Source: https://www.everycrsreport.com/changes/20170817_R44760_cece6d4da3b52d42292bf3999ec0f0d66d4bbf4b__20170828_R44760_76106182238e763c01bb04bcdaf104fd15f05484.html
Timestamp: 2019-02-19 18:38:15
Document Index: 233641751

Matched Legal Cases: ['§18052', '§5000', '§18052', '§1312', '§1301', '§1301', '§1304', '§1311', '§1312', '§1312', '§1321', '§18052', '§18052', '§18052', '§18052', '§155', '§155', '§155', '§18052', '§155', '§18052', '§18052', '§155']

Changes in State Innovation Waivers: Frequently Asked Questions from August 17, 2017 to August 28, 2017 - EveryCRSReport.com
Changes from August 17, 2017 to August 28, 2017
August 1728, 2017 (R44760)
Which ACA Provisions May a State Waive Under a State Innovation Waiver?
Which Federal Agency Has the Authority to Grant a Waiver?
What Are the Minimum Requirements for a Successful Application?
Are There Any Limitations on the Scope of State Innovation Waivers?
What Is the Application Process for a State Innovation Waiver?
Is Any Federal Funding Available Under a State Innovation Waiver?
How Long Can a State Innovation Waiver Be in Effect?
May States Submit State Innovation Waiver Applications in Coordination with Other Federal Waiver Applications?
How Many States Have Applied for State Innovation Waivers?
Table 1. Requirements for a Successful State Innovation Waiver Application
Table 2. States That Have Applied for State Innovation Waivers
Section 1332 of the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) provides states with the option to waive specified requirements of the ACA. In the absence of these requirements, the state is to implement its own plan to provide health insurance coverage to state residents that meets the ACA's terms.
Under a state innovation waiver, a state can apply to waive ACA requirements related to qualified health plans, health insurance exchanges, premium tax credits, cost-sharing subsidies, the individual mandate, and the employer mandate. The state can apply to waive any or all of these requirements, in part or in their entirety.
To obtain approval for a waiver application, a state must show that the plan it will implement in the absence of the waived provision(s) meets certain requirements. The state's plan must ensure that as many state residents have health insurance coverage under the plan as would have had coverage absent the waiver, and the coverage must be as affordable and comprehensive as it would have been absent the waiver. Additionally, the state's plan cannot increase the federal deficit.
The Secretary of the Department of Health and Human Services (HHS) and the Secretary of the Treasury share responsibility for reviewing state innovation waiver applications and deciding whether to approve applications. The earliest a state innovation waiver could have gone into effect was January 1, 2017. As of the date of this report, Alaska and Hawaii are the only states with approved state innovation waivers. ThreeFour other states—California, Minnesota, Oklahoma, and Vermont—have submitted waiver applications. California has since withdrawn its application, and Minnesota's, Oklahoma's, and Vermont's applications are pending.
Section 1332 of the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) allows states to apply for waivers of specified provisions of the ACA. Under a state innovation waiver, a state is expected to implement a plan (in place of the waived provisions) that meets certain minimum requirements. The state's plan must provide coverage to as many state residents as would be covered absent the waiver, and that coverage must be as affordable and comprehensive as it would be absent the waiver. Additionally, the state's plan cannot increase the federal deficit. The earliest a state innovation waiver could have gone into effect was January 1, 2017.
This report answers frequently asked questions about how states can use and apply for state innovation waivers.
A state may apply to waive any or all of the ACA provisions listed below for plan years beginning on or after January 1, 2017.1
Part I of Subtitle D of the ACA: Part I of Subtitle D comprises Sections 1301-1304. In general, the provisions in Part I relate to the establishment of qualified health plans (QHPs).2
Part II of Subtitle D of the ACA: Part II of Subtitle D comprises Sections 1311-1313, which largely include provisions related to the establishment of health insurance exchanges and related activities.
Section 1402 of the ACA: Provision of cost-sharing subsidies to eligible individuals who purchase non-group health insurance through a health insurance exchange.3
Section 36B of the Internal Revenue Code (IRC): Provision of premium tax credits to eligible individuals who purchase non-group health insurance through an exchange.
Section 4980H of the IRC: Shared responsibility requirement for large employers (often called the employer mandate).4
Section 5000A of the IRC: Requirement for individuals to maintain health insurance coverage (often called the individual mandate).5
Each part noted above is comprised of many provisions, which makes the scope of provisions that can be waived under a state innovation waiver quite broad. For example, Part I of Subtitle D of the ACA includes provisions that outline requirements for health plans to be certified as QHPs. It defines the essential health benefits (EHB) package that each QHP must offer, places limitations on the enrollee cost sharing that QHPs may impose, and requires that the QHP provide coverage meeting a minimum level of actuarial value.6 Additionally, Part I of Subtitle D creates catastrophic health plans and determines eligibility for such plans.
The Secretary of the Department of Health and Human Services (HHS) is to review waiver requests for provisions not included in the IRC; the Secretary of the Treasury is to review requests to waive provisions in the IRC (the availability of premium tax credits and the application of the employer and individual mandates).7
The Secretary of HHS or the Treasury is to assess a waiver application to determine whether the state's plan meets the requirements related to coverage, affordability, comprehensiveness, and federal-deficit neutrality outlined in statute and further described in guidance.8 These requirements are described in Table 1. The Secretary or Secretaries (as appropriate) may grant a request for a state innovation waiver if a state's application meets the requirements.
In guidance, HHS and the Treasury note that their assessment of a state's waiver application considers changes to the state's health care system that are contingent only upon approval of the waiver.9 Their assessment does not consider policy changes that are dependent on further state action or other federal determinations. For example, the Secretary's or Secretaries' (as appropriate) assessment of a state innovation waiver application would not consider changes to Medicaid or the state Children's Health Insurance Program (CHIP) that require approval outside of the state innovation waiver process, and savings accrued as a result of changes to Medicaid or CHIP would not be considered when determining whether the state innovation waiver meets the deficit-neutrality requirement. HHS and the Treasury indicate that this is the case regardless of whether a state's application for a state innovation waiver is submitted alone or in coordination with another waiver application. (For more information about the coordinated waiver process, see "May States Submit State Innovation Waiver Applications in Coordination with Other Federal Waiver Applications?")
(as described in statute and guidance)
Coverage: The state's plan must provide coverage to at least a comparable number of individuals as the provisions of Title I of the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) would provide.
At least as many individuals who had minimum essential coverage (MEC) absent a waiver must have MEC under the waiver.a This requirement must be forecast to be met for each year the waiver is in effect.
In considering whether this requirement is met, the plan's impact on all state residents, regardless of coverage type, will be considered, and the plan's effects on different groups of individuals in the state, particularly those considered vulnerable, will be assessed.b Whether the plan sufficiently prevents gaps in or discontinuations of coverage also will be considered.
Affordability: The state's plan must provide coverage and cost-sharing protections that are at least as affordable as the provisions of Title I of the ACA.
An individual's health care coverage under the waiver must be as affordable as coverage absent the waiver. Affordability is generally measured by comparing the sum of an individual's premium contributions and cost-sharing responsibilities for a health plan to the individual's income. Spending on health care services that are not covered by a health plan may be considered if the services are affected by the state's plan. This requirement must be forecast to be met for each year the waiver is in effect.
In considering whether this requirement is met, the plan's impact on all state residents, regardless of coverage type, will be considered and the plan's effects on different groups of individuals in the state, particularly those considered vulnerable, will be assessed.b In assessing the plan, the affordability of coverage on average will be considered, and how the plan affects individuals who have large heath care spending burdens relative to their incomes will be examined.
Comprehensiveness: The state's plan must provide coverage that is at least as comprehensive as the essential health benefits (EHB),c as certified by the Office of the Actuary of the Centers for Medicare & Medicaid Services (CMS).
Health care coverage under the state plan must be at least as comprehensive overall for individuals as coverage was absent the waiver. Comprehensiveness is measured by comparing coverage under the plan to coverage under the state's EHB benchmark plan or coverage under the state's Medicaid program and/or the State Children's Health Insurance Programs (CHIP), as appropriate.c This requirement generally must be forecast to be met for each year the waiver is in effect.
In considering whether this requirement is met, the proposal's impact on all state residents, regardless of coverage type, will be considered, and the effects of the proposal on different groups of individuals in the state, particularly those considered vulnerable, will be assessed.b
Deficit Neutral: The state's plan must not increase the federal deficit.
Projected federal spending net of federal revenues must be equal to or lower than it would be absent the waiver. The state's plan must not increase the federal deficit over the period of the waiver or in total over the 10-year budget plan submitted by the state as part of its application.d
Source: Congressional Research Service's compilation and summary of statute (42 U.S.C. §18052(b)(1)) and guidance (80 Federal Register 78131, December 16, 2015). The requirements are not covered in regulations.
Notes: The Secretary of the Department of Health and Human Services (HHS) is to review waiver applications for provisions not included in the Internal Revenue Code (IRC); the Secretary of the Treasury is to review requests to waive provisions in the IRC (the availability of premium tax credits and the application of the employer and individual mandates).
a. MEC is defined in the tax code (26 U.S.C. §5000A(f)) and includes most types of comprehensive coverage, including public coverage, such as coverage under programs sponsored by the federal government (e.g., Medicaid, Medicare), as well as private insurance (e.g., employer-sponsored insurance, non-group insurance).
b. Vulnerable individuals include "low-income individuals, elderly individuals, and those with serious health issues or who have a greater risk of developing serious health issues." (80 Federal Register 78131, December 16, 2015, p. 78132)
c. Under the ACA, certain health plans must cover the EHB. The ACA does not explicitly define the EHB; rather, it lists 10 broad categories from which benefits and services must be included and requires the Secretary of HHS to further define the EHB. For information about the 10 categories as well as how the EHB are currently defined, see CRS In Focus IF10287, The Essential Health Benefits (EHB).
d. The state innovation waivers cannot extend longer than five years unless a state requests continuation and such request is not denied by the appropriate Secretary. Statute requires that an application for a waiver include a 10-year budget plan that is budget neutral for the federal government (42 U.S.C. §18052(a)(1)(B)(ii)).
In guidance, HHS and the Treasury describe some federal operational considerations that may limit the scope of the waivers.10 HHS administers all federally facilitated health insurance exchanges (FFEs), and it operates the same infrastructure technology platform in each state that has an FFE. The agencies explain that HHS cannot accommodate any state-specific changes to FFE platforms. For example, waivers that would require a state's FFE to use different rules for calculating the financial assistance available to an individual in the state are not feasible. Similarly, the Internal Revenue Service (IRS) cannot accommodate any state-specific changes to tax rules. For example, waivers that would require the IRS to use different eligibility rules for premium tax credits for individuals in one state are not feasible.
A state seeking a state innovation waiver must enact a law that allows the state to carry out the actions under the waiver prior to submitting an application for a waiver.11 Prior to submitting an application, a state must provide a public notice and comment period and conduct public hearings regarding the state's application.12 Upon conclusion of these activities, a state may submit its application to the Secretary of HHS. The Secretary of HHS is to transmit any application seeking to waive requirements in the IRC to the Secretary of the Treasury for review.
The Secretary or Secretaries (as appropriate) are to review a state's application to determine whether it is complete. A state's application is not considered complete unless it includes the materials identified in regulations.13 The materials include, but are not limited to, information about the enacted state legislation allowing the state to carry out the actions under the waiver, a description of the plan or program the state expects to implement in place of the waived provisions, and analyses showing that the state's plan or program meets the requirements for granting a waiver. If a state's application is not complete, the state is to be notified about the missing elements and given an opportunity to submit them. Once the Secretary or Secretaries (as appropriate) make a preliminary determination that a state's application is complete, the entire application is to be made available to the public for review and comment.14
The final decision of the Secretary or Secretaries on a state's application must be issued no later than 180 days after the determination that the Secretary of HHS received a complete application from a state.15
It is possible for a state to receive federal funding under an approved waiver. A state's receipt of a state innovation waiver could result in the residents of the state not receiving the "premium tax credits, cost-sharing reductions, or small business credits under sections 36B of the Internal Revenue Code of 1986 or under part I of subtitle E for which they would otherwise be eligible."16 If this occurs, the state is to receive the aggregate amount of subsidies that would have been available to the state's residents had the state not received a state innovation waiver—this is referred to as pass-through funding.17 The amount of pass-through funding is to be determined annually by the appropriate Secretary. The state is to use the pass-through funding for purposes of implementing the plan or program established under the waiver.18
State innovation waivers cannot extend longer than five years unless a state requests continuation and such request is not denied by the appropriate Secretary.19 Requests for continuation are to be deemed granted if they are not denied by the appropriate Secretary within 90 days after submission.
The Secretaries are required to develop a process for coordinating applications for state innovation waivers and for other existing waivers under federal law relating to the provision of health care, including waivers available under Medicare, Medicaid, and CHIP.
Under the coordinated process, a state must be able to submit a single application for a state innovation waiver and any other applicable waivers available under federal law.20 The single application must comply with the procedures described for state innovation waiver applications and the procedures in any other applicable federal law under which the state seeks a waiver.21
As discussed in the answer to the question "What Are the Minimum Requirements for a Successful Application?," HHS and the Treasury have indicated that an application for a state innovation waiver will be assessed on its own terms and that assessment of the state innovation waiver will not consider the impact of changes that require separate federal approval. This is the case even if the state submits a single application for multiple waivers.
As of the date of this report, fivesix states have submitted applications for state innovation waivers—Alaska, California, Hawaii, Minnesota, Oklahoma, and Vermont.22 California has since withdrawn its application.23 The Centers for Medicare & Medicaid Services (CMS) has approved Alaska's and Hawaii's applications. See Table 2 for more details.
(as of August 17, 2017)
Information About Approved Waivers
Pass-Through Funding
Approved—July 2017
Alaska established the Alaska Reinsurance Program (ARP) to help health insurance issuers offering plans in the individual market offset the cost of covering specified high-cost conditions for enrollees.
Under the approved waiver, the ACA provision requiring issuers to consider all enrollees in individual plans offered by the issuer to be members of a single risk pool is waived,a to the extent the provision prohibits issuers from including expected reinsurance payments from the ARP when establishing its market-wide index rate.
The expected effect of allowing issuers to consider the ARP payments when setting market-wide rates is to reduce premiums in the individual market, and the expected effect of the reduced premiums is reduced federal spending on premium tax credits for residents of Alaska. The state is to receive the resulting reductions in federal spending as pass-through funding. Under the waiver, Alaska is to use the pass-through funding for ARP payments to issuers beginning in CY2018.
The approved waiver does not modify the eligibility criteria for premium tax credits for residents of Alaska.
Estimated to be $48.4 million for CY2018
Estimated to be $322.7 million over the period CY2018-CY2022
CY2018-CY2022
Withdrawn by California—January 2017
Approved—December 2016
Under the approved waiver, multiple ACA provisions relating to the establishment and operation of a Small Business Health Options Program (SHOP) exchange, as they pertain to small employers and SHOP exchanges, are waived.b As a result, Hawaii is no longer required to operate SHOP exchanges for small employers. The amount that small employers in Hawaii would have received in small business tax credits for coverage purchased through a SHOP exchange is provided to the state in pass-through funding to support a program that assists small employers with the cost of health insurance coverage.
Estimated to be $459,169 for CY2017
Estimated to be $2.8 million over the period CY2017-CY2021
CY2017-CY2021
Source: Various documents available on the CMSCMS website, "Section 1332: State Innovation Waivers," at https://www.cms.gov/CCIIO/Programs-and-Initiatives/State-Innovation-Waivers/Section_1332_State_Innovation_Waivers-.html, viewed August 1728, 2017.
Notes: ACA = Patient Protection and Affordable Care Act (P.L. 111-148, as amended); N.A. = Not applicable. This table includes details about approved waivers; the website from which the information is sourced also includes detailed information about waivers that have not been approved (for California, Minnesota, Oklahoma, and Vermont).
a. Specifically, ACA §1312(c)(1).
b. Specifically, the following ACA sections: §1301(a)(1)(C)(ii); §1301(a)(2); §1304(b)(4)(D)(i) and (ii); §1311(b)(1)(B); §1312(a)(2); §1312(f)(2)(A); and §1321(c)(1).
42 U.S.C. §18052(a)(2).
A qualified health plan (QHP) is a plan that meets certain requirements and is certified to be sold through a health insurance exchange (in the non-group or small-group market). Although QHPs are certified to be sold through exchanges, they also can be sold in the non-group or small-group market outside of exchanges. For more information, see CRS Report R44065, Overview of Health Insurance Exchanges.
For more information about cost-sharing subsidies and premium tax credits, see CRS Report R44425, Health Insurance Premium Tax Credits and Cost-Sharing Subsidies: In Brief.
For more information about the employer mandate, see CRS Report R43981, The Affordable Care Act's (ACA) Employer Shared Responsibility Determination and the Potential Employer Penalty.
For more information about the individual mandate, see CRS Report R44438, The Individual Mandate for Health Insurance Coverage: In Brief.
For more information about the essential health benefits package, see CRS Report R44163, The Patient Protection and Affordable Care Act's Essential Health Benefits (EHB).
42 U.S.C. §18052(a)(6).
42 U.S.C. §18052(b)(1) and Department of the Treasury, Department of Health and Human Services (HHS), "Waivers for State Innovation," 80 Federal Register 78131, December 16, 2015 (Hereinafter "Waivers for State Innovation guidance"). The requirements are not covered in regulations.
Waivers for State Innovation guidance.
42 U.S.C. §18052(b)(2).
The public notice and comment period is to be "sufficient to ensure a meaningful level of public input for the application for a section 1332 waiver." 45 C.F.R. §155.1312.
45 C.F.R. §155.1308(f).
The public notice and comment period is to be "sufficient to ensure a meaningful level of public input and does not impose requirements that are in addition to, or duplicative of, requirements imposed under the Administrative Procedures Act, or requirements that are unreasonable to unnecessarily burdensome with respect to state compliance." 45 C.F.R. §155.1316(b).
42 U.S.C. §18052(d)(1) and 45 C.F.R. §155.1316(c).
42 U.S.C. §18052(a)(3).
Under the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended), eligible small employers can receive small business health insurance tax credits to help pay the cost of providing health insurance to employees. In general, these credits are available only to small employers that purchase coverage through a Small Business Health Options Program (SHOP) exchange. The statutory text quoted above makes it unclear whether the subsidy amounts a state could receive under a state innovation waiver could include amounts that small employers would have received in small business health insurance tax credits, because the text refers to "small business credits" but the following language does not identify the section of the ACA that provides for the credits (which is Part II of Subtitle E of Title I). This ambiguity has not been resolved in regulations or guidance; however, the Centers for Medicare & Medicaid Services (CMS) approved Hawaii's application for a state innovation waiver and is giving small business tax credit funds to the state. For more details, see "How Many States Have Applied for State Innovation Waivers?"
42 U.S.C. §18052(e).
45 C.F.R. §155.1302(a).
For information about each state's application, see CMS, Center for Consumer Information and Insurance Oversight (CCIIO), "Section 1332: State Innovation Waivers," at https://www.cms.gov/CCIIO/Programs-and-Initiatives/State-Innovation-Waivers/Section_1332_State_Innovation_Waivers-.html.
Letter from Peter V. Lee, Executive Director of Covered California, to Kevin J. Counihan, Director and Marketplace Executive Officer, CCIIO, January 18, 2017, http://hbex.coveredca.com/stakeholders/Covered%20California%201332%20Waiver/1332%20Application%20Withdrawal%20Request%2001%2018.pdf.