Source: https://www.federalregister.gov/articles/2013/06/04/2013-13149/patient-protection-and-affordable-care-act-establishment-of-exchanges-and-qualified-health-plans
Timestamp: 2016-08-24 19:52:16
Document Index: 426012677

Matched Legal Cases: ['§ 155', '§ 156', '§ 155', '§ 155', '§ 155', '§ 156', '§ 156', '§ 156', '§ 156', '§ 156', '§ 156', '§ 155', '§ 155', '§ 155', '§ 155', '§ 155', '§ 155', '§ 155', '§ 155', '§ 155', '§ 155', '§ 155', '§ 155', '§ 155', '§ 155', '§ 156', '§ 155', '§ 155', '§ 156', '§ 155', '§ 155', '§ 155', '§ 155', '§ 155', '§ 155', 'arts 155', 'arts 153', 'arts 155', 'arts 155', 'arts 153']

Dates: These regulations are effective on July 1, 2013.
-33240 (8 pages)
Document Number: 2013-13149
Shorter URL: https://federalregister.gov/a/2013-13149 Related Topics
Beginning in 2014, individuals and small businesses will be able to purchase private health insurance through competitive marketplaces, called Affordable Insurance Exchanges or “Exchanges” (also called Health Insurance Marketplaces). Section 1311(b)(1)(B) of the Affordable Care Act contemplates that in each State there will be a SHOP that assists qualified employers in providing health insurance options for their employees. The final rule, Patient Protection and Affordable Care Act; Establishment of Exchanges and Qualified Health Plans; Exchange Standards for Employers (Exchange Establishment Rule),
as modified by the Notice of Benefit and Payment Parameters for 2014,
sets forth standards for the administration of SHOP Exchanges. In this rule, we finalize provisions proposed in the Establishment of Exchanges and Qualified Health Plans; Small Business Health Options Program Notice of Proposed Rule Making,
which amends some of the standards established in the Exchange Establishment Rule.
In the Exchange Establishment Rule, we established standards for special enrollment periods for people enrolled through an individual market Exchange, and provided that, in most instances, a special enrollment period is 60 days from the date of the triggering event. See 45 CFR 155.420. We also made these provisions applicable to SHOPs, at § 155.725(a)(3). In the proposed rule we proposed and this final rule amends, the special enrollment period for the SHOP to 30 days for most applicable triggering events, so that it aligns with the special enrollment periods for the group market established by the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
To further align the SHOP provisions with HIPAA, we also proposed that if an employee or dependent becomes eligible for premium assistance under Medicaid or the Children's Health Insurance Program (CHIP) or loses eligibility for Medicaid or CHIP, this would be a triggering event, and the employee or dependent would have a 60-day special enrollment period to select a QHP. This triggering event had previously been inadvertently omitted from the regulations because it applies only to group health plans and health insurance coverage in the group market. We also proposed to make a conforming change to § 156.285(b)(2), so that this section references the SHOP special enrollment periods in a way that is consistent with our proposed changes to § 155.725.
In the Exchange Establishment Rule, we also set forth the minimum functions of a SHOP, including that the SHOP must allow employers the option to offer employees all QHPs at a level of coverage chosen by the employer, and that the SHOP may allow employers to offer one or more QHPs to qualified employees by other methods. We proposed and are now finalizing the following transitional policy. For plan years beginning on or after January 1, 2014 and before January 1, 2015, a SHOP will not be required to permit qualified employers to offer their qualified employees a choice of QHPs at a single level of coverage, but will have the option of doing so. Federally-facilitated SHOPs (FF-SHOPs) will not exercise this option, but will instead allow employers to choose a single QHP from the choices available in FF-SHOP to offer their qualified employees. This transitional policy is intended to provide additional time to prepare for an employee choice model and to increase the stability of the small group market while providing small groups with the benefits of SHOP in 2014 (such as a choice among competing QHPs and access for qualifying small employers to the small business health care tax credit). We also proposed changes to the effective date of the SHOP premium aggregation function set forth at § 155.705(b)(4) in the Exchange Establishment Rule consistent with this transitional policy, which we are finalizing in this rule.
Section 1311(c)(6) of the Affordable Care Act sets forth that the Secretary of Health and Human Services (HHS) shall direct Exchanges to provide for special enrollment periods. Section 155.420 of the Exchange Establishment Rule established special enrollment periods for the individual market, and § 155.725(a)(3) established them for the SHOP.
HHS has consulted with a wide range of interested stakeholders on policy matters related to the SHOP, including through regular conversations with the National Association of Insurance Commissioners (NAIC), employers, health insurance issuers, trade groups, consumer advocates, agents and brokers, and other interested parties. HHS has also held many consultations with States about the SHOP, both individually and through group conversations. HHS received many comments in response to the Exchange Establishment proposed rule,
to which we responded in the Notice of Benefit and Payment Parameters for 2014 final rule (78 FR 15410). We considered these stakeholder comments in developing this final rule.
III. Provisions of the Proposed Rule and Responses to Public Comments Back to Top
Comment: Two commenters suggested that HHS should revisit § 156.200(g), as finalized in the Notice of Benefit and Payment Parameters for 2014. Section 156.200(g) is a QHP certification requirement linking, or tying, federally-facilitated Exchange and FF-SHOP participation. Generally, the certification requirement applies when an issuer or a member of the same issuer group as the issuer (defined at § 156.20 as a group under common ownership and control, or using a common national service mark) has a share of the small group market in a State with a federally-facilitated Exchange/FF-SHOP that exceeds 20 percent, as determined from the most recent earned premiums data reported to HHS. .Specifically, the certification requirement applies in the following circumstances: We interpret § 156.200(g)(1) to require that issuers that have greater than 20 percent small group market share offer at least one silver-level QHP and one gold-level QHP through the FF-SHOP as a condition of participation in the federally facilitated individual market Exchange.
We also interpret § 156.200(g)(1) to require that issuers that do not have greater than 20 percent market share in a State's small group market, but that are members of an issuer group that has at least one member with greater than 20 percent market share, have to offer the required silver and gold level coverage through the SHOP as a condition of participation in the individual market Exchange.
Under § 156.200(g)(2), issuers that do not offer small group market products in a State, but that are members of an issuer group that has at least one member with greater than 20 percent market share, would not have to offer the required SHOP coverage themselves. Instead, another issuer in that issuer's group would do so, and in light of the fact that we intend the tying provision to fall primarily on issuers with greater than 20 percent market share, we interpret § 156.200(g)(2) to require that the issuer meeting the requirement in these circumstances be an issuer whose small group market share exceeds 20 percent.
Facilitating employee choice at a single level of coverage selected by the employer—bronze, silver, gold, or platinum—is a required SHOP function established in the Exchange Establishment Rule (45 CFR 155.705(b)(2)) and discussed in greater detail in the preamble to the December 2012 HHS Notice of Benefit and Payment Parameters for 2014 proposed rule. In addition, the rules permit SHOPs to allow a qualified employer to choose one QHP for employees (§ 155.705(b)(3)).
When we proposed this policy, we also sought comments on a transitional policy in which a FF-SHOP would allow employers to offer to their employees a single QHP from those offered through the SHOP (77 FR 73184). A few commenters suggested that each FF-SHOP should provide employee choice. Most commenters on this issue, however, supported allowing employers to choose a single QHP option for employees, either as an additional option or as the only option in the initial years of the FF-SHOP. The commenters who supported providing a qualified employer only the option choosing a single QHP to offer in the initial years of FF-SHOP operation cited several concerns, including the following: whether issuers could meet the deadlines for submission of small group market QHPs given the new small group market rating rules; whether issuers could complete enrollment and accounting system changes required to interact with the SHOP enrollment and premium aggregation systems required by employee choice. The commenters stated that issuer efforts to prepare and price QHPs for an employee choice environment and to make the systems and operational changes required for SHOP enrollment and premium aggregation could compete with efforts to prepare for participation in the Exchange (both individual and SHOP).
The Exchange Establishment Rule also included a premium aggregation function for the SHOP that was designed to assist employers whose employees were enrolled in multiple QHPs. Because this function will not be necessary in 2014 for SHOPs that delay implementation of the employee choice model, we also proposed at § 155.705(b)(4) that the premium aggregation function be optional for plan years beginning before January 1, 2015.
Specifically, we proposed amendments to § 155.705(b)(2), (b)(3), and (b)(4) providing as follows: (1) The effective date of the employer choice requirements at § 155.705(b)(2) and the premium aggregation requirements at § 155.705(b)(4) for both State-based SHOPs and FF-SHOPs will be January 1, 2015; (2) State-based SHOPs could elect to offer employee choice and perform premium aggregation for plan years beginning before January 1, 2015, but need not do so; and (3) FF-SHOPs will begin to offer employee choice and premium aggregation in plan years beginning on or after January 1, 2015. We received the following comments concerning these proposals.
Comment: Many commenters expressed support for the proposed transition policy for both the employer choice requirement of § 155.705(b)(2) and the premium aggregation requirement of § 155.705(b)(4), stating that the transition would provide the additional time needed to build the systems necessary to ensure the success of employee choice and premium aggregation. Other commenters opposed the delay, believing that transitioning to employee choice would undermine the value proposition of the SHOP in any State that exercised this option and reduce enrollment in the SHOP. One commenter suggested that during the transitional policy SHOPs operate under a simplified implementation that does not include a web portal and plan comparison tool.
HHS will monitor through any information provided under § 155.720(i) the effect of implementing employee choice in States that elect to implement it in 2014. This process will provide much of the systematic testing suggested by commenters.
Comment: Some commenters requested that HHS clarify how the transitional employee choice policy would affect the employer contribution methodology for the FF-SHOP that was issued in the Notice of Benefit and Payment Parameters for 2014 and codified at § 155.705(b)(11)(ii), as these commenters suggested the purpose of this contribution model may no longer be pertinent without employee choice, specifically the ability to calculate composite premiums.
Response: This rule does not modify the premium contribution methodology codified in § 155.705(b)(11)(ii), which permits either State law or employers to require the FF-SHOP to base contributions on a calculated composite premium for employees. In the case of the FF-SHOP before 2015 operating with the employee choice transitional policy, we now clarify that the benchmark plan selected by the employer will be the single QHP offered by the employer to its employees, simplifying this process for the employer.
This SHOP provision differs from the length of special enrollment periods in group markets provided by HIPAA, which last for 30 days after loss of eligibility for other group health plan or health insurance coverage or after a person becomes a dependent through marriage, birth, adoption, or placement for adoption.
Because we believe that there is no rationale for providing a longer special enrollment period in a SHOP than is provided in the group market outside the SHOP, we proposed amendments to § 155.725 to clarify that a qualified employee or dependent of a qualified employee who has obtained coverage through the SHOP would have 30 days from the date of most of the triggering events specified in § 155.420 to select a QHP. Additionally, consistent with revisions to HIPAA enacted by section 311 of the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA) (Pub. L. 111-3, enacted on February 4, 2009), we proposed that a qualified employee or dependent of a qualified employee who has lost eligibility for Medicaid or CHIP coverage, or who has become eligible for State premium assistance under a Medicaid or CHIP program would be eligible for a special enrollment period in a SHOP and would have 60 days from the date of the triggering event to select a QHP. Specifically, we proposed striking § 155.725(a)(3) and adding a new paragraph (j) consolidating the proposed SHOP special enrollment provisions in one paragraph. We proposed a provision clarifying that a dependent of a qualified employee is eligible for a special enrollment period only if the employer offers coverage to dependents of qualified employees. We also proposed paragraphs (j)(5) and (j)(6) that retain certain provisions relating to effective dates of coverage and loss of minimum essential coverage from the original § 155.420. We proposed conforming revisions to § 156.285(b)(2), so that provision would reference the special enrollment periods in proposed § 155.725(j) instead of those set forth at § 155.420. We believe these changes appropriately align the SHOP provisions with provisions applicable to the rest of the group market, and welcome comment on the proposal. We received the following comments concerning these proposals.
Comment: We received many comments supporting the proposed alignment of the length of special enrollment periods in the SHOP with the small group market at large. Some of these commenters stated that aligning with the existing market standards will reduce confusion, simplify public education, and prevent adverse selection. However, some commenters were concerned that reducing the length of special enrollment periods may not provide sufficient time for an employee to understand and compare the plan or plans offered to the employee. These commenters were particularly concerned that an employee choice model would require additional time for an employee to make an informed decision, as employees would have many more plans to compare before making a decision.
In § 156.285, we proposed requiring QHPs in the SHOP to provide the special enrollment periods added to § 155.725. While we received many comments on the proposed special enrollment periods, we received no comments on this conforming amendment. We are finalizing this provision as proposed.
This final rule consists of a provision to amend the duration of certain special enrollment periods to correspond to the duration in group markets under HIPAA. The rule also adds a triggering event that creates a special enrollment period for qualified employees and/or their eligible dependents when an employee or qualified dependent with coverage through the SHOP becomes eligible for State premium assistance under Medicaid or CHIP or loses eligibility for Medicaid or CHIP. HIPAA, as revised by CHIPRA, already includes this triggering event, which was inadvertently omitted from the original list in § 155.420(d). We do not believe either of these actions would impose any new costs on issuers, employers, enrollees, or the SHOP. In fact, the amendment would create alignment of SHOP regulations with laws for the existing group market and could potentially create efficiencies for QHP issuers.
Because issuers may now have an additional year to develop these systems and may thus be able to stage their efforts rather than implementing all system changes by October 1, 2013, we believe that the total cost will be unchanged.
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) requires agencies to prepare an initial regulatory flexibility analysis to describe the impact of the rule on small entities, unless the head of the agency can certify that the rule would not have a significant economic impact on a substantial number of small entities. The RFA generally defines a “small entity” as—(1) A proprietary firm meeting the size standards of the Small Business Administration (SBA); (2) a not-for-profit organization that is not dominant in its field; or (3) a small government jurisdiction with a population of less than 50,000. States and individuals are not included in the definition of “small entity.” HHS uses as its measure of significant economic impact on a substantial number of small entities a change in revenues of more than 3 percent. 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. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small government jurisdictions. Small businesses are those with sizes below thresholds established by the SBA. For the purposes of the regulatory flexibility analysis, we expect the following types of entities to be affected by this proposed rule: (1) Small employers and (2) QHP issuers.
few, if any, issuers are small enough to fall below the size thresholds for small business established by the SBA. In that rule, we used a data set created from 2009 NAIC Health and Life Blank annual financial statement data to develop an updated estimate of the number of small entities that offer comprehensive major medical coverage in the individual and group markets. For purposes of that analysis, HHS used total Accident and Health earned premiums as a proxy for annual receipts. We estimated that there are 28 small entities with less than $7 million in accident and health earned premiums offering individual or group comprehensive major medical coverage.
The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. HHS will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. This final rule is not a “major rule” as defined by 5 U.S.C. 804(2).
2.Section 155.705 is amended by revising paragraphs (b)(2) through (4) to read as follows: § 155.705 Functions of a SHOP.
3.Section 155.725 is amended by: A. Amending paragraph (a)(1) by adding “and” at the end of the paragraph.
(i) Experiences an event described in § 155.420(d)(1), (2), (4), (5), (7), (8), or (9);
(5) The effective dates of coverage are determined using the provisions of § 155.420(b). (6) Loss of minimum essential coverage is determined using the provisions of § 155.420(e).
1. Patient Protection and Affordable Care Act; Establishment of Exchanges and Qualified Health Plans; Exchange Standards for Employers, 77 FR 18310 (March 27, 2012) (to be codified at 45 CFR parts 155, 156, 157).
2. Patient Protection and Affordable Care Act; CMS Notice of Benefit and Payment Parameters for 2014, 78 FR 15410 (March 11, 2013) (to be codified at 45 CFR parts 153, 155, 156, 157, 158).
3. Patient Protection and Affordable Care Act; Establishment of Exchanges and Qualified Health Plans; Small Business Health Options Program, 77 FR 15553 (March 11, 2013) (to be codified at 45 CFR parts 155 156).
5. Patient Protection and Affordable Care Act; Establishment of Exchanges and Qualified Health Plans; Proposed Rule, 76 FR 41866 (July 15, 2011) (to be codified at 45 CFR parts 155 156).
6. Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2014; Proposed Rule, 77 FR 73118 (December 7, 2012) (to be codified at 45 CFR parts 153, 155, 156, 157, 158).
8. Patient Protection and Affordable Care Act; Establishment of Exchanges and Qualified Health Plans, Exchange Standards for Employers and Standards Related to Reinsurance, Risk Corridors and Risk Adjustment Regulatory Impact Analysis, March 2012. Available at: http://cciio.cms.gov/resources/files/Files2/03162012/hie3r-ria-032012.pdf.