# Patient Protection and Affordable Care Act; Establishment of the Multi-State Plan Program for the Affordable Insurance Exchanges

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A2013-04954

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** March 11, 2013
- **Citation:** 78 FR 15560

## Text

OFFICE OF PERSONNEL MANAGEMENT
45 CFR Part 800
RIN 3206-AM47
Patient Protection and Affordable Care Act; Establishment of the Multi-State Plan Program for the Affordable Insurance Exchanges

AGENCY:

U.S. Office of Personnel Management.

ACTION:

Final rule.

SUMMARY:

The U.S. Office of Personnel Management (OPM) is issuing a final regulation establishing the Multi-State Plan Program (MSPP) pursuant to the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, referred to collectively as the Affordable Care Act. Through contracts with OPM, health insurance issuers will offer at least two multi-State plans (MSPs) on each of the Affordable Insurance Exchanges (Exchanges). One of the issuers must be non-profit. Under the law, an MSPP issuer may phase in the States in which it offers coverage over 4 years, but it must offer MSPs on Exchanges in all States and the District of Columbia by the fourth year in which the MSPP issuer participates in the MSPP. This rule aims to balance adhering to the statutory goals of MSPP while aligning its standards to those applying to qualified health plans to promote a level playing field across health plans.

DATES:

Effective May 10, 2013, except for § 800.503. OPM will publish a document announcing the effective date of § 800.503 in the
Federal Register
.

Note:

Section 2719 of the Public Health Service Act and its implementing regulations apply to all non-grandfathered group health plans and health insurance issuers, including MSPP issuers, with respect to internal claims and appeals and external review. Because rulemaking implementing section 2719 has not yet been completed, the provisions of this regulation relating to external review (§ 800.503) will take effect on the effective date of those regulations.

FOR FURTHER INFORMATION CONTACT:

Julia Elam by telephone at (202) 606-2128, by FAX at (202) 606-0033, or by email at
mspp@opm.gov.

SUPPLEMENTARY INFORMATION:

The Patient Protection and Affordable Care Act (Pub. L. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), together known as the Affordable Care Act, provides for the establishment of Health Insurance Marketplaces, or Exchanges, in each State, where individuals and small businesses can purchase qualified coverage. The Exchanges will provide competitive marketplaces for individuals and small employers to directly compare available private health insurance options on the basis of price, quality, and other factors. The Exchanges will enhance competition in the health insurance market, improve choice of affordable health insurance, and give individuals and small businesses purchasing power comparable to that of large businesses. The U.S. Office of Personnel Management is issuing this final regulation to implement section 1334 of the Affordable Care Act by establishing the Multi-State Plan Program, as described below.

Abbreviations

FEHBA Federal Employees Health Benefits Act (5 U.S.C. 8901
et seq.
)

FEHBP Federal Employees Health Benefits Program

HHS U.S. Department of Health and Human Services

HMO Health Maintenance Organization

I/T/Us Indian Health Service, tribes and tribal organizations, and urban Indian organizations

MSP Multi-State Plan

MSPP Multi-State Plan Program

NAIC National Association of Insurance Commissioners

OPM U.S. Office of Personnel Management

PHS Act Public Health Service Act

QHP Qualified Health Plan

SHOP Small Business Health Options Program

Pursuant to its responsibilities under the Affordable Care Act, the U.S. Department of Health and Human Services (HHS) issued regulations outlining standards to certify Exchanges and qualified health plans (QHPs) that will be offered on Exchanges. If a State does not elect to operate an Exchange or is not certified (or conditionally approved) to operate one, HHS will operate the Exchange in that State.

Section 1334 of the Affordable Care Act directs the U.S. Office of Personnel Management (OPM) to establish the Multi-State Plan Program (MSPP) to foster competition among plans competing in the individual and small group health insurance markets on the Exchanges. Specifically, section 1334 directs OPM to contract with private health insurance issuers (one of which must be non-profit) to offer at least two multi-State plans (MSPs) on each of the Exchanges in each State. The law allows MSPP issuers to phase in coverage, but coverage must be offered on Exchanges in all States and the District of Columbia by the fourth year in which the MSPP issuer participates in the MSPP. The first open enrollment period for plans offered through Exchanges will begin on October 1, 2013, for coverage starting January 1, 2014.

The purpose of this regulation is to outline the process by which OPM will establish and administer the MSPP, as well as to establish standards and requirements for MSPs and MSPP issuers.

Summary of Comments

On December 5, 2012, OPM published proposed regulations (77 FR 72582) establishing the MSPP at part 800 of title 45, Code of Federal Regulations. The comment period for the proposed rule closed on January 4, 2013. OPM received about 350 comments from a wide variety of entities and individuals. A summary of the comments we received follows, along with our responses to the comments and changes we are making to the proposed regulations in light of the comments. In addition, we are making some minor technical and editorial changes to the proposed regulations to correct errors and improve clarity and readability.

Responses to Overarching Comments

Of the approximately 350 comments we received on the proposed rule, about 105 were unique comment letters. Many of the others were form letters, including letters requesting an extension of the comment period.

A broad range of stakeholders commented on the proposed regulation, including 14 States and the National Association of Insurance Commissioners (NAIC). We also received comments from about a dozen health insurance issuers, group health plans, and their associations. Most of the remaining comments came from health care providers, pharmaceutical companies, business groups, labor unions, and consumer groups.

Length of the Comment Period

We received many comments about the 30-day comment period and whether we would extend it. Some commenters contended that the 30-day comment period did not provide sufficient time to provide feedback.

Our comment period is consistent with the Administrative Procedure Act and Executive Orders 12866 and 13563. OPM values the participation of a broad array of diverse stakeholders, and we have succeeded in obtaining that participation, as evidenced by the volume of comments as well as the diversity of viewpoints offered in response to our proposed regulation. Moreover, OPM has provided several other opportunities for public input on policies relating to the MSPP. On June

16, 2011, OPM issued a Request for Information (RFI) to solicit feedback from stakeholders about the program. On September 21, 2012, OPM issued a draft MSPP application and received public comments over a 30-day period. OPM has also held meetings and phone calls with numerous stakeholders to seek input and guidance, including from the NAIC, States, tribal governments, consumer advocates, health insurance issuers, labor organizations, provider associations, and trade groups.

Church Plans

One commenter urged OPM to consider entering into an MSPP contract with a church plan. The commenter explained that church plans are defined in various sections of the law, including section 414(e) of the Internal Revenue Code and section 3(33) of the Employee Retirement Income Security Act (ERISA). A church plan does not, by itself, meet the definition of health insurance issuer in section 2791(b)(2) of the PHS Act; in addition, enrollment is limited to church employees and members of the clergy. The commenter interpreted section 1334 of the Affordable Care Act as allowing OPM to contract with church plans to offer coverage through the MSPP. First, the commenter stated that, while section 1334(a)(1) provides that the Director shall enter into contracts for MSPs with health insurance issuers, it does not expressly preclude OPM from entering into contracts with entities other than issuers. The commenter asserted that church plans should be considered eligible to contract for an MSP because OPM can treat a church plan as equivalent to an issuer under the Church Parity and Entanglement Protections Act, Public Law 106-244 (“Parity Act”). The commenter recommended that OPM could exercise its discretion to exempt church plans from a number of requirements for MSPs, including permitting a church plan MSP to limit enrollment to members of the clergy and church employees.

We disagree with the commenter's interpretation of section 1334 and do not believe that a church plan meets the requirements necessary for OPM to offer such a plan under an MSPP contract. Section 1334(a)(1) explicitly requires OPM to enter into contracts for MSPs with “health insurance issuers,” and we do not agree that the statute authorizes OPM to enter into contracts with entities other than health insurance issuers. Because church plans, by themselves, do not meet the definition of health insurance issuers as described above, OPM does not have the authority to contract for them under § 1334.

Responses to Comments on the Regulations

Subpart A—General Provisions and Definitions

Basis and Scope (§ 800.10)

OPM proposed this section to define the basis and scope of part 800, which establishes the primary authority for the establishment of the MSPP under the Affordable Care Act. Other relevant statutory provisions MSPP issuers and MSPs must comply with include all provisions of part A of title XXVII of the Public Health Service (PHS) Act. Section 800.10 also sets forth the scope of this regulation, which establishes standards for health insurance issuers wishing to contract with OPM to participate in the MSPP and for the appeals processes for both MSPP issuers and enrollees.

We received no comments on § 800.10 as proposed. Accordingly, we are adopting it as final, with no changes.

Definitions (§ 800.20)

In § 800.20, OPM proposed definitions for terms that are used throughout part 800. In general, the definitions contained in § 800.20 come from the following sources: title I of the Affordable Care Act and the final Exchange regulation at 45 CFR parts 155, 156, and 157; title XXVII of the PHS Act and the regulations at 45 CFR part 144; and the Federal Employees Health Benefits Act (FEHBA) at chapter 89 of title 5, United States Code, and the regulations governing the Federal Employees Health Benefits Program (FEHBP) at 5 CFR part 890 and 48 CFR 1609.70. Some new definitions were created for the purpose of implementing the MSPP. The application of the terms defined in this section is limited to this final rule.

OPM proposes definitions for several terms based on three HHS regulations. First, HHS published an Essential Health Benefits (EHB) final rule in the
Federal Register
on February 25, 2013, to provide standards related to EHB, actuarial value (AV), and accreditation. Second, HHS published a final rule in the
Federal Register
on February 27, 2013, to provide standards related to fair health insurance premiums, guaranteed availability, guaranteed renewability, risk pools, and rate review (the health insurance market rules). Third, HHS published a final rule elsewhere in today's edition of the
Federal Register
, to provide notice of standards relating to benefit and payment parameters for 2014, including standards related to advance payments of the premium tax credit and cost-sharing reductions (the payment rule). OPM is using the definitions promulgated by HHS.

Comments:
OPM received several comments recommending changes in the definitions in proposed § 800.20. A few commenters expressed concern with how OPM plans to operationalize the definition of “Indian.” Specifically, the commenters suggested that OPM adopt the definition at 42 CFR 447.50 and not use the definition at 45 CFR 155.300(a) as we proposed. OPM was also asked to correct the definition of “Indian Plan Variation,” which currently cross references 45 CFR 156.400, so that there is no confusion regarding eligibility of Indians for zero-cost-sharing and variable cost-sharing plan variations.

Response:
While the terms “Indian” and “Indian Plan Variation” were introduced in the proposed rule, referencing 45 CFR 155.300(a) and 45 CFR 155.400, respectively, we are removing them from the final rule, as they are not used elsewhere in the rule.

Comments:
A few commenters noted that OPM should not exclude policies and contracts from the “benefit plan material or information” definition. Two commenters said that we should not exclude policies and contracts from the definition, because including them in the scope of the regulation could be helpful to limited-English-proficient (LEP) individuals in making effective decisions.

One commenter wanted us to clarify that a provider directory falls within the definition of “benefit plan material or information.”

Response:
We are adopting the proposed definition of “benefit plan material or information.” The term, as defined, includes explanations or descriptions, whether printed or electronic, that describe a health insurance issuer's products. The term does not include a policy or contract for health insurance coverage. As it does in the FEHBP, OPM will review and approve the policy or contract for health insurance coverage. Such approval is necessary for effective contract administration and oversight. We agree that a provider directory does fall within the scope of the definition.

Comment:
One commenter suggested that introducing a second prong to the definition of “group of issuers”—to include “an affiliation of health insurance issuers and an entity who is not an issuer but who owns a nationally licensed service mark”—would expand the authority granted under section 1334 of the Affordable Care Act. The commenter recommended that we not

expand the definition of “group of issuers” to include entities not identified in the Affordable Care Act as potential participants in the MSPP.

Response:
Section 1334 does not define “group of issuers,” but only provides examples of affiliations of health insurance issuers that may be considered health insurance issuers. Thus, OPM, in the exercise of its discretion, and within the parameters set by section 1334, has established a definition that we believe affords flexibility in terms of the types of entities with which OPM may contract. In addition, this definition, which attempts to encompass a diversity of contractual arrangements similarly available to OPM under the FEHBP, promotes the goals of section 1334(a) of the Affordable Care Act, which directs OPM to implement the MSPP in a manner similar to the manner in which we implement the contracting provisions with respect to carriers under the FEHBP. As we noted in the proposed rule, this definition of “group of issuers” is applicable only for the purposes of section 1334.

Comment:
One commenter recommended that OPM revise the definition of “non-profit entity” to exclude the portion of the definition that states a non-profit entity may also be, for purposes of the MSPP, “a group of health insurance issuers licensed under State law a substantial portion of which are incorporated under State law as non-profit entities,” as this would further reduce competition in a State where a “for-profit” issuer may already have a significant market share.

Response:
We are adopting the proposed definition of “non-profit entity.” This definition is consistent with the manner in which OPM implements the contracting provisions with respect to carriers under the FEHBP and builds on our significant experience in contracting with and overseeing carriers under that program.

Comment:
Another commenter recommended amending the definitions of “multi-State plan (MSP)” and “Multi-State Plan Program issuer (MSPP issuer)” to clarify whether each MSP will be under separate contract with OPM or will contract through the MSPP issuer.

Response:
OPM is revising the definition of “MSP” to clarify that an MSP is offered under contract with OPM via an MSPP issuer.

Comment:
A commenter suggested that OPM broaden the definition of “State Insurance Commissioner” to acknowledge the potential for multiple regulatory roles in a State.

Response:
We understand the commenter's concern and acknowledge the possibility of multiple regulatory roles in some States, but we are retaining the proposed definition. This term is a standard term that is understood in the industry; therefore, we decline to amend the definition. Our definition of “State Insurance Commissioner” aligns with the definition used in many of the model acts issued by the National Association of Insurance Commissioners (NAIC) to ensure consistency with definitions widely used by State insurance regulatory entities.

Subpart B—Multi-State Plan Program Issuer Requirements

General Requirements (§ 800.101)

Section 800.101 of the proposed rule sets forth standards to implement § 1334(b) of the Affordable Care Act. The general requirements include licensure, a contract with OPM, required levels of coverage, eligibility and enrollment, compliance with OPM direction and other legal requirements. In § 800.101(i), we also proposed that an MSPP issuer must comply with applicable non-discrimination statutes and ensure that their MSPs do not discriminate based on race, color, national origin, disability, age, sex, gender identity, or sexual orientation. We sought comment on any unique enrollment and eligibility issues that might affect MSPs. A broad spectrum of consumer and professional organizations commented on this provision.

Comments:
Many commenters support OPM's intent to include non-discrimination provisions, but recommended adding specific additional language to strengthen these protections, including clarifying non-discrimination based on sex or gender identity.

Some commenters requested that OPM add specific non-discrimination language in § 800.101(d) that describes the MSP and MSPP issuer responsibilities for eligibility and enrollment. The specific suggestion was to notify MSPP issuers that benefit packages must be “substantially equal” to EHB benchmarks and not include any discriminatory benefit design elements as defined under 45 CFR 156.125.

Response:
In response to comments, we are revising § 800.101(i) of this final rule to ensure consistency with the prohibition on discrimination with respect to EHB in 45 CFR 156.125 and the non-discrimination standards applicable to QHPs under 45 CFR 156.200(e). With regard to defining EHB benchmarks, we have determined that these comments are outside the scope of this rule. These standards are governed by HHS regulations.

Comments:
Some commenters suggested that certain health care providers be included as protected categories for non-discrimination, and one commenter wanted MSPP issuers and MSPs to align their payment systems to comply with State and Federal non-discrimination provisions.

Response:
The broad prohibition on discrimination in § 800.101(i) clearly bars discrimination against certain health care providers of the MSPP issuer. Similar comments were addressed in § 800.109, concerning health providers and network adequacy. We are concerned that specifying types of providers who are protected from discrimination would detract from the larger issue of broadly ensuring access to the full range of covered services. Accordingly, no further change in proposed § 800.101(i) is needed to address this concern.

Comments:
A few commenters recommended that OPM expressly clarify in § 800.101(i) that the Indian Health Service, tribes and tribal organizations, and urban Indian organizations (collectively, I/T/Us) are not violating the non-discrimination requirements if they limit their services, in whole or part, to American Indians/Alaska Natives.

Response:
An MSPP issuer would not violate the non-discrimination requirements by contracting with health care providers who are authorized or directed by law to serve specific populations, such as Indian health providers. We note that an MSPP issuer must meet all standards related to network adequacy and essential community providers specified in § 800.109 and 45 CFR 156.235, respectively.

Comments:
A few commenters stated that OPM should clarify that MSPs and MSPP issuers must comply with any consumer protections and regulatory procedures a State or Exchange has put in place.

Response:
As explained in our proposed regulation, MSPs and MSPP issuers are generally required to comply with applicable State law. This would include the application of stronger protections in the Exchange provided by State law, as long as application of those provisions to the MSPP is consistent with the Affordable Care Act. We received no comments to indicate that the consumer protections applicable to the MSPP are any weaker than those required by any State or Exchange. On the contrary, OPM intends to protect

consumers through its administration of the MSPP in a manner similar to the manner in which it has protected enrollees in the FEHBP for more than 50 years. In any event, if there are specific consumer protections and regulatory procedures that go above and beyond Federal standards, OPM encourages States to identify them so OPM can consider and address them through a memorandum of understanding (MOU) with the State and, if appropriate, in its contracts with issuers.

Comments:
A few commenters asked how OPM will work with active purchasing Exchanges and recommended that OPM incorporate a “do no harm” objective in the preamble.

Response:
We will retain our current language and decline to incorporate a “do no harm” provision, as such a provision would be vague and ambiguous. Instead, we will maintain our approach of applying standards that neither competitively advantage nor disadvantage MSPs and MSPP issuers.

Comment:
One commenter stated that OPM should require MSPP issuers to meet standards for certification and licensing prior to signing a contract with OPM for MSPs in the State.

Response:
Section 800.101 clearly provides that an MSPP issuer must be licensed as a health insurance issuer in each State where it offers health insurance coverage, and it is deemed certified by OPM when it signs a contract with OPM.

Compliance With Federal law (§ 800.102)

Proposed § 800.102 specifies the Federal laws with which MSPP issuers must comply as a condition of participation in the MSPP. Paragraph (a) refers to applicable provisions of title XXVII of the PHS Act, while paragraph (b) refers to applicable provisions of title I of the Affordable Care Act.

In this final rule, paragraphs (a) and (b) no longer refer to Appendix A and B, respectively, which in the proposed rule listed specific provisions of title XXVII of the PHS Act and title I of the Affordable Care Act. We are omitting these appendices because, although the statutes listed in those appendices do apply to MSPP issuers, they may not necessarily be a comprehensive list of all applicable statutes. Also, it is possible that the list of statutes in the appendices may change over time.

We are also omitting Appendix C in this final rule, because § 36B of the Internal Revenue Code does not set forth responsibilities of issuers.

Comments:
Commenters suggested that OPM had erroneously neglected to include section 2716 of the PHS Act and section 1312 of the Affordable Care Act.

Response:
MSPP issuers that choose to participate in the Small Business Health Options Program (SHOP) will operate under the same rules as issuers of health insurance coverage in the small group market generally. OPM agrees that section 1312 of the Affordable Care Act applies to MSPP issuers.

Comments:
A few commenters noted that we listed section 2707 of the PHS Act in Appendix A to the proposed rule, which listed PHS Act provisions applicable to MSPs, and asked OPM to clarify that the PHS Act requirements were applicable solely to the off-Exchange markets and would not apply to MSPP issuers for products sold through an Exchange.

Response:
While all the requirements applicable to QHP issuers contained in section 2707 are also contained in requirements applicable to QHPs, they also apply directly.

Authority To Contract With Issuers (§ 800.103)

As provided in section 1334(a)(1) of the Affordable Care Act, OPM proposed in § 800.103 that it may enter into an MSPP contract with a group of issuers affiliated either by common ownership and control or by the use of a nationally licensed service mark, or an affiliation of health insurance issuers and an entity that is not an issuer but that owns a nationally licensed service mark.

We received no substantive comments on this section. Accordingly, we are adopting proposed § 800.103 as final, with no changes.

Phased Expansion (§ 800.104)

In § 800.104, we proposed phased expansion of the MSPP into States and that MSPP issuers may provide partial coverage within a State. We also proposed that MSPP issuers must be licensed in the State where they offer coverage and OPM may enter into a contract with an issuer that is not licensed in all States. We stated in the preamble of the proposed regulation that § 800.104 implements provisions of section 1334(e) of the Affordable Care Act regarding the phase-in of multi-State plans. OPM proposed in § 800.104(b) that MSPP issuers offering MSPs can offer coverage in part of a State, and do not have to offer coverage throughout the entire State. We also solicited comment on whether an MSPP issuer should be required to offer coverage statewide by the fourth year of participation in the MSPP, when coverage must be offered in each Exchange in all States and the District of Columbia.

Comments:
Several commenters expressed support for phased expansion into States. Another commenter stated that a multi-year phase-in process will allow MSPs to build appropriate networks and partnerships to satisfy the requirements of the Affordable Care Act and satisfy the needs of the citizens of each State. One commenter stated that MSPP issuers should be required to offer coverage on each Exchange in all States and the District of Columbia as soon as possible or in as many States as possible. Another commenter recommended an extension of the phase-in period to 6 years instead of a 4-year phase-in.

Response:
We are retaining the standards that are outlined in section 1334(e) of the Affordable Care Act. However, we have removed from the regulatory text the number of States that an issuer must phase into because section 1334(e) refers to percentages and not specific numbers. We believe the phased expansion approach into States will encourage MSPP issuers to expand MSPs to provide more consumer choice throughout the country. It is our intention to ensure that MSPP issuers have appropriate networks to adequately serve MSP enrollees, and we will take these comments into consideration when we are evaluating potential MSPP issuers.

Comment:
One commenter was concerned that MSPP issuers will subcontract to meet the phase-in requirements and that these will encourage “marriages of convenience.”

Response:
Section 1334 permits OPM to contract with health insurance issuers and entities that come together in order to apply as an MSP issuer. We encourage any such new entities to give careful thought and planning to their strategies for phasing in coverage to the States and the District of Columbia, and we will ensure through our application review and contracting process that these entities are prepared to offer quality health insurance options in the States for which they are applying.

Comment:
One commenter recommended that OPM should require licensure in all jurisdictions by the end of the phase-in.

Response:
We have adequately addressed the licensure requirement in § 800.104(c). As stated in that section, OPM may enter into a contract with an MSPP issuer that is not licensed in every State, provided that the issuer is licensed in every State where it offers MSP coverage through any Exchanges in that State and demonstrates to OPM that it is making a good-faith effort to

become licensed in every State, consistent with the timeframe for the phase-in.

Comments:
We received many comments on whether OPM should have a role in selecting the States in which MSPP issuers should or should not offer coverage during phased expansion. Several commenters recommended that OPM not specify which States an MSPP issuer must cover in the first year. Other commenters recommended that OPM should consider slow-tracking implementation of the MSPP in certain States and granting these States waivers from participation. Another commenter suggested that OPM limit MSPP issuers to offering MSPs in States that will have Federally-facilitated Exchanges or State Partnership Exchanges in 2014. One commenter suggested that OPM focus the phase-in on States where consumers lack viable coverage options.

Response:
OPM declines to identify specific States that MSPP issuers should cover during phased expansion. We recognize the importance of providing consumers with more health insurance coverage options and, while we will not choose specific States where MSPP issuers must provide coverage during the phase-in, we will use our oversight and contract negotiation roles to provide consumers with the additional choice of two high-quality health insurance plans and promote competition on the Exchanges.

Comments:
One commenter supported OPM's proposal that OPM may enter into contracts with issuers that cannot provide statewide coverage and stated that it will give MSPP issuers time to develop the capacity to offer coverage throughout a service area, which will enhance competition in the MSPP. Several commenters appreciated that issuers failing to offer statewide coverage must propose a plan for becoming statewide, but expressed that without more specificity American Indians/Alaska Natives will not be able to access MSPs.

Response:
We acknowledge the importance of access to health coverage and MSPs, especially in rural and underserved areas. However, we are providing in the final regulation that OPM may enter into a contract with an MSPP issuer that will provide partial coverage within a State. We recognize the challenges that issuers would face if there were a requirement to offer coverage statewide, and we were made aware of these challenges from issuers in the MSPP Request for Information as well as comments on the proposed rule. However, we are maintaining in the final rule our proposed requirement for MSPP issuers who are offering partial coverage in a State to supply a plan for offering coverage throughout the State. As we review MSPP issuer applications, we will pay special attention to service areas that are medically underserved, such as rural areas and American Indian/Alaska Native populations. We intend to encourage issuers to offer coverage statewide where they have capacity to do so, and will take these comments into consideration when negotiating MSPP contracts.

Comments:
Several commenters wanted clarification of phased expansion in terms of MSPs being able to meet network adequacy standards. One commenter recommended that MSPP issuers not be permitted to offer MSPs in a State unless the plan is capable of offering coverage to all residents of a State, including meeting network adequacy standards throughout the State, to avoid selective coverage by issuers.

Response:
While we appreciate the concern for network adequacy, we decline to set a standard of phased expansion and statewide coverage in terms of network adequacy. We believe that network adequacy is sufficiently addressed in § 800.109 to ensure that an MSP's services are available to all enrollees.

Comments:
Many commenters were concerned by our proposal to allow partial coverage within a State. Some stated that MSPP issuers should be required to comply with all State requirements regarding geographic scope of coverage that apply to QHPs. One commenter recommended that MSPs follow specific State standards for statewideness. Some commenters stated that, without a requirement of statewideness, there is a possibility of red-lining by MSPP issuers or adverse selection resulting in MSPP issuers avoiding certain populations. Commenters were also concerned about market dislocation. One commenter stated that MSPP issuers would be able to avoid offering coverage in rural and other high-cost areas, which would give them a competitive advantage over both QHP issuers and issuers not offering on an Exchange. Lastly, one commenter stated that a core purpose of the MSPP is to benefit individuals who lack options, and allowing issuers to avoid certain difficult areas in a State contradicts this basic purpose. One commenter suggested that we include language indicating that we will consult with State regulators and the State Exchange in determining that MSP coverage does not exclude specific high-utilizing, high-cost, or medically-underserved populations.

Response:
We are not prohibiting MSPP issuers from being statewide; on the contrary, we encourage them to do so from the start if they have the capacity. MSPP issuers should follow State laws regarding statewideness to the extent it is within their capability to do so. In addition, we are finalizing this regulation with the requirement for an MSPP issuer to provide a plan for expanding coverage statewide. Furthermore, we intend to address an MSPP issuer's ability to expand coverage statewide as part of the MSPP application and contract negotiation processes. We acknowledge the commenters' concern for red-lining and other “cherry-picking” practices where an issuer might offer plans only in geographic areas that are expected to have lower risk. Therefore, we will evaluate MSPP issuers to ensure that the locations in which they propose to offer MSP coverage have been established without regard to racial, ethnic, language, health-status-related factors listed in section 2705(a) of the PHS Act, or other factors that exclude specific high-utilizing, high-cost, or medically-underserved populations. We agree that a core purpose of the MSPP is to provide additional choice of health insurance plans and promote competition on the Exchanges, and MSPP issuers should not be permitted to avoid areas in a State that are difficult to serve. We are aware of these concerns and are committed to MSPP issuers being neither competitively advantaged nor disadvantaged, compared to QHP issuers.

OPM proposed that, by the end of the phase-in period, MSPP issuers should be required to offer coverage on the SHOP in addition to the individual Exchange. We solicited comments on this approach to SHOP participation, including on whether participation in SHOP should be required from the outset or whether we should allow MSPP issuers to provide a plan that requires a period longer than the phase-in period to fully participate in the SHOP. We received comments on the phase-in to SHOPs from States, an issuer association, and professional organizations.

Comments:
Several commenters supported our approach of allowing MSPP issuers the flexibility to phase-in to SHOPs. One commenter asked that OPM clarify whether the statement in the preamble that the “MSPP issuer may choose to participate in the SHOP” is a proposal to phase-in MSPP issuer coverage in the SHOP. Some commenters were concerned that MSPs will have a competitive advantage if they are not required to follow the same

rules as the Federally-facilitated Exchange and State requirements for QHPs to offer coverage in both the individual and SHOP markets. One commenter noted that OPM's approach presents a significant challenge, since it has merged markets. Some commenters would like OPM to require participation in the SHOP from the outset or require full participation in the SHOP at the fourth year of phase-in.

Response:
We appreciate the support for our approach of allowing MSPP issuers the flexibility to phase-in coverage to the SHOPs, which was discussed in the preamble of the proposed rule, though not addressed in the regulatory text. Based on the policy for Federally-facilitated SHOP participation published in the HHS Payment Notice, we are finalizing our regulation to require MSPP issuers to comply with 45 CFR 156.200(g). In the HHS Payment Notice, HHS adopted a provision stating that a QHP issuer applicant will participate in a Federally-facilitated SHOP based on an issuer applicant's current small group market share. The provision uses a threshold of 20 percent market share to determine whether a small group market issuer is subject to the tying provision for QHPs in the Federally-facilitated SHOPs. For the MSPP, we believe this standard for the Federally-facilitated SHOP can be met if a State-level MSPP issuer or any other issuer in the same issuer group affiliated with an MSPP issuer provides coverage on the Federally-facilitated SHOP.

In this final rule, we adopt a policy for the MSPP that mirrors the standard set by HHS for the Federally-facilitated SHOP. We also adopt a policy for SHOP participation on State-based Exchanges that is consistent with our approach to State law under § 800.114 while retaining OPM discretion on timing of MSPP issuers to participate in the SHOP. For State-based SHOPs, we will permit an MSPP issuer flexibility to phase-in participation in the SHOP if the State has set a standard that requires QHPs to participate. We understand the burden of building capacity and network in order to offer in the SHOPs and want to balance the needs of small employers, MSPP issuers, and States. We believe section 1334(e) provides OPM discretion to allow an MSPP issuer to phase-in SHOP participation in States that require participation and this flexibility meets the needs of many stakeholders. Therefore, we are finalizing regulatory text in § 800.104(c) that requires MSPP issuers to comply with standards in 45 CFR 156.200(g) and with State standards for SHOP participation, subject to § 800.114, and gives OPM discretion to provide MSPP issuers flexibility during the initial years of the program to phase into the SHOP in a State-based Exchange. We also clarify that an MSPP issuer must offer coverage for both individuals and small groups in a State with a merged individual and small group market. We encourage MSPP issuers to expand coverage in States and SHOPs when they have adequate capacity to accept enrollees.

Benefits (§ 800.105)

In § 800.105, OPM proposed to implement section 1334(c)(1)(A) of the Affordable Care Act, which directs an MSP to offer a benefits package that is uniform in each State and consists of the EHB described in section 1302 of the Affordable Care Act. OPM developed its benefits policy in coordination with HHS, which promulgated the EHB rule. Generally, under that rule, EHB would be defined by a benchmark plan selected by each State or, in the absence of a State benchmark designation, a default benchmark. However, the EHB rule also states at 45 CFR 156.105 that MSPs must meet benchmark standards set by OPM.

In § 800.105(a)(1), OPM proposed that an MSPP issuer must offer a uniform benefits package for each MSP and that the benefits for each MSP must be uniform within a State, but not necessarily uniform among States. In § 800.105(a)(2), OPM proposed that the benefits package referred to in § 800.105(a)(1) must comply with section 1302 of the Affordable Care Act, as well as any applicable standards set by OPM or HHS in regulations. Together, these provisions clarify that MSPP issuers must comply with applicable HHS requirements and that OPM may issue additional guidance regarding any issues unique to MSPs.

In § 800.105(b)(1), OPM proposed allowing MSPP issuers to offer a benefits package, in all States, that is substantially equal to either (1) each State's EHB-benchmark plan in each State in which it operates; or (2) any EHB-benchmark plan selected by OPM. The second option offers administrative efficiencies for MSPP issuers, who face a number of challenges in being able to offer MSPs on each Exchange in all States and the District of Columbia. We also noted in our proposed rule that MSPP issuers could potentially achieve a similar consistency in their benefits offerings by adhering to State EHB-benchmark plans and applying the EHB substitution rules at 45 CFR 156.115.

Comments:
We received many comments on the proposed EHB-benchmark policy from a broad range of stakeholders. Many commenters argued that the proposed policy would lead to adverse selection or consumer confusion. Some commenters argued that the proposed policy would also constitute Federal preemption of State authority to regulate insurance. At least one commenter said that the proposed policy would lead to administrative complexities and inefficiencies. Finally, some commenters preferred to have only a national benchmark.

Some commenters noted that differences between an OPM-selected benchmark and State-selected benchmark are unlikely to be actuarially significant. Some commenters also noted that the proposed policy would encourage issuers to participate in the MSPP. Other commenters also noted that OPM-selected benchmarks would provide robust prescription drug coverage, obesity treatment services, medical nutrition therapy, pediatric services, and chiropractic care.

Response:
We agree with commenters who noted that the differences between an OPM-selected benchmark and State-selected benchmark are unlikely to be actuarially significant. We are not aware of any compelling evidence that multiple benchmarks would lead to adverse selection or consumer confusion, nor did the commenters produce any evidence of adverse selection or consumer confusion. Accordingly, we are adopting as final the proposed provision to allow an MSPP issuer to offer a benefits package in all States that is substantially equal to either the EHB-benchmark plan in each State in which it proposes to offer an MSP or any EHB-benchmark plan selected by OPM.

Comments:
Several commenters discussed the need for national MSPs for American Indians/Alaska Natives.

Response:
We acknowledge that consistency among States would be helpful for I/T/Us that may consider purchasing plans for tribes that are in multiple States. Members of tribes would still need to access the Exchanges in their States to determine their eligibility and enrollment for products available through the Exchange, including an MSP. While the MSPP is not a national plan, reciprocity of coverage among MSPs in States is an issue we intend to take up in contract negotiations with MSPP issuers. We look forward to conferring with tribes on this approach and engaging them in how the MSPP may best meet their needs.

Comments:
Several commenters asked us to eliminate or provide additional guidance regarding the “substantially equal” standard.

Response:
Because HHS is defining the standard for the term “substantially equal,” we expect MSPP issuers to follow HHS guidance relating to this term.

OPM also proposed that even if an MSPP issuer chooses to use an EHB-benchmark plan selected by OPM in all States, the MSPP issuer must still use a State-selected benchmark in States that do not allow any substitution for services within the benchmark benefits. The reason for this is if an MSPP issuer were to use an OPM-selected benchmark in States that require all plans to offer the same set of benefits, then the MSP in that State would be different from all of the other plans offered on the market, which could potentially lead to market disruption, adverse selection, or consumer confusion could occur.

Comments:
Many commenters supported the policy that OPM-selected benchmarks and substitutions not be allowed in States having standard benefit designs.

Response:
We are adding a paragraph (b)(3) to § 800.105 to clarify that an MSPP issuer must comply with any State standards relating to substitution of benchmark benefits or standard benefit designs. Accordingly, in a State that does not allow substitution of benchmark benefits, or that has standard benefit designs, an MSPP issuer that has chosen to use an OPM-selected EHB-benchmark plan under paragraph (b)(2)(ii) must use the State's EHB-benchmark plan.

No matter which option an MSPP issuer chooses, it must apply that option uniformly in each State in which the MSPP issuer proposes to offer MSPs. This means that, except as discussed above, our approach will not permit an issuer to use a State benchmark plan in some States in which it operates and an OPM-chosen benchmark plan in others.

In § 800.105(c)(1), OPM proposed selecting, as EHB-benchmark plans, the three largest FEHBP plan options by enrollment that are open to Federal employees and annuitants, which were identified by HHS pursuant to section 1302(b) of the Affordable Care Act. On July 3, 2012, HHS identified the three largest FEHBP plan options (as of March 31, 2012) as Blue Cross Blue Shield (BCBS) Standard Option; BCBS Basic Option; and Government Employees Health Association (GEHA) Standard Option.
1

An MSPP issuer that selects one of these benchmarks must offer this benefits package in all States in which it operates an MSP.

1
Centers for Medicare and Medicaid Services, Essential Health Benefits: List of the Largest Three Small Group Products by State, available at
http://cciio.cms.gov/resources/files/largest-smgroup-products-7-2-2012.pdf.PDF
(July 3, 2012).

Several commenters urged OPM to be judicious in evaluating all proposed benchmarks. Based on initial comparative research, it appears that the proposed OPM-selected EHB-benchmark plans are largely similar in scope of benefits covered to those benchmark-eligible plans in the small group markets.
2

This research also indicates that the OPM-selected EHB-benchmark plans, like other benchmark-eligible plans, may lack coverage for pediatric oral services, pediatric vision services, and habilitative services and devices. Moreover, the EHB-benchmark may also lack State-required benefits. Accordingly, OPM proposed standards to supplement the OPM-selected EHB-benchmark plans in § 800.105(c)(2)-(c)(4).

2
U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, ASPE Research Brief, Essential Health Benefits: Comparing Benefits in Small Group Products and State and Federal Employee Plans, available at
http://aspe.hhs.gov/health/reports/2011/MarketComparison/rb.pdf
(December 2011).

In § 800.105(c)(2), we proposed that any OPM-selected EHB-benchmark plan lacking coverage of pediatric oral services or pediatric vision services must be supplemented by the addition of the entire category of benefits from the largest Federal Employee Dental and Vision Insurance Program (FEDVIP) dental or vision plan option, respectively, pursuant to 45 CFR 156.110(b) and section 1302(b) of the Affordable Care Act. On July 3, 2012, HHS identified the largest FEDVIP dental and vision plan options, as of March 31, 2012, to be, respectively, MetLife Federal Dental Plan High Option and FEP BlueVision High Option.

We also solicited comments on the provision of pediatric oral services by MSPs in order to meet the requirements of section 1302(b)(1)(J) of the Affordable Care Act. Under one proposed approach, an MSP would include pediatric oral services in its benefit package. Finally, we solicited comments on how stand-alone dental plans offered on the Exchanges should affect this requirement, if at all.

Comments:
While some commenters favored offering stand-alone dental plans, others expressed concern that the expense of separate out-of-pocket maximums might discourage families from purchasing separate coverage for pediatric oral services. Some commenters proposed to require all MSPs to offer both a complete medical package and an identical plan without pediatric oral services in areas where stand-alone pediatric dental coverage is available.

Response:
Given the range of possible benefit designs, we are not promulgating any further regulatory provisions regarding coverage of pediatric oral services. Instead, we will keep these comments in mind during MSPP contract negotiations, which would allow greater flexibility on benefit designs.

In § 800.105(c)(3), we proposed that an MSPP issuer must follow State definitions for habilitative services and devices where the State chooses to specifically define this category pursuant to 45 CFR 156.110(f). When a State chooses not to define this category and any OPM-selected EHB-benchmark plan lacks coverage of habilitative services and devices, OPM may determine what to include in this category.

Comments:
All commenters supported OPM's intention to include habilitative services and devices in the MSPs. However, they disagreed on whether we should defer to State definitions or have OPM define a specific set of habilitative services and devices that each MSP must cover. Some asked that we require parity in scope, amount, and duration for habilitative and rehabilitative services. Other commenters supported our proposed approach for when a State chooses not to define the category of habilitation. When this happens, we will determine what habilitative services and devices must be included in an OPM-selected EHB-benchmark plan. One commenter suggested that we refer to both habilitative “services and devices” in § 800.105(c)(3) as we do in § 800.105(c)(4).

Response:
Based on the comments, we will direct MSPP issuers to follow State definitions of habilitative services and devices where they exist and, where they do not exist, OPM will consider these comments during MSPP contract negotiation. We are adopting proposed § 800.105(c)(3) as final, with the one technical correction mentioned above.

In § 800.105(c)(4), OPM proposed that, at least for years 2014 and 2015, OPM's EHB-benchmark plans would also include, for each State, any State-required benefits enacted by December 31, 2011, that are included in a State's EHB-benchmark plan or specific to the market in which the MSPP issuer offers coverage. Accordingly, these State-required benefits would be treated as part of the EHB. However, consistent with 45 CFR 155.170, OPM proposed that State-required benefits enacted after December 31, 2011, would be in addition to the EHB. Under section

1334(c)(4) of the Affordable Care Act, a State must assume the cost of such additional benefits over the EHB by making payments either to the enrollee or on behalf of the enrollee to the MSPP issuer, if applicable. An MSPP issuer must calculate and report the costs of additional State-required benefits pursuant to § 800.105(e). This standard is also consistent with 45 CFR 155.170.

Comments:
Most commenters supported the inclusion of State-required benefits before December 31, 2011. However, one commenter opposed the inclusion of State-required benefits. Another commenter stated that the cutoff date for inclusion of State-required benefits should be November 26, 2012, the date when the proposed EHB rule was published.

Response:
We are making no changes to § 800.105(c)(4), because it is consistent with standards applicable to QHPs at 45 CFR 155.170.

Comments:
Several commenters recommended that State payments for State-required benefits above the EHB benchmark be made only to issuers instead of allowing States the option of making payments to either issuers or enrollees.

Response:
We are making no changes to proposed § 800.105(e), because it is consistent with section 1334(c)(4) of the Affordable Care Act, as well as standards applicable to QHPs at 45 CFR 155.170.

In § 800.105(d), OPM proposed that an MSPP issuer's benefits package, including its prescription drug list, must be submitted to and approved by OPM, which will determine whether a benefits package proposed by an MSPP issuer is substantially equal to an EHB-benchmark plan, in accordance with the requirements set forth by HHS in the proposed EHB rule. In determining whether an MSPP issuer's benefits package should be approved, OPM proposed to follow the HHS approach set forth at 45 CFR 156.115, 156.122, and 156.125. Section 156.115(b) of title 45, Code of Federal Regulations, allows issuers to make benefit substitutions within each EHB category and directs issuers to submit evidence of actuarial equivalence of substituted benefits to a State. We requested comments on whether MSPP issuers should submit evidence of actuarial equivalence of substituted benefits to OPM in addition to, or in lieu of, their submission to a State.

Comments:
Many commenters recommended that, if MSPP issuers are allowed to make actuarially equivalent substitutions, evidence should be submitted to both States and OPM.

Response:
We are adopting the proposed § 800.105(d), and we will work collaboratively with State regulatory officials during the MSPP application process to ensure they receive evidence of actuarial equivalence of substituted benefits.

In reviewing an MSPP issuer's proposed benefit design, OPM plans to review an MSPP issuer's benefits package for discriminatory benefit design, consistent with section 1302(b)(4) of the Affordable Care Act and 45 CFR 156.110(d), 156.110(e), and 156.125, and will work closely with States and HHS to identify and investigate any potentially discriminatory benefit design in MSPs.

In summary, we are adopting proposed § 800.105 as final, with the change described above relating to standardized benefit designs. We also are making minor technical corrections, including by inserting a reference to both habilitative “services and devices” in § 800.105(c)(3) to be consistent with § 800.105(c)(4).

Cost-Sharing Limits, Premium Tax Credits, and Cost-Sharing Reductions (§ 800.106)

In § 800.106(a), OPM proposed that, for each MSP it offers, an MSPP issuer must ensure that the cost-sharing provisions of the MSP comply with section 1302(c) of the Affordable Care Act as well as any applicable standards set by OPM or HHS in regulations. The HHS standards are set forth in 45 CFR 156.130. In § 800.106(b), OPM proposed that an MSPP issuer, for each MSP it offers, must ensure that an eligible individual receives advance payments of premium tax credits under section 36B of the Internal Revenue Code (the Code) and cost-sharing reductions under section 1402 of the Affordable Care Act. This provision would establish MSPP issuer responsibilities under section 1334(c)(3)(A) of the Affordable Care Act, which specifies that an individual enrolled in an MSP is eligible for the premium tax credits and cost-sharing reductions in the same manner as an individual who is enrolled in a QHP. We clarify that under § 800.106(b), MSPP issuers must comply with the same standards as QHP issuers, including applicable provisions of sections 1402(a)(2) and 1412(c)(2)(B) of the Affordable Care Act and 45 CFR part 156, subpart E. OPM may issue additional guidance regarding any unique issues faced by MSPs.

We received comments on this section from a broad spectrum of consumer and professional organizations and a few individual States. In general, our intention is to require MSPP issuers to comply with Exchange rules to ensure that MSPs operate on a level playing field with other issuers operating in the Exchanges. To the extent any rules governing MSPs differ from those governing QHPs, OPM will design them to afford the MSPs and MSPP issuers neither a competitive advantage nor a disadvantage with respect to other plans offered on the Exchange.

Comments:
Some commenters requested that OPM clarify its requirement that MSPPs must comply with State cost-sharing restrictions.

Response:
It is our intention to require MSPP issuers to follow HHS rules regarding cost-sharing except when State laws impose stricter requirements for their Exchanges. In the event a State standardizes cost-sharing arrangements and these standards comply with HHS regulations, an MSPP issuer will also be required to comply with State standards for cost-sharing.

Comments:
One group of commenters suggested that OPM require an MSP to cover out-of-network subspecialty care with the same cost-sharing arrangements as in-network.

Response:
As acknowledged in our final application for the MSPP, we may, in some circumstances, also require MSPP issuers to provide in-network benefits for services from certain out-of-network providers; however, this would not be done through rulemaking. We will take these comments under consideration during our contract negotiation with MSPP issuers.

Concerns about the cost-sharing variation for American Indian/Alaska Native families who want to purchase child-only coverage are not within the scope of OPM's rulemaking authority. The Exchanges and HHS will facilitate all plan variations between MSPP issuers and potential enrollees just as they will do for families participating in the QHPs. However, where appropriate, OPM will coordinate closely with HHS on areas of special concern for American Indian/Alaska Native adults and children.

We are adopting proposed § 800.106(a) as final, with no changes, and we are making technical changes to § 800.106(b).

Levels of Coverage (§ 800.107)

In § 800.107, we proposed that an MSPP issuer, like a QHP issuer participating in Exchanges, must offer at least one plan at the silver level of coverage and one plan at the gold level of coverage in each Exchange in which the issuer is certified to offer an MSP pursuant to a contract with OPM. OPM will use its discretion about whether an MSPP issuer may offer products in

addition to the required gold and silver products.

We also proposed that an MSPP issuer must offer a child-only plan at the same level of coverage as any health insurance coverage offered to individuals who, as of the beginning of the plan year, have not attained the age of 21. OPM proposed that MSPP issuers must comply with applicable HHS requirements to offer plan variations that will reduce or eliminate cost-sharing for eligible enrollees pursuant to section 1402 of the Affordable Care Act. Any MSP plan variations will be submitted to OPM for review and approval, and OPM will coordinate its approach to them with the final HHS notice of benefit and payment parameters for 2014. OPM will exercise this discretion to promote the best interests of enrollees and potential enrollees in the MSPP and to ensure adequate administrative oversight of each MSP and MSPP issuer.

A number of comments, although informative, relate to issues that do not fall within the scope of OPM's rulemaking. In general, our intention is to direct MSPP issuers to comply with State requirements related to the offering of levels of coverage, including but not limited to standardized benefit designs and tiers.

Comments:
Some commenters recommended that OPM require or encourage MSPP issuers to offer coverage beyond gold and silver plans. The suggestions included requiring MSPP issuers to offer one or more of the following: At least one bronze plan; a plan in both the MSP and State Medicaid program; and catastrophic coverage.

Response:
The Affordable Care Act requires each MSPP issuer to offer both a gold and silver plan. OPM will not require bronze coverage through this regulation, but has the discretion to approve other levels of coverage through contract negotiation with issuers. Therefore, where a State allows it, we will consider plans that offer catastrophic or bronze levels of coverage. We will also consider applicants to the MSPP that propose to offer an MSP in the Exchange and simultaneously provide coverage through a State Medicaid program. We agree with commenters that this would reduce the potential for gaps as consumers transition between Medicaid and Exchange eligibility. However, we do not have authority to require MSPP issuers to participate in Medicaid.

No changes are needed in § 800.107 in light of the comments we received. Therefore, we are adopting proposed § 800.107 as final, with no changes.

Assessments and User Fees (§ 800.108)

The proposed rule provides OPM discretion to collect an assessment or user fee from MSPP issuers as a condition of participating in the MSPP. The proposed rule also describes, generally, that any OPM-collected assessments and user fees would be to cover the administrative costs of performing the contracting and certification of MSPs and of operating the program, functions typically conducted through an Exchange for QHPs.

Comments:
Some commenters asked OPM to confirm that MSPP issuers would pay any State-based Exchange user fees in addition to the MSPP-specific assessments or user fees. These commenters were concerned that any administrative fee above and beyond the Exchange fee charged to QHP issuers is duplicative and could lead to a competitive disadvantage for MSPP issuers. One commenter asked how the process for paying assessments and user fees to OPM would work.

Response:
In this final rule, OPM is preserving its discretion to collect an MSPP assessment or user fee, and clarifies that it may begin collecting the fee in 2015; OPM does not intend to collect an assessment or user fee in 2014. The user fee could be used to fund OPM activities directly related to MSPP certification and administration. We currently estimate that any future assessment or fee would be no more than 0.2 percent of premiums.

The MSPP user fee would not be a substitute for any user fee or assessment imposed by a State-based Exchange or Federally-facilitated Exchange. Rather, OPM intends for any MSPP user fee it collects to be offset against any State-based Exchange or Federally-facilitated Exchange user fee that the MSPP issuer must pay. This offset would preserve a level playing field for MSPP issuers. Under this approach, the MSPP issuers would pay the same total assessment or user fee to participate in an Exchange as all other QHPs participating in that Exchange. In addition, this process would allow the Exchanges to receive the bulk of the user fee from MSPP issuers to cover the Exchange costs, while also providing a marginal amount to fund the certification activities that OPM will perform in the place of an Exchange with respect to the MSPs.

OPM would issue further guidance in advance of collecting any user fees in 2015. For example, OPM would provide instructions on whether MSPP issuers should pay the MSPP portion of the user fee to OPM and pay separately the balance of the State-based or Federally-facilitated Exchange user fee to the State or HHS, as appropriate.

Comments:
Several commenters wanted more detail about OPM's costs for certifying and administering the MSPP and to what use the assessment or user fee would be put. One commenter suggested eliminating the assessment or user fee since MSPP administration is a function of OPM.

Response:
As stated in the proposed rule, the MSPP assessment or user fee would be used for OPM's MSPP functions for administration, including entering into contracts with, certifying, recertifying, decertifying, and overseeing MSPs and MSPP issuers for that plan year. OPM will communicate such costs to MSPP issuers and Exchanges when available. The MSPP user fee is similar to a fee that OPM collects and uses to administer contracts for the FEHBP and will only be used to administer the MSPP as it performs plan management functions similar to State-based and Federally-facilitated Exchanges.

Network Adequacy (§ 800.109)

OPM proposed, in § 800.109, a standard for network adequacy for the MSPP that mirrors the HHS standard set forth in 45 CFR 156.230 and is intended to ensure that an MSP's services are available to all enrollees. Consistent with the Exchange final rule's alignment with the NAIC Model Act, OPM proposed directing an MSPP issuer to (1) maintain a network that is sufficient in the number and types of providers to ensure that all services will be accessible without reasonable delay for enrollees; (2) offer a provider network that is consistent with network adequacy provisions set forth in section 2702(c) of the PHS Act; and (3) offer a provider network that includes essential community providers in compliance with 45 CFR 156.235. OPM intends for an MSPP issuer to make its provider directory available to the Exchange for online publication and to potential enrollees in hard copy, upon request. The proposed regulation stated that OPM would issue guidance containing the criteria and standards that OPM will use to determine the adequacy of a provider network. In addition, we solicited comment on State licensure and any issues for MSPs with respect to State-specific network adequacy requirements.

Comments:
Some commenters recommended that network adequacy provisions include specific provider types, such as certified registered nurse anesthetists, tribal health care providers, chiropractic physicians, optometrists, and Christian Science providers. Some

commenters also stated that OPM should prohibit discrimination against specific provider types. A few commenters recommended that OPM require MSPP issuers to adopt a standard Indian Addendum for contracting with tribal health care providers.

Response:
While the MSP network adequacy standard should provide access to a range of health care providers, specifying the inclusion of specified provider types, beyond what is required under the Affordable Care Act for QHPs (e.g., essential community providers), would detract from the larger issue of broadly ensuring affordable access to the full range of covered services. Accordingly, the final rule retains the language in proposed § 800.109(a) that requires MSPP issuers to maintain networks that include sufficient numbers and types of providers to ensure all services will be accessible without unreasonable delay. This includes providers representing medical, surgical, pediatric, mental health, and allied health disciplines to meet the anticipated health care needs of a diverse patient population. We acknowledge the importance of having standards in place to prevent discrimination against specific provider types, because a variety of providers is important for accessing services. However, we believe that the non-discrimination standards set forth in §§ 800.101 and 800.102 adequately prohibit discrimination against specific provider types. OPM will reinforce these protections through its contract negotiations with MSPP issuers.

With regard to the comments on the standard Indian Addendum, OPM recognizes that furnishing MSPP issuers with a standard Indian Addendum to a provider contract may make it easier for MSPP issuers to contract with Indian providers. We are aware that the Centers for Medicare and Medicaid Services (CMS) has partnered with the Indian Health Service to develop a Draft Model Qualified Health Program Addendum for contracting between QHP issuers and tribal health care providers. However, CMS has not required that QHP issuers use the Addendum in the Exchange rule. We think it more appropriate to address this issue in our contract negotiations. We will continue to coordinate closely with CMS on the use of the standard Indian Addendum by MSPP issuers when contracting with Indian providers.

Comments:
A few commenters recommended that OPM require MSPP issuers to contract with “any willing essential community provider.” Similarly, a few commenters suggested that OPM require MSPP issuers to comply with any State laws concerning “any willing provider” or “any willing pharmacy.”

Response:
In proposed § 800.109(a)(3), OPM adopted an approach that mirrors that of HHS regarding inclusion of essential community providers for QHPs. OPM intends for MSPP issuers to contract with essential community providers. We do not intend to change this provision of the proposed regulation, but we wish to assure commenters that we consider §§ 800.109(a) and 800.114 to require MSPP issuers to comply with State “any willing provider” laws.

Comments:
We received some comments related to standards for provider directories under proposed § 800.109(b). Overall, commenters supported the proposed standards, which mirrored the HHS standards in the Exchange final rule. However, one commenter suggested that OPM require MSPP issuers to maintain a dedicated email address that providers and consumers could use to submit inaccurate provider directory information for correction. In addition, another commenter requested that OPM streamline requirements for provider directories by allowing downloadable electronic versions in place of hard copy and avoiding requiring regular updates of providers accepting new patients.

Response:
The proposed § 800.109(c) mirrors the HHS approach to provider directories for QHPs. We will consider, during the MSPP contract negotiations, the comment on an MSPP issuer maintaining a dedicated email address for changes in provider directory information. With regard to the commenter who suggested that MSPP issuers not be required to provide a hard copy of the provider directory to potential enrollees upon request, this suggestion conflicts with HHS standards.

Comments:
We received numerous comments related to establishing a uniform MSPP network adequacy standard. Many commenters did not support OPM developing a uniform standard for the MSPP. These commenters suggested that not applying the same standards to all QHPs and MSPs within a State would lead to adverse selection and market dislocation, and would not be in the best interests of consumers, though they did not submit any evidence to support these contentions. Specifically, two commenters identified States that had existing network adequacy standards for managed care products and recommended that an MSPP issuer comply with those standards. Conversely, many other commenters recommended that OPM establish a national, uniform standard for network adequacy for the MSPP. These commenters indicated that a uniform standard would be considered a critical component of the MSPP and is especially important in ensuring that MSPs provide reasonable and timely access to health care.

Response:
OPM recognizes that many, though not all, States direct health insurance issuers to evaluate the adequacy of their provider networks on an ongoing basis and monitor network adequacy in their traditional role of regulating health insurance. Based on comments received on the proposed rule, and informed by previous comments concerning the RFI and the draft application, we have adopted an approach under which the MSPP will establish a uniform standard for network adequacy using time and distance standards that are based on those published by CMS for Medicare Advantage plans (for providers and facilities) and Medicare Part D (for retail pharmacies), which we note meet the QHP network standards in 45 CFR 156.230. For 2014, we will assess MSPP issuers' compliance with these time and distance standards for a broad, diverse list of provider types and facility types, which we believe adequately reflects the ability of an MSPP issuer to assure that all services will be accessible without unreasonable delay for enrollees. More information is available in our final MSPP application that was published on January 18, 2013, on the Federal Business Opportunities Web site at
www.FBO.gov
under solicitation number OPM35-12-R-0006, Multi-State Plan Program.

In the first year of the MSPP, we will apply only the MSPP standard for MSPP issuer networks, and in future years may require an MSPP issuer to meet State network standards, if appropriate and in the best interest of MSP enrollees. Accordingly, we are adopting proposed § 800.109 as final, with no changes; however, we will continue to consider these comments during the MSPP contract negotiations.

Service Area (§ 800.110)

In § 800.110, OPM proposed that MSPP issuers comply with the service areas defined by Exchanges, but this does not necessarily require that an MSP be offered in all defined service areas. We also proposed that for each State in which the MSPP issuer does not offer coverage in all service areas, the MSPP issuer's application for participation in the MSPP and the information it submits to support

renewal of a contract must include a plan for offering coverage throughout the State. We sought comment on whether MSPP issuers should be required to offer MSPs in all service areas by the fourth year of participation in the MSPP.

Comments:
We received some support for our proposal on service areas from a commenter stating that our policy allows MSPP issuers time to develop the capacity to offer coverage throughout a service area and this will enhance competition. Several commenters were concerned about MSPP issuers' ability to cherry-pick the areas where they offer plans. Some commenters recommended that MSP service and rating areas be aligned to prevent issuers from cherry-picking. Another commenter recommended that MSPs be required to comply with the service area requirements applicable to all other issuers in a State. One commenter recommended that MSPs be required to cover geographic service areas in a particular State where they are licensed if their license is other than statewide, and the commenter also recommended that MSPs should follow the same rules as QHPs, concerning partial rating regions. Finally, several commenters were concerned that our proposed policy may not ensure access in a meaningful way or promote competition.

Response:
Similar to our response to comments on § 800.104, we are not prohibiting MSPP issuers from offering coverage in all service areas; on the contrary, we encourage them to do so if they have the capacity. We are clarifying in the final rule that MSPs will be required to comply with the service area requirements applicable to all QHPs in a State. We are not making any additional requirements regarding partial rating regions or geographic service areas in States with certain licensure laws that determine service area. We acknowledge the commenters' concern that issuers may cherry-pick certain service areas. However, we believe that requiring that MSPs be subject to the same service area requirements as QHPs will create a level playing field and prevent issuers from cherry-picking. In addition, we intend to pay special attention to whether service areas include rural areas and American Indian/Alaska Natives during MSPP contract negotiations. We will evaluate the service area of an MSP to ensure that it has been established without regard to racial, ethnic, language, health status-related factors specified under section 2705(a) of the PHS Act, or other factors that exclude specific high-utilizing, high-cost or medically-underserved populations.

Similar to our changes under § 800.104, we are removing the requirement in the proposed rule that, for each State in which the MSPP issuer does not offer coverage in all service areas, the MSPP issuer would submit a plan on expanding coverage throughout the State. For reasons described in our responses to comments on § 800.104 related to statewide coverage, we intend to encourage MSPP issuers to expand coverage and will assess their capacity to do so through the MSPP contract negotiations.

Accreditation Requirement (§ 800.111)

In § 800.111, OPM proposed a requirement that MSPP issuers be or become accredited consistent with the HHS standards for QHP issuers. We also proposed that the MSPP issuer must authorize the accrediting entity to release to OPM and to Exchanges a copy of the MSPP issuer's most recent accreditation survey, along with any survey-related information that OPM or an Exchange may require. OPM also proposed that an issuer that is not accredited as of the date that it enters into a contract with OPM must become accredited within the timeframe established by OPM in accordance with 45 CFR 155.1045.

Comments:
Several commenters recommended that OPM set a timeframe for accreditation that meets the accreditation timeframe set for QHP issuers either participating in Federally-facilitated Exchanges or in State-based Exchanges. Some commenters supported a unique timeline for MSPP issuer accreditation.

Response:
OPM intends to follow the timeframe for accreditation in 45 CFR 155.1045 and similar provisions adopted by State-based Exchanges, though we are reserving the authority to set our own timeframe under narrow circumstances that take into account the unique nature of the MSPP. Due to the broad geographic coverage required for the MSPP, MSPP issuers may need additional time to collect data on local performance for accreditation. Similarly, a group of issuers coming together to contract as an MSPP issuer under a common service mark may need additional time to coordinate between accrediting entities or among component plans. Additional time may also be required if a component plan has previously been accredited by an entity other than the accrediting entities recognized by the Secretary. Therefore, in accordance with our authority under 45 CFR 155.1045, we are adopting our proposed approach in the final regulation, with no changes.

Comment:
One commenter recommended that the MSPP issuer must have a schedule for a review of policies and procedures with a recognized accrediting agency during that initial year and have documentation that a readiness review for accreditation has been completed.

Response:
OPM will consider this comment in creating contract language for MSPP issuers who are obtaining accreditation in accordance with § 800.111(c).

Comment:
One commenter asked OPM to clarify how consumers will be educated about the differences between an accredited and unaccredited plan; another commenter requested that accreditation surveys be made public.

Response:
Accreditation status of MSPP issuers (as well as all QHP issuers) will be made available to consumers through Exchange systems. No change in the regulation is needed.

Comment:
One commenter suggested that to allow a group of independent insurance issuers to jointly offer an MSP, accreditation must be required at the State level rather than at a national level.

Response:
MSPP issuers will be accredited on the basis of local performance in accordance with the requirements for QHP issuers specified in section 1311 of the Affordable Care Act and 45 CFR 156.275(a). No change is required in the proposed rule.

Reporting Requirements (§ 800.112)

The proposed § 800.112(a) specified that OPM may collect such data and information as are permitted or required by the Affordable Care Act to be collected from an MSPP issuer. OPM has also proposed to collect such other data and information as it determines necessary for the oversight and administration of the MSPP.

OPM will use its FEHBP contract administration as a model for reporting requirements. Examples of reporting that is currently required for FEHBP carriers and that may be required for the MSPP include financial reports, premium payment information, enrollment reporting, and quality assurance information.
3

OPM will determine the data and information that MSPP issuers report and the frequency and process for submitting such reports to be published in future guidance. Reporting of certain types of information is critical for OPM to

implement and administer the MSPP. To oversee MSPP contracts, OPM will need to collect certain information to ensure the integrity of the MSPP, to protect enrollees, to prevent fraud and abuse, to monitor quality and quality improvement, and for other purposes.

3
OPM's Routine Reports and Submissions required for FEHB carriers is available at
http://www.opm.gov/carrier/reports/index.asp.

Comments:
Commenters raised several issues with regard to MSPP reporting requirements. Many commenters noted that MSPP issuers should comply with applicable State and Exchange standards.

Response:
We note that § 800.115(e) requires MSPP issuers to comply with all Federal and State quality improvement and reporting requirements.

Comments:
Many commenters also urged that we coordinate with States on data collection to avoid duplicative efforts. Some also asked us to share data with the public. A couple of commenters stated that OPM should not use a centralized health claims data warehouse for the MSPP, but adopt a decentralized approach.

Response:
We agree with commenters that our approach to data collection should be coordinated with States. OPM intends to enter into MOUs with States to streamline data collection and reduce duplicate reporting requirements. This rule does not address specifics of how OPM will collect data, and our method for data collection will be developed in future policy guidance, in consultation with HHS.

Comment:
One commenter stated that the MSPP should adopt the pharmacy benefit manager (PBM) transparency standards that OPM has established for the FEHBP, while another commenter opposed such an approach.

Response:
PBM transparency standards will be established through the MSPP contract, and we will consider these comments in developing contract language.

Comments:
Several commenters urged us to adopt specific data collection requirements, such as annual reports on each health plan, including data on the number of enrollees receiving treatment for drug and alcohol abuse and MSPP issuer definitions of medical necessity and rider policies.

Response:
Specific reporting requirements may change from year to year based on the needs of the program. Accordingly, such issues are more appropriately addressed through contract negotiations, rather than this regulation.

Comments:
The preamble of the proposed rule also suggested that OPM may collect demographic data. Several commenters supported data collection on demographics. A couple of commenters noted that issuers may not currently collect demographic data and, in some States, demographic data collection could be prohibited by law. One commenter opposed all demographic data collection.

Response:
Although we are not finalizing any specific demographic data collection in this rule, our authority to administer MSPP contracts includes collection of demographic data, if we decide to do so in the future. In that event, we will consult with any States that have laws prohibiting collection of demographic data.

Section 800.112(b) specifies quality and quality improvement standards. With respect to quality reporting, under the FEHBP, OPM requires all health plans to report their performance through Healthcare Effectiveness Data and Information Set (HEDIS) metrics and Consumer Assessment of Healthcare Providers and Systems (CAHPS) surveys, independent of the source of plan accreditation. This allows for comparison among plans in a consistent manner. OPM expects to begin with a similar approach to performance measurement in MSPs to facilitate oversight. We expect our approach to evolve as HHS sets forth further guidance on quality reporting standards for QHPs.

Comments:
Several commenters supported our proposed approach regarding quality and quality improvement standards. One commenter was concerned that requiring HEDIS reporting, which is proprietary to one accrediting entity, would be an undue burden to other accrediting entities. One commenter recommended that we immediately use the eValue8 quality reporting tool. Another commenter noted that we include measures applicable to children, including specific modules for children with special health care needs across the entire breadth of conditions and domains (preventive care, mental health, and chronic care).

Response:
We are adopting in this final regulation our proposed approach to quality and quality improvement standards, because it reflects current FEHBP policies and Federal standards for QHPs. We anticipate that quality reporting standards will evolve over time, and we will consider these comments as the standards develop.

Benefit Plan Material or Information (§ 800.113)

In proposed § 800.20, OPM defined the term “benefit plan material or information” to include explanations or descriptions, whether printed or electronic, that describe a health insurance issuer's products. The term does not include a policy or contract for health insurance coverage. As it does in the FEHBP, OPM will review and approve the policy or contract for health insurance coverage. We view oversight of such contractual documents as uniquely within OPM's responsibilities under section 1334(a)(4) to implement the MSPP in a manner similar to the manner in which we implement the contracting provisions with respect to carriers under the FEHBP. OPM cannot manage MSPP contracts similarly to FEHBP contracts without the authority to review and revise these documents. See the discussion of § 800.20 for our responses to comments on the definition of “benefit plan material or information.”

Section 800.113(a) states that MSPP issuers must comply with Federal and State laws related to benefit plan material or information. An MSPP issuer must also comply with OPM guidance specifying OPM standards, process, and timeline for approval of benefit plan material or information.

Comments:
We received many comments about the proposed policy on compliance with Federal and State law. Several commenters supported the requirement that MSPP issuers comply with both Federal and State laws relating to benefit plan material or information. Several commenters wanted OPM to clarify that State approval of a policy form is a precondition of OPM approval. One commenter wanted OPM to defer to States for approval of policy forms, except where a State's action or inaction prevents an MSP from being offered on an exchange.

Response:
While OPM intends to review and approve policy forms for health insurance coverage, OPM expects MSPP issuers to comply with related State law requirements for form review. Accordingly, an MSPP issuer's requirement to comply with State law includes the requirement to comply with form review laws. However, State approval of a policy form is not a precondition of OPM approval. OPM expects that few disagreements will arise between OPM and a State regarding form review and, if they do, we will work with the State to successfully resolve the discrepancy in a manner that is acceptable to both OPM and the particular State.

Proposed § 800.113(b) states that all MSP enrollee notices must meet minimum access standards for individuals with limited English proficiency (LEP) and for individuals with disabilities as described in 45 CFR 155.205(c). As stated in the final

Exchange rule, HHS intends to issue further guidance on minimum standards to address language access and coordinate HHS accessibility standards with insurance affordability programs, and across HHS programs, as appropriate. OPM expects MSPP issuers to comply with these minimum access standards once HHS publishes this guidance. OPM may also establish additional standards for MSPP applications and notices.

Comments:
Several commenters wanted OPM to clarify that obligations to provide materials in different languages be calculated by State or service area, not nationwide. Two commenters wanted us to provide clearer guidance on our language access policies. They suggested that, to start with, OPM clarify that LEP guidance set forth by HHS' Office of Civil Rights, which is referenced in footnote 48 of the HHS proposed rule with respect to appeals, will also apply to other benefit material or information.

Response:
Such guidance will be addressed through the contract negotiation process.

Section 800.113(c) states that an MSPP issuer is responsible for the accuracy of its benefit plan material or information. Section 800.113(d) states that benefit plan material or information must also be in plain language, be truthful, not be misleading, and have no material omissions.

QHPs must comply with the provisions of section 2715 of the PHS Act and its implementing regulations at 45 CFR 147.200 on Summary of Benefit and Coverage and Uniform Glossary requirements. Under § 800.113(e), OPM also will require MSPs to comply with the statute and regulations. Additionally, OPM expects that MSPP issuers will meet any requirements that allow standardized benefit information to be displayed on HHS or Exchange web portals.

Section 800.113(f) states that OPM will review and approve certain benefit plan material or information as defined in § 800.20 of the proposed regulation. OPM may not necessarily review all benefit plan material or information. It may request from MSPP issuers those materials that it wishes to review and approve. OPM's review will focus on the MSPP issuer's compliance with the standards promulgated by OPM with respect to benefit plan material or information.

Comments:
One commenter did not want OPM to review and approve benefit plan material or information. One commenter was concerned about the practical difficulties for both issuers and regulators with respect to the dual requirement that OPM review and approve policy forms and that issuers also comply with State requirements. One commenter wanted more clarity on the interplay between Federal and State review. One commenter stated that OPM review of communication materials, and its discussion with States, should be concluded no later than 90 days prior to the beginning of the annual enrollment period.

Response:
OPM cannot entirely cede responsibility for the review of benefit plan material or information since such review is important to oversight. Nonetheless, in order to avoid unnecessary duplication and burden, OPM will work with States concerning the review of benefit plan material or information and may work with States to define respective roles through MOUs. OPM will also aim for prompt review of benefit plan material or information.

Section 800.113(g) states that OPM will allow an MSPP issuer to state that OPM has certified a plan as an MSP and will oversee its administration. OPM is aware that many States have adopted laws or regulations prohibiting issuers from using advertisements that “may lead the public to believe that the advertised coverages are somehow provided by or endorsed by [a] governmental agenc[y].”
4

However, because OPM will have certified an MSPP issuer and an MSP as meeting certain standards, potential issuers may wish to include this fact in materials they distribute to the public subject to review by OPM. OPM does not view this as a violation of State law anti-endorsement provisions because it is not misleading, but rather a recitation of the fact that the issuer is providing coverage pursuant to a contract with OPM.

4
These State law prohibitions derive from the NAIC's Advertisements of Accident and Sickness Insurance Model Regulation § 13.C. (Apr. 1999).

Comment:
One commenter did not want MSPP issuers to include a statement on certification by OPM.

Response:
For the reasons set forth above, we are adopting the proposed policy regarding statement of certification.

Comments:
Several commenters stated that it is critical that the information about the special protections for American Indians/Alaska Natives be clearly stated in all plan materials so that they are informed about the cost-sharing plan variations that may apply to them so they can enroll in the correct plan. The commenters also stated that American Indians/Alaska Natives should know whether a plan network includes their I/T/U provider.

Response:
We acknowledge that certain American Indians/Alaska Natives should be made aware of special protections and whether a plan includes I/T/U providers. We encourage MSPP issuers to make this information available to MSPP plan participants. We will continue to work with CMS and the Indian Health Service to make sure American Indians/Alaska Natives are informed about the cost-sharing plan variations.

Because no changes are required based on the comments received, OPM is adopting proposed § 800.113 as final, with no changes.

Compliance With Applicable State Law (§ 800.114)

As proposed, § 800.114 would require MSPP issuers generally to comply with State law. Paragraph (a) of the proposed regulation restated the requirement set forth in section 1334(b)(2) of the Affordable Care Act, including the three categories of State laws with which MSPP issuers need not comply: (1) State laws that are inconsistent with section 1334; (2) State laws that prevent the application of a requirement of part A of title XXVII of the PHS Act; and (3) State laws that prevent the application of a requirement of title I of the Affordable Care Act. We have made a technical edit in paragraph (a) to make it more consistent with § 800.116.

In paragraph (b) of proposed § 800.114, we provided greater detail on the methods OPM would use to determine whether a State law fits into one of the above categories. Specifically, we proposed that OPM would use a list of four factors: (1) Whether the law in question imposes a requirement that differs from those applicable to QHPs and QHP issuers on one or more Exchanges in the State; (2) whether the law creates responsibilities, administrative burdens, or costs that would significantly deter or impede the MSPP issuer from offering a viable product on one or more Exchanges; (3) whether the law creates responsibilities, administrative burdens, or costs that significantly deter or impede OPM's effective implementation of the MSPP; or (4) whether the law prevents an MSPP issuer from offering an MSP on one or more Exchanges in the State.

Comments:
Many commenters found the factors listed in paragraph (b) to be too broad and vague. A few commenters noted that paragraph (b)(1) compares MSP requirements to QHP requirements, whereas (b)(2) appears to lack an analog against which to measure responsibilities, administrative burdens,

or costs that apply to MSPs and MSPP issuers. A few commenters expressed specific concern about the use of the words “significantly deter or impede” in paragraphs (b)(2) and (b)(3). A few commenters requested that the word “unreasonable” be added to paragraph (b)(2) to modify “responsibilities, administrative burdens, or costs.” A few commenters generally opposed OPM's authority to find that a State law is inconsistent with Federal law, and one commenter questioned OPM's legal authority to preempt State law through a determination of inconsistency.

Response:
At proposed § 800.114(a), we listed the justifications for nonapplicability of a State law to the MSPP, as set forth at section 1334(b)(2) of the Affordable Care Act, which provides that an MSPP issuer must be “subject to all requirements of State law not inconsistent with this section, including the standards and requirements that a State imposes that do not prevent the application of a requirement of part A of title XXVII of the [PHS] Act, or a requirement of this title [I of the Affordable Care Act.]” In proposed paragraph (b), we listed factors that may inform OPM's analysis under paragraph (a). Although these listed elements would be considered relevant to the analysis, OPM would only be authorized to excuse an MSPP issuer from compliance with a State law that is inconsistent with section 1334 of the Affordable Care Act, prevents the application of a provision of part A of title XXVII of the PHS Act, or prevents the application of a requirement of title I of the Affordable Care Act.

In light of the concerns expressed concerning the regulatory factors identified in the proposed regulation, we have amended the regulatory text to remove the list of factors. By removing these factors from the regulation, we do not disavow them as relevant considerations in evaluating whether the statutory standard for preemption has been satisfied. Rather, we do not wish to give the impression that they are any more or less important than any other factors that may be relevant in a specific circumstance to a determination of whether a State law should be preempted.

Comment:
One commenter recommended that OPM consider the seamlessness of a consumer's experience purchasing health insurance on an Exchange and the avoidance of consumer confusion in evaluating State laws under this section.

Response:
We will consider all relevant information, including consumers' experiences in shopping on Exchanges, when determining whether a State law must be preempted under the statutory standards listed in paragraph (a). Each determination under this section will depend on specific facts and circumstances.

Comments:
A few commenters recommended that OPM consult with States and Exchanges prior to making a determination of inconsistency under this section.

Response:
We agree that OPM should work collaboratively with States, particularly in making determinations regarding State laws. OPM intends to continue to establish and cultivate working relationships with officials in State regulatory agencies and Exchanges. Such relationships may exist informally, or may eventually be reflected in MOUs, as OPM intends to pursue MOUs with each State in which the MSPs are being offered. In either case, OPM would consult with States during the process of making a determination of inconsistency regarding a State law. We have changed paragraph (b) to state expressly our intention to engage in such consultation.

Comments:
Some commenters expect that OPM's ability to render a determination of inconsistency under this section will create competitive advantages for MSPs over QHPs. A few commenters stated that “double regulation,” by both OPM and each State, will competitively disadvantage MSPs.

Response:
We are sensitive to concerns that the MSPP will create disruptions in different markets, and this regulation has been designed to comply with the statutory directives of the Affordable Care Act while minimizing any such disruptions. The proposed rule reflects a balanced approach under which an MSPP issuer will comply with all State laws except any with respect to which OPM has determined that such State law is contrary to Federal law. This approach will keep each MSP in relative balance with QHPs offered on the same Exchange. No evidence has been offered to support the commenters' assertion that OPM's reservation and potential exercise of this authority creates a competitive advantage for the MSPs or MSPP issuers.

Moreover, OPM's proposed framework for MSPP compliance incorporates State law and sets standards and requirements similar to those used successfully under the FEHBP. We designed this regulatory framework to ensure that the program is capable of sufficient flexibility to facilitate its implementation. We intend to employ that flexibility to take any appropriate action to ensure that MSPs are neither unreasonably competitively advantaged nor disadvantaged.

Comments:
Some commenters recommended that we require compliance not only with State law but also with QHP standards set by States and Exchange authorities. A few commenters recommended that OPM require MSPP issuers to enter into contracts with Exchanges that will actively or selectively contract with QHP issuers. One commenter requested clarification that MSPP issuers would be required to comply with technical requirements for QHPs, such as data submission formatting.

Response:
As noted in the preamble to the proposed rule, we intend that MSPs and MSPP issuers be subject to all of the same standards and requirements as QHPs and QHP issuers, except where deviations are authorized by law. We look forward to working collaboratively with States to ensure that we are aware of all relevant standards, including those of a technical nature, to ensure that MSPs and MSPP issuers comply with such standards.

Requiring MSPP issuers to enter into a contract with Exchanges would circumvent section 1334(d) of the Affordable Care Act, which vests certification authority for MSPs in OPM rather than Exchanges by providing that MSPs offered under a contract with OPM are deemed to be certified by an Exchange. We consider active or selective contracting models employed by Exchanges to be operational processes rather than QHP standards, and we will not direct MSPP issuers to participate in such processes, consistent with statute.

Comment:
One commenter requested clarification that OPM's determination of inconsistency under this section would only apply to MSPs and MSPP issuers in Exchanges in one State, as opposed to throughout all States.

Response:
A determination of inconsistency under this section would be limited to the State in which the State law in question exists. OPM recognizes that some State laws are based on model acts, and that several States may employ the same or similar language in State laws. However, we also realize that the facts and circumstances that give rise to a determination of inconsistency may vary from one State to another. OPM will evaluate State laws carefully, and will refer to previous determinations as precedent when determining the applicability of a State law, but will not automatically apply a determination of inconsistency to more than one State law without consulting with the State

regulatory agencies and Exchange(s), and thoroughly evaluating the unique facts and circumstances in each State.

Comment:
One commenter requested clarification as to whether OPM would conduct independent research or rely on a complaint-driven process to select which State laws may be subject to a determination of inconsistency under this section.

Response:
We intend to use all available information to assess the compatibility of State laws with the MSPP, including complaints from enrollees, communication with issuers, collaboration with States, and additional research.

Comment:
One commenter recommended that OPM adopt a standard for noncompliance with State law where only a “compelling national goal” would justify a finding that a State law does not apply to MSPP issuers.

Response:
The standards we have adopted are those set forth in the statute.

Comment:
One commenter supported the proposed approach, but requested acknowledgement that OPM would assume responsibility for enforcement of State law with respect to MSPP issuers.

Response:
Although we intend to communicate closely with States to ensure compliance with State and Federal laws, OPM is not authorized to assume responsibility for enforcement of State law. The same vehicles available to States to enforce their laws against QHPs would also be available to enforce them against MSPs. As noted above, we look forward to working collaboratively with States to ensure that consumers receive high-quality coverage.

Comment:
One commenter supported our proposal, but requested clarification that OPM would decide whether a State law applies, as opposed to an issuer or another party.

Response:
As reflected in the proposed regulatory text, we agree that OPM should decide whether a State law meets one of the three standards in paragraph (a). This responsibility flows from the statutory authority granted to OPM by section 1334 of the Affordable Care Act to implement and administer the MSPP.

Comments:
A few commenters recommended that Federal Indian law be recognized separately from State law.

Response:
The requirement for MSPP issuer compliance with State law set forth in § 800.114 is included in the final regulation to implement section 1334(b)(2) of the Affordable Care Act, which specifies that an MSPP issuer “is subject to all requirements of State law not inconsistent with this section [1334], including the standards and requirements that a State imposes that do not prevent the application of a requirement of” part A of title 27 of the PHS Act or title I of the Affordable Care Act. We acknowledge the unique concerns of I/T/Us, including concerns that involve the interaction of State law and Federal Indian law, and we intend to address them, to the extent practicable, through contractual terms.

Level Playing Field (§ 800.115)

In § 800.115, we proposed that an MSPP issuer would comply with Federal and State laws involving guaranteed renewal, rating, preexisting conditions, non-discrimination, quality improvement and reporting, fraud and abuse, licensure, solvency and financial requirements, market conduct, prompt payment, appeals and grievances, privacy and confidentiality, and benefit plan material or information. This section addresses compliance directly involving these areas of law, which are expressly listed at section 1324 of the Affordable Care Act. Section 1324 states that, if an MSP is not subject to a Federal or State law that falls into one of the 13 categories listed, no private health insurance coverage would be subject to such law. We received comments from States, Exchanges, consumer groups, providers and provider groups, pharmaceutical companies, and professional associations.

Comments:
A few commenters, while generally supporting OPM's proposed approach, expressed concern that our approaches to rate review, benefit plan material and information, and external review may trigger section 1324 (i.e., that they would cause private insurance plans to be exempt from laws listed in that section).

Response:
As explained in the preamble to the proposed rule and in the responses to comments regarding §§ 800.201, 800.501-504, and 800.113, our approach to rate review, benefit plan material or information, and external review would not excuse private health insurance coverage from compliance under section 1324. First, laws involving rate review do not fall within a category listed in section 1324 of the Affordable Care Act.

Second, our proposed rule explicitly requires MSPP issuers to comply with Federal and State laws related to benefit plan material or information. As set forth in § 800.20, and as discussed in responses to comments regarding that section and § 800.113, the definition of “benefit plan material and information” does not include a policy or contract for health insurance coverage.

Finally, as we indicated in the proposed rule, we believe that our approach to external review is required by section 1334 of the Affordable Care Act and does not trigger the level playing field provisions of section 1324 because our approach will comply with external review requirements.

Specifically, we believe our approach to external review is required by section 1334(a)(4), which directs OPM to implement the MSPP in a manner similar to the manner in which we implement the contracting provisions with respect to carriers under the FEHBP. External review is part of the contracting process. Through the external review process, matters of contract coverage are resolved.

As noted in the proposed rule, section 2719 of the PHS Act and its implementing regulations apply to all non-grandfathered group health plans and health insurance issuers, including MSPP issuers, with respect to internal claims and appeals and external review. We understand that the Departments of HHS, Labor, and the Treasury (the tri-Departments) intend to amend those regulations at 45 CFR 147.136 to clarify that the MSPP external review process is governed by section 2719(b)(2)(B). Under section 2719(b)(2), the external review requirements that must be met are established by the tri-Departments, which have made the judgment that the external review process adopted in this rule satisfies the requirements under that section. Thus, the level playing field provisions of section 1324 of the Affordable Care Act would not be triggered because MSPs and MSPP issuers would comply with the external review requirements in section 2719(b) of the PHS Act, just as other health insurance issuers in the group and individual markets are required to do. As noted in the
DATES
section of this notice of final rulemaking, rulemaking by the tri-Departments interpreting section 2719 in this manner has not yet been completed. We are making the provisions of this regulation on external review effective on the date that such tri-Department regulations become effective.

In addition, our approach to external review does not afford the MSPs any competitive advantage. Although OPM—instead of the States—will administer the external review process for MSPs, that process provides for application of the standards and requirements with which other issuers must comply under section 2719(b)(2) of the PHS Act. Thus, MSPs will in fact be

subject to, and comply with, the same law on external review as other issuers.

No commenter identified any State external review law that imposes higher standards than does the Federal external review law proposed for the MSPP. Based on our experience with the disputed claims process under the FEHBP, we believe that our external review process is comparable to any State external review process. We look forward to working collaboratively with States to ensure that our external review process is no less protective than the most protective State standards.

Comment:
One commenter recommended the expansion of the scope of “licensure” under this section.

Response:
We recognize that licensure laws in some States may impose varying requirements on health insurance issuers. Compliance with a broader range of State laws that may be conditions of licensure would be required under § 800.114 of this regulation, subject to the exceptions listed there. However, for purposes of analysis under this section, an MSPP issuer complies with laws “relating to” licensure by being licensed in each State in which the issuer offers an MSP.

Comment:
One commenter requested clarification as to whether the inverse of section 1324 would also be required, i.e., whether the other private health insurance coverage in a State would be subject to a State law to which an MSP is subject.

Response:
States typically regulate health insurance markets, and the MSPs will operate within those markets. As set forth in § 800.114, MSPs and MSPP issuers generally are subject to the same laws to which the rest of the health insurance market is subject.

Comments:
A few commenters expressed concern that OPM would prompt a “race to the bottom” by circumventing, through the MSPP, consumer protections provided by State laws.

Response:
The MSPP will promote uniformly high standards for MSPs to be made available to consumers. As noted in the proposed rule, we will deviate from State standards only when the standards are inconsistent with the implementation of OPM's statutory directive to implement this program. Like plans offered through the FEHBP, MSPs will be high-quality products that are subject to the experienced oversight of OPM.

We are adopting proposed § 800.115 as final, with no changes.

Process for Dispute Resolution (§ 800.116)

In § 800.116, we proposed a process by which a State may request that OPM reconsider a determination under § 800.114 that a State law does not apply to MSPs or MSPP issuers. The proposed process calls for a State to demonstrate that the State law at issue is not inconsistent with section 1334 of the Affordable Care Act, does not prevent the application of a requirement of part A of title XXVII of the PHS Act, and does not prevent the application of a requirement of title I of the Affordable Care Act. This section goes on to set forth the procedural framework for the process, including the form of the request, permissible supporting information and documentation, the timeframe for resolution, and the nature of OPM's written decision as final agency action. Most of the comments we received regarding this section were from States and Exchanges, and a few additional comments were submitted by consumer groups, issuers, and professional organizations.

Comments:
A few commenters recommended that this process be conducted by a third party outside of OPM. One commenter suggested that disputes over the applicability of State law be conducted through State administrative and judicial processes.

Response:
OPM cannot cede authority to make these determinations to an outside entity, because Congress directed OPM to implement and administer the MSPP.

The process outlined in this section offers a formal route to seek resolution of a complaint without having to initiate costly, contentious litigation over the applicability of State laws under the MSPP. Thus, review under this section would be conducted by a different official within OPM than the official who made an initial determination under § 800.114. Similar review is conducted under certain circumstances in the FEHBP when a dispute arises between OPM and a carrier. OPM's experience with such review has shown that it is an effective means of resolving disputes.

Comments:
One commenter requested a shorter timeframe than the 60 days proposed in paragraph (c)(3). Another commenter recommended that OPM ensure the resolution of all potential disputes involving a State's law prior to an MSP being offered on an Exchange within that State.

Response:
Sixty days is an appropriate period within which written decisions must be issued, but we intend to resolve each dispute under this section as quickly as possible after it arises.

We have attempted, through the provisions of this regulation, to anticipate potential Exchange approaches to substantive standards and requirements. However, we are aware that new State laws may be enacted or QHP standards established subsequent to the promulgation of this regulation. This process is necessitated in part by the evolving nature of health insurance regulation and QHP standards. In addition, we anticipate that any inconsistencies between State laws and section 1334 of the Affordable Care Act may not become apparent until after MSPP operations have begun. We intend to work collaboratively with States to mitigate or avoid any potential disruptions that may result from the ongoing nature of this process.

Comments:
A few commenters recommended that a
de novo
review be conducted under this section, that State law applicability be presumed, or that OPM bear the “burden” of demonstrating that a determination of inconsistency is supported.

Response:
This process is designed to create an avenue for a State to show that OPM's considered determination under § 800.114 was made in error, which would present an opportunity to avoid potential litigation that could arise from such a determination. As such, the State is responsible for demonstrating consistency between Federal and State law.

Comments:
A few commenters recommended that determinations regarding laws under both §§ 800.114 and 800.115 be subject to the process for dispute resolution under this section. Other commenters requested clarification as to whether the dispute resolution applied to all State laws or only to State laws that do not fit into the list of categories under section 1324(b) of the Affordable Care Act.

Response:
We agree that a State should have an opportunity to request reconsideration of a determination of inconsistency regarding any State law and we are revising paragraph (a) accordingly.

Comment:
One commenter recommended that the record for judicial review under paragraph (c)(4) include all relevant information, not only the record that was before OPM when a decision was rendered.

Response:
The Administrative Procedure Act permits judicial review of final agency action, and limits such review to the record that was before the agency when it took the action being reviewed. This regulation neither restricts nor expands that limitation.

Comments:
A few commenters recommended that parties other than States be permitted to seek dispute resolution under this section. One commenter recommended that MSPP issuers bear the burden of demonstrating that State laws should not apply to them.

Response:
This process is designed to assist States in working with OPM to prevent and mitigate market disruptions. State health insurance laws are regulatory by nature; the most expert entities to address them are therefore the regulatory agency and/or Exchange charged with their implementation. Regulatory agencies and Exchanges are well-equipped to represent the interests of the issuers with which they work and the consumers they serve.

We are amending paragraph (a) of § 800.116 as indicated above, to reflect that a determination of inconsistency involving any State law may be the subject of the process outlined in this section. We are also making a technical correction in paragraph (b) and inserting a technical amendment in paragraph (c)(3) for greater clarity.

Subpart C—Premiums, Rating Factors, Medical Loss Ratios, and Risk Adjustment

General Requirements (§ 800.201)

Under § 800.201, OPM proposed a number of standards for setting rates in the MSPP. First, we proposed that OPM would negotiate premiums, as provided in section 1334(a)(4) of the Affordable Care Act, in a similar manner to the way we negotiate with FEHBP carriers each year.

Second, the proposed rule included a provision that required MSPP rates to remain in effect for the 12-month plan year.

Third, OPM proposed to issue rating guidance for the MSPP, similar to the way OPM communicates with FEHBP carriers.

Fourth, we proposed that MSPP issuers comply with standards in HHS guidance for calculating actuarial value (AV), specifically those standards proposed in 45 CFR 156.135.

Fifth, OPM proposed a process for rate setting and review that requires an MSPP issuer to follow State rating standards with respect to rating factors generally applicable in a State. With respect to rate review, OPM's proposal reflected that some States have a prior approval process for rates and the authority to reject rates. Therefore, we proposed to work closely with each State in approving a rate for the MSPs in that State and to consult with that State about patterns in its markets and about other rates that an MSPP issuer might be proposing in that State for non-MSPs. In doing so, MSPP issuers would be required to file rates with a State, but the final decision regarding rates for MSPs would rest with OPM, as required by the statute. As described in proposed § 800.201(e) and (f), with respect to rate review, OPM's rate process and analysis will be transparent to States in which the MSP is operating. MSPP issuers will be subject to a State's rate review process, including a State's Effective Rate Review Program established by HHS pursuant to section 2794 of the PHS Act and 45 CFR part 154. OPM proposed that, for States with Effective Rate Review Programs under section 2794 of the PHS Act, the MSPP issuer would comply with the State standards. In addition, OPM proposed that in States where HHS is reviewing rates, HHS would accept the judgment of OPM for MSP rates. Furthermore, MSPP issuers must comply with the reporting and disclosure requirements for all rate justifications to HHS, States, and Exchanges, such as the requirements set forth in 42 CFR 156.210(c). In the event that a State withholds approval of an MSP rate for reasons that OPM determines, in its discretion, to be arbitrary, capricious, or an abuse of discretion, the Act authorizes the Director to make the final decision to approve rates for participation in the MSPP, notwithstanding the absence of State approval.

Finally, OPM proposed that MSPP issuers must comply with section 1312(c)(1) and (2) of the Affordable Care Act and implementing regulations, which provide that a health insurance issuer consider all enrollees in all non-grandfathered health plans in the individual market to be members of a single risk pool and all enrollees in non-grandfathered health plans in the small group market to be members of a single risk pool within a State. With proposed § 800.201(g), OPM clarified that an MSPP issuer must consider

[Text truncated at 120,000 characters. The full text is on the page linked above.]

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2013-04954. Public record. Not legal advice.