regulation. This is because the statute 

envisions that the entity receiving 

reimbursement have a benefits 

arrangement (that is, a plan) in place 

that satisfies certain criteria (for 

example, implements programs and 

procedures to generate cost-savings with 

respect to participants with chronic and 

high-cost conditions.) The statute 

provides a definition of ‘‘employmentbased plan’’ as constituting a ‘‘group 

benefits plan’’ that has certain 

characteristics. Those characteristics 

(for example, must be maintained by 

one or more employers, can include a 

multiemployer plan as defined in 

section 3(37) of ERISA) borrow 

components of the ERISA definition of 

a ‘‘group health plan’’. For that reason, 

we define ‘‘employment-based plan’’ as 

meaning a ‘‘group health plan’’ as 

defined in the RDS regulations at 42 

CFR 423.882 that provides health 

benefits to early retirees, but excludes 

Federal governmental plans. (Unlike the 

RDS statutory provisions, the Early 

Retiree Reinsurance Program’s statutory 

provisions do not expressly include 

Federal plans). The RDS regulatory 

definition of ‘‘group health plan’’ largely 

tracks the ERISA definition. For reasons 

previously stated, we believe it is 

beneficial to use the same or similar 

terminology, and have the same or 

similar requirements for the RDS 

Program and the Early Retiree 

Reinsurance Program, when 

appropriate. Because the RDS program 

requires a sponsor to have a benefits 

arrangement that constitutes a group 

health plan, we believe the benefits 

arrangement must be in place for 

purposes of the Early Retiree 

Reinsurance Program (that is, an 

employment-based plan), should also be 

a group health plan (that is, an 

employment-based plan, defined 

generally as group health plan). 

Generally, the regulation uses the term 

‘‘sponsor’’ when referring to the entity 

that applies for and receives 

reimbursement under the program, and 

uses the term ‘‘employment-based plan’’ 

when discussing the health benefits 

arrangement the sponsor must offer. 

In addition to introducing the 

definition of ‘‘sponsor’’, the regulation 

also defines other terms that are not 

defined in the statute, including the 

term ‘‘authorized representative.’’ We 

define this term to mean an individual 

with legal authority to sign and bind a 

sponsor to the terms of a contract or 

agreement. This term is important in the 

regulatory provision relating to the 

program application and the plan 

sponsor agreement. The regulation 

requires an authorized representative to 

sign a plan sponsor agreement as part of 

the program application. 

We use the term ‘‘benefit option’’ in 

the regulation when discussing the fact 

that there is only one cost threshold and 

cost limit per early retiree per plan, 

regardless of how many benefit options 

within that plan the early retiree is 

enrolled in, in a given plan year. We 

define ‘‘benefit option’’ as a particular 

benefit design, category of benefits, or 

cost-sharing arrangement offered within 

an employment-based plan. 

The statute at section 1102(b) requires 

that an employment-based plan be 

certified by the Secretary, and submit an 

application for the program, before the 

plan can participate in the program. As 

stated above, under this regulation, the 

entity that participates in (that is, 

applies for) the program, is the plan 

sponsor. We will not approve an 

application unless the sponsor, and the 

employment-based plan, meet their 

respective requirements under the 

statute and the regulation. Therefore, we 

define the term ‘‘certified’’ as meaning 

that the sponsor and its employmentVerDate Mar<15>2010 14:33 May 04, 2010 Jkt 220001 PO 00000 Frm 00079 Fmt 4700 Sfmt 4700 E:\FR\FM\05MYR1.SGM 05MYR1

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based plan or plans meet the 

requirements of this part and the 

sponsor’s application to participate in 

the program has been approved by the 

Secretary. All elements of this 

requirement must be satisfied before a 

sponsor can participate in the program. 

The statute at section 1102(b)(2) 

requires employment-based plans to 

have programs and procedures in place 

to generate cost savings for participants 

with chronic and high-cost conditions. 

We define the term ‘‘chronic and highcost condition’’ to mean a condition for 

which $15,000 or more in health benefit 

claims are likely to be incurred during 

a plan year by any one participant. 

Sponsors participating in this program 

are likely to be sponsors that have 

offered the applicable plan in previous 

years. Sponsors, therefore, will 

recognize which conditions are likely to 

result in $15,000 in claims in a plan 

year for one participant. While we 

expect that the employment-based plans 

will have programs and procedures in 

place that have generated or have the 

potential to generate savings for 

participants with these conditions, 

which may vary across plans, 

geographic regions and due to other 

factors, we do not expect plans to have 

programs and procedures in place for all 

conditions for which claims are likely to 

exceed $15,000 in a plan year for a plan 

participant. To require that plans have 

programs and procedures in place to 

address all chronic and high-cost 

conditions could exclude many 

sponsors from participating in the 

program and could be overly restrictive. 

We expect sponsors to take a reasonable 

approach when identifying such 

conditions and selecting programs and 

procedures to lower the cost of care, as 

well as improve the quality of care, for 

such conditions. 

We define ‘‘claim’’ or ‘‘medical claim’’ 

in order to lay out in more detail what 

is required on the claim to be 

reimbursed under this program, and to 

note that the terms ‘‘claim’’ or ‘‘medical 

claim’’ include medical, surgical, 

hospital, prescription drug and other 

types of claims as determined by the 

Secretary. The statute at section 

1102(a)(2)(A) defines ‘‘health benefits’’ 

as medical, surgical, hospital, 

prescription drug, and such other 

benefits as shall be determined by the 

Secretary whether self-funded, or 

delivered through the purchase of 

insurance or otherwise. The regulatory 

definition of ‘‘health benefit’’ clarifies 

that such benefits include benefits for 

the diagnosis, cure, mitigation, or 

prevention of physical or mental disease 

or condition with respect to any 

structure or function of the body. (As 

discussed below, health benefits do not 

include benefits specified at 45 CFR 

146.145(c)(2) through (4)). Therefore, 

per the Secretary’s authority to 

determine benefits for which claims 

may be submitted, the terms ‘‘claim’’ or 

‘‘medical claim’’ include claims for the 

benefits set out in the definition of 

‘‘health benefit.’’ This list of benefits, for 

which the Secretary has the authority to 

determine are appropriate under the 

program, is not exhaustive. 

The statute at section 1102(a)(2)(C) 

defines ‘‘early retirees’’ as individuals 

who are age 55 and older but are not 

eligible for coverage under Medicare, 

and who are not active employees of an 

employer maintaining, or currently 

contributing to, the employment-based 

plan or of any employer that has made 

substantial contributions to fund such 

plan. We have incorporated this 

definition into the regulation, and we 

clarified that spouses, surviving 

spouses, and dependents are also 

included in the definition of early 

retiree. This definition accommodates 

the language in section 1102(a)(1) of the 

statute, which states that reimbursement 

under the program is made to cover a 

portion of the costs of providing health 

coverage to early retirees and to the 

eligible spouses, surviving spouses, and 

dependents of such retirees. This 

definition accommodates the language 

in section 1102(a)(1) in such a way that 

reimbursement can be made under the 

program for the health benefit costs of 

eligible spouses, surviving spouses, and 

dependents of such retirees, even if they 

are under the age of 55, and/or are 

eligible for Medicare. We believe the 

statute can reasonably be interpreted to 

provide reimbursement for the health 

benefit costs of such individuals. This 

interpretation will provide additional 

assistance to sponsors, which will 

encourage them to continue to offer 

coverage to the spouses, surviving 

spouses, and dependents of early 

retirees. 

The regulatory definition of early 

retiree also clarifies that the 

determination of whether an individual 

is not an active employee is made by the 

sponsor in accordance with the rules of 

its plan. However, an individual is 

presumed to be an active employee if, 

under the Medicare Secondary Payer 

(MSP) rules in 42 CFR 411.104 and 

related Centers for Medicare & Medicaid 

Services’ (CMS) guidance, the person is 

considered to be receiving coverage by 

reason of current employment status. 

The presumption would apply whether 

or not the MSP rules actually apply to 

the sponsor. We also clarify that a 

sponsor may treat a person receiving 

coverage under its employment-based 

plan as a dependent in accordance with 

the rules of its plan, regardless of 

whether that person constitutes a 

dependent for Federal or state tax 

purposes. These two clarifications are 

also found in the RDS regulation in the 

definition of ‘‘qualifying covered 

retiree,’’ under which, as that term 

implies, an individual must be a retiree. 

As previously stated, we believe that 

regulatory terminology and concepts 

should be the same or similar between 

the RDS Program and the Early Retiree 

Reinsurance Program when appropriate, 

and we believe it is appropriate when 

determining whether an individual is a 

retiree under each program. Finally, in 

the regulatory definition of ‘‘early 

retiree,’’ we also clarify that for purposes 

of this definition, the phrase ‘‘an 

employer maintaining or currently 

contributing to the employment-based 

plan or any employer that has made 

substantial contributions to fund such 

plan,’’ which is also found in the 

statutory definition of ‘‘early retiree,’’ 

means a plan sponsor. Under ERISA 

(and the RDS Program regulation), a 

plan sponsor is an entity (such as an 

employer) that establishes or maintains 

a group health plan. Thus, because this 

part of the statutory definition of early 

retiree in the Affordable Care Act speaks 

to the relationship between the sponsor 

(for example, the employer) and the 

employment-based plan, we believe this 

clarification is appropriate. 

Section 149.610 of this regulation 

permits the Secretary to reopen and 

revise a reimbursement determination 

upon the Secretary’s own motion or 

upon the request of a sponsor within 1 

year of the reimbursement 

determination for any reason, within 4 

years of the reimbursement 

determination for good cause, or at any 

time in instances of fraud or similar 

fault. These three standards are the 

same regulatory standards that apply 

with respect to CMS’ ability to reopen 

or revise an initial or reconsidered 

determination under the RDS Program, 

at 42 CFR 423.890(d). The RDS 

regulatory provision provides examples 

of what constitutes ‘‘good cause,’’ and 

again, because of the similarity between 

that program and the Early Retiree 

Reinsurance Program, we believe those 

examples would be appropriate for the 

latter. Therefore, similar to the RDS 

regulation, this regulation provides the 

following examples of good cause: (1) 

New and material evidence exists that 

was not readily available at the time the 

reimbursement determination was 

made, (2) A clerical error in the 

computation of the reimbursement 

determination was made, or (3) The 


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evidence that was considered in making 

the reimbursement determination 

clearly shows on its face that an error 

was made. For example, if a sponsor 

receives a post-point-of-sale price 

concession that was not known at the 

time a reimbursement determination 

was made, good cause may be found 

and the reimbursement determination 

may be reopened and revised. 

The statute at section 1102(a)(2)(A) 

defines ‘‘health benefits’’ as medical, 

surgical, hospital, prescription drug, 

and such other benefits as shall be 

determined by the Secretary, whether 

self-funded, or delivered through the 

purchase of insurance or otherwise. We 

clarify in the regulatory definition that 

such benefits include benefits for the 

diagnosis, cure, mitigation, or 

prevention of physical or mental disease 

or condition with respect to any 

structure or function of the body. This 

is not an exhaustive list. We also specify 

that health benefits do not include 

certain benefits designated as excepted 

benefits under the regulations 

implementing the health insurance 

portability provisions of the Health 

Insurance Portability and 

Accountability Act (HIPAA). Those 

provisions impose certain requirements 

on group health plans and group health 

insurance issuers, but do not apply 

those requirements to certain 

arrangements that typically are not part 

of a major medical plan (that is, 

excepted benefits). For example, longterm care benefits are excepted benefits. 

In the context of the Early Retiree 

Reinsurance Program, we do not believe 

it would be appropriate to consider 

health benefits as including benefits 

provided under such arrangements, as 

we believe the best read of the statutory 

phrase ‘‘medical, surgical, hospital, 

[and] prescription drug’’ means such 

major medical benefits. 

In order to aid stakeholders in 

understanding when the Secretary will 

make reimbursement to a sponsor, we 

define the term ‘‘incurred’’ to mean the 

point in time when the sponsor, health 

insurance issuer, group health plan or 

plan participant, or a combination of 

these or similar stakeholders, become 

responsible for payment of the claim. In 

short, the Secretary will not pay a 

sponsor until a claim has been incurred 

and paid, as the statute at section 

1102(c)(1)(B) specifies that claims ‘‘shall 

be based on the actual amount 

expended.’’ 

We define a ‘‘negotiated price 

concession’’ as any direct or indirect 

remuneration that would serve to 

decrease the costs incurred under the 

employment-based plan. We set out 

examples of what negotiated price 

concessions are, which include 

discounts, rebates, coupons, and goods 

in kind. The list at § 149.2, 

‘‘Definitions,’’ describing what may 

constitute a negotiated price concession 

is not an exhaustive list. 

Because the statute does not use the 

terms ‘‘early retiree’’ and ‘‘plan 

participant’’ interchangeably, we define 

the term ‘‘plan participant’’ to include all 

enrollees in a plan, including an early 

and other retiree, an early and other 

retiree’s spouse, surviving spouse, and 

dependent, and an active employee and 

an active employee’s spouse and 

dependent. 

The statute at section 1102(c)(1)(B) 

specifies that claims submitted under 

the program ‘‘shall be based on the 

actual amount expended by the 

participating employment-based plan 

involved within the plan year’’ for the 

health benefits provided to early retirees 

and eligible spouses, surviving spouses, 

and dependents. This regulation 

includes a definition of plan year, and 

defines plan year as the year that is 

designated as the plan year in the plan 

document of an employment-based 

plan, except that if the plan document 

does not designate a plan year, if the 

plan year is not a 12-month plan year, 

or if there is no plan document, the plan 

year is: (1) The deductible or limit year 

used under the plan, (2) the policy year, 

if the plan does not impose deductibles 

or limits on a 12-month basis: (3) the 

sponsor’s taxable year, if the plan does 

not impose deductibles or limits on a 

12-month basis, and either the plan is 

not insured or the insurance policy is 

not renewed on a 12-month basis, or (4) 

the calendar year, in any other case. We 

define this term in such a way to give 

deference to the plan year the sponsor 

has already established for other 

purposes. However, we balance that 

deference with our belief that the intent 

of the statute is to calculate 

reimbursement amounts, and to apply 

the cost threshold and cost limit, to 

periods of time that are 12 months in 

duration. We believe most sponsors’ 

plan years are in fact 12 months in 

duration. 

The term ‘‘post point-of-sale 

negotiated price concession’’ is defined 

because not all negotiated price 

concessions occur at or before the point 

of sale. The statute requires negotiated 

price concessions to be excluded from 

the calculation of reimbursement, which 

causes reimbursement to be based on 

the actual amounts paid, not an inflated 

amount that may not reflect a price 

concession. When post point-of-sale 

negotiated price concessions occur they 

may cause data submitted for 

reimbursement to become inaccurate, 

resulting in ultimately, an inaccurate 

reimbursement. Once these price 

concessions are accounted for, a 

sponsor’s reimbursement determination 

may be reopened and revised. 

For purposes of brevity, we defined 

the term ‘‘program’’ to mean the Early 

Retiree Reinsurance Program. 

We define the term ‘‘Secretary’’ to 

mean the Secretary of the Department of 

Health & Human Services or the 

Secretary’s designee. We include the 

Secretary’s designee in the definition 

because the Secretary will not actually 

be performing the tasks set out in this 

regulation, but will designate an 

individual or entity to act on the 

Secretary’s behalf. 

The term ‘‘sponsor agreement’’ is 

based on the definition of the term in 

the RDS regulation. The sponsor 

agreement is basically used to ensure 

that the sponsor and Department are 

bound to comply with the details of the 

program that appear in the regulation 

and in other guidance, and to address 

any other points that must be addressed 

in order to implement this program. 

B. Requirements for Eligible 

Employment-Based Plans (Subpart B) 

1. General Requirement (§ 149.30) 

In this section, we provide the 

requirements that allow a sponsor to be 

eligible to participate in the Early 

Retiree Reinsurance Program. 

2. Requirements to Participate (§ 149.35) 

Section 1102(b)(2)(A) of the 

Affordable Care Act requires that an 

employment-based plan implement 

programs and procedures to generate 

cost-savings with respect to participants 

with chronic and high-cost conditions. 

We interpret this to mean that a plan 

must have in place programs and 

procedures that have generated or have 

the potential to generate cost-savings for 

these participants in order to participate 

in the Early Retiree Reinsurance 

Program, not necessarily that the 

sponsor has to ensure that new 

programs and procedures are put in 

place just to participate in this program. 

Proper management and treatment of 

chronic and high-cost conditions may 

be promoted by generating cost-savings 

for plan participants with these 

conditions because plan participants 

may be more apt to seek out proper and 

timely treatment and management 

before a condition becomes critical if 

treatment and management are 

financially manageable. As an example 

of a program and procedure to generate 

cost savings for a participant with a 

chronic condition, a sponsor may 

determine that diabetes, if not managed 


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24454 Federal Register / Vol. 75, No. 86 / Wednesday, May 5, 2010 / Rules and Regulations 

properly, is likely to lead to claims in 

excess of $15,000 for a plan year for one 

plan participant. The sponsor may 

ensure implementation of a diabetes 

management program that includes 

aggressive monitoring and behavioral 

counseling to prevent complications 

and unnecessary hospitalization. With 

respect to generating cost savings for a 

high-cost condition, a sponsor may 

determine that cancer is a high-cost 

condition for which it should generate 

cost savings. The sponsor may ensure 

that its plan covers all or a large portion 

of the participant’s coinsurances or 

copayments, and/or it could eliminate 

or reduce the plan’s deductible for 

treatment and visits related to the 

condition. Sponsors may choose other 

chronic and high-cost conditions to 

address, but upon audit the sponsor 

must be able to demonstrate that its 

programs and procedures have 

generated or had the potential to 

generate cost savings, consistent with 

the representations the sponsor made in 

its program application. 

We considered various options of how 

best to implement this provision and 

developed several options. The first 

option was to further identify which 

specific conditions meet the chronic 

condition definition and which specific 

conditions meet the high-cost condition 

definition and identify these specific 

conditions in sub-regulatory guidance to 

be issued at the time of, or immediately 

after, the issuance of this regulation. 

Issues that arose with this option 

consisted of: 

(1) How best to define the terms 

‘‘chronic and high-cost conditions’’, 

which would likely involve a significant 

amount of data analysis. Chronic and 

high-cost conditions can vary 

significantly across geographic regions, 

age ranges, and due to other factors. We 

do not think that specifying the chronic 

and high-cost conditions to be 

addressed could effectively occur 

within the 90 days allowed for 

establishment of this program; and 

(2) Our belief that the Congress 

intends this to be an inclusive program, 

not a program that excludes potential 

sponsors merely because they did not 

develop programs to address the 

specific conditions we might identify in 

our guidance. Had the Congress 

narrowly defined the types of plans for 

which sponsors might be reimbursed, 

we might have thought that this 

program is not an inclusive program. 

Instead Congress defined the term 

‘‘employment-based plan’’ broadly in the 

statute at section 1102 (a)(2)(B). It 

defines the term as a ‘‘group benefits 

plan providing health benefits’’ as a plan 

that ‘‘is * * * maintained by one or 

more current or former employers 

(including without limitation any State 

or local government or political 

subdivision thereof), employee 

organization, a voluntary employees’ 

beneficiary association, or a committee 

or board of individuals appointed to 

administer such plan; or * * * a 

multiemployer plan * * * ’’ Therefore 

the scope of sponsors eligible to receive 

this reimbursement is extremely broad, 

which shows intent on behalf of 

Congress to be inclusive. 

The inclusive nature of the program is 

particularly important because this 

program will involve plans with plan 

years that began before the effective date 

of the program, as will be discussed 

below. This means that a plan may not 

have a program in place to address 

certain chronic and high-cost conditions 

that we may have identified after the 

plan year has started, which would then 

exclude the sponsor from participation 

in the program. In such cases, sponsors 

would, in effect, be penalized if we 

identified specific conditions. As stated 

above, chronic and high-cost conditions 

can vary significantly across geographic 

regions, age ranges, and due to other 

factors, so we expect that sponsors 

might focus cost-saving programs and 

procedures on conditions that effect 

enrollees in their plan or plans. Our 

intent is that the regulation takes into 

account these differences. 

The approach we decided to take was 

to define the term ‘‘chronic and highcost condition’’ as specified in § 149.2— 

Definitions. ‘‘Chronic and high-cost 

condition’’ means a condition for which 

$15,000 or more in applicable claims are 

likely to be incurred during a plan year 

by one participant. Therefore, a sponsor 

must have programs and procedures in 

place that generate or have the potential 

to generate cost savings for plan 

participants with conditions that are 

likely to generate $15,000 in claims for 

a plan year, in order to participate in 

this program. We do not require that a 

sponsor have programs and procedures 

in place to address all conditions that 

may result in claims exceeding $15,000 

for one participant in a plan year. The 

sponsor must take a reasonable 

approach to identifying which 

conditions it must address. We believe 

this is a reasonable interpretation of the 

statute because it will promote cost 

savings for participants with chronic 

and high-cost conditions, but due to the 

approaches’ flexibility (that is, the fact 

that sponsors may choose programs and 

procedures that meet this requirement 

that are applicable to their enrollees) 

will serve to allow as many of the types 

of sponsors referenced in the definition 

of ‘‘employment-based plan’’ as possible 

to become certified to participate in the 

program. Of course, this requirement 

does not supersede requirements in 

other Federal laws that may apply to 

programs and procedures for chronic 

and high-cost conditions, such as the 

Americans with Disabilities Act. 

In order to administer this program 

and to audit the program as required by 

section 1102(d), we are requiring the 

sponsor to make records available for 

these purposes. For example, when a 

sponsor is audited, the auditors may 

request a copy of the sponsor’s (or the 

sponsor’s health insurance issuer or 

group health plan’s, as applicable) 

policies and procedures to detect fraud, 

waste and abuse, and data to 

substantiate the effectiveness of the 

policies and procedures. Under this 

provision, the sponsor is required to 

ensure that the applicable policies and 

procedures are produced. 

We also require that the sponsor have 

a written agreement with its health 

insurance issuer (as defined in 45 CFR 

160.103) or employment-based plan (as 

defined in 45 CFR 149.2), as applicable, 

requiring the health insurance issuer or 

employment-based plan to disclose 

information on behalf of the sponsor to 

the Secretary. This requirement in part 

exists to accommodate the HIPAA 

Privacy Rule at 45 CFR part 160 and 

subparts A and E of part 164 (‘‘Privacy 

Rule’’). This rule applies to ‘‘covered 

entities,’’ which include group health 

plans (that is, employment-based plans) 

and health insurance issuers, as defined 

in 45 CFR 160.103. Third party 

administrators would be business 

associates, as defined in 45 CFR 

160.103, of group health plans. 

Sponsors would not become covered 

entities by sponsoring a plan. Sponsors 

typically do not perform administrative 

activities for their group health plans 

and therefore do not have access to the 

claims information or similar protected 

health information (PHI) we require in 

this regulation to support program 

reimbursement. Much of the data that 

we would need to support program 

reimbursements, as outlined above, 

would be PHI held by group health 

plans, health insurance issuers, or third 

party administrators on behalf of group 

health plans. The requirement for health 

insurance issuers and employmentbased plans to disclose information to 

the Secretary encompasses information 

created or held by Business Associates 

on behalf of the health insurance issuer 

or group health plan. 

We believe that we have the authority 

to require the disclosure of the PHI in 

accordance with section 1102(c)(1)(A), 

which states that a participating plan 

‘‘shall submit claims for reimbursement 


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to the Secretary which shall contain 

documentation of the actual costs of the 

items and services for which each claim 

is being submitted.’’ Additionally, 

section 1102(d) requires the Secretary to 

conduct audits of claims data submitted 

by, or on behalf of, sponsors 

participating in the program, to ensure 

that such plans are in compliance with 

the statute, and this simply cannot be 

done without mandating disclosure of 

PHI. Thus, covered entities can comply 

with the mandate (without first 

obtaining specific authorization from 

individuals) pursuant to ‘‘the required 

by law’’ provisions of the Privacy Rule 

(45 CFR 164.512(a)). 

As noted above, typically group 

health plans and health insurance 

issuers or third party administrators 

acting on behalf of group health plans, 

have PHI that the Secretary requires for 

the submission of claims data for 

reimbursement under the program 

pursuant to the regulations. In these 

situations, it may be unlawful, under 

the Privacy Rule, for PHI to be shared 

with the sponsors. This regulation does 

not authorize disclosure of PHI to 

sponsors. Therefore, for purposes of this 

subpart, the sponsor must have a 

written agreement with the group health 

plan (that is, the employment-based 

plan) or health insurance issuer, as 

applicable, regarding disclosure of 

records, and the plan or issuer must 

disclose to us, on the sponsor’s behalf, 

the information, data, documents, and 

records necessary for the sponsor to 

comply with this program, part, and 

guidance, at a time and in a manner 

specified by the Secretary. Sponsors of 

self-funded plans with legal access to 

such data will be able to either provide 

this data to us themselves or have a 

group health plan or insurer provide the 

data to us on their behalf. 

Section 1102 (c)(6) of the Affordable 

Care Act requires the Secretary to 

establish procedures to protect against 

fraud, waste and abuse. In order to 

implement this provision, the Secretary 

will, for example, check the exclusions 

lists developed by the HHS’ Office of 

the Inspector General and the U.S. 

General Services Administration before 

allowing an entity to participate, or play 

a role, in the program, and will take 

other steps such as verifying the 

identities of the early retirees for whom 

claims are being submitted. The 

Secretary may also verify the identities 

of the individuals associated with the 

sponsor and health insurance issuer, or 

group health plan, as applicable, and 

will examine claims before 

reimbursement is made, to ensure, 

among other things, that instances of 

fraud, waste and abuse are minimized. 

Furthermore, the Secretary will perform 

audits per section 1102(d) of the 

Affordable Care Act. To aid the 

Secretary in detecting and reducing 

fraud, waste and abuse, we are requiring 

that sponsors ensure that there are 

policies and procedures in place to 

detect and reduce fraud, waste and 

abuse. While the policies and 

procedures may be maintained by the 

sponsor’s health insurance issuer or 

group health plan, the sponsor will have 

to attest that these policies and 

procedures are in place in the 

application. The sponsor must comply 

with requests from the Secretary to 

produce the policies and procedures 

and any documents or data to 

substantiate the implementation, and 

the effectiveness, of the procedures. We 

believe we meet the requirements of the 

statute by taking actions to detect and 

reduce fraud, waste, and abuse, by 

requiring sponsors to have such policies 

and procedures in place, and by 

requiring a sponsor to produce the 

policies and procedures upon request 

(such as for the purposes of an audit). 

If it is found that a sponsor committed 

fraud, waste or abuse, or allowed fraud, 

waste, and abuse to occur under its plan 

or plans, the Secretary may recoup from 

the sponsor some or all of the 

reimbursements paid under the 

program, and/or may revoke a sponsor’s 

certification to participate in the 

program. Of course, there are other laws 

relating to fraud, waste, and abuse, with 

which sponsors and their health 

insurance issuers or group health plans 

must comply. 

3. Application (§ 149.40) 

Section 1102(b)(1)(B) requires the 

sponsor to submit ‘‘an application for 

participation in the program, at such 

time, in such manner, and containing 

such information as the Secretary shall 

require.’’ In order to implement this 

provision, a sponsor must submit one 

application per plan, and identify the 

plan year cycle for which the sponsor is 

applying (that is, starting month and 

day, and ending month and day; no year 

is required). One application must be 

filed for each plan. Filing a different 

application for each plan will aid in 

tracking the plan as this program 

progresses to ensure proper 

reimbursement and compliance with 

program requirements. 

In order to verify the accuracy of the 

information contained in the 

application, the application will have to 

be signed by an authorized 

representative of the applicant and the 

authorized representative will have to 

certify that the information contained in 

the application is true and accurate to 

the best of the authorized 

representative’s knowledge and belief, 

among other certifications. We use the 

term applicant in this section to refer to 

any sponsor that has filed an 

application that has not yet been 

certified under the program. The term 

applicant is used to clarify that the 

applicant is not entitled to the privileges 

of a certified sponsor, such as the ability 

to submit a reimbursement request or 

appeal a reimbursement determination. 

Before a sponsor may submit claims and 

make a reimbursement request, the 

sponsor’s application must be approved 

by the Secretary. Applications will be 

processed in the order in which they are 

received. Because funding for this 

program is limited, we expect more 

requests for reimbursement than there 

are funds to pay the requests. Therefore 

we expect an applicant to perform its 

due diligence when applying, which 

should result in the submission of a 

complete application upon the first 

submission. Because it is important that 

applicants submit complete applications 

the first time, we will be providing 

assistance. If an application is 

incomplete, it will be denied and the 

applicant will have to submit a new 

application, which will be processed 

based on when the new application is 

received. If we were to allow an 

applicant to cure defects in the 

application, it would likely result in an 

extended application process, which 

would hinder the efficient 

implementation of this program. We 

must be prepared to exercise our 

authority under section 1102(f) to stop 

accepting applications based on the 

availability of the $5 billion 

appropriated for the program. It is 

therefore of paramount importance to 

applicants that they submit complete 

applications upon their first submission, 

otherwise there may not be an 

opportunity to submit a new and 

complete application. 

An application for a given plan does 

not have to be submitted each year. To 

require a separate application for a plan 

each year would only complicate the 

process and would place unneeded 

burden on applicants and the Secretary. 

The application will request the plan 

year cycles (that is, the start month and 

day and the end month and day; no year 

required), which for our purposes will 

provide the information we need to 

calculate reimbursement based on 

reimbursement requests. We do not 

think that an annual application 

approval is required. Once a plan is 

certified, the application approved, and 

the sponsor continues to meet the 

requirements of the statute, this part, 


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and applicable guidance, the plan and 

sponsor will continue to be certified and 

the application approved. 

We set out in § 149.40 what we 

believe we will need in order to approve 

an application. The application must 

include the applicant’s Tax 

Identification Number, the applicant’s 

name and address, and contact 

information for the applicant. To ensure 

compliance with the requirements of the 

statute, an applicant must provide a 

summary in its application of how it 

will use the reimbursement to meet the 

requirements of the program, including 

how it will use the reimbursement to 

reduce plan participant or sponsor 

costs, or any combination of these costs, 

and its plans to implement programs 

and procedures to generate savings for 

plan participants with chronic and highcost conditions. Because the statute 

requires that the funds dispersed under 

this program not be used as general 

revenue, we are requiring sponsors to 

maintain the level of effort in 

contributing to support their applicable 

plan or plans. Otherwise, sponsors 

might circumvent the prohibition on 

using the program funds as general 

revenue by using, dollar for dollar, 

sponsors’ funds not otherwise used for 

health benefits due to the program 

reimbursement, as general revenue. We 

expect that sponsors will use the 

reimbursement to pay for increases in, 

for example, the sponsor’s premium, or 

increases in other health benefit costs 

(or to reduce plan participants’ costs). 

Therefore the sponsor’s summary of 

how it will use the program’s 

reimbursement must also explain how 

the reimbursement will be applied to 

maintain the sponsor’s level of effort in 

contributing to support the applicable 

plan. We do not expect a sponsor to 

explain every detail of their programs 

and procedures and use of program 

funds but to give us an idea of how it 

will meet these requirements. We 

understand that these submissions may 

vary because applicants’ situations with 

respect to their plans may vary widely. 

For example, reimbursements received 

in the first year that a sponsor 

participates may be applied the second 

year of participation because many 

plans will have already been negotiated, 

agreed to, and implemented upon the 

effective date of this regulation. Other 

sponsors may have more flexibility to 

use these reimbursements immediately 

to lower costs. 

We will also require applicants to 

project their reimbursement amounts for 

the first two plan-year cycles in the 

application so that we can project total 

reimbursement amounts. To help us 

with our funding projections, we will 

need sponsors to identify specific 

projected reimbursement amounts for 

each of the two plan-year cycles. This 

assessment will help us determine if 

and when we should stop accepting 

applications due to funding limitations. 

We will also require applicants to 

identify all benefit options under the 

employment-based plan that any early 

retiree, for whom the applicant may 

receive program reimbursement, may be 

claimed. This is necessary for us to track 

where funds are being spent and to 

otherwise manage the program. We will 

also require sponsors to attest that there 

are fraud, waste and abuse policies and 

procedures in place. 

As is required in the RDS program, as 

a condition of participation, the sponsor 

will be required to sign a plan sponsor 

agreement, which will include certain 

assurances made by the sponsor. 

Included in this agreement will be a 

provision stating that reimbursement is 

based on information and data 

submitted by the sponsor and if the 

information and data are found to be 

inaccurate, incomplete or otherwise 

incorrect, the Secretary may reopen and 

revise a reimbursement determination, 

including recouping reimbursement 

from the sponsor. The sponsor will be 

required to specifically agree to comply 

with the terms and conditions for 

participation in the program, and 

acknowledge that information in the 

application is being provided for the 

purpose of obtaining federal funds. This 

list of application requirements is not 

exhaustive. Due to the compressed 

timeline for implementing this program, 

we may need to request additional 

information in the application. 

Finally, we allow the Secretary to 

reopen a determination under which an 

application had been approved or 

denied so that if it is later determined 

that a sponsor committed fraud or 

otherwise was untruthful in the 

application, the Secretary can revisit the 

determination. 

4. Consequences of Non-Compliance, 

Fraud or Similar Fault (§ 149.41) 

To clarify the actions the Secretary 

may take in instances when noncompliance, fraud, waste, and abuse, or 

similar fault are found, we include a 

regulation that states that failure to 

comply with the requirements of this 

part, or if fraud, waste, and abuse, or 

similar fault are found, the Secretary 

may recoup or withhold funds, 

terminate or deny an application, or 

take any combination of these actions. 

We include termination of an 

application because, depending upon 

the specific situation involved, if it is 

found that a sponsor committed fraud or 

otherwise was untruthful in the 

application, the determination to 

approve an application can be revised 

under § 149.40. We believe it is 

important to set out what actions the 

Secretary may take so that sponsors are 

aware of the ramifications of noncompliance, fraud, waste and abuse, or 

similar fault. This regulation does not, 

of course, supersede other Federal laws 

or consequences of non-compliance 

fraud, waste and abuse, or similar fault. 

5. Funding Limitation (§ 149.45) 

Section 1102(f) authorizes the 

Secretary to stop accepting applications 

based on the availability of funds. We 

clarify that a reimbursement request 

made on behalf of a certified plan may 

also be denied, in whole or in part, due 

to limitation of funds. Determinations 

based on funding limitations are final, 

binding and cannot be appealed, 

because any appeal, even if a sponsor is 

successful, would not result in 

reimbursement to a sponsor. Once the 

program funds are exhausted there will 

be no funds to reimburse a sponsor that 

may have been successful upon appeal. 

C. Reinsurance Amounts (Subpart C) 

1. Amount of Reimbursement 

(§ 149.100) 

The statute at section 1102(c) requires 

the Secretary, upon receipt of a valid 

claim for health benefits, to make 

reimbursement in an amount of 80 

percent of the portion of the health 

benefit costs (net of negotiated price 

concessions) attributable to the claims 

that exceed $15,000, but are below 

$90,000. We interpret the statute to 

mean that cumulative health benefits 

incurred in a given plan year and paid 

for a given early retiree, as defined in 

§ 149.2, that fall between those amounts 

will receive reimbursement, rather than 

reimbursement being made only for 

discrete health benefit items or services 

whose reimbursement total falls 

between those amounts. This 

interpretation will get much needed 

program funds to plan sponsors more 

quickly. The statute also specifies that 

in determining the amount of claims, 

the costs paid by the early retiree (or his 

or her spouse, surviving spouse, or 

dependent) in the form of deductibles, 

copayments, or coinsurance shall be 

included in the amounts paid by the 

participating employment-based plan. 

As an initial matter, we clarify in the 

regulation that reimbursement will be 

made under the program only for claims 

that are incurred during the applicable 

plan year, and paid. 

The regulation refers to the $15,000 

lower limit and the $90,000 ceiling as 


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1Sponsors can also apply for plan years that start 

after June 1, 2010. 

the ‘‘cost threshold’’ and ‘‘cost limit’’, 

respectively, and indicates that 

reimbursement under the program is 

calculated by first determining the costs 

for health benefits net of negotiated 

price concessions, within the applicable 

plan year for each early retiree, and then 

subtracting amounts below the cost 

threshold and above the cost limit 

within the applicable plan year for each 

early retiree. We also clarify that for 

purposes of determining the amounts 

below the cost threshold and above the 

cost limit for any given early retiree, all 

costs for health benefits paid by the plan 

or by the early retiree for all benefit 

options the early retiree is enrolled in 

with respect to a given certified 

employment-based plan for a given plan 

year, will be combined. We make this 

clarification because the statute, at 

section 1102(c)(3), specifies that ‘‘a 

claim submitted by a participating 

employment-based plan shall not be less 

than $15,000 nor greater than $90,000’’ 

(emphasis added). For example, an early 

retiree is simultaneously enrolled in two 

different benefit options within one 

group health plan—Option 1 as a 

retiree, and Option 2 as a spouse of a 

retiree. For purposes of determining 

when the early retiree satisfies the cost 

threshold, all claims incurred and paid 

for that early retiree by both benefit 

options within the applicable plan year, 

will be counted. The claims for that 

early retiree under each benefit option 

will not be separately counted. For 

purposes of determining if and when 

the early enrollee has satisfied the cost 

limit, the same principle applies. In 

other words, within one employmentbased plan for a given plan year, there 

is one threshold limit, and one cost 

limit, per early retiree. 

We also indicate that the 

reimbursement formula specified in the 

regulation applies to insured plans as 

well as self-funded plans, and that with 

respect to insured plans, costs for health 

benefits means costs the insurer and the 

early retiree pay for health benefits net 

of negotiated price concessions the 

insurer receives for health benefits. 

Thus, for insured plans, the amount of 

premium the sponsor pays (and the 

amount of premium contribution the 

early retiree pays) is irrelevant for 

purposes of calculating reimbursement 

under the program. We believe this is 

the correct interpretation because 

section 1102(c)(1)(A) states that claims 

for reimbursement must ‘‘contain 

documentation of actual costs of items 

and services * * *.’’ Premiums are not 

costs for items and services. 

2. Transition (§ 149.105) 

The program becomes effective June 

1, 2010. We carefully considered 

whether to allow sponsors to participate 

in the program for plan years that ended 

before the program’s effective date, but 

decided that such an approach would 

seem inconsistent with the program’s 

effective date. We also considered 

whether to permit sponsors to 

participate only for plan years that start 

on or after the program’s effective date, 

but decided that such an approach 

would arbitrarily favor sponsors with 

plan years that start soon after June 1, 

2010. Therefore, we decided to allow 

sponsors to apply for plan years that 

start before June 1, 2010, provided they 

end after that date (for example, 

calendar year 2010 plans).1 This raised 

the question of how claims incurred 

during such a plan year, but before June 

1, 2010, would be dealt with under the 

program. Under one approach 

considered, any such claims would 

count toward the cost threshold, and 

any such claims exceeding the 

threshold, but below the cost limit, 

would be eligible for program 

reimbursement. We did not adopt that 

approach, as it arguably would unfairly 

favor sponsors with plan years that 

started significantly before the 

program’s effective date, especially in 

light of the program’s limited funding. 

We decided upon the following 

approach. For claims incurred before 

June 1, 2010, the amount of such claims 

up to $15,000 count toward the cost 

threshold and the cost limit. The 

amount of claims incurred before June 

1, 2010 that exceed $15,000 are not 

eligible for reimbursement and do not 

count toward the cost limit. The 

reinsurance amount to be paid is based 

solely on claims incurred on and after 

June 1, 2010, and that fall between the 

cost threshold and cost limit for the 

plan year. As an example, for a plan 

with a plan year that began July 1, 2009, 

with an end date of June 30, 2010, with 

an early retiree for which it has spent 

$120,000 in health benefit claims before 

June 1, 2010, and it then spends another 

$30,000 in health benefit claims on the 

early retiree between June 1, 2010 and 

June 30, 2010, the sponsor would 

receive credit for $15,000 in claims 

incurred before June 1 and receive 

reimbursement of 80 percent of the 

$30,000 (for the claims incurred after 

June 1, 2010), or $24,000. We believe 

this is a reasonable approach because it 

provides as much relief as possible as 

soon as possible to sponsors, while 

giving meaning to the effective date of 

the program. A sponsor should therefore 

not submit claims above the $15,000 

cost threshold that were incurred before 

June 1, 2010, for reimbursement, as 

submission of such claims is outside the 

scope of the regulation. Also, to submit 

these claims for reimbursement will 

make the reimbursement process more 

complex than it needs to be. 

3. Negotiated Price Concessions 

(§ 149.110) and Cost Threshold and Cost 

Limit (§ 149.115) 

Section 1102(c)(1)(B) states that any 

negotiated price concessions obtained 

by an employment-based plan with 

respect to a health benefit must be 

reflected in claims submitted for 

program reimbursement. We recognize 

that sponsors and insurers sometimes 

do not receive certain negotiated price 

concessions until after payment is 

made, and in many cases, after the plan 

year during which the claim is incurred 

and paid, has ended. For example, this 

is typically the case with prescription 

drug rebates. Thus, we specify in the 

regulation that sponsors must disclose 

such ‘‘post-point-of-sale’’ negotiated 

price concessions, in a form and manner 

to be specified by the Secretary. We 

expect to specify the form and manner 

of such disclosures in future guidance. 

This will ensure that sponsors 

ultimately submit accurate claims data, 

and thus ultimately receive accurate 

reimbursement. 

Finally, the statute indicates that the 

$15,000 and $90,000 figures shall be 

adjusted each fiscal year based on the 

percentage increase in the Medical Care 

Component of the Consumer Price Index 

for all urban consumers (rounded to the 

nearest multiple of $1,000) for the year 

involved. We specify in the regulations 

that for plan years starting on or after 

October 1, 2011, the figures will be so 

adjusted. 

D. Use of Reimbursements (Subpart D) 

Use of Reimbursements (§ 149.200) 

Section 1102(c)(4) requires that the 

reimbursement ‘‘shall be used to lower 

costs for the plan. Such payments may 

be used to reduce premium costs for an 

entity’’ receiving a reimbursement or to 

reduce premium contributions, copayments, deductibles, co-insurance, or 

other out-of-pocket costs for plan 

participants. We encourage sponsors to 

use their reimbursement under the 

program for both of the following 

purposes: (1) To reduce the sponsor’s 

health benefit premiums or health 

benefit costs, and (2) To reduce health 

benefit premium contributions, copayments, deductibles, coinsurance, or 


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other out-of-pocket costs, or any 

combination of these costs, for plan 

participants. We expect that sponsors 

will continue to provide at least the 

same level of contribution to support 

the applicable plan, as it did before this 

program. For example, for a sponsor that 

pays a premium to an insurer, if the 

premium increases, program funds may 

be used to pay the sponsor’s share of the 

premium increase from year to year, 

which reduces the sponsor’s premium 

costs. Section 1102(c)(4) sets forth the 

requirements for use of reimbursements 

under this section and envisions a role 

for the Secretary in developing a 

mechanism to monitor the appropriate 

use of such reimbursements. Additional 

information about this mechanism will 

be disseminated as it is developed. 

The statute does not appear to use the 

terms ‘‘early retiree’’ and ‘‘plan 

participants’’ interchangeably. 

Therefore, we interpret this provision to 

mean that a sponsor may only receive 

program funds for claims of early 

retirees or their spouses, surviving 

spouses or dependents, but the funds 

may be used to lower health benefit 

costs for all participants in the plan, 

including retirees, and their spouses 

and dependents, and active employees 

and their spouses and dependents. At 

§ 149.200 (b), we clarify the statutory 

prohibition on using the funds as 

general revenue of the sponsor. 

E. Reimbursement Methods (Subpart E) 

1. General Reimbursement Rules 

(§ 149.300), Timing (§ 149.310), 

Reimbursement Conditioned Upon 

Available Funds (§ 149.315), Universe of 

Claims That Must Be Submitted 

(§ 149.320), Requirements for Eligibility 

of Claims (§ 149.325), and Content of 

Claims (§ 149.330) 

Section 1102(c)(1) of the Affordable 

Care Act states that a participating 

employment-based plan shall submit 

claims for reimbursement to the 

Secretary which shall contain 

documentation of the actual costs of the 

items and services for which each claim 

is being submitted. As noted above, we 

define ‘‘claim’’ as documentation 

specifying the health benefit provided, 

the provider or supplier, the incurred 

date, the individual for whom the health 

benefit was provided, the date and 

amount of payment net any known 

negotiated price concessions, and the 

employment-based plan and benefit 

option under which the health benefit 

was provided. The terms ‘‘claim’’ or 

‘‘medical claim’’ include medical, 

surgical, hospital, prescription drug and 

other such claims as determined by the 

Secretary. We clarify in the regulation 

that claims for benefits for the diagnosis, 

cure, mitigation, or prevention of 

physical or mental disease or condition 

with respect to any structure or function 

of the body, may be filed. This 

clarification is not an exhaustive list of 

claims that the Secretary may determine 

are appropriate. 

The regulation also specifies that 

claims cannot be submitted for a given 

plan year until the application that is 

associated with the claim and that 

references the applicable plan year cycle 

has been approved. With respect to a 

given early retiree, claims cannot be 

submitted until the early retiree’s total 

paid costs for health benefits incurred 

for the plan year exceed the applicable 

cost threshold. Once that threshold has 

been reached, claims can be submitted, 

but they must include all claims below 

the applicable cost threshold for the 

plan year in order to verify that the cost 

threshold has been met. Claims must be 

submitted based on the amounts 

actually paid, which may include the 

amounts paid by the early retiree. Once 

the cumulative claims of an early 

retiree, as defined in § 149.2, exceed 

$90,000 for a plan year, a sponsor 

should not submit claims above this 

claims limit for that early retiree 

because no reimbursement will be paid 

on these claims. 

2. Documentation of the Actual Cost of 

Medical Claims Involved (§ 149.335), 

Rule for Insured Plans (§ 149.340), and 

Use of Information Provided (§ 149.345) 

All claims submissions must include 

a list of early retirees for whom claims 

are being submitted. Both the 

documentation of actual costs of claims 

and the list of early retirees must be 

submitted in a form and manner to be 

specified by the Secretary. Claims 

submissions will be processed on a firstin, first-out basis until program funding 

is expended. 

We also specify that with respect to 

insured plans, the claims and the list of 

early retirees can be submitted directly 

to the Secretary by the insurer. 

In order for a sponsor to receive credit 

for the cost-sharing amounts paid by the 

early retiree or the early retiree’s spouse, 

surviving spouse or dependent, the 

sponsor must provide prima facie 

evidence that the early retiree or the 

early retiree’s spouse, surviving spouse 

or dependent, paid his or her portion of 

the costs. Such evidence may include an 

actual payment receipt. If a sponsor 

cannot provide prima facie evidence, it 

may receive credit under the program 

only for the portion of the claim the 

sponsor actually paid. 

There may be instances when a 

sponsor contracts with, for example, a 

staff-model health maintenance 

organization, that either has its own 

provider(s) on-staff or pays providers a 

capitated payment to care for plan 

participants. In these instances, claims 

might not ordinarily be produced. 

However, in order for the Secretary to 

calculate reimbursement under this 

program for such sponsors, the sponsor 

will be required to ensure that the 

insurer submit the information required 

in a claim as specified in § 149.330 and 

§ 149. 335. The information submitted 

by the insurer must be reasonable in 

light of the specific market that the 

insurer is serving. 

3. Maintenance of Records (§ 149.350) 

The regulations also specify how the 

Secretary may use the information 

collected for purposes of the program, 

and the records maintenance 

requirements that apply to the sponsor. 

The specified records must be 

maintained for 6 years after the 

expiration of the plan year in which the 

costs were incurred, or longer if 

otherwise required by law. The sponsor 

must require its health insurance issuer 

or employment-based health plan, as 

applicable, to maintain and produce 

upon request records to satisfy the 

maintenance of records requirements. 

F. Appeals (Subpart F) 

1. Appeals (§ 149.500) 

Section 1102(c)(6) of the Affordable 

Care Act requires the Secretary to 

establish an appeals process to permit 

sponsors to appeal a determination 

made by the Secretary with respect to 

claims submitted under the program. 

Due to the limited funding and 

temporary nature of the program, we 

have established a one-step appeal 

process. A sponsor may appeal directly 

to the Secretary within 15 calendar days 

of receipt of the determination at issue. 

Section 149.500 sets out what we 

consider to be an adverse 

reimbursement determination, which is 

a determination relating to the amount 

of reimbursement paid under the 

program. 

2. Content of Request for Appeal 

(§ 149.510) 

The request for appeal must specify 

the findings or issues with which the 

sponsor disagrees and the reasons for 

the disagreements. The request for 

appeal may include supporting 

documentary evidence the sponsor 

wishes the Secretary to consider. 

Essentially the sponsor must provide 

the Secretary with its issues and 

arguments and any supporting 

documentation that it has to support its 


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arguments. The Secretary may accept 

subsequent supporting documentation 

if, for example, the sponsor did not have 

time during the 15-day window to 

perform a comprehensive data analysis 

of the issue. It would be helpful in the 

request for appeal if the sponsor notes 

that further information will be 

provided to support the request for 

appeal and a date by which the 

information will be received by the 

Secretary. 

3. Review of Appeals (§ 149.520) 

The regulation sets out generally the 

process the Secretary will use when 

reviewing the appeal and clarifies that 

the Secretary’s decision will be final 

and binding, unless fraud or similar 

fault are involved. The Secretary will 

not accept oral argument or oral 

testimony, either in person or on the 

telephone. 

If all or part of a reimbursement 

request is denied based on the 

unavailability of funds, the sponsor may 

not appeal because an appeal would 

serve no purpose. If funds are 

exhausted, there will be no funds to 

reimburse a sponsor if it is found that 

the sponsor should otherwise be eligible 

for reimbursement. Allowing an appeal 

when funds are exhausted only serves to 

add burden to sponsors that have 

received an adverse determination, 

because, if we allow such an appeal, an 

aggrieved sponsor may feel that it must 

appeal in order to exhaust its remedies 

and to protect its interests. Once the 

funds for the program are exhausted, 

there is no interest for the sponsor to 

protect because there will be no chance 

of reimbursement, even upon a 

successful appeal. It will also serve to 

increase the Secretary’s burden because 

the Secretary will have to process and 

respond to each of these appeals, when 

there would be no possibility of a 

reimbursement adjustment in favor of 

the sponsor. 

The Secretary will inform the sponsor 

and the applicable HHS designee of the 

Secretary’s decision. Because time is of 

the essence with respect to funding, we 

do not specify how the Secretary will 

inform these stakeholders of the 

decision because it may be in writing, 

via electronic means or orally. The 

response process will be further 

reviewed to ensure that stakeholders 

receive appropriate notice of a decision. 

Of course, we do specify that if the 

sponsor requests a written response, the 

Secretary will provide a written 

response. 

G. Disclosure of Data Inaccuracies 

(Subpart G) 

1. Sponsor’s Duty To Report Data 

Inaccuracies (§ 149.600) 

Claims submitted for reimbursement 

may change after the 15-day appealrequest period has expired. For 

example, if a provider reverses a claim 

after the appeal-request period has 

expired, data would need to be updated 

to reflect the reversal. However, in order 

to make accurate reimbursements 

(reopen and revise reimbursement 

determinations that have already been 

made), sponsors are required to submit 

accurate data for reimbursement 

purposes. We understand that claims 

may be reversed or otherwise altered 

and that data that was accurate when 

submitted for reimbursement under the 

program may become inaccurate. 

Furthermore, reimbursement under this 

program is based on claims that are net 

of negotiated price concessions. Because 

negotiated price concessions include 

post-point-of-sale price concessions, 

data submitted for reimbursement may 

become inaccurate once the price 

concessions are finalized for a given 

plan year. 

We do not believe it is necessary to 

require a sponsor to submit a formal 

appeal under § 149.500 to the Secretary 

merely because data changes due to the 

natural course of business. Also, we 

realize that certain changes in data due 

to the normal course of business might 

not become evident to a sponsor within 

15 days after a reimbursement 

determination. Therefore, we are 

establishing a process that will give 

sponsors the ability to update us on any 

data inaccuracies and will allow us to 

reopen and revise a reimbursement 

determination as necessary, based on 

the updated data. We believe this would 

be the most efficient way to administer 

this program, particularly because of the 

limited nature of the program funds and 

the uncertain length of time that an 

appeal to the Secretary may involve. 

2. Secretary’s Authority To Reopen and 

Revise Reimbursement Determination 

Amounts (§ 149.610) 

While the details of this process will 

be developed in sub-regulatory 

guidance, we state that the Secretary 

may reopen and revise a reimbursement 

determination upon its own motion or 

upon the request of a sponsor, within 1 

year of a reimbursement determination, 

for any reason, within 4 years of a 

reimbursement determination for good 

cause, or at any time in instances fraud 

or similar fault. We define the term 

‘‘good cause’’ in § 149.2, and discuss in 

the regulation what we believe is not 

good cause for revising the 

reimbursement. This regulation tracks 

the language in the RDS and Part D 

reconciliation reopening regulations at 

§ 423.890 and § 423.346, respectively. 

We specify in this section that the 

Secretary may reopen and revise a 

reimbursement determination on the 

Secretary’s own motion. If the Secretary 

becomes aware that a reimbursement 

determination was made based upon 

inaccurate data, this will allow the 

Secretary to reopen and revise the 

reimbursement determination without 

the sponsor having to make a request. 

Reimbursement determinations may be 

reopened and revised to pay out more 

funds to a sponsor assuming such funds 

exist or to recoup funds that were 

already paid, or to withhold funds from 

a future reimbursement to offset a 

sponsor’s liability. 

H. Change of Ownership Requirements 

(Subpart H) 

1. Change of Ownership Requirements 

(§ 149.700) 

We include in this regulation 

requirements for a sponsor to provide 

the Secretary with advance notice of any 

change of ownership of the sponsor. 

Complying with this requirement is 

critically important, as it helps to ensure 

that program reimbursement is being 

made only to legitimate entities, and 

only to such entities that are actually 

complying with the requirements of the 

program. The requirements mirror the 

change of ownership requirements that 

are found in the RDS regulation, which 

we believe are appropriate for the Early 

Retiree Reinsurance Program, in light of 

the fact that we expect many sponsors 

to participate in both programs. 

Complying with the change of 

ownership requirements is especially 

critical with respect to the Early Retiree 

Reinsurance Program, in light of the 

program’s limited funding. 

The regulations define a change of 

ownership as any of the following: 

(1) The removal, addition, or 

substitution of a partner, unless the 

partners expressly agree otherwise as 

permitted by applicable state law. 

(2) Transfer of all or substantially all 

of the assets of the sponsor to another 

party. 

(3) The merger of the sponsor’s 

corporation into another corporation or 

the consolidation of the sponsor’s 

organization with one or more other 

corporations, resulting in a new 

corporate body. 

Transfer of corporate stock or the 

merger of another corporation into the 

sponsor’s corporation, with the sponsor 


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surviving, does not ordinarily constitute 

change of ownership. 

A sponsor that has a sponsor 

agreement in effect and is considering or 

negotiating a change in ownership must 

notify the Secretary at least 60 days 

before the anticipated effective date of 

the change. When there is a change of 

ownership that results in a transfer of 

the liability for health benefit costs, the 

existing sponsor agreement is 

automatically assigned to the new 

owner. This requirement is necessary 

because there may be obligations under 

the plan sponsor agreement that do not 

surface until some time after the change 

of ownership. The Secretary must 

ensure that there is a party to the plan 

sponsor agreement that can satisfy those 

obligations, which may include the 

return of program reimbursement. The 

new owner to whom a sponsor 

agreement is assigned is subject to all 

applicable statutes, regulations, and 

guidance, and to the terms and 

conditions of the sponsor agreement. 

Failure to notify the Secretary at least 60 

days before the anticipated effective 

date of the change may result in the 

Secretary recovering funds paid under 

the program. 

III. Waiver of Proposed Rulemaking 

and Delay in Effective Date 

A. Waiver of Notice-and-Comment 

Procedure 

We ordinarily publish a notice of 

proposed rulemaking in the Federal 

Register and invite public comment on 

the proposed rule. The notice of 

proposed rulemaking includes a 

reference to the legal authority under 

which the rule is proposed, and the 

terms and substances of the proposed 

rule or a description of the subjects and 

issues involved. This procedure can be 

waived under section 553(b)(3)(B) of the 

Administrative Procedure Act, however, 

if an agency finds good cause that 

notice-and-comment procedure is 

impracticable, unnecessary, or contrary 

to the public interest and incorporates a 

statement of the finding and its reasons 

in the rule issued. Below, we discuss 

our reasons for the waiver of notice-andcomment procedure. 

Section 1102(a)(1) of the Affordable 

Care Act requires the Secretary, not later 

than 90 days after enactment of the Act, 

to establish a temporary Early Retiree 

Reinsurance Program. The Affordable 

Care Act was enacted on March 23, 

2010, which means that the Secretary 

must implement the Early Retiree 

Reinsurance Program by June 21, 2010. 

We believe this is insufficient time for 

notice-and-comment rulemaking. The 

90 days Congress specified does not 

allow for development of the rule, a 

meaningful public comment period, and 

agency analysis of, and response to, 

those comments before this rule can be 

made final. Moreover, we need to 

actually establish a temporary Early 

Retiree Reinsurance Program—not 

simply issue this interim final rule—by 

June 1, 2010, in order to align the 

effective date of the program with some 

sponsors’ plan year start dates and to 

simplify accounting for sponsors and 

the Secretary, as is discussed below. We 

must finalize this rule in order to take 

the multiple other steps necessary to 

establish the program. Within the time 

frame contemplated in the statute, we 

need to have regulations effective in 

time for applicants to be able to review 

them and begin to put together their 

information so that they can apply (once 

the application process is finalized). 

The application process cannot be 

finalized until the regulations are close 

to being finalized in this Interim Final 

Rule. Furthermore, the Secretary needs 

to have established the rules by which 

she is going to implement this program 

so that she can move forward with 

actually administering it, which 

includes contracting with a contractor to 

aid with administering the program. The 

regulations have to be close to finalized 

before the Secretary can draft a 

comprehensive scope of work for the 

contract that will be issued to aid the 

Secretary with administering this 

program. 

Therefore, we find good cause to 

waive the notice of proposed 

rulemaking and to issue this final rule 

on an interim basis without prior 

comment. While we are not providing 

prior comment, we are providing a 30- 

day public comment period. 

B. Waiver of Delay of Effective Date 

In addition, section 553(d) of the APA 

ordinarily requires that a regulation be 

effective no earlier than 30 days after 

publication. Under section 553(d)(3) 

this requirement can be waived for good 

cause. 

As explained above, Section 

1102(a)(1) of the Affordable Care Act 

requires the Secretary to establish the 

Early Retiree Reinsurance Program by 

June 21, 2010. In order to better align 

the effective date of some sponsors’ plan 

and/or fiscal years with the effective 

date of the program, to allow sponsors 

to be credited for claims starting at the 

beginning of a month in order to 

simplify accounting for sponsors and 

the Secretary, and to allow sponsors to 

be credited for claims incurred before 

June 21, 2010, we need to actually 

establish the program—not simply issue 

this Interim Final Rule—by June 1, 

2010, as opposed to June 21, 2010. As 

a result, we find good cause to waive the 

30-day delay in effective date that 

would otherwise apply under section 

553(d) of the Administrative Procedure 

Act (APA) for this rule implementing 

the Early Retiree Reinsurance Program. 

This Interim Final Rule will become 

effective on June 1, 2010. 

In addition, 5 U.S.C. 801 generally 

requires that agencies submit major 

rules to the Congress 60 days before the 

rules are scheduled to become effective. 

This delay does not apply, however, 

when there has been a finding of good 

cause for waiver of prior notice and 

comment as set forth above. 

IV. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 30- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

3506(c)(2)(A) of the Paperwork 

Reduction Act of 1995 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 are soliciting public comment on 

each of these issues for the following 

sections of this document that contain 

information collection requirements 

(ICRs). 

A. ICRs Regarding Requirements To 

Participate (§ 149.35) 

Section 149.35(b)(1) requires plan 

sponsors to make available 

documentation, data, and other 

information related to this part and any 

other records specified by the Secretary, 

as stated in § 149.350. The burden 

associated with this requirement is 

detailed in our discussion of § 149.350. 

Section 149.35(b)(2) states that a plan 

sponsor must have a written agreement 

with its health insurance issuer (as 

defined in 45 CFR 160.103) or 

employment-based plan (as applicable) 

regarding disclosure of information, 

data, documents, and records to the 

Secretary, and the health insurance 

issuer or employment-based plan must 


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disclose to the Secretary, on behalf of 

the sponsor, the information necessary 

for the sponsor to comply with the 

program, this part, and program 

guidance. The burden associated with 

this requirement is the time and effort 

necessary for a plan sponsor to develop, 

sign, and maintain the aforementioned 

written agreement with its health 

insurance issuer or employment-based 

plan. We estimate that it will take 1 

hour to develop, sign, and maintain one 

such written agreement. We also 

estimate that each plan sponsor on 

average will need to maintain and sign 

3 such agreements. Using the RDS 

Program as a baseline, we estimate that 

4,500 Early Retiree Reinsurance 

Program plan sponsors must comply 

with this requirement. The estimated 

annual burden associated with this 

requirement is 13,500 hours. The 

estimate cost of compliance with this 

requirement is $1,005,885, for the first 

year of the program. For the subsequent 

four years, we estimate that roughly 

one-quarter of the 4,500 sponsors 

(1,125) will contract with one different 

entity each year to disclose information, 

data, etc., to the Secretary. For each of 

those years, the estimated cost of 

compliance with this requirement is 

$83,824. 

Section 149.35(b)(3) requires plan 

sponsors to have procedures to protect 

against fraud, waste and abuse under 

this program, and must comply timely 

with requests from the Secretary to 

produce the procedures and any 

documents or data to substantiate the 

implementation of the procedures and 

their effectiveness. Additionally, 

§ 149.35(b)(5) requires plan sponsors to 

comply timely with requests from the 

Secretary to produce the procedures and 

any documents or data to substantiate 

the implementation of the procedures 

and their effectiveness. The burden 

associated with the requirements in 

§ 149.35(b)(3) is the time and effort 

necessary to develop, implement, and 

maintain procedures to protect against 

fraud, waste and abuse under this 

program. There is also burden 

associated with producing the 

procedures and any supporting 

documentation up request by the 

Secretary. We estimate that it will take 

20 hours for each plan sponsor or 

designee to develop, implement and 

maintain one set of such policies and 

procedures. We also estimate that with 

respect to each plan sponsor, an average 

of three separate sets of policies and 

procedures will have to be developed, 

implemented and maintained, to 

account for the fact that many sponsors 

will have multiple benefit options, each 

using a different entity that is 

submitting claims to the program on 

their behalf. However, we estimate that 

one-third of the 4,500 expected plan 

sponsors will be contracting with 

entities that submit claims to the 

program that already have fraud, waste 

and abuse programs and procedures in 

place. Therefore, we estimate that 3,000 

plan sponsors will have to newly 

develop, implement, and maintain such 

program and procedures. The estimated 

annual burden for these requirements is 

20 hours per set of fraud, waste and 

abuse procedures. The estimated cost 

associated with this requirement is 

$9,982,800 for the first year of the 

program. For the subsequent four years 

of the program, we estimate that roughly 

one quarter of the estimated 4,500 

sponsors (roughly 1,125) will contract 

with one new entity each year, to 

submit claims to the program on the 

sponsor’s behalf. For each of those 

years, the estimated annual burden 

associated with this burden is 1,125 

sponsors multiplied by 20 hours, or 

22,500 hours, with estimated costs equal 

to $1,247,850. 

Section 149.35(b)(4) also requires plan 

sponsors to submit an application to the 

Secretary in the manner, and at the 

time, required by the Secretary, as 

specified in § 149.40. The burden 

associated with this requirement is 

detailed in our discussion of § 149.40. 

B. ICRs Regarding Application 

(§ 149.40) 

Section 149.40 discusses the 

application process for the early retiree 

reinsurance program. As stated in 

§ 149.40(a) requires an applicant to 

submit an application to participate in 

this program to the Secretary, which is 

signed by an authorized representative 

of the applicant who certifies that the 

information contained in the 

application is true and accurate to the 

best of the authorized representative’s 

knowledge and belief. Section 149.40(e) 

states that an applicant must submit an 

application for each plan for which it 

will submit a reimbursement request. 

Furthermore, as part of the application 

process, every application must be 

accompanied by the information listed 

in § 149.40(f). 

The burden associated with the 

requirements in this section is the time 

and effort necessary for a plan sponsor 

or its designee to complete an 

application for each plan for which it 

will submit a reimbursement request. In 

addition, there is burden associated 

with compiling and submitting the 

required ancillary information listed in 

§ 149.40(f). We estimate that the 

program will receive an average of 1 

application each, from 4,500 plan 

sponsors or their designees. We further 

estimate that it will take 35 hours for a 

plan sponsor or designee to complete 

one application package. The total 

estimated annual burden associated 

with this requirement is 157,500 hours. 

The total estimated annual cost 

associated with this requirement is 

$8,820,675. This is a one-time burden, 

as sponsors are not required to submit 

a new application for each plan year. 

C. ICRs Regarding Documentation of 

Actual Costs of Medical Claims Involved 

(§ 149.335) 

Section § 149.335 requires that 

sponsors must submit claims, with each 

submission consisting of a list of early 

retirees for whom claims are being 

submitted, and documentation of the 

actual costs of the items and services for 

each claim being submitted. These 

material must be submitted in a form 

and manner specified by the Secretary. 

Additionally, in order for a sponsor to 

receive reimbursement for the portion of 

a claim that an early retiree paid, the 

sponsor must submit prima facie 

evidence that the early enrollee paid his 

or her portion of the claim. The burden 

associated with the requirements in this 

section is the time and effort necessary 

for sponsors to assemble and submit the 

aforementioned information. We 

estimate that it will take each sponsor 

an average of 45 hours to comply with 

these requirements, with the number of 

hours varying based upon the number of 

early retirees for whom claims are 

submitted, the number of claims, the 

technology used to generate the required 

information, etc. We estimate that each 

of the 4,500 participating sponsors will 

make two submissions annually. The 

total estimated annual burden 

associated with this requirement is 

405,000 hours. The total estimated 

annual cost associated with these 

requirements is $15,758,550. 

D. ICRs Regarding Maintenance of 

Records (§ 149.350) 

Section 149.350(a) requires the 

sponsor of the certified plan (or a 

subcontractor, as applicable) must 

maintain and furnish to the Secretary, or 

its designee, upon request the records as 

specified in § 149.350(b). The records 

must be maintained for 6 years after the 

expiration of the plan year in which the 

costs were incurred, or longer if 

otherwise required by law. Similarly, as 

required by § 149.350(d), the sponsor 

must require its health insurance issuer 

or employment-based plan, as 

applicable, to maintain and produce 

upon request records to satisfy 

subparagraph (c) of this regulation. The 


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burden associated with the 

requirements in this section is the time 

and effort necessary to retain the 

specified records. We estimate that each 

of the estimated 4,500 sponsors will 

require 6 hours to retain the records. 

The total estimated annual burden 

associated with this requirement is 

27,000 hours. The total estimated 

annual cost associated with this 

requirement is $1,050,570. 

E. ICRs Regarding Appeals (§ 149.500 

and § 149.510) 

Section 149.500(d) states that if a 

sponsor appeals an adverse 

reimbursement determination, the 

sponsor must submit the appeal in 

writing to the Secretary within 15 days 

of receipt of the determination. Section 

149.510 requires a request for appeal to 

specify the findings or issues with 

which the sponsor disagrees and the 

reasons for the disagreements. In 

addition, the request for appeal may 

include supporting documentary 

evidence the sponsor wishes the 

Secretary to consider. The burden 

associated with the aforementioned 

requirements is the time and effort 

necessary for a sponsor to draft and 

submit an appeal, including supporting 

documentation. While this requirement 

is subject to the PRA, we believe the 

associated burden is exempt under 5 

CFR 1320.4. In this case, the 

information associated with an appeal 

would be collected subsequent to an 

administrative action, that is, an adverse 

reimbursement determination or an 

application denial. 

F. ICRs Regarding Sponsor’s Duty To 

Report Data Inaccuracies (§ 149.600) 

Section 149.600 requires a sponsor to 

disclose any data inaccuracies on which 

a reimbursement request has been made, 

including inaccurate claims data and 

negotiated price concessions, in a 

manner and at a time specified by the 

Secretary in guidance. The burden 

associated with this requirement is the 

time and effort necessary for a sponsor 

to comply with the reporting 

requirement. We estimate that 1,500 

sponsors annually will be subject to this 

requirement, and that burden associated 

with this requirement is 32 hours per 

sponsor (two disclosures per year per 

sponsor, each disclosure having an 

estimated burden of 16 hours). The 

estimated annual burden associated 

with this requirement is 48,000 hours. 

The total estimated annual cost 

associated with this burden is 

$1,867,680. 

G. ICRs Regarding Change of Ownership 

Requirements (§ 149.700) 

Section 149.700(c) requires a sponsor 

that has a sponsor agreement in effect 

under this part and is considering or 

negotiating a change in ownership to 

notify the Secretary at least 60 days 

before the anticipated effective date of 

the change. The burden associated with 

the requirement is the time and effort 

necessary for a sponsor to comply with 

the reporting requirement. Based on our 

experience with the RDS Program, we 

estimate that it will take each sponsor 

an average of 1 hour to comply with 

these requirements, and that 50 

sponsors per year will be subject to this 

requirement. The total estimated annual 

burden associated with this requirement 

is 50 hours. The total estimated annual 

cost associated with these requirements 

is $2,773. 

All of the information collection 

requirements containing burden were 

submitted to the Office of Management 

and Budget (OMB) for emergency 

review and approval as part of a single 

information collection request (ICR). As 

part of the emergency review and 

approval process, OMB waived the 

notification requirements. The ICR was 

approved under OMB control number 

0938–1087 with an expiration date of 

October 31, 2010. However, we are still 

seeking public comments on the 

information collection requirements 

discussed in this interim final rule with 

comment. All comments will be 

considered as we continue to develop 

the ICR as we must resubmit the ICR to 

obtain a standard 3-year approval. 

TABLE 1—ANNUAL RECORDKEEPING AND REPORTING BURDEN

Regulation section OMB Control No. 

Respondents Responses 

Time per response 

(hours) 

Total burden 

(hours) 

Hourly labor 

cost ($) 

Total labor 

cost ($) 

Total 

capital/ 

maintenance cost 

($) 

Total cost 

($) 

§ 149.35(b)(2) ............................ 0938–1087 4,500 13,500 1 13,500 74.51 1,005,885 0 1,005,885 

1,125 1,125 1 1,125 74.51 83,824 0 83,824 

§ 149.35(b)(3) ............................ 0938–1087 3,000 9,000 20 180,000 55.46 9,982,800 0 9,982,800 

1,125 1,125 20 22,500 55.46 1,247,850 0 1,247,850 

§ 149.40 ..................................... 0938–1087 4,500 4,500 35 157,500 ** 8,820,675 0 8,820,675 

§ 149.335 ................................... 0938–1087 4,500 9,000 45 405,000 38.91 15,758,550 0 15,758,550 

§ 149.350 ................................... 0938–1087 4,500 4,500 6 27,000 38.91 1,050,570 0 1,050,570 

§ 149.600 ................................... 0938–1087 1,500 3,000 16 48,000 38.91 1,867,680 0 1,867,680 

§ 149.700(c) ............................... 0938–1087 50 50 1 50 55.46 2,773 0 2,773 

Total ................................... .................... 11,300 45,800 .................... 854,675 .................... .................... .................... 39,820,607 

**$74.51 per hour for 1 hour per response, $55.46 per hour for 34 hours per response. 

If you comment on these information 

collection and recordkeeping 

requirements, please do either of the 

following: 

1. Submit your comments 

electronically as specified in the 

ADDRESSES section of this proposed rule; 

or 

2. Submit your comments to the 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Attn: CMS Desk Officer, CMS– 

9996–IFC, fax (202) 395–6974, or via 

email OIRA_submission@omb.eop.gov. 

V. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

VI. Regulatory Impact Analysis 

A. Overall Impact 

We have examined the impacts of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993), the 

Regulatory Flexibility Act (RFA) 

(September 19, 1980, Pub. L. 96–354), 

section 1102(b) of the Social Security 

Act, section 202 of the Unfunded 


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Mandates Reform Act of 1995 (Pub. L. 

104–4), Executive Order 13132 on 

Federalism (August 4, 1999), and the 

Congressional Review Act (5 U.S.C. 

804(2)). 

Executive Order 12866 directs 

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). A regulatory impact 

analysis (RIA) must be prepared for 

major rules with economically 

significant effects ($100 million or more 

in any 1 year). This rule will be 

economically significant because it sets 

out the requirements that sponsors will 

need to meet in order to participate in 

the Early Retiree Reinsurance Program 

and obtain a portion of the $5 billion the 

Congress appropriated for this program. 

While a small portion of the funds will 

be used to administer the program, the 

remainder of the $5 billion will be paid 

to eligible sponsors over the life of the 

program, resulting in economically 

significant net positive transfers to 

sponsors. We believe that the costs 

imposed on sponsors that want to 

receive the early retiree reimbursement 

will not be significant relative to the 

payments received. The costs will 

consist of staff or contractor time to 

complete the application to participate, 

to file claims for reimbursement, and to 

comply with program requirements 

such as any requests related to an audit, 

as well as any supplies necessary to 

perform these tasks summarized in 

Table 1 above. As a result this 

rulemaking is ‘‘economically significant’’ 

as measured by the $100 million 

threshold, and hence also a major rule 

under the Congressional Review Act. 

Accordingly, we have prepared a 

regulatory impact analysis that to the 

best of our ability presents the costs and 

benefits of the rulemaking. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses, if a rule has a significant 

impact on a substantial number of small 

entities. According to the Kaiser Family 

Foundation and Health Research & 

Educational Trust’s 2009 Employer 

Health Benefits Survey, 5 percent of 

surveyed businesses with 3 to 199 

workers offered retiree health benefits. 

See pg. 166 of the Survey. http:// 

ehbs.kff.org/pdf/2009/7936.pdf. It is 

unclear how many offered health 

benefits to early retirees, but since there 

were about 3.3 million such firms (page 

15 of the survey), even if only 5 percent 

provided such benefits, over 150,000 

such firms would be eligible for the 

program. However, we estimate that the 

number of sponsors that will actually 

participate in the Early Retiree 

Reinsurance Program, will be similar to 

the number that participate in the 

Retiree Drug Subsidy Program. For 

purposes of the RFA, we estimate that 

5 percent of sponsors are small entities 

as that term is used in the RFA 

(including small businesses, nonprofit 

organizations, and small governmental 

jurisdictions). Ultimately, the number of 

small businesses affected will depend 

upon how many small businesses apply 

for the reimbursement, which we do not 

currently know. What we do know is 

that we have made, and will make, the 

application and claims submission 

processes as simple as possible, while 

still protecting the integrity of the 

program. Therefore, if small businesses 

want to participate, they may do so. 

Turning to small business providers, 

the great majority of hospitals and most 

other health care providers and 

suppliers are small entities, either by 

being nonprofit organizations or by 

meeting the Small Business 

Administration (SBA) definition of a 

small business (having revenues of less 

than $7.0 million to $34.5 million in 

any 1 year). While this rule does not 

directly impact providers (unless they 

apply to be sponsors), it does increase 

access to health insurance, which may 

then cause more individuals to be able 

to afford health care and therefore be 

able to utilize providers’ services and 

products more often. Therefore, health 

care providers may see an increase in 

patients and may not be required to 

deliver health care free of charge or at 

reduced rates in as many instances as 

they may currently do. 

Because much of the effect on health 

care providers depends upon where 

plan participants choose to receive these 

services, which must be from a provider 

that accepts the plan participant’s 

coverage, the term ‘‘health care 

provider’’ is likely to include health care 

entities operated by small governmental 

entities such as counties or towns. 

Small governmental health care entities 

may include county hospitals, clinics or 

other such entities. Regardless of the 

entity, we expect a positive effect on 

these entities. For purposes of the RFA, 

a significant number of health care 

providers indirectly affected by the 

program are considered small 

businesses according to the SBA’s size 

standards with total revenues of $7 

million to $34.5 million or less in any 

1 year and an undetermined percent are 

nonprofit organizations. Individuals and 

States are not included in the definition 

of a small entity. Uncertainty arises 

because we do not know how many 

small businesses or other small entities 

will apply to participate in the Early 

Retiree Reinsurance Program, nor do we 

know how the increased access to 

health insurance will affect small 

businesses that provide health care 

services and products to the participants 

affected by the program. We believe, 

however, that this interim final rule will 

have a significant positive economic 

effect on a substantial number of small 

businesses. The HHS interpretation of 

the Regulatory Flexibility Act has 

historically been that it does not trigger 

a regulatory flexibility analysis as a 

result of positive economic impacts (the 

statute requires that economic impacts 

be minimized, which makes no sense 

when applied to positive effects). The 

Department nonetheless usually 

prepares a voluntary regulatory 

flexibility analysis in such 

circumstances. In addition, because a 

regulatory flexibility analysis is only 

required for rules for which an NPRM 

must be prepared, there is an additional 

exemption that applies to this rule. 

Accordingly, we conclude that a 

regulatory flexibility analysis is not 

required. Nonetheless, we believe that 

this regulatory impact section, together 

with the remainder of the preamble, 

constitutes a voluntary analysis that 

meets the requirements that would 

otherwise be applicable. 

In addition, section 1102(b) of the Act 

requires us to prepare a regulatory 

impact analysis if a rule may have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. For purposes of section 

1102(b) of the Act, we define a small 

rural hospital as a hospital that is 

located outside of a metropolitan 

statistical area and has fewer than 100 

beds. We do not believe this rule will 

have a significant impact on the 

operations of a substantial number of 

small rural hospitals because the 

increased access to health insurance, 

while positively affecting small rural 

hospitals’ ability to collect payment for 

services rendered to plan participants 

affected by the program, will be unlikely 

to increase revenues in an economically 

significant amount. Therefore, the 

Secretary has determined that this 

interim final rule will not have a 

significant impact on the operations of 

a substantial number of small rural 

hospitals. In addition, such an analysis 

is not required when an NPRM is not 

required, as in this case. 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

also requires that agencies assess 

anticipated costs and benefits before 

issuing any rule whose mandates 

required spending in any 1 year of $100 


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million in 1995 dollars, updated 

annually for inflation. In 2010, that 

threshold is approximately $135 

million. This rule does not mandate any 

spending by State, local, or tribal 

governments in the aggregate, or by the 

private sector. In fact, participation in 

the program is voluntary and for all 

sponsors participating, we expect in the 

aggregate that sponsors will receive $5 

billion in reimbursement, less 

administrative costs. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

This rule will not have a substantial 

direct effect on State or local 

governments, preempt State laws, or 

otherwise have a Federalism 

implication. 

B. Need for Regulatory Action 

As previously discussed, the 

Affordable Care Act, includes this 

provision that establishes the temporary 

Early Retiree Reinsurance Program. 

Section 1102(a)(1) requires the Secretary 

to establish the program within 90 days 

of enactment of the law, which is June 

21, 2010. This interim final rule is 

necessary to implement this program by 

the statutory deadline. The program is 

designed to assist people in the early 

retiree age group who often face 

difficulties obtaining insurance in the 

individual market because of advanced 

age or chronic conditions that make 

coverage unaffordable and inaccessible. 

The Early Retiree Reinsurance Program 

will provide financial help for 

employer-based plans to continue to 

provide coverage to plan participants, 

and provides financial relief to plan 

participants. 

C. Anticipated Effects 

1. Effects on Plan Sponsors 

This rule will positively affect 

employers and employee organizations 

that self-fund health benefits or pay 

premiums to insure their early retirees’ 

health benefits. The amount of the 

effects depends upon the sponsors’ 

determination of the use of the 

reimbursement. Thus the positive effect 

will range from negligible if they use the 

reimbursement almost exclusively for 

plan participants’ costs to just under $5 

billion, minus the administrative costs 

of this program if they maximize the 

amount of reimbursement used to lower 

plan costs. 

2. Effects on Plan Participants 

We believe that this rule will have a 

positive effect on plan participants. We 

believe that the program will encourage 

sponsors to maintain coverage that they 

might not otherwise maintain, and will 

lower health benefit costs for plan 

participants and sponsors. With access 

to insurance, we believe, that plan 

participants will access health care as 

needed, instead of delaying a health 

care encounter until the condition 

progresses to a point when an encounter 

is unavoidable (and then more severe 

and expensive). Furthermore, we 

believe plan participants will not incur 

as much debt due to health care costs. 

The amount of the effects depends upon 

the sponsors’ determination of the use 

of the reimbursement. Thus, the positive 

effect will range from moderate if 

sponsors use almost all of the 

reimbursement for sponsors’ costs (in 

this case, the lower costs to the sponsor 

encourages continued provision of 

retiree coverage, which is of benefit to 

the retiree) to nearly $5 billion, minus 

administrative costs, if sponsors use the 

reimbursement almost exclusively to 

lower plan participants’ costs. 

3. Effects on Other Providers 

We expect this rule to have an 

indirect positive effect on providers 

because more individuals will have 

access to health insurance, which will 

cause these individuals to seek health 

care when needed, as may not be the 

case currently, and health care 

providers will be able to receive 

payment for services provided. It is a 

two-fold benefit. Providers may have 

more patients and more of the patients 

will be able to pay for the services or 

products provided, whether directly (for 

example, co-insurance or co-payment) 

or via their insurance. 

4. Effects on the Medicare and Medicaid 

Programs 

This rule does not impose any 

consequential costs on Medicare or 

Medicaid. While sponsors may only 

submit claims for reimbursement for 

early retirees and early retirees’ spouses, 

surviving spouses or dependents, the 

reimbursements paid to a sponsor must 

be used to lower costs for all plan 

participants, which may include 

enrollees who also have Medicare 

coverage. Other than increased 

utilization of health care services or 

products for plan participants that are 

covered by a certified plan, we do not 

expect any notable impact on Medicare. 

We expect the impact due to increased 

utilization to be minimal. 

This rule may in fact lessen the 

number of individuals on Medicaid, or 

slow any growth in numbers of 

individuals eligible for Medicaid, 

because sponsors that are considering 

dropping health insurance for early 

retirees or plan participants may decide 

otherwise, once the sponsor becomes 

eligible for the program. Furthermore, it 

is possible that employers may decide to 

offer health insurance to early retirees 

because of the program. 

D. Alternatives Considered 

With respect to implementing this 

program, there is no alternative. The 

Congress requires that the program be in 

effect not later than 90 days after the 

enactment of the bill. The statute was 

enacted March 23, 2010. With respect to 

the application process, we considered 

numerous requirements as to what we 

would need in order to protect the 

integrity of the program, but ultimately 

settled on the requirements in the 

regulation. We had originally 

considered requiring an attestation from 

a qualified actuary, certifying that the 

sponsor’s estimate of projected costs is 

reasonable. We decided against this 

requirement because the projection was 

merely for the purpose of letting us 

know if and when we should stop 

taking applications. Weighing the 

expense of requiring a sponsor to pay an 

actuary to make the certification against 

the benefit the certification would 

provide, we decided not to require this 

because we want this program to be as 

inclusive as possible. 

We also considered how best to 

implement the provision relating to 

participants with chronic and high-cost 

conditions. We considered identifying 

specific conditions in sub-regulatory 

guidance but decided that such a policy 

would ultimately work against the goals 

of the program because we would not be 

able to do a comprehensive analysis to 

identify them in the time allotted to 

implement this program. Furthermore, 

because many sponsors’ plans were 

initiated before the effective date of the 

statute and any guidance we may have 

developed, sponsors that covered what 

they think are chronic and high-cost 

conditions, but which we did not 

identify as such, would have been 

penalized. Because this is supposed to 

be an inclusive program, we defined the 

term ‘‘chronic and high-cost conditions’’ 

to be any condition for which the plan 

is likely to incur health benefits costs of 

at least $15,000 for any one plan 

participant in a plan year. If a sponsor 

has programs and procedures that have 

generated or have the potential to 

generate cost savings in place to address 


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any such conditions, it will meet the 

requirement. 

Ultimately, the approach we took in 

these regulations is intended to balance 

the need to protect the integrity of the 

program with the inclusive nature of the 

program. 

E. Accounting Statement and Table 

Whenever a rule is considered an 

economically significant rule under 

Executive Order 12866, we are required 

to develop an Accounting Statement. 

We have prepared an accounting 

statement below (Table 2) showing the 

classification of the expenditures 

associated with the provisions of this 

interim final rule. 

The terminology from this table may 

be interpreted as follows: 

1. Annualized—means to determine 

cost/benefits on a yearly basis as 

opposed to quarterly. This would 

include both start-up and ongoing costs 

amortized over the number of years 

used in the RIA. Due to the uncertainty 

in estimating these costs/benefits we 

have estimated the amortization equally 

over the 4 years 2010 through 2013. 

2. Monetized—means to develop 

quantitative estimates and convert them 

to dollar amounts, if possible. 

3. Qualitative Benefits and Costs— 

means to categorize or rank the 

qualitative effects in terms of their 

importance (for example, certainty, 

likely magnitude, and reversibility). 

4. Effects—means the effects on 

Medicare/Medicaid program, 

beneficiaries, and health care facilities, 

taken from the impact analysis. (We 

note that regulations with annual costs 

that are less than one billion dollars are 

likely to have a minimal effect on 

economic growth.) 

5. All quantitative estimates must be 

presented as discounted flows using 3 

percent and 7 percent factors. 

TABLE 2—ACCOUNTING STATEMENT

Category Primary estimate Year dollars Discount rate Period 

covered 

Source citation (RIA, 

preamble, etc.) 

BENEFITS 

Annualized monetized 

benefits (in millions of 

dollars per year).

Not estimated.

COSTS 

Annualized monetized 

costs (in millions of 

dollars per year).

39.8 .............................. 2010 ............................. 7% ................................ 2010–2013 Paperwork Reduction 

Act Burden in Preamble. 

39.8 .............................. 2010 ............................. 3% ................................

TRANSFERS 

Annualized monetized 

transfers: ‘‘on budget’’ 

(in millions of dollars 

per year).

$1,250 .......................... 2010 ............................. 7% ................................ 2010–2013 Statute. 

$1,250 .......................... 2010 ............................. 3% ................................

From whom to whom? .. From the Federal Government to eligible 

sponsors and for administration of the 

program including to 

contractors.

From the Federal Government to eligible 

sponsors and for administration of the 

program including to 

contractors.

From the Federal Government to eligible 

sponsors and for administration of the 

program including to 

contractors.

......................

Category Effects *Source Citation 

(RIA, preamble, etc.). 

Effects on State, local, 

and/or tribal governments.

Positive, but currently 

unable to be determined.

...................................... ...................................... ...................... RIA. 

Effects on small businesses.Positive, but currently 

unable to be determined.

...................................... ...................................... ...................... RIA. 

E. Conclusion 

We used statistics from the RDS 

Program as a model because it has 

similar characteristics to the 

characteristics of this new Early Retiree 

Reinsurance Program, and, based on this 

model, we expect that approximately 

4,500 sponsors will apply to participate 

in the Early Retiree Reinsurance 

Program. Of those sponsors, we expect 

approximately 3,000 will be private 

entities and 1,500 will be State and local 

governments. Alternatively, the number 

of applicants could be substantially 

higher if small or other employers 

participate in this program in higher 

numbers than they did in the Retiree 

Drug Subsidy Program. Regardless, total 

spending cannot exceed the $5 billion 

appropriated for this program over the 

four-year period. While some of the 

funds allotted for the program are 

required to be used to implement the 

program, we anticipate an overall 

positive transfer of $5 billion to eligible 

sponsors (and indirectly a portion of 

those funds will be transferred for the 

benefit of plan participants), less 

administrative costs. The analysis 

above, together with the remainder of 

this preamble, provides a regulatory 

impact analysis and meets the 


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requirements for a Final Regulatory 

Flexibility Analysis. 

In accordance with the provisions of 

Executive Order 12866 the Office of 

Management and Budget reviewed this 

regulation. 

List of Subjects in 45 CFR Part 149 

Administrative practice and 

procedure, Health care, Health 

insurance, Penalties, Reporting and 

recordkeeping requirements. 

■ For the reasons set forth in the 

preamble, the Department of Health and 

Human Services amends 45 CFR subtitle 

A, subchapter B, by adding a new part 

149 to read as follows: 

PART 149—REQUIREMENTS FOR THE 

EARLY RETIREE REINSURANCE 

PROGRAM 

Subpart A—General Provisions 

Sec. 

149.1 Purpose and basis. 

149.2 Definitions. 

Subpart B—Requirements for Eligible 

Employment-based Plans 

149.30 General requirements. 

149.35 Requirements to participate. 

149.40 Application. 

149.41 Consequences of Non-Compliance, 

Fraud, or Similar Fault 

149.45 Funding limitation. 

Subpart C—Reinsurance Amounts 

149.100 Amount of reimbursement. 

149.105 Transition provision. 

149.110 Negotiated price concessions. 

149.115 Cost threshold and cost limit. 

Subpart D—Use of Reimbursements 

149.200 Use of reimbursements. 

Subpart E—Reimbursement Methods 

149.300 General reimbursement rules. 

149.310 Timing. 

149.315 Reimbursement conditioned upon 

available funds. 

149.320 Universe of claims that must be 

submitted. 

149.325 Requirements for eligibility of 

claims. 

149.330 Content of claims. 

149.335 Documentation of costs of actual 

claims involved. 

149.340 Rule for insured plans. 

149.345 Use of information provided. 

149.350 Maintenance of records. 

Subpart F—Appeals 

149.500 Appeals. 

149.510 Content of request for appeal. 

149.520 Review of appeals. 

Subpart G—Disclosure of Inaccurate Data 

149.600 Sponsor’s duty to report data 

inaccuracies. 

149.610 Secretary’s authority to reopen and 

revise reimbursement determination 

amounts. 

Subpart H—Change of Ownership 

Requirements 

149.700 Change of ownership requirements. 

Authority: Section 1102 of the Patient 

Protection and Affordable Care Act (Pub. L. 

111–148). 

Subpart A—General Provisions 

§ 149.1 Purpose and basis. 

This part implements the Early 

Retiree Reinsurance Program, as 

required by section 1102 of the Patient 

Protection and Affordable Care Act 

(Pub. L. 111–148). 

§ 149.2 Definitions. 

For purposes of this part, the 

following definitions apply: 

Authorized representative means an 

individual with legal authority to sign 

and bind a sponsor to the terms of a 

contract or agreement. 

Benefit option means a particular 

benefit design, category of benefits, or 

cost-sharing arrangement offered within 

an employment-based plan. 

Certified means that the sponsor and 

its employment-based plan or plans 

meet the requirements of this part and 

the sponsor’s application to participate 

in the program has been approved by 

the Secretary. 

Chronic and high-cost condition 

means a condition for which $15,000 or 

more in health benefit claims are likely 

to be incurred during a plan year by one 

plan participant. 

Claim or medical claim means 

documentation, in a form and manner to 

be specified by the Secretary, indicating 

the health benefit provided, the 

provider or supplier, the incurred date, 

the individual for whom the health 

benefit was provided, the date and 

amount of payment net any known 

negotiated price concessions, and the 

employment-based plan and benefit 

option under which the health benefit 

was provided. The terms claim or 

medical claim include medical, 

surgical, hospital, prescription drug and 

other such claims as determined by the 

Secretary. 

Early retiree means a plan participant 

who is age 55 and older who is enrolled 

for health benefits in a certified 

employment-based plan, who is not 

eligible for coverage under title XVIII of 

the Act, and who is not an active 

employee of an employer maintaining, 

or currently contributing to, the 

employment-based plan or of any 

employer that has made substantial 

contributions to fund such plan. In this 

part, the term early retiree also includes 

the enrolled spouse, surviving spouse, 

and dependents of such individuals. 

The determination of whether an 

individual is not an active employee is 

made by the sponsor in accordance with 

the rules of its plan. For purposes of this 

subpart, however, an individual is 

presumed to be an active employee if, 

under the Medicare Secondary Payer 

rules in 42 CFR 411.104 and related 

guidance published by the Centers for 

Medicare & Medicaid Services, the 

person is considered to be receiving 

coverage by reason of current 

employment status. This presumption 

applies whether or not the Medicare 

Secondary Payer rules actually apply to 

the sponsor. For this purpose, a sponsor 

may also treat a person receiving 

coverage under its employment-based 

plan as a dependent in accordance with 

the rules of its plan, regardless of 

whether that individual is considered a 

dependent for Federal or state tax 

purposes. For purposes of this 

definition of early retiree, an employer 

maintaining, or currently contributing 

to, the employment-based plan or any 

employer that has made substantial 

contributions to fund such plan, means 

a plan sponsor (as defined in this 

section). 

Employment-based plan means a 

group health plan as defined in this 

section of the regulation. 

Good cause means: 

(1) New and material evidence exists 

that was not readily available at the time 

the reimbursement determination was 

made; 

(2) A clerical error in the computation 

of the reimbursement determination was 

made by the Secretary; or 

(3) The evidence that was considered 

in making the reimbursement 

determination clearly shows on its face 

that an error was made. 

Group health plan means group 

health plan as defined in 42 CFR 

423.882 that provides health benefits to 

early retirees, but excludes Federal 

governmental plans. 

Health benefits means medical, 

surgical, hospital, prescription drug, 

and other benefits that may be specified 

by the Secretary, whether self-funded or 

delivered through the purchase of 

health insurance or otherwise. Such 

benefits include benefits for the 

diagnosis, cure, mitigation, or 

prevention of physical or mental disease 

or condition with respect to any 

structure or function of the body. Health 

benefits do not include benefits 

specified at 45 CFR 146.145(c)(2) 

through (4). 

Incurred means the point in time 

when the sponsor, health insurance 

issuer (as defined in 45 CFR 160.103), 

employment-based plan, plan 

participant, or a combination of these or 


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similar stakeholders, become 

responsible for payment of the claim. 

Negotiated price concession means 

any direct or indirect remuneration 

(including discounts, direct or indirect 

subsidies, charge backs or rebates, cash 

discounts, free goods contingent on a 

purchase agreement, up-front payments, 

coupons, goods in kind, free or reducedprice services, grants, or other price 

concessions or similar benefits) offered 

to some or all purchasers, which may 

include a sponsor, a health insurance 

issuer, or an employment-based plan) 

that would serve to decrease the costs 

incurred under the employment-based 

plan. 

Plan participant means anyone 

enrolled in an applicable plan including 

an early retiree, as defined in this 

section, a retiree, a retiree’s spouse and 

dependent, an active employee and an 

active employee’s spouse and 

dependent. 

Plan year means the year that is 

designated as the plan year in the plan 

document of an employment-based 

plan, except that if the plan document 

does not designate a plan year, if the 

plan year is not a 12-month plan year, 

or if there is no plan document, the plan 

year is: 

(1) The deductible or limit year used 

under the plan; 

(2) The policy year, if the plan does 

not impose deductibles or limits on a 

12-month basis; 

(3) The sponsor’s taxable year, If the 

plan does not impose deductibles or 

limits on a 12-month basis, and either 

the plan is not insured or the insurance 

policy is not renewed on a 12-month 

basis, or; 

(4) The calendar year, in any other 

case. 

Post point-of-sale negotiated price 

concession means any negotiated price 

concession that an employment-based 

plan or insurer receives with respect to 

a given health benefit, after making 

payment for that health benefit. 

Program means the Early Retiree 

Reinsurance Program established in 

section 1102 of the Patient Protection 

and Affordable Care Act. 

Secretary means the Secretary of the 

United States Department of Health & 

Human Services or the Secretary’s 

designee. 

Sponsor means a plan sponsor as 

defined in section 3(16)(B) of the 

Employee Retirement Income Security 

Act of 1974 (ERISA), 29 U.S.C. 

1002(16)(B), except that in the case of a 

plan maintained jointly by one 

employer and an employee organization 

and for which the employer is the 

primary source of financing, the term 

means the employer. 

Sponsor agreement means an 

agreement between the sponsor and the 

United States Department of Health & 

Human Services, or its designee, which 

is made to comply with the provisions 

of this part. 

Subpart B—Requirements for Eligible 

Employment-Based Plans 

§ 149.30 General requirements. 

A sponsor is eligible to participate in 

the program if it meets the requirements 

of section 1102 of the Patient Protection 

and Affordable Care Act, this part, and 

guidance developed by the Secretary. 

§ 149.35 Requirements to participate. 

(a) A sponsor’s employment-based 

plan must— 

(1) Be certified by the Secretary. 

(2) Include programs and procedures 

that have generated or have the 

potential to generate cost-savings with 

respect to plan participants with 

chronic and high-cost conditions. 

(b) A sponsor must— 

(1) Make available information, data, 

documents, and records as specified in 

§ 149.350. 

(2) Have a written agreement with its 

health insurance issuer (as defined in 45 

CFR 160.103) or employment-based 

plan (as applicable) regarding disclosure 

of information, data, documents, and 

records, to the Secretary, and the health 

insurance issuer or employment-based 

plan must disclose to the Secretary, on 

behalf of the sponsor, at a time and in 

a manner specified by the Secretary in 

guidance, the information, data, 

documents and records necessary for 

the sponsor to comply with the 

program, this part, and program 

guidance. 

(3) Ensure that policies and 

procedures to protect against fraud, 

waste and abuse under this program are 

in place, and must comply timely with 

requests from the Secretary to produce 

the policies and procedures and any 

documents or data to substantiate the 

implementation of the policies and 

procedures and their effectiveness. 

(4) Submit an application to the 

Secretary in the manner, and at the 

time, required by the Secretary as 

specified in § 149.40. 

§ 149.40 Application. 

(a) The applicant must submit an 

application to participate in this 

program to the Secretary, which is 

signed by an authorized representative 

of the applicant who certifies that the 

information contained in the 

application is true and accurate to the 

best of the authorized representative’s 

knowledge and belief. 

(b) Applications will be processed in 

the order in which they are received. 

(c) An application that fails to meet 

all the requirements of this part will be 

denied and the applicant must submit 

another application if it wishes to 

participate in the program. The new 

application will be processed based on 

when the new submission is received. 

(d) An applicant need not submit a 

separate application for each plan year 

but must identify in its application the 

plan year start and end date cycle 

(starting month and day, and ending 

month and day) for which it is applying. 

(e) An applicant must submit an 

application for each plan for which it 

will submit a reimbursement request. 

(f) In connection with each 

application the applicant must submit 

the following: 

(1) Applicant’s Tax Identification 

Number. 

(2) Applicant’s name and address. 

(3) Contact name, telephone number 

and email address. 

(4) Plan sponsor agreement signed by 

an authorized representative, which 

includes— 

(i) An assurance that the sponsor has 

a written agreement with its health 

insurance issuer (as defined in 45 CFR 

160.103) or employment-based plan, as 

applicable, regarding disclosure of 

information to the Secretary, and the 

health insurance issuer or employmentbased plan must disclose to the 

Secretary, on behalf of the sponsor, at a 

time and in a manner specified by the 

Secretary in guidance, information, 

data, documents, and records necessary 

for the sponsor to comply with the 

requirements of the program. 

(ii) An acknowledgment that the 

information in the application is being 

provided to obtain Federal funds, and 

that all subcontractors acknowledge that 

information provided in connection 

with a subcontract is used for purposes 

of obtaining Federal funds. 

(iii) An attestation that policies and 

procedures are in place to detect and 

reduce fraud, waste, and abuse, and that 

the sponsor will produce the policies 

and procedures, and necessary 

information, records and data, upon 

request by the Secretary, to substantiate 

existence of the policies and procedures 

and their effectiveness. 

(iv) Other terms and conditions 

required by the Secretary. 

(5) A summary indicating how the 

applicant will use any reimbursement 

received under the program to meet the 

requirements of the program, including: 

(i) How the reimbursement will be 

used to reduce premium contributions, 

co-payments, deductibles, coinsurance, 

or other out-of-pocket costs for plan 


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participants, to reduce health benefit or 

health benefit premium costs for the 

sponsor, or to reduce any combination 

of these costs; 

(ii) What procedures or programs the 

sponsor has in place that have generated 

or have the potential to generate cost 

savings with respect to plan participants 

with chronic and high-cost conditions; 

and 

(iii) How the sponsor will use the 

reimbursement to maintain its level of 

contribution to the applicable plan. 

(6) Projected amount of 

reimbursement to be received under the 

program for the first two plan year 

cycles with specific amounts for each of 

the two cycles. 

(7) A list of all benefit options under 

the employment-based plan that any 

early retiree for whom the sponsor 

receives program reimbursement may be 

claimed. 

(8) Any other information the 

Secretary requires. 

(g) An application must be approved, 

and the plan and the sponsor certified, 

by the Secretary before a sponsor may 

request reimbursement under the 

program. 

(h) The Secretary may reopen a 

determination under which an 

application had been approved or 

denied: 

(1) Within 1 year of the determination 

for any reason; 

(2) Within 4 years of the 

determination if the evidence that was 

considered in making the determination 

shows on its face that an error was 

made; or 

(3) At any time in instances of fraud 

or similar fault. 

§ 149.41 Consequences of NonCompliance, Fraud, or Similar Fault. 

Upon failure to comply with the 

requirements of this part, or if fraud, 

waste, and abuse, or similar fault are 

found, the Secretary may recoup or 

withhold funds, terminate or deny a 

sponsor’s application, or take a 

combination of these actions. 

§ 149.45 Funding limitation. 

(a) Based on the projected or actual 

availability of program funding, the 

Secretary may deny applications that 

otherwise meet the requirements of this 

part, and if an application is approved, 

may deny all or part of a sponsor’s 

reimbursement request. 

(b) The Secretary’s decision to stop 

accepting applications or satisfying 

reimbursement requests based on the 

availability of funding is final and 

binding, and is not appealable. 

Subpart C—Reinsurance Amounts 

§ 149.100 Amount of reimbursement. 

(a) For each early retiree enrolled in 

a certified plan in a plan year, the 

sponsor receives reimbursement in the 

amount of 80 percent of the costs for 

health benefits (net of negotiated price 

concessions for health benefits) for 

claims incurred during the plan year 

that are attributed to health benefits 

costs between the cost threshold and 

cost limit, and that are paid by the 

employment-based plan or by the 

insurer (if an insured plan), and by the 

early retiree. 

(b) Costs are considered paid by an 

early retiree, if paid by that individual 

or another person on behalf of the early 

retiree, and the early retiree (or person 

paying on behalf of the early retiree) is 

not reimbursed through insurance or 

otherwise, or other third party payment 

arrangement. 

(c) Reimbursement is calculated by 

first determining the costs for health 

benefits net of negotiated price 

concessions, within the applicable plan 

year for each early retiree, and then 

subtracting amounts below the cost 

threshold and above the cost limit 

within the applicable plan year for each 

such individual. 

(d) For purposes of determining 

amounts below the cost threshold and 

above the cost limit for any given early 

retiree, all costs for health benefits paid 

by the employment-based plan (or by 

the insurer, if applicable), or by or on 

behalf of, an early retiree, for all benefit 

options the early retiree is enrolled in 

with respect to a given certified 

employment-based plan for a given plan 

year, will be combined. For each early 

retiree enrolled in an employment-based 

plan, there is only one cost threshold 

and one cost limit per plan year 

regardless of the number of benefit 

options the early retiree is enrolled in 

during that plan year. 

§ 149.105 Transition provision. 

For a certified plan that has a plan 

year that begins before June 1, 2010 and 

ends on any date thereafter, the 

reinsurance amount for the plan year 

must be determined as follows: 

(a) With respect to claims incurred 

before June 1, 2010, the amount of such 

claims up to $15,000 count toward the 

cost threshold and the cost limit. The 

amount of claims incurred before June 

1, 2010 that exceed $15,000 are not 

eligible for reimbursement and do not 

count toward the cost limit. 

(b) The reinsurance amount to be paid 

is based only on claims incurred on and 

after June 1, 2010, that fall between the 

cost threshold and cost limit for the 

plan year. 

§ 149.110 Negotiated price concessions. 

(a) The amount of negotiated price 

concessions that will be taken into 

account in determining the reinsurance 

amount will reflect negotiated price 

concessions that have already been 

subtracted from the amount the 

employment-based plan or insurer paid 

for the cost of health benefits and the 

amount of post-point-of-sale negotiated 

price concessions received. 

(b) At a time specified by the 

Secretary, sponsors are required to 

disclose the amount of post-point-ofsale price concessions that were 

received but not accounted for in their 

submitted claims. 

§ 149.115 Cost threshold and cost limit. 

The following cost threshold and cost 

limits apply individually, to each early 

retiree as defined in § 149.2: 

(a) The cost threshold is equal to 

$15,000 for plan years that start on any 

date before October 1, 2011. 

(b) The cost limit is equal to $90,000 

for plan years that start on any date 

before October 1, 2011. 

(c) The cost threshold and cost limit 

specified in paragraphs (a) and (b) of 

this section, for plan years that start on 

or after October 1, 2011, will be adjusted 

each fiscal year based on the percentage 

increase in the Medical Care Component 

of the Consumer Price Index for all 

urban consumers (rounded to the 

nearest multiple of $1,000) for the year 

involved. 

Subpart D—Use of Reimbursements 

§ 149.200 Use of reimbursements. 

(a) A sponsor must use the proceeds 

under this program: 

(1) To reduce the sponsor’s health 

benefit premiums or health benefit 

costs, 

(2) To reduce health benefit premium 

contributions, copayments, deductibles, 

coinsurance, or other out-of-pocket 

costs, or any combination of these costs, 

for plan participants, or 

(3) To reduce any combination of the 

costs in (a)(1) and (a)(2) of this section. 

(b) Proceeds under this program must 

not be used as general revenue for the 

sponsor. 

Subpart E—Reimbursement Methods 

§ 149.300 General reimbursement rules. 

Reimbursement under this program is 

conditioned on provision of accurate 

information by the sponsor or its 

designee. The information must be 

submitted, in a form and manner and at 

the times provided in this subpart and 


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other guidance specified by the 

Secretary. A sponsor must provide the 

information specified in section 

§ 149.335. 

§ 149.310 Timing. 

(a) An employment-based plan and a 

sponsor must be certified by the 

Secretary before claims can be 

submitted and a reimbursement request 

may be made. Reimbursement will be 

made with respect to submitted claims 

for health benefits at a time and in a 

manner to be specified by the Secretary, 

after the sponsor or its designee submits 

the claims to the Secretary. Claims must 

satisfy the requirements of this subpart 

in order to be eligible for 

reimbursement. 

(b) Claims for health benefits may be 

submitted for a given plan year only 

upon the approval of an application that 

references that plan year cycle. Claims 

for an early retiree for a plan year 

cannot be submitted until the total paid 

costs for health benefits for that early 

retiree incurred for that plan year 

exceed the applicable cost threshold. 

(c) For employment-based plans for 

which a provider in the normal course 

of business does not produce a claim, 

such as a staff-model health 

maintenance organization, the 

information required in a claim must be 

produced and provided to the Secretary, 

as set out in this regulation and 

applicable guidance. 

§ 149.315 Reimbursement conditioned 

upon available funds. 

Notwithstanding a sponsor’s 

compliance with this part, 

reimbursement is conditioned upon the 

availability of program funds. 

§ 149.320 Universe of claims that must be 

submitted. 

(a) Claims submitted for an early 

retiree, as defined in § 149.2, must 

include claims below the applicable 

cost threshold for the plan year. 

(b) Claims must not be submitted 

until claims are submitted for amounts 

that exceed the applicable cost 

threshold for the plan year for the early 

retiree. 

(c) Sponsors must not submit claims 

for health benefits for an early retiree to 

the extent the sponsor has already 

submitted claims for the early retiree 

that total more than the applicable cost 

limit for the applicable plan year. 

§ 149.325 Requirements for eligibility of 

claims. 

A claim may be submitted only if it 

represents costs for health benefits for 

an early retiree, as defined in § 149.2, 

has been incurred during the applicable 

plan year, and has been paid. 

§ 149.330 Content of claims. 

Each claim on its face must include 

the information specified in, and meet, 

the definition of claim or medical claim 

found at § 149.2. 

§ 149.335 Documentation of costs of 

actual claims involved. 

(a) A submission of claims consists of 

a list of early retirees for whom claims 

are being submitted, and documentation 

of the actual costs of the items and 

services for claims being submitted, in 

a form and manner specified by the 

Secretary. 

(b) In order for a sponsor to receive 

reimbursement for the portion of a claim 

that an early retiree paid, the sponsor 

must submit prima facie evidence that 

the early enrollee paid his or her portion 

of the claim. 

§ 149.340 Rule for insured plans. 

With respect to insured plans, the 

claims and data specified in the subpart 

may be submitted directly to the 

Secretary by the insurer. 

§ 149.345 Use of information provided. 

The Secretary may use data and 

information collected under this section 

only for the purpose of, and to the 

extent necessary in, carrying out this 

part including, but not limited to, 

determining reimbursement and 

reimbursement-related oversight and 

program integrity activities, or as 

otherwise allowed by law. Nothing in 

this section limits the Office of the 

Inspector General’s authority to fulfill 

the Inspector General’s responsibilities 

in accordance with applicable Federal 

law. 

§ 149.350 Maintenance of records. 

(a) The sponsor of the certified plan 

(or a subcontractor, as applicable) must 

maintain and furnish to the Secretary, 

upon request the records enumerated in 

paragraph (b) of this section. The 

records must be maintained for 6 years 

after the expiration of the plan year in 

which the costs were incurred, or longer 

if otherwise required by law. 

(b) The records that must be retained 

are as follows— 

(1) All documentation, data, and other 

information related to this part. 

(2) Any other records specified by the 

Secretary. 

(c) The Secretary may issue additional 

guidance addressing recordkeeping 

requirements, including (but not limited 

to) the use of electronic media. 

(d) The sponsor must require its 

health insurance issuer or employmentbased plan, as applicable, to maintain 

and produce upon request records to 

satisfy subparagraph (a) of this 

regulation. 

(e) The sponsor is responsible for 

ensuring that the records are maintained 

and provided according to this subpart. 

Subpart F—Appeals 

§ 149.500 Appeals. 

(a) An adverse reimbursement 

determination is final and binding 

unless appealed pursuant to paragraph 

(e) of this section. 

(b) Except as provided in paragraph 

(c) of this section, a sponsor may request 

an appeal of an adverse reimbursement 

determination. 

(c) A sponsor may not appeal an 

adverse reimbursement determination if 

the denial is based on the unavailability 

of funds. 

(d) An adverse reimbursement 

determination is a determination 

constituting a complete or partial denial 

of a reimbursement request. 

(e) If a sponsor appeals an adverse 

reimbursement determination, the 

sponsor must submit the appeal in 

writing to the Secretary within 15 

calendar days of receipt of the 

determination pursuant to guidance 

issued by the Secretary. 

§ 149.510 Content of request for appeal. 

The request for appeal must specify 

the findings or issues with which the 

sponsor disagrees and the reasons for 

the disagreements. The request for 

appeal may include supporting 

documentary evidence the sponsor 

wishes the Secretary to consider. 

§ 149.520 Review of appeals. 

(a) In conducting review of the 

appeal, the Secretary reviews the 

appeal, the evidence and findings upon 

which the adverse reimbursement 

determination was made, and any other 

written evidence submitted by the 

sponsor or the Secretary’s designee and 

will provide a ruling on the appeal 

request. 

(b) In conducting the review, the 

Secretary reviews the determination at 

issue, the evidence and findings upon 

which it was based, any written 

documents submitted to the Secretary 

by the sponsor and the Secretary’s 

designee, and determines whether to 

uphold, reverse or modify the 

Secretary’s initial reimbursement 

determination. 

(c) A decision by the Secretary under 

this provision is final and binding. 

(d) Regardless of the Secretary’s 

decision, additional reimbursement is 

contingent upon the availability of 

funds at the time of the Secretary’s 

determination. 

(e) The Secretary informs the sponsor 

and the applicable Secretary’s designee 


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24470 Federal Register / Vol. 75, No. 86 / Wednesday, May 5, 2010 / Rules and Regulations 

of the decision. The Secretary sends a 

written decision to the sponsor or the 

applicable Secretary’s designee upon 

request. 

Subpart G—Disclosure of Data 

Inaccuracies 

§ 149.600 Sponsor’s duty to report data 

inaccuracies. 

A sponsor is required to disclose any 

data inaccuracies upon which a 

reimbursement determination is made, 

including inaccurate claims data and 

negotiated price concessions, in a 

manner and at a time specified by the 

Secretary in guidance. 

§ 149.610 Secretary’s authority to reopen 

and revise a reimbursement determination. 

(a) The Secretary may reopen and 

revise a reimbursement determination 

upon the Secretary’s own motion or 

upon the request of a sponsor: 

(1) Within 1 year of the 

reimbursement determination for any 

reason. 

(2) Within 4 years of a reimbursement 

determination for good cause. 

(3) At any time, in instances of fraud 

or similar fault. 

(b) For purposes of this section, the 

Secretary does not find good cause if the 

only reason for the revision is a change 

of legal interpretation or administrative 

ruling upon which the determination to 

reimburse was made. 

(c) A decision by the Secretary not to 

revise a reimbursement determination is 

final and binding (unless fraud or 

similar fault is found) and cannot be 

appealed. 

Subpart H—Change of Ownership 

Requirements 

§ 149.700 Change of ownership 

requirements. 

(a) Change of ownership consists of: 

(1) Partnership. The removal, addition, 

or substitution of a partner, unless the 

partners expressly agree otherwise as 

permitted by applicable state law. 

(2) Asset sale. Transfer of all or 

substantially all of the assets of the 

sponsor to another party. 

(3) Corporation. The merger of the 

sponsor’s corporation into another 

corporation or the consolidation of the 

sponsor’s organization with one or more 

other corporations, resulting in a new 

corporate body. 

(b) Change of ownership; exception. 

Transfer of corporate stock or the merger 

of another corporation into the 

sponsor’s corporation, with the sponsor 

surviving, does not ordinarily constitute 

change of ownership. 

(c) Advance notice requirement. A 

sponsor that has a sponsor agreement in 

effect under this part and is considering 

or negotiating a change in ownership 

must notify the Secretary at least 60 

days before the anticipated effective 

date of the change. 

(d) Assignment of agreement. When 

there is a change of ownership as 

specified in paragraph (a) of this 

section, and this results in a transfer of 

the liability for health benefits, the 

existing sponsor agreement is 

automatically assigned to the new 

owner. 

(e) Conditions that apply to assigned 

agreements. The new owner to whom a 

sponsor agreement is assigned is subject 

to all applicable statutes and regulations 

and to the terms and conditions of the 

sponsor agreement. 

(f) Failure to notify the Secretary at 

least 60 days before the anticipated 

effective date of the change may result 

in the Secretary recovering funds paid 

under this program. 

Dated: April 29, 2010. 

Jay Angoff, 

Director, Office of Consumer Information and 

Insurance Oversight. 

Dated: April 29, 2010 

Kathleen Sebelius, 

Secretary. 

[FR Doc. 2010–10658 Filed 5–4–10; 8:45 am] 

BILLING CODE 4150–03–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Office of the Secretary 

45 CFR Part 159 

RIN 0991–AB63 

Health Care Reform Insurance Web 

Portal Requirements 

AGENCY: Office of the Secretary, HHS. 

ACTION: Interim final rule with comment 

period. 

SUMMARY: The Patient Protection and 

Affordable Care Act (the Affordable Care 

Act) was enacted on March 23, 2010. It 

requires the establishment of an internet 

Web site (hereinafter referred to as a 

Web portal) through which individuals 

and small businesses can obtain 

information about the insurance 

coverage options that may be available 

to them in their State. The Department 

of Health and Human Services (HHS) is 

issuing this interim final rule in order 

to implement this mandate. This interim 

final rule adopts the categories of 

information that will be collected and 

displayed as Web portal content, and 

the data we will require from issuers 

and request from States, associations, 

and high risk pools in order to create 

this content. 

DATES: Effective Date: These regulations 

are effective on May 10, 2010. 

Comment Date: To be assured 

consideration, comments must be 

received at the address provided below, 

no later than 5 p.m. on June 4, 2010. 

ADDRESSES: In commenting, please refer 

to file code DHHS–9997–IFC. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

• Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. Follow 

the instructions on the home page. 

• By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

DHHS–9997–IFC, P.O. Box 8014, 

Baltimore, MD 21244–8014. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

• By express or overnight mail. You 

may send written comments to the 

following address ONLY: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: DHHS–9997–IFC, 

Mail Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

• By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments before the close 

of the comment period to either of the 

following addresses: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue, SW., 

Washington, DC 20201 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, 


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