Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement

Federal RegisterSep 16, 2021

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Text

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 890

RIN 3206-AO28

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

[REG-114676-21]

RIN 1545-BQ15

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2590

RIN 1210-AC08

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 144, 148, 149, and 150

[CMS-9907-P]

RIN 0938-AU61

Requirements Related to Air Ambulance Services, Agent and Broker Disclosures, and Provider Enforcement

AGENCY:

Office of Personnel Management; Internal Revenue Service, Department of the Treasury; Employee Benefits Security Administration, Department of Labor; Centers for Medicare & Medicaid Services, Department of Health and Human Services.

ACTION:

Proposed rules.

SUMMARY:

This document sets forth proposed rules implementing certain provisions of Title I (No Surprises Act) and Title II (Transparency) of Division BB of the Consolidated Appropriations Act, 2021 (CAA). These proposed rules would amend and add provisions to existing rules under the Internal Revenue Code (Code), the Employee Retirement Income Security Act (ERISA), the Public Health Service Act (PHS Act), and the Federal Employees Health Benefits (FEHB) Act. These proposed rules would implement certain provisions of the No Surprises Act that would increase transparency by requiring group health plans and health insurance issuers in the group and individual markets, and FEHB carriers, to submit certain information about air ambulance services to the Secretaries of Health and Human Services (HHS), Labor, and the Treasury, and the Director of the Office of Personnel Management, as applicable, and by requiring providers of air ambulance services to submit certain information to the Secretaries of HHS and Transportation. These proposed rules also include HHS-only proposed rules that would increase transparency by requiring a health insurance issuer offering individual health insurance coverage or short-term, limited-duration insurance to disclose to policyholders and to report to HHS any direct or indirect compensation provided by the issuer to an agent or broker associated with enrolling individuals in such coverage. These proposed rules would also provide the process by which HHS would investigate complaints and potential violations of PHS Act provisions and, if warranted, take enforcement action, including the imposition of civil money penalties, against providers and facilities, including providers of air ambulance services. These proposed rules would amend existing regulations to clarify the process to investigate complaints and potential violations of the PHS Act and impose civil money penalties against plans and issuers. These proposed rules would also establish the process by which HHS would impose civil money penalties if a provider of air ambulance services fails to submit some or all required data to HHS.

DATES:

To be assured consideration, comments must be received at one of the addresses provided below, by October 18, 2021.

ADDRESSES:

In commenting, please refer to file code CMS-9907-P.

Comments, including mass comment submissions, must be submitted in one of the following three ways (please choose only one of the ways listed):

Electronically.

You may submit electronic comments on this regulation to

https://www.regulations.gov.

Follow the “Submit a comment” instructions.

By regular mail.

You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-9907-P, P.O. Box 8016, Baltimore, MD 21244-8016.

Please allow sufficient time for mailed comments to be received before the close of the comment period.

By express or overnight mail.

You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-9907-P, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

For information on viewing public comments, see the beginning of the

SUPPLEMENTARY INFORMATION

section.

FOR FURTHER INFORMATION CONTACT:

For matters related to air ambulance reporting: Padma Babubhai Shah, Office of Personnel Management, (202) 606-4056; Kari DiCecco, Internal Revenue Service, Department of the Treasury, (202) 317-5500; Matthew Meidell or Pinar Shapiro, Employee Benefits Security Administration, Department of Labor, (202) 693-8335; Christina Whitefield, Centers for Medicare & Medicaid Services, Department of Health and Human Services, (301) 492-4172. For matters related to agent and broker disclosures under Part 148: Adam Wheeler, (410) 786-3942.

For matters related to enforcement under Part 150: Judah Katz, (410) 786-3879 or Lisa Cuozzo, (410) 786-1746.

SUPPLEMENTARY INFORMATION:

Inspection of Public Comments:

Comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post comments received before the close of the comment period on the following website as soon as possible after they have been received:

https://www.regulations.gov.

Follow the search instructions on that website to view public comments. The Centers for Medicare & Medicaid Services (CMS) will not post on

Regulations.gov

public comments that make threats to individuals or institutions or suggest that the individual will take actions to harm the individual. CMS continues to encourage individuals not to submit duplicative comments. We will post acceptable comments from multiple unique commenters even if the content is identical or nearly identical to other comments.

I. Background

A. Legislative and Regulatory Overview

Title I of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) added Title XXVII to the Public Health Service Act (PHS Act) to establish various reforms to the group and individual health insurance markets. The Patient Protection and Affordable Care Act, Public Law 111-148, was enacted on March 23, 2010, and the Health Care and Education Reconciliation Act of 2010, Public Law 111-152, was enacted on March 30, 2010. (These statutes are collectively known as the “Affordable Care Act” or “ACA.”) The ACA reorganized,

amended, and added to the provisions of Part A of Title XXVII of the PHS Act relating to group health plans and health insurance issuers in the group and individual markets. The term “group health plan” includes both insured and self-insured group health plans. The ACA added section 9815(a)(1) to the Internal Revenue Code (Code) and section 715(a)(1) to the Employee Retirement Income Security Act (ERISA) to incorporate the provisions of Part A of Title XXVII of the PHS Act into the Code and ERISA, and made them applicable to group health plans and health insurance issuers providing health insurance coverage in connection with group health plans. Sections 2701 through 2728 of the PHS Act are thereby incorporated into the Code and ERISA.

The Consolidated Appropriations Act, 2021 (CAA) was enacted on December 27, 2020 and includes Title I (No Surprises Act) and Title II (Transparency) in Division BB. The CAA added provisions that apply to plans and issuers offering group or individual health insurance coverage in chapter 100 of the Code, in part 7 of ERISA, and in a new Part D of Title XXVII of the PHS Act. The CAA also amended the Federal Employees Health Benefits (FEHB) Act, 5 U.S.C. 8901,

et seq.,

by adding a new subsection (p) to 5 U.S.C. 8902 that requires each contract with an FEHB carrier to require the carrier to comply with requirements described in certain provisions of the Code, ERISA, and the PHS Act in the same manner as those provisions apply to a group health plan or health insurance issuer offering group or individual health insurance coverage. The CAA provisions that apply to providers, facilities, and providers of air ambulance services, such as requirements related to cost sharing, prohibitions on balance billing for certain items and services, and requirements related to disclosures about balance billing protections, were added to Title XXVII of the PHS Act in a new Part E.

Section 106(a) of the No Surprises Act requires providers of air ambulance services to report certain information to the Secretaries of HHS and Transportation. Section 106(b) of the No Surprises Act added parallel provisions at section 9823 of the Code, section 723 of ERISA, and section 2799A-8 of the PHS Act. These provisions include requirements for plans and issuers to report claims and other information regarding air ambulance services and providers of air ambulance services.

The Director of the Office of Personnel Management (OPM) is of the view that the collection of FEHB plan air ambulance claims data is necessary and appropriate for a more complete understanding of air ambulance services provided across the industry. Further, the OPM Director is of the view that this data would inform OPM for purposes of enforcing the protections provided under 5 U.S.C. 8902(p) and for the appropriate administration and oversight of FEHB plans.

Sections 106(a) and (b) of the No Surprises Act impose these air ambulance data reporting requirements for 2 years. Section 106(c) of the No Surprises Act further requires HHS, in consultation with the Secretary of Transportation, to issue a comprehensive public report summarizing the data and providing an assessment of the state and certain aspects and characteristics of the air ambulance market. Section 106(e) of the No Surprises Act provides for the imposition of civil money penalties of not more than $10,000 on providers of air ambulance services for failure to submit required data. Section 106(e)(3) specifies that certain provisions of section 1128A of the Social Security Act (SSA) shall apply to a civil money penalty under section 106(e) of the No Surprises Act in the same manner as such provisions apply to a penalty or proceeding under section 1128A of the SSA. In addition, section 418 of the Federal Aviation Administration (FAA) Reauthorization Act of 2018

directs the Secretary of Transportation, in consultation with HHS, to form an Advisory Committee on Air Ambulance and Patient Billing (Advisory Committee). Section 106(d) of the No Surprises Act directs HHS, in consultation with the Secretary of Transportation, to take into consideration (as applicable and to the extent feasible) any recommendations included in the Advisory Committee's report.

Public Law 115-254.

The charter of the Advisory Committee allowed for the formation of subcommittees to perform specific assignments. The Advisory Committee formed three subcommittees, which included a subcommittee on the Prevention of Balance Billing. At its second full Committee meeting in May 2021, the Advisory Committee recommended the collection of eight specific data elements from providers of air ambulance services: (1) Average cost per trip; (2) air ambulance base rates and patient-loaded statute mileage rates; (3) ancillary fees for specialty services, like neonatal, cardiac, and “other” (for example, specialized medicines like snakebites in rural areas); (4) reimbursement data aggregated by payor type (Medicare, Medicaid, self-insured, private insurance) and per transport, based on median rate and zip code, as well as further identifying data regarding private insurance by provider type (hospital-sponsored program, municipality-sponsored program, hospital independent partnership (hybrid) program, or independent program); (5) alternate revenue sources (for example, subsidies or membership programs) broken down per transport for reporting purposes; (6) volume of transports, segregated by aircraft type (fixed wing and rotary wing) and takeoff zip code for government purposes, or for public use when aggregated with other data; (7) market share for air transport, obtained from the FAA certificate holder and identifying the certificate holder's parent company; and (8) market share for health care, by looking at the program type for the FAA certificate holder.

Section 9823 of the Code, section 723 of ERISA, and section 2799A-8 of the PHS Act require information to be reported jointly to HHS, the Department of Labor (DOL), and the Department of the Treasury (collectively, the Departments).

“Meeting Summary, Second Meeting of the AAPB Advisory Committee,” U.S. Department of Transportation, Air Ambulance and Patient Billing Advisory Committee, May 27-28, 2021, Washington, DC pp. 15-17. Available at:

https://www.transportation.gov/sites/dot.gov/files/2021-07/AAPB%20Second%20Meeting%20Minutes.pdf

Section 106(d) of the No Surprises Act requires HHS, in consultation with the Secretary of Transportation, to undertake notice and comment rulemaking to specify the form and manner in which plans and issuers must submit this information.

The CAA amended the FEHB Act to require that protections from air ambulance surprise billing must be offered by carriers in the same manner as those protections apply under section 9817 of the Code, section 717 of ERISA, and section 2799B-2 of the PHS Act and to require that protections from surprise billing by providers of air ambulance services with respect to FEHB enrollees apply in the same manner as those protections apply under section 2799B-5 of the PHS Act.

The CAA also amended Title XXVII of the PHS Act to add section 2746, which requires a health insurance issuer offering individual health insurance coverage or short-term, limited-duration insurance to disclose to enrollees in such coverage and to report annually to HHS the direct or indirect compensation provided by the issuer to an agent or broker associated with enrolling

individuals in such coverage. Section 2746(d) directs HHS to finalize, through notice and comment rulemaking, the timing, form, and manner in which issuers must make these disclosures to consumers and submit reports to HHS. These new statutory requirements are applicable beginning December 27, 2021.

Section 2723(b) of the PHS Act, as amended by the CAA, authorizes HHS to impose civil money penalties as a means of enforcing the individual and group market requirements contained in Part A and Part D of Title XXVII of the PHS Act with respect to health insurance issuers when a state fails to substantially enforce these provisions, as well as with respect to group health plans that are non-Federal governmental plans.

Section 2799B-4 of the PHS Act, as added by section 104 of the No Surprises Act, establishes a similar framework for HHS's enforcement authority over providers and facilities, including providers of air ambulance services, in states that fail to substantially enforce the requirements of Part E of Title XXVII of the PHS Act, as added by the CAA. This provision also authorizes HHS to impose civil money penalties of up to $10,000 per violation on providers and facilities, including providers of air ambulance services, that fail to comply with the applicable PHS Act requirements in such states. It further provides that certain provisions of section 1128A of the SSA shall apply to a civil money penalty or assessment under section 2799B-4 of the PHS Act in the same manner as such provisions apply to a penalty, assessment, or proceeding under subsection (a) of section 1128A of the SSA.

Also see

section 2761 of the PHS Act, which establishes a parallel framework for enforcement of the individual market requirements contained in Part B of Title XXVII of the PHS Act.

The Departments are issuing regulations in several phases implementing provisions of Title I (No Surprises Act) and Title II (Transparency) of Division BB of the CAA. Later this year, the Departments intend to issue regulations regarding the Federal independent dispute resolution (IDR) process (sections 103 and 105 of the No Surprises Act) and patient protections through transparency and the patient-provider dispute resolution process (section 112 of the No Surprises Act).

On July 13, 2021, the Departments and OPM issued interim final rules entitled

Requirements Related to Surprise Billing; Part I,

which generally apply to group health plans and health insurance issuers offering group or individual health insurance coverage (including grandfathered health plans) with respect to plan years (in the individual market, policy years) beginning on or after January 1, 2022; FEHB health benefits plans with respect to contract years beginning on or after January 1, 2022; and health care providers and facilities, and providers of air ambulance services beginning on January 1, 2022 (July 2021 interim final rules). The July 2021 interim final rules implement sections 9816(a)-(b) and 9817(a) of the Code; sections 716(a)-(b) and 717(a) of ERISA; sections 2799A-1(a)-(b), 2799A-2(a), 2799B-1, 2799B-2, 2799B-3, and 2799B-5 of the PHS Act; and 5 U.S.C. 8902(p), to protect consumers from surprise medical bills for emergency services, air ambulance services furnished by nonparticipating providers of air ambulance services, and non-emergency services furnished by nonparticipating providers at participating facilities in certain circumstances.

Requirements Related to Surprise Billing; Part I, 86 FR 36872, (July 13, 2021). Public comments on this rule are due by September 7, 2021.

Among other requirements, the July 2021 interim final rules require emergency services to be covered without any prior authorization, without regard to whether the health care provider or facility furnishing the emergency services is a participating provider or a participating emergency facility with respect to the services, and without regard to any other term or condition of the plan or coverage other than the exclusion or coordination of benefits or a permitted affiliation or waiting period. With respect to emergency services furnished by nonparticipating providers or facilities, air ambulance services furnished by nonparticipating providers of air ambulance services, and non-emergency services furnished by nonparticipating providers at certain participating facilities, the July 2021 interim final rules generally limit cost sharing for out-of-network services to in-network levels, require such cost sharing to count toward any in-network deductibles and out-of-pocket maximums, and prohibit balance billing in certain circumstances. Balance billing refers to the practice of out-of-network providers billing patients for the difference between: (1) The provider's billed charges; and (2) the amount collected from the plan or issuer plus the amount collected from the patient in the form of cost sharing (such as a copayment, coinsurance, or amounts paid toward a deductible).

Division BB of the CAA also includes: Provisions regarding transparency in plan and insurance identification cards (section 107); continuity of care (section 113); accuracy of provider network directories (section 116); prohibition on gag clauses (section 201) that are applicable for plan years beginning on or after January 1, 2022; and pharmacy benefit and drug cost reporting (section 204) that is required by December 27, 2021. The Departments intend to undertake rulemaking to fully implement these provisions, but rules regarding some of these provisions might not be issued until after January 1, 2022. The Departments note that any such rulemaking to fully implement these provisions would include a prospective applicability date that provides plans, issuers, providers, and facilities, as applicable, a reasonable amount of time to comply with new or clarified requirements. Until rulemaking to fully implement these provisions is finalized and effective, plans and issuers are expected to implement the requirements using a good faith, reasonable interpretation of the statute.

B. Stakeholder Consultation and Input

The Departments consulted with stakeholders on policies related to Division BB of the CAA, including air ambulance data collection, disclosure and reporting of agent and broker compensation, and enforcement of the PHS Act. The Departments held several listening sessions with consumers, health care providers, facilities, providers of air ambulance services, employers, agents, brokers, health plans and health insurance issuers, advocacy groups, and the actuarial community to gather public input. The Departments also solicited input from state representatives on numerous relevant topics and consulted with stakeholders through regular meetings with the National Association of Insurance Commissioners (NAIC), and regular contact with state regulators, issuers, trade groups, consumer advocates, employers, and other interested parties. The Departments considered all public input received as the Departments developed the policies in these proposed rules and welcome additional public comment as part of these proposed rules.

C. Structure of Proposed Rules

The regulations outlined in these proposed rules would be codified in 5 CFR part 890; 26 CFR part 54; 29 CFR part 2590; and 45 CFR parts 144, 148, 149, and 150.

The proposed changes to 45 CFR part 144 would make technical and conforming amendments regarding the purpose of part 150.

The proposed changes to 45 CFR part 148 would set forth requirements for health insurance issuers offering individual health insurance coverage or short-term, limited-duration insurance to disclose to policyholders information regarding direct and indirect compensation provided by the issuer to an agent or broker associated with enrolling individuals in such coverage. The proposed amendments to 45 CFR part 148 also set forth proposed requirements related to the annual reports that health insurance issuers offering individual health insurance coverage or short-term, limited-duration insurance would be required to submit to HHS regarding the direct and indirect compensation paid to agents and brokers. In addition, these proposed rules would make technical and conforming amendments regarding the basis, purpose, and scope of 45 CFR part 148.

The proposed changes to 45 CFR part 149 would require plans, issuers, and providers of air ambulance services to submit to HHS certain data regarding air ambulance services. Proposed rules under 26 CFR 54.9823-1 and 29 CFR 2590.723 would provide that group health plans and health insurance issuers offering group health insurance coverage that satisfy the requirements under 45 CFR part 149 that implement section 2799A-8 of the PHS Act would be treated as satisfying the parallel requirements under section 9823 of the Code and section 723 of ERISA. The proposed change to 5 CFR part 890 would require FEHB carriers to comply with the requirements of 45 CFR 149.230 with respect to an FEHB plan in the same manner as such provisions apply to a group health plan or health insurance issuer offering group or individual health insurance coverage. OPM would coordinate with HHS to receive FEHB air ambulance services data.

The proposed changes to 45 CFR part 150 would make procedural changes to the process HHS utilizes to investigate possible violations of the PHS Act, including proposed amendments to clarify the process to investigate complaints and potential violations of the PHS Act and to impose civil money penalties against non-Federal governmental plans and issuers of group or individual health insurance coverage. The proposed changes would also set forth the process for imposing civil money penalties on providers and facilities, including providers of air ambulance services, for failure to comply with 45 CFR part 149 and failure to provide data required in section 106(a) of the No Surprises Act.

II. Provisions of the Proposed Rules on Reporting Requirements Regarding Air Ambulance Services—Departments of HHS, Labor, and the Treasury

A. In General

These proposed rules propose requirements related to data collection from providers of air ambulance services, as required by section 106(a) of the No Surprises Act, and from plans and issuers offering group or individual health insurance coverage, as required by section 9823 of the Code, section 723 of ERISA, and section 2799A-8 of the PHS Act, as added by section 106(b) of the No Surprises Act.

These proposed rules also include an HHS-only proposed rule that sets forth civil money penalties specified in section 106(e) of the No Surprises Act that would apply to providers of air ambulance services for failure to submit data as required under section 106(a) of the No Surprises Act.

Section 106(b) of the No Surprises Act amends part D of Title XXVII of the PHS Act by adding new section 2799A-8. As such, the enforcement provisions under PHS Act section 2723 and 45 CFR part 150 extend to PHS Act section 2799A-8 air ambulance data reporting requirements on issuers and non-Federal governmental group health plans. Section 106(a) of the No Surprises Act is codified in the United States Code as a note to PHS Act section 2799A-8.

Air ambulance services frequently result in surprise medical bills due to individuals' inabilities to select an in-network provider of air ambulance services when faced with an urgent medical situation. Because of low network participation rates by providers of air ambulance services, individuals are also unable to avoid potential higher cost sharing and balance billing by out-of-network providers. A 2019 study by the Government Accountability Office (GAO) analyzed data from 2017 and found that 69 percent of air ambulance transports of privately-insured patients were out-of-network.

Air Ambulance: Available Data Show Privately-Insured Patients Are at Financial Risk.

GAO-19-292 (March 2019).

When individuals are unable to avoid providers or providers of air ambulance services that are not in their plan's network, it raises health care costs and exposes individuals to financial risk.

The ability to balance bill is often used as leverage by providers to obtain higher in-network payments, which results in higher premiums, higher cost sharing for consumers, and overall increased health care expenditures.

Studies have shown that surprise medical bills can be substantial, including with respect to air ambulance services. The GAO found that for privately-insured patients, the median price charged by providers of air ambulance services was about $36,400 for a rotary-wing transport and $40,600 for a fixed-wing transport in 2017.

In an earlier study,

the GAO noted that there is no national data on balance billing and the extent to which providers of air ambulance services have contracts with health insurance companies. Some states have attempted to collect data on balance billing. The GAO study stated that a Michigan state review of 19 cases of balance billing for air ambulance services between 2013 and 2016 showed an average balance bill of $31,000. Data on cases investigated and closed by the Maryland Insurance Administration between January 2014 and April 2018 showed that the amount of balance bills for air ambulance services ranged from $12,300 to $52,000.

Cooper Z et al., Out-of-Network Billing and Negotiated Payments for Hospital-Based Physicians, Health Affairs 39, No. 1, 2020. doi: 10.1377/hlthaff.2019.00507.

See,

Cooper, Z. et al, Surprise! Out-Of-Network Billing For Emergency Care in the United States, NBER Working Paper 23623, 20173623; Duffy, E. et al., “Policies to Address Surprise Billing Can Affect Health Insurance Premiums.” The American Journal of Managed Care 26.9 (2020): 401-404; and Brown E.C.F., et al., The Unfinished Business of Air Ambulance Bills, Health Affairs Blog (March 26, 2021), DOI: 10.1377/hblog20210323.911379, available at

https://www.healthaffairs.org/do/10.1377/hblog20210323.911379/full/.

Air Ambulance: Available Data Show Privately-Insured Patients Are at Financial Risk.

GAO-19-292 (March, 2019).

Air Ambulance: Data Collection and Transparency Needed to Enhance DOT Oversight.

GAO-17-637 (July 27, 2017).

Although some states have enacted laws to regulate the billing practices of providers of air ambulance services, many of these efforts have been unsuccessful due to a preemption provision in the Airline Deregulation Act of 1978 (ADA). The ADA states, in relevant part, “. . . a State, political subdivision of a State, or political authority of at least two States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of an air carrier that may provide air transportation under this subpart.”

Assuming that a provider of air ambulance services is an “air carrier” covered by this provision, as is typical,

the provision preempts state

laws that would limit the amount of payment that the provider of air ambulance services would otherwise be entitled to receive.

Even within states that have enacted protections against surprise billing, state insurance regulations typically apply only to health insurance coverage, as ERISA generally preempts state laws that would otherwise regulate self-insured group health plans sponsored by private employers.

Finally, states are limited in their ability to address surprise bills that involve an out-of-state provider, including an out-of-state provider of air ambulance services.

49 U.S.C. 41713(b).

A provider of air ambulance services is a covered “air carrier” if it has economic authority from the Department of Transportation to provide interstate air transportation. Most providers of air ambulance services have such authority under the

provisions of 14 CFR part 298.

See, for example, Scarlett

Air Methods Corp.,

922 F.3d 1053 (10th Cir. 2019);

Air Evac EMS

Cheatham,

910 F.3d 751 (4th Cir. 2018).

See, for example, Guardian Flight LLC

Godfread,

991 F.3d 916, 921 (8th Cir. 2021) (holding that ADA preempted state law prohibiting out-of-network providers of air ambulance services from balance billing and requiring them to accept amounts paid by insurers);

Bailey

Rocky Mountain Holdings, LLC,

889 F.3d 1259, 1269-72 (11th Cir. 2018) (holding that ADA preempted state law that prohibited providers of air ambulance services from collecting more than amount specified in fee schedule).

In addition, FEHB contract terms preempt state law in accordance with 5 U.S.C. 8902(m)(1).

As states, the Federal Government, oversight agencies, and advocacy groups have examined the issue of air ambulance services and balance billing, it has become clear that there is a lack of comprehensive, national data on air ambulance costs, transports, and contractual arrangements between providers of air ambulance services and plans and issuers. In its 2017 report, the GAO recommended that the Federal Government assess available data to determine what additional information would be needed to address future concerns regarding unfair or deceptive practices.

In addition, section 418 of the FAA Reauthorization Act of 2018 directed the Secretary of Transportation, in consultation with HHS, to form an Advisory Committee on Air Ambulance and Patient Billing (Advisory Committee). In January 2021, the Advisory Committee's subcommittee on the Prevention of Balance Billing recommended to the full Advisory Committee the collection of data to “(a) improve understanding of the air ambulance industry by policymakers, (b) increase transparency of market conditions impacting air ambulance services, and (c) indirectly improve contract negotiation between payors and air ambulance providers and suppliers.”

See Air Ambulance: Data Collection and Transparency Needed to Enhance DOT Oversight.

GAO-17-637 (July 27, 2017).

Air Ambulance and Patient Billing Advisory Committee's Subcommittee on Prevention of Balance Billing, “A Report on the Prevention of Balance Billing”, January 2021, DOT-OST-2018-0206-0026_attachment_1. At its second full committee meeting in May 2021, the Advisory Committee recommended the collection of eight specific data elements from providers of air ambulance services.

See

section I.A of the preamble. The Committee's final report containing this recommendation had yet to be produced at the time this rulemaking was published.

Section 106 of the No Surprises Act takes important steps to increase transparency regarding air ambulance services. Specifically, section 106(a) of the No Surprises Act requires providers of air ambulance services to submit certain data to the Secretaries of HHS and Transportation. Section 106(b) of the No Surprises Act requires plans and issuers to submit certain data on air ambulance services to the Secretaries of HHS, DOL, and the Treasury, through section 9823 of the Code, section 723 of ERISA and section 2799A-8 of the PHS Act. Section 106(d) of the No Surprises Act requires HHS, in consultation with the Secretary of Transportation, to specify through notice and comment rulemaking, the form and manner in which the reports described under section 106(a) of the No Surprises Act (regarding reporting by providers of air ambulance services) and section 9823 of the Code, section 723 of ERISA, and section 2799A-8 of the PHS Act (regarding reporting by plans and issuers) must be submitted to such Secretaries. Therefore, in these proposed rules, HHS proposes amendments to 45 CFR part 149 that specify the form and manner of these reports. In addition, the Department of the Treasury and DOL propose to add 26 CFR 54.9823-1 and 29 CFR 2590.723 to specify that group health plans and health insurance issuers offering group health insurance coverage would satisfy the requirements under section 9823 of the Code and section 723 of ERISA, respectively, by submitting a report to HHS that satisfies the requirements of 45 CFR 149.230. In the interest of burden reduction and efficiency, the Departments propose that the required information reporting by group health plans and health insurance issuers offering group and individual health insurance coverage, together with the required information reporting by FEHB carriers,

would be satisfied through reporting to HHS.

OPM proposes to authorize and require FEHB carriers to submit air ambulance data to HHS. OPM will coordinate with HHS to receive FEHB air ambulance services data.

B. Basis and Scope (45 CFR 149.10)

HHS proposes to amend 45 CFR 149.10(a) to add a reference to section 106(a) of the No Surprises Act, which requires data reporting by providers of air ambulance services, to the basis of part 149.

C. Applicability (45 CFR 149.20)

HHS proposes to amend 45 CFR 149.20 to include a reference to the new subpart C, which under these proposed rules would include data submission requirements for plans and issuers. See section II.F. of the preamble for discussion of the applicability of the proposed rules regarding data submission requirements for providers of air ambulance services.

D. Definitions (45 CFR 149.30)

HHS proposes to amend 45 CFR 149.30 by adding definitions relevant to data submission requirements for providers of air ambulance services and plans and issuers. The Departments propose to define an air ambulance base as a site from which a provider of air ambulance services operates to provide air ambulance services. The Departments propose to define a National Provider Identifier (NPI) by referencing the definition in 45 CFR 162.406. The Departments seek comment on these proposed definitions.

E. Reporting Requirements for Plans and Issuers Regarding Air Ambulance Services (45 CFR 149.230)

HHS proposes to amend part 149 by adding 45 CFR 149.230 to subpart C to describe the data reporting requirements for plans and issuers. Proposed 45 CFR 149.230(a) includes general requirements, the timing and form of the data submission, and the reporting requirements in circumstances when a transfer of business occurs.

As discussed in sections I.A and II.A of the preamble, section 106(b) of the No Surprises Act added parallel provisions at section 9823 of the Code, section 723 of ERISA, and section 2799A-8 of the PHS Act requiring plans and issuers to submit information regarding air ambulance services jointly to the Departments. Section 106(d) of the No Surprises Act directs HHS, in consultation with the Secretary of Transportation, to undertake notice and comment rulemaking to specify the form and manner in which plans and issuers must submit this information. Therefore, in these proposed rules, HHS proposes amendments to 45 CFR part 149 that specify the form and manner for the reports required in section 9823 of the Code, section 723 of ERISA, and section 2799A-8 of the PHS Act, as enacted in section 106(b) of the No Surprises Act. In the interest of burden reduction and efficiency, the Department of the Treasury and DOL

propose to add 26 CFR 54.9823-1 and 29 CFR 2590.723, respectively, to provide that plans and issuers would satisfy the requirements to submit information pursuant to section 9823 of the Code and section 723 of ERISA by satisfying the information reporting requirements under proposed 45 CFR 149.230. Similarly, as discussed further in section IV of the preamble, OPM proposes to add conforming reporting requirements to require FEHB carriers to comply with the requirements of proposed 45 CFR 149.230 with respect to an FEHB plan in the same manner as such provisions apply to a group health plan or health insurance issuer offering group or individual health insurance coverage.

The Departments interpret section 9823 of the Code, section 723 of ERISA, and section 2799A-8 of the PHS Act to require plans and issuers to submit data regarding air ambulance services on a calendar year basis. The Departments are of the view that a calendar year reporting period would maximize the uniformity of the data across all submitters and provide a suitable basis for performing the trend analyses that section 106(c) of the No Surprises Act requires HHS to conduct as part of developing a comprehensive public report. In order to ensure completeness of the data, the Departments propose that data with respect to a calendar year would include both data relevant to air ambulance services furnished within the calendar year, as well as data relevant to services for which payments were made within the calendar year (even if the service was provided in a different calendar year). The Departments are of the view that this approach is necessary due to the limited duration of the data collection and statutory deadlines that may not allow sufficient time for claims run-out, particularly with respect to providers of air ambulance services that do not have contractual relationships with plans and issuers.

Based on the expectation that this rulemaking would be finalized during 2021, as required in section 106(d) of the No Surprises Act, and consistent with the statutory requirement on plans and issuers to report the required data not later than 90 days after the last day of the applicable calendar year, the Departments propose that plans and issuers would be required to submit the data for calendar year 2022 by March 31, 2023, and the data for calendar year 2023 by March 30, 2024. In order to ensure the completeness of the data, in proposed 45 CFR 149.230(a)(3), the Departments further propose that an issuer that acquires from another issuer a line or block of business that provided coverage of air ambulance services during calendar years 2022 or 2023 would be required to report the air ambulance services data on behalf of the acquired business for the entire applicable calendar year. The Departments propose that these reporting requirements would apply to the selling and acquiring issuers if a sale or transfer occurs as a result of issuers being merged, combined, spun off, affected by, or engaging in any similar transaction during a calendar year. In addition, to ensure completeness and timeliness of reporting of all relevant air ambulance services data, the proposed rule would provide that the Secretary of HHS may provide examples of these transactions in guidance.

In addition, the Departments and OPM are publishing a proposed information collection, which would provide additional technical details regarding the required data elements, for public comment at the same time as or shortly after publishing these proposed rules. The proposed information collection would include a proposed data template and instructions. The proposed information collection would specify that plans and issuers do not need to submit information required in proposed 45 CFR 149.230 if they did not receive claims or make or expect to make payments for air ambulance services with respect to the reporting period.

Section 9823 of the Code, section 723 of ERISA, and section 2799A-8 of the PHS Act require plans and issuers offering group or individual health insurance coverage to submit claims data for air ambulance services that include the following information about the claims: Whether the services were provided on an emergent or non-emergent basis; whether the provider of such services is part of a hospital-owned or sponsored program, municipality-sponsored program, hospital independent partnership (hybrid) program, independent program, or tribally operated program in Alaska; whether the transport originated in a rural or urban area; the type of aircraft used for the transport (fixed-wing or rotary-wing air ambulance); and whether the provider of the air ambulance service has a contract with the plan or issuer to provide air ambulance services.

Those statutory sections further require plans and issuers to provide, in addition to the information described in the preceding paragraph of the preamble, such other information regarding providers of air ambulance services as the Departments may specify. Section 106(c) of the No Surprises Act requires HHS, in consultation with the Secretary of Transportation, to produce a comprehensive public report that must include several different analyses that require collection of other data not specifically identified in section 9823 of the Code, section 723 of ERISA, and section 2799A-8 of the PHS Act. These analyses include: An assessment of the average charges for air ambulance services; amounts paid by plans and issuers to providers of air ambulance services; amounts paid out-of-pocket by consumers; the frequency of patient balance billing; the frequency of claims appeals made by providers of air ambulance services to plans and issuers; and any other data relating to air ambulance services determined necessary and appropriate by Secretaries of HHS and Transportation. To perform these analyses, the Secretaries of HHS and Transportation would need to be able to match the information collected from plans and issuers to the information collected from providers of air ambulance services under section 106(a) of the No Surprises Act.

Therefore, in proposed 45 CFR 149.230(b), HHS proposes to require submission of claims-level data on air ambulance services in order to collect the information necessary to satisfy these statutory requirements related to the HHS public report. Moreover, the Departments are of the view that submission of claims-level data would be less burdensome than submission of multiple sets of total claims data aggregated by the various categories described in section 9823 of the Code, section 723 of ERISA, and section 2799A-8 of the PHS Act, particularly given the relatively small volume of claims for air ambulance services. It is the Departments' understanding that information regarding the service delivery model of the provider of air ambulance services (such as affiliation with a hospital or municipality or other similar program) may not be available to plans and issuers. Therefore, the Departments propose to require plans and issuers to report that data element only to the extent it is available to them.

The Departments appreciate the need to ensure both stakeholder and consumer privacy, particularly when collecting claims-level data, and therefore would take precautions to protect the confidentiality of claims-level data. HHS proposes to collect only that claims-level data that would be sufficient for producing the comprehensive report required by the statute. Moreover, HHS intends to

collect and maintain the information using information technology (IT) systems that are designed to meet all of the security standards protocols established under Federal law or by HHS relevant to such information.

HHS's enterprise-wide information security and privacy program was launched in FY 2003, to help protect HHS against potential IT threats and vulnerabilities. The program ensures compliance with Federal mandates and legislation, including the Federal Information Security Management Act and the President's Management Agenda. The HHS Cybersecurity Program plays an important role in protecting HHS's ability to provide mission-critical operations. In addition, the HHS Cybersecurity Program is the cornerstone of the HHS IT Strategic Plan.

The claims-level data elements that HHS proposes to require plans and issuers to submit to support HHS's publication of the comprehensive public report, but that are not explicitly listed in section 9823 of the Code, section 723 of ERISA, and section 2799A-8 of the PHS Act, include: The date of service; billing NPI and Current Procedural Terminology (CPT)/Healthcare Common Procedure Coding System (HCPCS) codes information; and certain information about each air ambulance transport (such as the loaded miles and whether the transport was an inter-facility transport). These data elements, specifically the NPI and the date of service, would enable the Secretaries of HHS and Transportation to combine and validate the information collected from plans and issuers and the information collected from providers of air ambulance services.

Similarly, to enable the Secretaries of HHS and Transportation to analyze and summarize the data in an appropriate and meaningful manner in a comprehensive public report, HHS also proposes that the claims-level data elements include the market type of the plan or coverage associated with the air ambulance services. For fully-insured coverage, this would include the individual, small group, and large group markets, as defined in section 2791(e) of the PHS Act. For self-insured group health plans, this would include identification of the plan sponsor as a small employer or large employer, as defined in section 2791(e) of the PHS Act, with reasonable estimates allowed when the exact information on the size of the employer is not available. Under this proposal, FEHB plans would also be separately identified.

Further, to satisfy the requirements for the comprehensive public report described in section 106(c) of the No Surprises Act, including the required assessments of the frequency of patient balance billing and claims appeals made by air ambulance providers, HHS proposes that the claims-level data elements include certain claim adjudication information (including whether the claim was paid, partially paid, denied, or appealed, and the reason for the denial and the outcome of the appeal, if applicable), as well as certain claim payment information (including submitted charges, amounts paid by the payor, and cost-sharing amount).

In order to streamline the provision of the required disclosures and to avoid unnecessary duplication of reporting with respect to group health insurance coverage, the Departments propose that, to the extent coverage under a plan consists of group health insurance coverage, the plan satisfies the reporting requirements if the plan requires the issuer offering the coverage to provide the information pursuant to a written agreement between the plan and the issuer. For example, if a plan and an issuer enter into a written agreement under which the issuer agrees to report the information required under proposed 45 CFR 149.230, and the issuer fails to submit a complete or timely report, then the issuer, but not the plan, would have violated these reporting requirements. However, if a plan has knowledge that the required report has not been submitted, the Departments would encourage the plan to work with the issuer to correct the noncompliance as soon as practicable or notify the applicable agency enforcing this requirement.

The Departments also highlight that nothing prevents a self-insured group health plan from contracting with another party, such as a third-party administrator (TPA), to report the required information, including, to the extent permitted under other Federal or state laws, entering into a written agreement for the other party to indemnify the plan in the event the other party fails to submit a complete or timely report. However, the plan would be required to monitor the other party to ensure that the entity is submitting the required information as it is ultimately the responsibility of the self-insured group health plan to report the information required under proposed 45 CFR 149.230. The proposed information collection instrument is designed in a manner that would enable a TPA that submits information on behalf of multiple self-insured group health plans to submit a single submission that includes the required data elements for all such plans.

Excepted benefits are exempt from requirements in chapter 100 of the Code, part 7 of ERISA, and Part A and Part D of Title XXVII of the PHS Act.

19 20

Short-term, limited-duration insurance is excluded from the definition of individual health insurance coverage and is exempt from the new requirements established in section 2799A-8 of the PHS Act. Therefore, short-term, limited-duration insurance (as defined in 26 CFR 54.9801-2, 29 CFR 2590.701-2, and 45 CFR 144.103) and coverage that consists solely of excepted benefits (as described in section 9832 of the Code, section 733 of ERISA, and section 2791 of the PHS Act) would not be subject to the reporting requirements set forth in 45 CFR 149.230 in these proposed rules. Individual coverage health reimbursement arrangements and other account-based plans, as described in 26 CFR 54.9815-2711(d)(6)(i), 29 CFR 2590.715-2711(d)(6)(i), and 45 CFR 147.126(d)(6)(i), make reimbursements subject to a maximum fixed dollar amount for a period, such that the benefit design of these coverage options makes concepts related to the reporting of data related to air ambulance services inapplicable. Therefore, under these proposed rules, the reporting requirements also would not apply to individual coverage health reimbursement arrangements and other account-based plans, consistent with the existing applicability provisions in 45 CFR 149.20 with respect to other No Surprises Act requirements in 45 CFR part 149.

See

section 9831 of the Code, section 732 of ERISA, and section 2722 of the PHS Act.

The CAA amended the PHS Act statutory exemption for these products to include the new requirements established under the new Part D of the PHS Act.

See

section 102(a)(3)(B) of the No Surprises Act, which made conforming amendments to add the phrase “and Part D” to section 2722(b), (c)(1), (c)(2) and (c)(3) of the PHS Act.

Section 9823 of the Code, section 723 of ERISA, and section 2799A-8 of the PHS Act (and other provisions of the No Surprises Act that are applicable to group health plans and health insurance issuers offering group or individual health insurance coverage) apply to grandfathered health plans. Section 1251 of the Affordable Care Act provides that grandfathered health plans are not subject to certain provisions of the Code, ERISA, and the PHS Act, as added by the Affordable Care Act, for as long as they maintain their status as grandfathered health plans. For example, grandfathered health plans are subject neither to the requirement to cover certain preventive services without cost sharing under section 2713 of the PHS Act, nor to the annual limitation on cost sharing set forth

under section 2707(b) of the PHS Act. If a plan or coverage were to lose its grandfathered status, it would be required to comply with both provisions, in addition to several other requirements. However, the CAA does not include an exception for grandfathered health plans that is comparable to section 1251 of the Affordable Care Act. Furthermore, section 102(d)(2) of the No Surprises Act amended section 1251(a) of the Affordable Care Act to clarify that the new and recodified patient protections provisions of the No Surprises Act, including those related to choice of health care professional, apply to grandfathered health plans. Therefore, the provisions of these proposed rules that apply to plans and issuers, proposed to be codified at 45 CFR 149.460, would apply to grandfathered plans.

The Departments seek comment on the use of the calendar year as the reporting period, including the time it typically takes to fully adjudicate and pay claims for air ambulance services (furnished by either participating or nonparticipating providers of air ambulance services), and the proposed data elements, as well as any potential challenges that plans and issuers may face in reporting the proposed data elements. The Departments also seek comment on the potential format for reporting the data.

F. Reporting Requirements Regarding Air Ambulance Services for Providers of Air Ambulance Services (45 CFR 149.460)

HHS proposes to amend 45 CFR part 149 by adding 45 CFR 149.460 to subpart E to describe the data reporting requirements for providers of air ambulance services. Proposed 45 CFR 149.460(a) includes the general requirements, the timing and form of the report, and the reporting requirements in circumstances where a transfer of business occurs. Proposed 45 CFR 149.460(b) outlines the information that would be required to be reported.

In proposed 45 CFR 149.460(a)(2), HHS interprets section 106(a) of the No Surprises Act to require providers of air ambulance services to submit data regarding air ambulance services on a calendar year basis, consistent with the proposal for the reporting period in proposed 45 CFR 149.230(a)(2). Moreover, typically, providers of air ambulance services do not operate based on plan years. HHS proposes that data with respect to a calendar year would include data relevant to air ambulance services furnished within the calendar year as well as data relevant to services for which payments were made within the calendar year (even if the service was provided in a different calendar year). HHS expects that these proposed rules would be finalized during 2021, as required in section 106(d) of the No Surprises Act, and consistent with the requirement at section 106(a) of the No Surprises Act on providers of air ambulance services to report the required data not later than 90 days after the last day of the applicable calendar year. Thus, HHS proposes that providers of air ambulance services would be required to submit the data for calendar year 2022 by March 31, 2023, and submit the data for calendar year 2023 by March 30, 2024. In order to ensure completeness of the data, in proposed 45 CFR 149.460(a)(3), HHS further proposes that a provider of air ambulance services that acquires a line or block of business from another provider of air ambulance services that provided such services during calendar years 2022 or 2023 would be required to report the air ambulance services data on behalf of the acquired business for the entire applicable calendar year. The Departments propose that these reporting requirements would apply to the selling and acquiring providers of air ambulance services if a sale or transfer occurs as a result of providers of air ambulance services being merged, combined, spun off, affected by, or engaging in any similar transaction during a calendar year. In addition, to ensure completeness and timeliness of reporting of all relevant air ambulance services data, the proposed rule would provide that the Secretary of HHS may provide examples of these transactions in guidance.

Section 106(a) of the No Surprises Act requires providers of air ambulance services to submit the following information regarding air ambulance services: Cost data separated to the maximum extent possible by air transportation costs and costs of medical services and supplies associated with furnishing air ambulance services; the number and location of all air ambulance bases; the number and type of aircraft operated by the provider; the number of transports by payor mix (including plans, issuers, government payors, and the uninsured); the number of claims denied by group health plans or health insurance issuers and the reasons for denials; and the number of emergency and non-emergency transports by base and by type of aircraft.

Section 106(a) of the No Surprises Act further requires providers of air ambulance services to report, in addition to the information described in the preceding paragraph, such other information regarding air ambulance services as the Secretaries of HHS and Transportation may specify. As noted in section II.E. of the preamble, section 106(c) of the No Surprises Act requires HHS to produce a comprehensive public report that must address several topics that require collection of additional information not specifically identified in section 106(a) of the No Surprises Act. These topics include: The percentage of providers of air ambulance services in various service delivery models (such as hospital-sponsored or municipality-sponsored programs); an assessment of the extent of competition among providers of air ambulance services on the basis of price and services offered; the average charges for air ambulance services; amounts paid by plans, issuers, and consumers; an assessment of the presence of air ambulance bases in, or with the capability to serve, rural areas and the relative growth in air ambulance bases in rural and urban areas over time; the percentage of providers of air ambulance services that have contracts with plans or issuers; unreasonable market concentration or excessive market domination that enable unreasonable price increases, and analyses of the debt collection practices against patients under various service delivery models; the frequency of patient balance billing, and the frequency of claims appeals made by providers of air ambulance services to plans and issuers; and any other data relating to air ambulance services determined necessary and appropriate by the Secretaries of HHS and Transportation. To address these topics, including performing the required analyses and assessments, HHS would need to be able to match the information collected from plans and issuers to the information collected from providers of air ambulance services.

Section 106(c)(2) of the No Surprises Act permits the Secretaries of HHS and Transportation to incorporate information from independent experts and third-party sources in the development of the report. HHS examined various sources of data and spoke with several industry experts and determined that in several areas, the data required to produce the analyses required in section 106(c)(1) of the No Surprises Act are not available from other sources. Therefore, in order to support the development of the report required in section 106(c)(1), HHS proposes collecting the necessary data from providers of air ambulance

services as described in these proposed rules. However, HHS seeks comment on additional data sources that may inform the development of the report, and the extent to which such data sources could be used in lieu of collecting specific data elements.

In proposed 45 CFR 149.460(b), HHS proposes requiring submission of air ambulance base-level and transport-level data on air ambulance services, as well as data elements not specifically identified in section 106(a) of the No Surprises Act, in order to collect the information necessary to satisfy these statutory requirements. For example, collection of data on revenue of the provider of air ambulance services from various sources, including non-transport sources, is necessary and appropriate to assess the competitiveness of the market for air ambulance services for purposes of the public report required under section 106(c) of the No Surprises Act, as well as to validate the data against the data collected from plans and issuers. Similarly, collection of air ambulance base-level data would help inform assessments regarding the competitiveness of the markets as well as capacity, service availability, and gaps in rural access to air ambulance services, which the Secretaries of HHS and Transportation are required to assess under section 106(c). Further, collection of transport-level data would enable the Secretaries of HHS and Transportation to conduct the assessments required under section 106(c) regarding the prices and services offered, the average charges for air ambulance services, and amounts paid by plans, issuers, and consumers, and would allow the Secretaries to complete the analyses of the debt collection practices, the frequency of patient balance billing, and the frequency of claims appeals.

Section 106(a)(2) of the No Surprises Act requires providers of air ambulance services to submit data on the number and location of all air ambulance bases they operate, the number and type of aircraft they operate, and the number of transports disaggregated by payor mix. In proposed 45 CFR 149.460(b)(2), HHS proposes collecting this information for each base, as well as additional information specific to the base and the aircraft that would enable the Secretaries of HHS and Transportation to conduct the assessments required in section 106(c) of the No Surprises Act. This additional information would include the NPIs associated with the base, the number and type of staff, the number and type of air ambulance transports per aircraft (including scene response patient transports, inter-facility patient transports, and transports of organs, medical personnel, and medical supplies), and the number of air ambulance responses for the base, including the number of such responses that did not result in transports. The additional information would also include the service delivery model(s) of the base (a hospital-owned or sponsored program, municipality-sponsored program, hospital independent partnership (hybrid) program, independent program, or tribally operated program in Alaska) and whether the base shares operational costs with the affiliated or sponsor organizations, to complement and support the data required to be collected under section 9823(b)(1)(B) of the Code, section 723(b)(1)(B) of ERISA, section 2799A-8(b)(1)(B) of the PHS Act, and section 106(a)(2)(D) of the No Surprises Act. The rationale for collecting this additional information is that service delivery models may vary by air ambulance base in addition to by provider. The additional information would also include base-specific data related to the providers' of air ambulance services in-network contractual arrangements with plans and issuers as well as other, non-direct payor contracts with plans, issuers, or other entities (including, but not limited to, TPAs or provider networks). This additional information would complement and support required data submissions and would also include air medical subscriptions or ambulance/emergency medical service membership programs associated with the base, and whether the base operates ground ambulance services in addition to air ambulance services. Finally, collection of this additional information would enable analyses under various provisions of section 106(c)(1) of the No Surprises Act.

Section 106(a) of the No Surprises Act requires providers of air ambulance services to submit cost data for air ambulance services, as HHS determines appropriate, and section 106(a) requires providers of air ambulance services to separate, to the maximum extent possible, air transportation costs and the costs of medical services and supplies. HHS reviewed the ambulance cost reporting forms developed for the Medicare Ground Ambulance Data Collection System, ambulance cost reporting forms developed by states, a cost report study prepared for the Association of Air Medical Services and Members, a review of several studies on air ambulances services, consulted with the Secretary of Transportation and subject matter experts, and held listening sessions and additional conversations with providers of air ambulance services. Based on these activities, HHS determined that the service delivery or organizational model of a provider of air ambulance services, the designation of the service area of a base (rural or urban),

and the identification of fixed and variable costs are all important factors affecting the costs and revenues of providers of air ambulance services. Because these factors vary at the air ambulance base level, HHS proposes in 45 CFR 149.460(b) to require submission of detailed cost and revenue data at the air ambulance base level, as well as at the regional and corporate level, for each air ambulance base, if applicable. The data HHS proposes to collect would enable the separation of fixed and variable costs of providers of air ambulance services, as well as medical costs as opposed to air transportation costs.

HHS may apply a custom definition or a broadly accepted definition, such as the one used by CMS for the Medicare Ambulance Fee Schedule, to determine whether air ambulance bases and services are provided in rural or urban areas. More detail on the Medicare Ambulance Fee Schedule is available at:

https://www.cms.gov/medicare/medicare-fee-for-service-payment/ambulancefeeschedule.

HHS proposes in 45 CFR 149.460(b)(3) that the required cost data be reported in the following categories: Labor costs by type of staff; facility costs by facility (including annual lease, rental, or mortgage costs, other costs of ownership, insurance, maintenance and improvements, utilities, taxes, computers and software, and other facility costs); vehicle costs by vehicle (including vendor fees, depreciation, safety enhancements, non-medical equipment (such as communications technology), registration and license, taxes, insurance, maintenance equipment and parts, fuel, and capital medical equipment); equipment and supplies; and overhead and vendor costs (including insurance, training, billing, accounting and finance, human resources, travel, marketing, sales, dispatch or call center, IT support, legal, medical direction, fees, fines, and taxes).

HHS proposes in 45 CFR 149.460(b)(4) that the required revenue data would include: Total revenue from paid air ambulance transports, by payor type, as well as revenue from other sources (such as contracts with facilities such as hospitals, prisons, and nursing homes); revenue from emergency air medical services other than for transports (for example, for transportation of organs, medical personnel, supplies, or equipment on an

emergency basis); revenue from sub-contracted ambulance services; fees for standby events; payments from non-direct contracts such as waiver, rental, lease, and supplemental arrangements; air medical subscriptions and ambulance or emergency medical service membership programs; charitable donations and foundation funding; program-related investments; receipt of local taxes earmarked for emergency medical services; contract revenues from local governments in return for air ambulance services; enterprise funds and utility rates; sales of assets and services; bond or debt financing; state or local donation of vehicles or durable equipment; and funding grants or the provision of time-limited funding from a government entity (including Federal, state, local, or other). The revenue data would enable the Secretaries of HHS and Transportation to conduct the holistic assessments required in various provisions of section 106(c)(1) of the No Surprises Act, including with respect to the ability of providers of air ambulance services to compete on the basis of price and services in various geographic areas, these providers' financial capability to serve rural areas, the relationship of the average charges for air ambulance services to business costs and market dynamics and characteristics, potential anti-competitive behaviors by providers of air ambulance services, and other factors that may affect the costs of air ambulance services.

Finally, section 106(a)(2) of the No Surprises Act requires providers of air ambulance services to submit the following data regarding air ambulance transports: The number of transports by payor mix (group health plans, health insurance issuers, state and Federal Government payors, and the uninsured); the number of claims for air ambulance services that have been denied payment by plans or issuers and the reasons for such denials; and the number of emergent and non-emergent transports disaggregated by air ambulance base and type of aircraft. In 45 CFR 149.460(b)(5), HHS proposes to require submission of transport-level data on air ambulance services in order to satisfy these statutory reporting requirements, as well as to collect the data necessary to enable HHS, in consultation with the Secretary of Transportation, to conduct the assessments required in section 106(c) of the No Surprises Act.

The transport-level data elements in addition to those specifically identified in section 106(a) of the No Surprises Act that HHS proposes to collect from providers of air ambulance services include: Date of service; billing NPI and CPT/HCPCS codes information; and certain information about the transport (such as the air ambulance base, flight duration, loaded miles, pick-up (origin) and drop-off (destination) locations and the point of ambulance pick-up zip code, and whether the transport was a scene response patient transport, inter-facility patient transport, or other transport (such as organ, medical personnel, or medical supplies transport)). These data elements would enable the Secretaries of HHS and Transportation to identify, combine, and validate the information collected from plans and issuers, and the information collected from providers of air ambulance services, as well as evaluate potential gaps in rural access. Consistent with the requirements in section 106(a) of the No Surprises Act and to enable HHS to combine and validate the information collected from providers of air ambulance services under these proposed rules with air ambulance data from other sources, as well as to enable HHS to assess abusive patient collection practices across various payors as required in section 106(c)(1)(I) of the No Surprises Act, HHS proposes requiring identification of the primary payor type for each transport, such as Medicare fee-for-service (FFS), Medicare Advantage, Medicaid, Veterans' Health Administration, TRICARE, Indian Health Service, group health plan, health insurance issuer, FEHB plan, Workers' Compensation, patient cost-sharing, and patient self-pay. Further, to satisfy the requirements for the comprehensive public report described in section 106(c) of the No Surprises Act, HHS proposes that the transport-level data elements should include information regarding the contractual arrangement with the plan or issuer, if applicable, to furnish air ambulance services under the plan or coverage, respectively, to support the assessment required in section 106(c)(1)(F) of the No Surprises Act, as well as the payment methodology for the transport (such as the base rate, mileage, and intervention or other charges), if applicable, as recommended by experts. For the same reasons, HHS proposes that the transport-level data elements should also include: Certain claim adjudication information (including whether the claim was paid, denied, or appealed, and the reason for the denial or the outcome of the appeal, if applicable) to support the data collection and analyses required in sections 106(a)(2)(E) and (c)(1)(J) of the No Surprises Act; certain payment information (including submitted charges, amounts paid by the payor not including the patient, and cost-sharing amount (if applicable)) to support the assessment required in section 106(c)(1)(C) of the No Surprises Act; the amount billed to the patient, the amount collected from the patient, and whether the bill was referred for collection, including lawsuits, liens, or wage garnishment actions to support the assessments required in section 106(c)(1)(G) and (c)(1)(I) of the No Surprises Act; and information on any payments from sources other than the primary payor, such as membership fees and state or municipal subsidies to support the analyses required in section 106(c)(1)(B), (c)(1)(H), and (c)(1)(K) of the No Surprises Act.

In order to protect stakeholder and consumer privacy, particularly when collecting transport-level data, HHS would take precautions to protect the confidentiality of transport-level data. HHS proposes to collect only that transport-level data that would be sufficient for producing the comprehensive report required by the statute. HHS intends to collect and maintain the information using information technology (IT) systems that are designed to meet all of the security standard protocols established under Federal law or by HHS relevant to such information.

HHS is publishing the proposed information collection for public comment at the same time as or shortly after these proposed rules. The proposed information collection would include a proposed data template and instructions.

HHS seeks comment on the use of the calendar year as the reporting period, including the time it typically takes payors to fully adjudicate and pay claims for air ambulance services (furnished by either participating or nonparticipating providers of air ambulance services), the proposed data elements described in this section of the preamble, the appropriate levels for reporting of these data elements (regional/corporate, base, transport), and potential challenges that providers of air ambulance services may face in reporting the proposed data elements, including any special considerations for the reporting of the proposed data elements with respect to municipality and other government-owned or sponsored providers of air ambulance services. HHS also seeks comment on the potential format for reporting the data.

III. Provisions of the Proposed Rules—Department of HHS

A. Part 144—Requirements Relating to Health Insurance Coverage

1. Basis and Purpose (45 CFR 144.101)

HHS proposes conforming amendments to 45 CFR 144.101 to reflect the proposed amendments to 45 CFR part 150, described in section III.C of the preamble. Specifically, HHS proposes to revise 45 CFR 144.101(e)

to include references to the enforcement-related provisions added by the No Surprises Act (section 2799B-4 of the PHS Act and section 106(e) of the No Surprises Act), and to specify that the enforcement provisions in 45 CFR part 150 apply to the provisions of 45 CFR part 149 concerning group or individual health insurance, providers and facilities, and providers of air ambulance services.

The July 2021 interim final rules redesignated paragraph (d) of 45 CFR 144.101 as paragraph (e) and further redesignated paragraph (e) of 45 CFR 144.101 as paragraph (f). Although the effective date of the July 2021 interim final rules is not until September 13, 2021, references to paragraph (e) in these proposed rules are references to the newly redesignated paragraph (e) (formerly paragraph (d)). This rule also proposes a technical correction to 45 CFR 144.103(e)(2) to correct a cross-reference that was inadvertently not updated when paragraph (d) was redesignated.

B. Part 148—Requirements for the Individual Health Insurance Market

1. Authority

HHS proposes to make technical corrections to the authority listed for 45 CFR part 148. More specifically, HHS proposes to update the list to reference the Federal insurance reforms applicable to the individual market captured in PHS Act sections 2722 through 2763, codified at 42 U.S.C. 300gg-21 through 300gg-63, along with PHS Act sections 2791 and 2792, codified at 42 U.S.C. 300gg-91 and 300gg-92. This would include new section 2746 of the PHS Act, as added by section 202(c) of Title II of Division BB of the CAA, in the list of authorities for 45 CFR part 148. Finally, HHS proposes to remove the reference to PHS Act section 2711, codified at 42 U.S.C. 300gg-11, because this statutory provision is not implemented as part of the HHS regulations in 45 CFR part 148.

See

45 CFR 147.126.

Also see

45 CFR 146.123.

2. Basis and Purpose (45 CFR 148.101)

HHS proposes to amend 45 CFR 148.101 to expand the purpose of 45 CFR part 148. Specifically, HHS proposes to add a reference to the new reporting and disclosure requirements regarding agent and broker compensation that these proposed rules would add as a new subpart F to 45 CFR part 148 to implement the requirements of section 2746 of the PHS Act, as added by section 202(c) of Title II of Division BB of the CAA.

3. Scope and Applicability Date (45 CFR 148.102)

HHS proposes to amend 45 CFR 148.102 by adding paragraph (a)(3) to specify that the requirements in proposed 45 CFR 148.410 would apply to health insurance issuers of individual health insurance coverage and short-term, limited-duration insurance. HHS also proposes to amend paragraph (b) by excepting 45 CFR 148.410 from the applicability dates specified in paragraph (b), as these proposed rules set forth the applicability date specific to 45 CFR 148.410 in that section.

Section 2746 of the PHS Act, as added by section 202(c) of Title II of Division BB of the CAA, applies to grandfathered individual health insurance coverage, for the reasons set forth in section II.E. of the preamble. Therefore, the provisions in proposed 45 CFR 148.410 that apply to individual health insurance coverage, would apply to grandfathered as well as nongrandfathered individual health insurance coverage.

4. Subpart F—Requirements Related to Reporting and Disclosure

HHS proposes to add a new subpart F to 45 CFR part 148 and new 45 CFR 148.410 within that subpart to implement the requirements of section 2746 of the PHS Act, as added by section 202(c) of Title II of Division BB of the CAA. Section 2746 of the PHS Act requires health insurance issuers offering individual health insurance coverage or short-term, limited-duration insurance to make disclosures to enrollees and submit reports to HHS regarding direct and indirect compensation provided by the issuer to an agent or broker associated with enrolling individuals in such coverage. Sections 2746(b) and (c) of the PHS Act detail the specific requirements for disclosure and reporting, respectively. HHS proposes to codify these requirements in new proposed 45 CFR 148.410.

Agents and brokers enter into appointment arrangements with health insurance issuers; these arrangements, which are generally regulated by state law, govern compensation provided to agents and brokers for assisting consumer enrollment in an issuer's plans. The specific compensation arrangement between a health insurance issuer and the agent or broker is typically laid out in a written document such as a commission schedule. Compensation arrangements may also include other types of compensation, such as fees and bonuses. Section 2746 of the PHS Act improves the transparency of this compensation system by requiring the disclosure of this compensation information to consumers and reporting of this information to HHS.

5. Subpart F—Requirements Related to Reporting and Disclosure—Disclosure of Agent and Broker Compensation to Individuals in Individual Health Insurance Coverage or Short-Term, Limited-Duration Insurance (45 CFR 148.410)

a. Health Insurance Issuer Standards

HHS proposes to add, in 45 CFR 148.410(a), a general statement of the obligations of health insurance issuers offering individual health insurance coverage or short-term, limited-duration insurance, to disclose to policyholders and report to HHS on an annual basis direct and indirect compensation provided by the issuer to an agent or broker associated with enrolling individuals in such coverage.

HHS proposes to add, in 45 CFR 148.410(b), definitions of key terms in these proposed rules. HHS proposes to define “agent or broker” through a cross-reference to the definition for the term in 45 CFR 155.20. Section 2746 of the PHS Act applies to both direct and indirect compensation paid to an agent or broker by a health insurance issuer offering individual health insurance coverage or short-term, limited-duration insurance, but does not define direct and indirect compensation. Therefore, HHS proposes regulatory definitions for these key terms that define direct and indirect compensation in a manner that covers all forms of consideration that might be transferred between an issuer offering individual health insurance coverage or short-term, limited-duration insurance and an agent or broker for enrollment in such coverage, regardless of the method by which that consideration is transferred.

In new proposed 45 CFR 148.410(b)(3), direct compensation is defined as monetary amounts, including sales and base commissions, paid by an issuer that are attributable directly to the policy, certificate, or contract of insurance and that are paid to an agent or broker for the sale, placement, or renewal of individual health insurance coverage or short-term, limited-duration insurance. HHS proposes in new proposed 45 CFR 148.410(b)(4) to define

indirect compensation as payments by an issuer attributable indirectly to a policy, certificate, or contract of insurance to agents, brokers, and other persons for items other than sales and base commission. Examples of indirect compensation include service fees, consulting fees, finders' fees, profitability and persistency bonuses, awards, prizes, volume-based incentives, and non-monetary forms of compensation. HHS proposes in new proposed 45 CFR 148.410(b)(2) to define a commission schedule as an itemized list or table that provides the commission levels that are paid by an issuer for the sale, placement, or renewal of individual health insurance coverage or short-term, limited-duration insurance. These definitions are based on the most common and essential terms HHS has observed in various examples of issuer commission schedules in the individual market. HHS proposes to define policyholder in new proposed 45 CFR 148.410(b)(5) for purposes of this section as the individual who purchases individual health insurance coverage or short-term, limited-duration insurance and is responsible for the payment of premiums.

b. Disclosure Requirements

To ensure transparency of agent and broker compensation when purchasing individual health insurance coverage or short-term, limited-duration insurance, and to implement sections 2746(b)(1) and (2) of the PHS Act, HHS proposes in new proposed 45 CFR 148.410(c) to codify the requirement that health insurance issuers offering individual health insurance coverage or short-term, limited-duration insurance must disclose to a potential or existing policyholder the amount of direct and indirect compensation provided to an agent or broker associated with enrolling the policyholder in the individual health insurance coverage or short-term, limited-duration insurance. This disclosure would be required to include the commission schedule used to determine the compensation owed to an agent or broker as part of the appointment contract between the agent or broker and the health insurance issuer offering individual health insurance coverage or short-term, limited-duration insurance, as well as the structure for compensation not captured on the commission schedule.

Consistent with the requirements in section 2746(b) of the PHS Act, HHS proposes in new proposed 45 CFR 148.410(c)(2) that for new, initial enrollments, this disclosure would be required to be made prior to when potential policyholders finalize plan selection and also to be included on any documentation confirming the initial enrollment, including enrollment documentation required in applicable state or Federal law or an initial enrollment package. Section 2746(b)(2) of the PHS Act requires health insurance issuers offering individual health insurance coverage or short-term, limited-duration insurance to include the disclosure on any documentation confirming the individual's enrollment. HHS recognizes that the term “any documentation” could be read broadly to refer to any documentation that a health insurance issuer provides during a plan year that serves as confirmation that the individual is enrolled in the coverage. However, HHS is of the view that requiring such a broad reading of the statutory requirement would be burdensome to issuers, without producing a commensurate benefit to individuals who receive the disclosure. Therefore, HHS proposes to interpret the statutory language more narrowly. Specifically, with respect to initial enrollments, HHS proposes, in 45 CFR 148.410(c)(2), to require disclosure on any documentation confirming initial enrollment, including enrollment documentation required in applicable state or Federal law or an initial enrollment package.

In addition, consistent with the provisions in section 2746(d) of the PHS Act that recognize the need to account for the different processes for plan renewals, HHS proposes in new proposed 45 CFR 148.410(c)(3) that for renewals of enrollment in a plan, an issuer must provide the required disclosure to the policyholder with the renewal notice required in 45 CFR 147.106(f) or 148.122(i), if applicable. HHS proposes this because plan renewals in the individual market generally do not have a moment when a consumer finalizes plan selection, as many of these renewals occur automatically, and because these renewal notices can also be considered to confirm enrollment in the plan for the upcoming plan year. Therefore, issuers would be required to provide the required disclosure as part of an initial enrollment package or renewal notice, but would not be required to provide the required disclosure on other documents that could be considered to confirm enrollment, such as explanations of benefits.

For example, pursuant to 45 CFR 147.200(a)(1)(iv), a health insurance issuer offering individual health insurance coverage must provide a summary of benefits and coverage to an individual covered under the policy upon application, by the first day of coverage (if there are changes), upon renewal, reissuance, or reenrollment, and upon request.

In the absence of any documentation required by applicable state or Federal law to confirm initial enrollment, or the requirement for a notice of renewal of coverage with respect to short-term, limited-duration insurance, HHS proposes, as a default in new proposed 45 CFR 148.410(c)(4), that issuers would be required to provide the disclosure with the invoice for the first premium payment for the initial coverage term and for each renewal period. HHS invites comment on whether there are other forms of documentation confirming enrollment for either individual health insurance coverage or short-term, limited-duration insurance on which disclosure of compensation information should be required and whether requiring delivery of the disclosure at another time, such as between the final plan selection and issuance of the invoice for the first premium payment, may be more appropriate.

HHS proposes to codify in new proposed 45 CFR 148.410(c)(5) minimum requirements for disclosure of direct and indirect compensation information. HHS proposes that, at a minimum, a health insurance issuer offering individual health insurance coverage or short-term, limited-duration insurance could satisfy the disclosure requirement using the commission schedules or other documents that detail the applicable commission levels and indirect compensation, such as bonuses. When used to satisfy this new disclosure requirement, these documents must clearly specify commissions paid by an issuer to an agent or broker for the applicable plans for which the agent or broker has an appointment arrangement with the issuer, distinguish between commission payments for new enrollments and such payments for renewed enrollments if the issuer differentiates compensation for those two types of enrollment, and explain the qualifying thresholds for the payment of indirect compensation to an agent or broker. Requiring that the disclosure must include a commission schedule would ensure a consistent and readily available document for all policyholders to use to understand the compensation that their insurance agent or broker would receive and make informed purchasing decisions. If an issuer of individual health insurance coverage or short-term, limited-duration insurance also offers direct or indirect compensation that is not captured by the commission schedule, the issuer must supplement the disclosure of the information on the commission

schedule with additional documentation disclosing such other compensation.

HHS expects that issuers subject to the requirements of this section would integrate this new disclosure requirement into their existing compliance operations. An issuer's obligation could be satisfied by the agent or broker making the required disclosure on the issuer's behalf. For example, issuers may provide agents or brokers who have an appointment arrangement with the issuer printed versions of the commission schedule and other documentation disclosing direct and indirect compensation, if applicable, to attach to enrollment materials or may provide a link to an online version of the document. This would equip agents and brokers with the information necessary to ensure that consumers would be aware of any compensation being paid by the issuer to the agent or broker prior to enrolling. Whether issuers choose to comply directly with this obligation or partner with their agents and brokers to provide the required disclosure, materials provided would be required to be made available in accessible formats for people with disabilities (at no cost to the individual) and people with limited English proficiency. Issuers would be required to comply with applicable Federal language and accessibility requirements regarding disclosure documents.

This typically requires documents to be made available in any of the 15 most common languages in the state.

Issuers would also be required to ensure effective communication with individuals with disabilities, including provision of appropriate auxiliary aids and services at no cost to the individual. Auxiliary aids and services may include interpreters, large print materials, accessible information and communication technology, open and closed captioning, and other aids or services for persons who are blind or have low vision, or who are deaf or hard of hearing. Information provided through information and communication technology also must be accessible to individuals with disabilities, unless certain exceptions apply.

HHS is of the view that individuals cannot receive meaningful disclosure if they cannot understand the information provided in the disclosure documents. HHS seeks comment on these proposals.

See,

for example, Guidance and Population Data for Exchanges, Qualified Health Plan Issuers, and Web-Brokers to Ensure Meaningful Access by Limited-English Proficient Speakers Under 45 CFR 155.205(c) and 156.250 (March 30, 2016)

https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Language-accessguidance.pdf

and “Appendix A—Top 15 Non-English Languages by State”

https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Appendix-A-Top-15-non-englishby-state-MM-508_update12-20-16.pd. See also

42 U.S.C. 18116, 42 U.S.C. 2000d

et seq.,

269 U.S.C. 794, 42 U.S.C. 12101

et seq.

Ibid.

See

42 U.S.C. 18116, 42 U.S.C. 2000d

et seq.,

269 U.S.C. 794, 42 U.S.C. 12101

et seq.

These proposed rules do not prescribe a specific format for issuers' commission schedules or other documents that detail the applicable direct or indirect compensation. Instead, HHS proposes in 45 CFR 148.410(c)(5) that, to the extent the commission schedules or other documents that detail the applicable direct or indirect compensation are used to satisfy the requirements of this section, the schedules or other documents would be required to comply with the minimum standards outlined therein regarding agent and broker compensation. This proposed requisite information includes information on initial and renewal commissions and explanation of the qualifying thresholds for the payment of indirect compensation to an agent and broker, at a minimum. Commission schedules are widely used in the health insurance industry and customarily include this minimum informational content with respect to initial and renewal commission rates. However, the format can vary by issuer. It is HHS's view, at this time, that the benefits of prescribing and standardizing the proposed minimum required content in a specific format for commission schedules would not outweigh the costs of implementation. HHS is also not proposing a specific format for the additional documentation that detail the applicable direct or indirect compensation. Instead, HHS is proposing minimum standards for the information that must be disclosed and permitting issuers to determine what documentation may contain that information and be used to satisfy the disclosure requirement, whether the issuer calls it a commission schedule or refers to it by another term. HHS invites comments on these proposals, especially the considerations of costs and benefits associated with standardizing the format for compensation disclosure.

HHS proposes that issuers would be required to make the necessary disclosures prior to the potential policyholder finalizing plan selection and, in addition, that the disclosure be included on any documentation confirming the individual's enrollment, as required under section 2746(b) of the PHS Act. This requirement would ensure that the person who is choosing the coverage and agreeing to be financially responsible for premiums and other payments due under the insurance contract (who HHS proposes to define as the `policyholder') can evaluate whether and to what extent the advice they received from an agent or broker may be influenced by the agent's or broker's compensation arrangement with an issuer prior to finalizing the plan selection.

HHS considered whether to propose requiring that issuers make these required disclosures to all plan enrollees, but are of the view that such a requirement would be needlessly burdensome. First, requiring issuers to disclose direct and indirect agent or broker compensation to each person in an enrollment group would be unreasonable as many enrollees are infants, minor children, or otherwise not responsible for choosing their health insurance coverage. As noted, requiring the disclosure be made to the policyholder would allow that individual to evaluate whether and to what extent the advice they received from an agent or broker may be influenced by the compensation received. HHS expects that the policyholder would be able to relay information from the disclosure to the other enrollees on the policy, similar to how the policyholder is entrusted to relay other information about the plan selection to the other enrollees in the policy. HHS is also of the view that requiring issuers to make these disclosures to each enrollee could place a larger burden on issuers and enrollees than necessary without adding meaningful consumer benefit. For example, to the extent an issuer uses the agent or broker to provide the disclosure, requiring disclosure to be made to all enrollees prior to finalizing the plan selection would necessitate an adult, seeking to purchase coverage for their family, to bring that entire family to the office of the insurance agent or broker in order to receive the disclosure of information about direct and indirect compensation before finalizing the plan selection in which the family members would be enrolled.

A similar burden exists for virtual or telephonic enrollments. The agent or broker assisting with the enrollment would need to contact each individual on the plan prior to finalizing plan selection, which could be time-consuming or nigh impossible. This would require all plan enrollees to be near a phone or computer at the time of enrollment and either answer a phone call or respond to an email prior to

finalizing plan selection. This amount of coordination seems unduly burdensome on consumers and would virtually eliminate parents' ability to finalize a plan selection while their children are in school, as the children would generally be unable to be contacted by the agent or broker while attending classes. In addition, emails or phone calls from unknown individuals are often not answered or responded to promptly, if at all, meaning a policyholder would need to first contact the other plan enrollees, telling them to expect a call from the agent or broker, which adds another layer of coordination and complexity. Additionally, children or developmentally challenged individuals may not be mentally capable of providing their consent or may not have an email address or phone number, meaning if they were not physically with the policyholder at the time directly prior to finalizing plan selection, contacting them would be impossible.

c. Reporting Requirements

To implement the requirement at section 2746(c) of the PHS Act that health insurance issuers offering individual health insurance coverage or short-term, limited-duration insurance must annually report to HHS prior to the beginning of open enrollment any direct or indirect compensation provided to an agent or broker associated with enrolling individuals in such coverage, HHS proposes in new proposed 45 CFR 148.410(d)(1) to require issuers to submit to HHS, in a form and manner prescribed by the Secretary, any direct and indirect compensation provided to agents and brokers associated with enrolling individuals in individual health insurance coverage and short-term, limited-duration insurance sold by the issuer. HHS intends to collect data similar to the data collected by DOL on compensation of insurance producers for group health plans subject to the Form 5500 reporting requirement.

DOL utilizes the Form 5500 series as part of its overall reporting and disclosure under ERISA. DOL collects information related to insurance on Form 5500 Schedule A, which includes the identifying information for the issuer and the agent or broker, and the amount of compensation paid to agents and brokers. Issuers would be expected to submit the reporting data to HHS through an online system. HHS is proposing to require issuers provide, for each payment recipient and intermediary organization in a specific month of the reporting year, a single row of data in comma-separated values (CSV) format containing the following fields/columns: (1) Payor Federal Tax ID Number (FTIN); (2) Recipient Identifier Type (“NPN” for writing agents or “FTIN” for payments made to intermediaries); (3) Recipient Identifier Value (the actual number); (4) The date on which the payment was made to the payment recipient; (5) Direct Compensation, expressed as a dollar amount (the commission); (6) Indirect Compensation, expressed as a dollar amount, if any (if indirect compensation payment amount was made in that month, for example, a bonus was paid out; bonuses for annual performance are accounted for in December of the reporting year rather than disaggregated into 12 parts for each month); (7) the basis for indirect compensation—a text field allowing entry of what the grounds for the indirect compensation were (bonus, incentive, etc.); and (8) other information specified by the Secretary, which may include, for example, distinguishing between individual health insurance coverage and short-term, limited-duration insurance, listing the appointment arrangement duration, and providing the number of plans the agent sold.

HHS proposes to add new proposed 45 CFR 148.410(d)(2) to specify that the reporting by issuers would be required to reflect both compensation arrangements directly between the writing agent or broker and the issuer, and compensation arrangements from the issuer to the writing agent or broker involving one or more intermediary organizations in connection with the sale of individual health insurance coverage or short-term, limited-duration insurance. Examples of intermediary organizations that are often involved in the sale, placement, or renewal of individual health insurance coverage or short-term, limited-duration insurance include general line agencies and marketing organizations. This proposed approach would ensure that the information reported annually to HHS reflects the full amount of compensation received by agents and brokers related to the sale, placement, or renewal of individual health insurance coverage and short-term, limited-duration insurance.

HHS proposes that the annual report submitted by issuers to HHS contain more detailed information than the disclosure to policyholders, including information related to intermediary organizations as well as actual compensation amounts rather than payment structures, because HHS proposes for the report to be due after the end of the year for which compensation was paid and prior to the beginning of open enrollment for the following year. This timeline would enable the report to HHS to provide a more complete reflection of compensation actually provided throughout the previous calendar year than the disclosure to consumers, which must be provided prior to individuals finalizing their plan selections and at renewal. In addition, requiring issuers to provide information to policyholders on the compensation arrangements between insurance agents or brokers and intermediary organizations, like general agencies, would substantially increase the complexity of the disclosure materials without providing the same level of consumer benefit. Disclosure of direct and indirect compensation is intended to inform the consumer of considerations, other than the consumer's best interests, that may impact the guidance and decision-making of the insurance agent or broker. HHS is of the view that information about whether that compensation would first be paid to a general agency and the amount of compensation that agency would claim before disbursing to the agent would not have a similar impact on the consumer's decision-making process. However, reporting of this additional information to HHS would assist HHS in monitoring and enforcing compliance with the disclosure requirements and ensuring that consumer disclosures accurately and adequately reflect direct or indirect compensation payment practices.

HHS proposes in new proposed 45 CFR 148.410(d)(4) to require submission to HHS of the required reports on an annual basis by the last business day of July of the calendar year following the applicable reporting period. For example, reporting for calendar year 2022 would be due by July 31, 2023. Under this proposed rule, for non-calendar year policies, which may exist in the short-term, limited-duration insurance market, issuers would be required to split the agent and broker compensation between the reports for two calendar years. For example, for a short-term, limited-duration policy in effect from December 1, 2022 to February 28, 2023, an issuer would be required to report the compensation paid on the policy for December 2022 in the report due by July 31, 2023 and the compensation paid on the policy for January and February 2023 in the report due July 31, 2024. HHS seeks comment on this proposal, and would provide additional guidance in the final rule on special cases, as may be necessary, including indirect compensation paid

for enrollments that span multiple years based on comments on this proposed rule and feedback from regulated entities subject to these requirements and other stakeholders.

Section 2746(c) of the PHS Act states that issuers must report the data to HHS prior to the beginning of open enrollment. The last business day of July would align with the statute and would avoid significant overlap with the qualified health plan certification process and states' rate and form review processes. This date would also provide HHS with adequate time to review the submitted reports prior to the beginning of open enrollment for the following year and would provide issuers ample time after the reporting year to prepare and validate the information.

d. Applicability

In new proposed 45 CFR 148.410(e), HHS is proposing to codify the provisions of section 2746(d) of the PHS Act, which establishes a transition rule for these new requirements and provides that the requirements would not be applicable to contracts executed between health insurance issuers offering individual health insurance coverage or short-term, limited-duration insurance and agents or brokers before December 27, 2021. HHS therefore proposes that these new requirements would apply to contracts executed between an agent or broker and a health insurance issuer offering individual health insurance coverage or short-term, limited-duration insurance on or after December 27, 2021. For purposes of determining the date of contract execution, HHS proposes to deem the execution of contractual addenda or revisions to the material terms of a pre-existing contract to be the execution of a new contract to which the disclosure and reporting requirements would apply.

HHS does not expect that many appointment contracts would be newly executed between the effective date of the statutory requirement, December 27, 2021, and the beginning of the first reporting period proposed in these proposed rules, January 1, 2022. As a result, under this proposal, HHS may exercise discretion and adopt a temporary policy of relaxed enforcement in connection with the enforcement of the proposed reporting requirement on a case-by-case basis for appointment contracts executed and policies effective within the period between December 27, 2021 and January 1, 2022, and encourages states that are the primary enforcers of these requirements to adopt a similar enforcement approach.

HHS seeks comment on all aspects of these proposals regarding the definitions, disclosure requirements, reporting requirements, and applicability.

C. Part 150—CMS Enforcement of Group and Individual Insurance Market and Provider and Facility Requirements

Section 2723 of the PHS Act contemplates that states would exercise primary enforcement authority with respect to issuers that offer health insurance coverage in the individual or group markets within the state. If a state notifies HHS that it does not have the authority to enforce PHS Act requirements, or if HHS determines that a state is not substantially enforcing PHS Act requirements with respect to issuers, HHS has the responsibility to enforce the PHS Act provision or provisions in that state and has delegated this enforcement authority to CMS.

The CAA enacted new provisions of the PHS Act that require health insurance issuers to submit certain information to HHS or the Departments. This includes the requirement under section 2746(c) for issuers that offer individual health insurance coverage and issuers that offer short-term, limited-duration insurance coverage to annually report to the Secretary of HHS, prior to the beginning of open enrollment, any direct or indirect compensation provided to an agent or broker associated with enrolling individuals in such coverage. Health insurance issuers must also report to the Departments certain information regarding air ambulance services under section 2799A-8 and certain information regarding pharmacy benefits and drug costs under section 2799A-10. Additionally, in accordance with section 2799A-9(a)(4), issuers must submit to HHS an annual attestation of compliance with the prohibition of gag clauses on price and quality information under section 2799A-9. Under section 2723 of the PHS Act, states have the opportunity to be the primary enforcers of sections 2746(c), 2799A-8, 2799A-9(a)(4), and 2799A-10. However, HHS is of the view that states would not look to enforce these PHS Act provisions because they are requirements for issuers to report to HHS or the Departments, and states would not have access to the submissions to assess compliance. Instead, HHS anticipates that states would focus resources on implementing and enforcing the other requirements in the CAA. HHS therefore proposes to have direct enforcement authority for these issuer requirements in all states, unless the state notifies HHS of its intent to enforce. HHS solicits comments on this approach and whether there are states that intend to assist with enforcement of any of these requirements.

In cases where there is a question about whether the state is failing to substantially enforce one or more PHS Act requirements, the procedures outlined in 45 CFR 150.201 through 150.221 govern. First, if CMS is satisfied that there is a reasonable question whether there has been a failure to substantially enforce one or more PHS Act requirements, CMS notifies the appropriate state parties, providing 30 days to respond. Then, if CMS makes a preliminary determination that the state is failing to substantially enforce, the state is provided an opportunity to show evidence of substantial enforcement. If CMS determines that the state's failure to substantially enforce has not been corrected, then CMS would send a final determination notice to the state identifying which requirements CMS would directly enforce and the effective date for such enforcement. Finally, current regulations provide a transition mechanism by which a state can assume or resume primary enforcement of the applicable PHS Act requirement(s).

Most states currently work to ensure that issuers offering health insurance coverage in the individual and group markets comply with applicable requirements of the PHS Act. Although some states lack direct state statutory authority to enforce, CMS has worked with many of these states to implement collaborative enforcement agreements. Through these agreements, a state performs the same regulatory functions with respect to the applicable individual and group insurance market requirements of Title XXVII of the PHS Act (market reform provisions) as it does to ensure compliance with state law, and seeks to achieve voluntary compliance from issuers if the state finds a potential violation. Similarly, consumers continue to contact the state with inquiries and to submit complaints relating to the market reform provisions. Under this collaborative approach, if the state finds a potential violation and is unable to obtain voluntary compliance from an issuer, it would refer the matter to CMS for possible enforcement action. If a state lacks authority or ability to enforce PHS Act requirements, then CMS would directly enforce the relevant market reform provisions in the state with respect to health insurance issuers in the group and individual markets. Finally, CMS directly enforces the relevant market reform provisions with

respect to non-Federal governmental plans in all states.

When CMS is responsible for enforcement with respect to issuers and non-Federal governmental plans, enforcement tools CMS uses in accordance with 45 CFR 150.301 through 150.347, include policy form review, complaint-driven investigations, and market conduct examinations. CMS also has authority to impose civil money penalties against health insurance issuers in a state in which CMS is directly enforcing the PHS Act, and against non-Federal governmental plan sponsors in all states that fail to comply with applicable PHS Act requirements.

See

section 2723(b) of the PHS Act.

Also see

45 CFR 150.301 through 150.347.

The CAA adds additional PHS Act requirements that apply to group health plans, including non-Federal governmental plans, health insurance issuers, providers, including providers of air ambulance services (providers), and health care facilities (facilities). CMS would enforce these provisions to the extent they apply to non-Federal governmental plans in all states and to issuers in states where CMS directly enforces in the aforementioned manner. With respect to enforcement of the requirements applicable to providers and facilities, the CAA largely mirrors the current issuer enforcement structure: Namely, states are the primary enforcers, with CMS only enforcing if a state fails to substantially enforce, and these proposed rules reflect this structure. However, the provisions of section 106(a) of the No Surprises Act that apply to providers of air ambulance services are enforced directly by CMS. The CAA and these proposed rules would require CMS to follow the process set forth in section 1128A of the SSA to impose civil money penalties on providers or facilities for non-compliance with provisions of Part E of Title XXVII of the PHS Act and on providers of air ambulance services for non-compliance with the requirement to submit data under section 106(a) of the No Surprises Act. The applicable state authority involved in oversight and enforcement of providers and facilities would likely be different in most, if not all, states from the applicable state authority responsible for oversight and enforcement over health insurance issuers.

HHS proposes to make conforming amendments to existing regulations in subparts A, B, and D and to add a new subpart E to 45 CFR part 150 to provide for CMS direct enforcement when a state is not substantially enforcing PHS Act requirements pertaining to providers and facilities and when a provider of air ambulance services fails to submit data required under section 106(e) of the No Surprises Act. HHS also proposes to amend existing regulations to add references to 45 CFR part 149, which implements these PHS Act requirements and to which the enforcement regulations in 45 CFR part 150 would also apply. Additionally, HHS proposes revising subpart C of 45 CFR part 150 to align these provisions with industry standards and clarify the existing CMS enforcement procedures, and equip CMS with additional tools to fulfill its enforcement responsibilities under the PHS Act.

HHS proposes revising the title of 45 CFR part 150 to reflect the extension of CMS's enforcement authority to providers and facilities in states that are not substantially enforcing the requirements in Part E of Title XXVII of the PHS Act and to providers of air ambulance services for purposes of the data submission requirements under section 106(e) of the No Surprises Act.

1. Basis and Scope (45 CFR 150.101)

HHS proposes to add to 45 CFR 150.101(a), which captures the basis of 45 CFR part 150, references to section 2799B-4 of the PHS Act, which subjects providers and facilities to the enforcement provisions of the PHS Act that HHS proposes to implement in 45 CFR part 150, and section 106(e) of the No Surprises Act, which subjects providers of air ambulance services to civil money penalties for failure to comply with data reporting requirements. HHS also proposes to make conforming edits to expand the scope of 45 CFR part 150 in 45 CFR 150.101(b), including to specifically outline the enforcement framework that HHS proposes to implement under subpart E of 45 CFR part 150. This includes proposed amendments to 45 CFR 150.101(b)(2) to add a reference to 45 CFR part 149 to expand the scope of the framework applicable to enforcement over health insurance issuers. In addition, HHS proposes to add a new paragraph (b)(3) to capture the scope of the framework applicable to enforcement over providers and facilities.

2. Definitions (45 CFR 150.103)

HHS proposes to amend 45 CFR 150.103 to revise the introductory text to add a reference to 45 CFR part 149 and to add definitions related to enforcement against providers and facilities. Specifically, HHS proposes to define the term “facility” for purposes of 45 CFR part 150 to mean a health care facility, an emergency department of a hospital, and an independent freestanding emergency department, as those terms are defined in 45 CFR 149.30, and any other facility subject to the requirements in Part E of Title XXVII of the PHS Act. HHS also proposes to define the term “provider” for purposes of 45 CFR part 150 to mean a physician or other health care provider, as that term is defined in 45 CFR 149.30, as well as a provider of air ambulance services, as that term is defined in 45 CFR 149.30. These combined definitions would make 45 CFR part 150 easier to read and understand, as the enforcement procedures outlined in 45 CFR part 150 apply to all the aforementioned parties separately defined in 45 CFR 149.30. HHS also proposes to make conforming amendments to add references to 45 CFR part 149 to the definition of “individual health insurance policy or individual policy” and the definition of “PHS Act requirements.” HHS seeks comment on these proposals.

3. State Enforcement (45 CFR 150.201)

Under 45 CFR 150.201, states have primary enforcement authority over health insurance issuers with respect to PHS Act requirements, unless the state notifies CMS that it has not enacted legislation to enforce or that it is not otherwise enforcing PHS Act requirements or the state fails to substantially enforce the PHS Act requirements that apply to issuers, in which case CMS would enforce those requirements. These proposed rules would make a conforming amendment at 45 CFR 150.201 to specify that states also have primary enforcement authority over providers and facilities that furnishes items or services to individuals in the state, unless the state notifies CMS that it has not enacted legislation to enforce or that it is not otherwise enforcing PHS Act requirements or the state fails to substantially enforce the PHS Act requirements that apply to providers and facilities, in which case CMS would enforce these requirements. Under this proposed rule, a state would be the primary enforcer of the PHS Act requirements against providers or facilities that furnish services via telehealth to individuals located in the state, even in circumstances where the provider or facility is located in a different state. While many states require licensure of out-of-state telehealth providers furnishing care to individuals within the state, HHS understands that this is not always true, and that many states have relaxed licensure requirements in response to

the COVID-19 public health emergency.

HHS seeks comment on whether the approach taken in this proposed rule presents challenges with respect to providers or facilities furnishing telehealth services.

See,

for example, Center for Connected Health Policy.

Cross-State Licensing.

Available at:

https://www.cchpca.org/topic/cross-state-licensing-professional-requirements/

(last accessed August 8, 2021); and Federation of State Medical Boards.

U.S. States and Territories Modifying Requirements for Telehealth in Response to COVID-19.

(July 28, 2021.) Available at:

https://www.fsmb.org/siteassets/advocacy/pdf/states-waiving-licensure-requirements-for-telehealth-in-response-to-covid-19.pdf.

HHS also proposes to make a technical correction to the title of subpart B to reflect that this subpart would apply to multiple PHS Act requirements rather than only one requirement. HHS proposes to revise the title of subpart B by changing “requirement” to “requirements” as the term should have been plural.

4. Circumstances Requiring CMS Enforcement (45 CFR 150.203)

HHS proposes to make technical corrections to the introductory language at 45 CFR 150.203 to reflect that this section would apply to multiple PHS Act requirements rather than only one requirement. HHS is not proposing further amendments because HHS would interpret and apply the current language outlining the circumstances requiring CMS enforcement, which generally refers to states, to situations involving providers and facilities in the same manner in which it applies to health insurance issuers in situations where the applicable state authority fails to substantially enforce applicable PHS Act requirements.

5. Sources of Information Triggering an Investigation of State Enforcement (45 CFR 150.205)

Section 150.205(d) provides that if information regarding the status of state enforcement of PHS Act requirements comes from state governors and commissioners of insurance, such information may trigger a CMS investigation of whether a state is failing to substantially enforce these requirements. Because governors, commissioners, and other applicable state insurance agency or entity leaders may not have oversight or enforcement authority over providers and facilities, information regarding state enforcement of PHS Act requirements with respect to providers and facilities may instead come from the state departments of health or other state agencies with that authority. Additionally, some states have officials distinct from the commissioners of insurance who are responsible for regulating health maintenance organizations (HMOs). Therefore, HHS proposes to amend 45 CFR 150.205(d) to add a reference to officials responsible for regulating HMOs, directors of public health or any other state department, agency, or board with applicable oversight authority over entities subject to PHS Act requirements to the list of state officials who may be the source of information triggering an investigation. Proposed amendments to 45 CFR 150.205(e)(2) would correct a typographical error which incorrectly referenced in 45 CFR 148.120 instead of 45 CFR 148.210.

6. Notice to the State (45 CFR 150.211)

Under these proposed rules, in determining whether a state is failing to substantially enforce PHS Act requirements that apply to providers and facilities, CMS would use the processes and standards already established with respect to state enforcement of applicable PHS Act requirements with respect to health insurance issuers in 45 CFR 150.205 through 150.221. CMS is of the view that these processes can largely also apply to state enforcement of the new PHS Act requirements applicable to providers and facilities without change. However, the current regulatory language at 45 CFR 150.211 specifies that if there is a reasonable question regarding state enforcement, CMS will send a notice to the governor or chief executive officer of the state, the insurance commissioner or chief insurance regulatory official, or the official responsible for regulating HMOs. Those individuals may not be the appropriate recipients if there is a reasonable question regarding state enforcement of PHS Act requirements that apply to providers or facilities. Therefore, HHS proposes to amend 45 CFR 150.211 to add paragraph (d) specifying that a notice of possible failure to substantially enforce PHS Act requirements in such circumstances would be sent to the relevant state official responsible for regulating providers and facilities and to make conforming changes to paragraph (b) to reflect that notices would be sent to the insurance commissioner or chief insurance regulatory official when there is a reasonable question regarding state enforcement of PHS Act requirements that apply to health insurance issuers. Paragraph (c) would be retained, which provides that such notices would be sent to the state official responsible for regulating HMOs, if different from the official listed in paragraph (b), when the alleged failure involves HMOs.

7. Transition to State Enforcement (45 CFR 150.221)

HHS proposes to make conforming amendments to 45 CFR 150.221(a)(2) to provide that the discussions between CMS and state officials regarding transition to state enforcement would include instructions to providers and facilities, rather than instructions only to issuers. HHS also proposes to amend 45 CFR 150.221(b) to similarly add references to providers and facilities to make clear that CMS may also negotiate a process to ensure that, to the extent practicable, and as permitted by law, its records documenting compliance and other relevant areas of CMS's enforcement operations are made available for incorporation into the records of the applicable state authority responsible for oversight and enforcement of providers and facilities. These proposed changes would capture a reference to the new PHS Act requirements enacted in the CAA applicable to providers and facilities to ensure the regulation includes situations where a transition back to state enforcement of applicable Federal requirements over such entities is appropriate. HHS also proposes to replace the language about making CMS enforcement records available to states by removing the language about “incorporation into the records” of the State regulatory authority that would assume enforcement to more generally refer to making such records available to the State regulatory authority.

8. Basis for Initiating an Investigation (45 CFR 150.303)

Currently, 45 CFR 150.303 provides that if CMS receives information that an issuer or non-Federal governmental plan may be failing to meet a PHS Act requirement, then an investigation may be warranted. HHS proposes to revise 45 CFR 150.303(a) to specify that CMS may undertake either an investigation or a market conduct examination, rather than only an investigation, within its discretion based on this information. This proposed revision would align 45 CFR 150.303(a) with the regulatory text in 45 CFR 150.313(b), which provides that CMS may initiate a market conduct examination when, based on the information described in 45 CFR 150.303, it finds evidence that a specific entity may be in violation of the PHS Act.

When determining whether to undertake an investigation or examination, CMS would consider a number of different factors, including the facts and circumstances surrounding the potential violation, the potential

number of impacted consumers, an issuer or non-Federal governmental plan's past history of substantiated complaints, the effect of the alleged violation on a consumer, the deterrent effect that knowledge of the investigation or examination may have on others who may consider committing similar violations, and other considerations that CMS deems appropriate.

HHS further proposes to revise 45 CFR 150.303(a) to add a new sentence to clarify that CMS may review any information it deems useful to determine if a violation of the PHS Act has occurred when undertaking an investigation or examination. HHS proposes this change to more clearly describe current CMS procedures, which may include a review of applicable data and documentation, such as paid and denied claims, summary plan documents, summary of benefits and coverage, and notifications to enrollees, to assess whether the entity may be in violation of the PHS Act. Additionally, HHS proposes a conforming amendment to paragraph (a)(2) to capture a reference to reports from providers and facilities—along with reports from state insurance departments, the NAIC and other Federal and state agencies—as potential sources or types of information that could lead to an investigation or examination to ensure compliance with the applicable PHS Act requirements.

HHS proposes to remove and replace 45 CFR 150.303(c), which currently states that a complaint may be directed to any CMS regional office. HHS proposes this change because the CMS regional offices no longer process complaints. Instead, CMS offers several methods for entities or individuals to submit complaints. These methods vary based on the type of coverage or plan in which an individual is enrolled and the substance of the complaint, and are described on CMS's public web pages. For PHS Act complaints regarding non-Federal governmental plans, consumers can email

PHIG@cms.hhs.gov.

For complaints with respect to issuers, consumers in states that are directly enforcing the applicable PHS Act provision are referred to the state department of insurance; for states in which CMS is directly enforcing PHS Act requirements, consumers can email

MarketConduct@cms.hhs.gov.

The list of current states in which CMS is directly enforcing one or more PHS Act provisions is available on the CMS website at

https://www.cms.gov/CCIIO/Programs-and-Initiatives/Health-Insurance-Market-Reforms/compliance.

HHS proposes to remove the complaint provision that is currently in 45 CFR 150.303(c), and replace it with a new provision specifying that CMS may conduct random or targeted investigations and market conduct examinations of issuers and non-Federal governmental plans to ensure compliance with the PHS Act. HHS is proposing this regulation to codify another enforcement tool for CMS for situations where it is responsible for enforcement of the Federal market reform provisions. The proposal is also intended to codify in regulation the new statutory obligations established under the CAA for HHS to conduct certain specified audits and reviews. More specifically, section 2799A-1(a)(2)(A)(ii) of the PHS Act directs HHS to conduct audits of a sample of claims data with respect to a year (beginning with 2022) from not more than 25 group health plans and health insurance issuers offering group or individual health insurance coverage to verify compliance with the qualifying payment amount requirements described in section 2799A-1 of the PHS Act, as enacted by the No Surprises Act. HHS expects states with primary enforcement authority with respect to section 2799A-1 of the PHS Act will carry out enforcement activities to verify compliance with the qualifying payment amount requirements in section 2799A-1 of the PHS Act and 45 CFR 149.140 to the extent that the qualifying payment amount is used to determine the “recognized amount” for purposes of calculating cost sharing under section 2799A-1. As noted in 45 CFR 149.140(f), HHS intends to carry out these statutory provisions in states in which CMS is directly enforcing using the market conduct examination procedures described in 45 CFR 150.313, as proposed to be amended, when conducting random and targeted audits for compliance with the requirements for applying a qualifying payment amount.

Additionally, section 203 of Title II of Division BB of the CAA amended section 2726(a) of the PHS Act to expressly require group health plans and health insurance issuers offering group or individual health insurance coverage

that provide both medical/surgical (M/S) benefits and mental health or substance use disorder (MH/SUD) benefits and that impose nonquantitative treatment limitations (NQTLs) on MH/SUD benefits to perform, document, and make available upon request to HHS (or the applicable state authority) comparative analyses of the design and application of their NQTLs. PHS Act section 2726(a)(8)(B), as added by section 203 of Title II of Division BB of the CAA further directs HHS to request, review, and report to Congress its findings regarding NQTL comparative analyses from group health plans and health insurance issuers each year. In order to satisfy the newly codified statutory obligations for HHS to conduct these specified audits and reviews under the CAA, CMS currently intends to focus random or targeted investigations under the new proposed 45 CFR 150.303(c) on ensuring compliance with (i) qualifying payment amount requirements described in section 2799A-1 of the PHS Act, which was added by the No Surprises Act, and (ii) the NQTL comparative analysis requirements described in section 2726(a)(8) of the PHS Act. CMS is committed to robust enforcement of these new requirements and ensuring compliance with other applicable PHS Act provisions. HHS is of the view that this is a necessary and appropriate exercise of its enforcement and rulemaking authorities under sections 2723 and 2792 of the PHS Act, respectively. Further, HHS is of the view that having authority to conduct random or targeted investigations or examinations for all PHS Act provisions, including but not limited to qualifying payment amount requirements described in section 2799A-1 of the PHS Act, which was added by the No Surprises Act and codified in regulations at 45 CFR 149.140, and the NQTL comparative analysis requirements described in section 2726(a)(8) of the PHS Act, would create a more efficient and effective enforcement program in that CMS would be able to proactively ensure consumers are receiving the benefits to which they are entitled rather than having to wait to receive a complaint or other information indicating a potential PHS Act violation in situations where CMS is responsible for enforcement. For example, an investigation or examination by CMS of one responsible entity may identify a potential systematic error or issue that the agency suspects may impact similarly situated entities subject to CMS's enforcement authority. These proposed rules would provide CMS

with another enforcement tool to investigate whether these other entities have experienced the same error or issue without having to wait to receive a complaint or other information indicating a PHS Act violation to take action.

86 FR 36899 and 36979 (July 13, 2021).

Pursuant to section 2723(b)(1) of the PHS Act, CMS enforces section 2726 of the PHS Act and other applicable provisions of Title XXVII of the PHS Act with respect to non-Federal governmental group health plans in all states and with respect to health insurance issuers selling products in the individual and fully insured group markets in states that elect not to enforce or fail to substantially enforce section 2726 of the PHS Act and other applicable provisions of Title XXVII of the PHS Act.

HHS also proposes a conforming amendment to the title for this section to also capture a reference to examinations and to remove the reference to a potential violation. This would align with the proposed amendments to 45 CFR 150.303, as outlined in this section of the preamble, to allow CMS to randomly select non-Federal governmental plans and issuers for investigation and market conduct examination to ensure compliance with applicable PHS Act requirements when CMS is responsible for enforcement, as well as the other amendments to 45 CFR 150.303 to specify that CMS may also undertake an examination based on information the agency receives that an issuer or non-Federal governmental plan may be failing to meet a PHS Act requirement.

HHS seeks comment on these proposed changes.

9. Notice to Responsible Entities (45 CFR 150.307)

HHS proposes to revise several provisions in 45 CFR 150.307 regarding the notice that is sent to responsible entities when there is a potential violation, to reflect and clarify the current CMS enforcement procedures. The proposed revisions are further intended to provide responsible entities additional information and clarity regarding CMS's authority and process for conducting investigations.

Specifically, HHS proposes to replace the word “investigation” with “information” in the introductory text to align this section with the regulatory text in 45 CFR 150.303, which generally addresses information that may warrant an investigation or an examination. HHS is also proposing to revise the introductory text to clarify that the notice would also be sent to initiate investigations of randomly selected non-Federal governmental plans and issuers under new proposed 45 CFR 150.303(c). The proposed revision to the introductory text also provides that CMS would also send this notice to the responsible entity or entities in situations where information received under 45 CFR 150.303(a) indicates a potential violation. HHS is also proposing to remove the provision in 45 CFR 150.307(a), which currently states that the notice describes the substance of the complaint or other information received, and to replace it with a new provision specifying that the notice describes the information received under 45 CFR 150.303 that gives rise to the investigation or notifies the responsible entity that it was selected by CMS for a random investigation under 45 CFR 150.303(c). HHS is proposing this change to clarify that CMS does not provide personally identifiable information (PII) or PHI via a complaint without the complainant's express consent. HHS also would not disclose confidential or other sensitive information protected from disclosure that may be included in the complaint. However, the notice would include other information sufficient to explain the potential violation(s) and provide the responsible entity an adequate opportunity to respond to the allegation(s), or to notify the responsible entity of its selection for, and the PHS Act provision(s) that are the focus of, a random investigation under new proposed 45 CFR 150.303(c).

HHS is not proposing to incorporate a reference to market conduct examinations in 45 CFR 150.307 due to the separate regulation, 45 CFR 150.313, that addresses and details CMS's authority and processes for conducting such examinations.

Consistent with current text at 45 CFR 150.307(b), CMS generally contacts the responsible entity once it reviews the information received under 45 CFR 150.303 and provides the responsible entity 30 days to respond with additional information, including documentation of compliance as described in 45 CFR 150.311. CMS also directs the responsible entity to submit any data or documentation that CMS identifies as relevant and may use to assess whether the responsible entity is violating applicable PHS Act provisions. However, there are circumstances in which CMS has determined it is not appropriate to provide the responsible entity 30 days to respond. Such circumstances include complaints involving urgent medical issues, allegations of fraud or abuse, and when CMS must complete the investigation within a specified time frame under the statute. Accordingly, CMS proposes to revise 45 CFR 150.307(b) to clarify that the notice provided under this section would direct the responsible entity to provide any documentation that CMS identifies as relevant to the investigation, in addition to other documentation, such as documentation of compliance as described in 45 CFR 150.311, that in the responsible entity's view would aid CMS in evaluating the allegations and the entity's compliance with the PHS Act requirements identified in the notice. HHS further proposes to revise 45 CFR 150.307(b) such that CMS would provide the date by which the responsible entity must respond to the notice; the goal is to ensure the efficient administration of investigations. CMS anticipates generally providing 14 days for response. In circumstances that warrant a more rapid response, CMS anticipates providing at least 24 hours for response. In circumstances that warrant additional time, such when CMS requests large amounts of data, CMS anticipates providing more than 14 days for response. HHS is not proposing any amendments to 45 CFR 150.307(c) and therefore would retain the requirement that the notice also inform the responsible entity that a civil money penalty may be assessed. Lastly, under the new proposed 45 CFR 150.307(d), the notice would also inform responsible entities that CMS may require the responsible entity to take certain corrective actions as necessary to bring it into compliance with the applicable PHS Act requirements. HHS believes it is necessary and appropriate to highlight, as part of this notice, that corrective actions may be required because, similar to the potential for a civil money penalty to be assessed, this is another potential outcome of an investigation.

HHS seeks comment on these proposed changes.

10. Request for Extension (45 CFR 150.309)

HHS is proposing conforming amendments to revise 45 CFR 150.309 by removing the references to 30 days and clarifying that a responsible entity may request an extension when it cannot prepare a response or provide the requested information to CMS by the deadline provided in the notice under 45 CFR 150.307, and that failure to respond by the initial deadline provided in the notice or an extended deadline granted by CMS may result in CMS's imposition of a civil money penalty based upon the complaint or other information alleging or indicating a violation of PHS Act requirements. To align with proposed amendments to 45 CFR 150.313, HHS proposes to codify examples of what CMS would consider good cause, which include but are not limited to situations when a responsible entity indicates it has limited staffing resources to prepare a response, or when a responsible entity requests clarification from CMS regarding its request for information.

11. Responses to Allegations of Noncompliance (45 CFR 150.311)

HHS proposes a conforming revision at 45 CFR 150.311(e) to add a reference

to the proposed notice to initiate a market conduct examination under new proposed 45 CFR 150.313(e), which is described in section III.C.12 of the preamble.

12. Market Conduct Examinations (45 CFR 150.313)

The proposed revisions to 45 CFR 150.313 would bring this rule in line with standard industry practices adopted by the NAIC, which CMS generally follows, and would also codify additional CMS procedures for market conduct examinations. HHS also proposes several amendments to reorganize the order and presentation of information in this regulation to improve clarity.

First, HHS proposes to remove the last sentence in 45 CFR 150.313(b) as the proposed adoption of 45 CFR 150.313(f), which would outline the requirements for responsible entities to provide the requested documentation to CMS, make this sentence unnecessary. HHS further proposes to revise 45 CFR 150.313(b) to clarify that CMS may initiate a market conduct examination of a randomly selected non-Federal governmental plan or issuer subject to CMS's enforcement authority. This change would align with the proposed revision at 45 CFR 150.303(c).

Second, HHS proposes to revise 45 CFR 150.313(c) to clarify that CMS would appoint examiners when CMS initiates a random market conduct examination. Conforming amendments are also proposed to the opening clause of 45 CFR 150.313(c) to replace the current reference to “investigation” with “further review” to more clearly distinguish the authority to initiate a market conduct examination from the authority to conduct an investigation.

HHS additionally proposes to redesignate 45 CFR 150.313(e)(1) and (2) as 45 CFR 150.313(h)(1) and (2) and also proposes to replace the title of the newly designated section to clarify that it pertains to a draft market conduct examination report. HHS also proposes to revise 45 CFR 150.313(e)(1), proposed to be redesignated at 45 CFR 150.313(h)(1), to remove the description of CMS review of the draft report and replace it with a general statement indicating that upon completion of the examination, CMS would compose and provide a draft report to the responsible entity. HHS further proposes to include in redesignated 45 CFR 150.313(h)(1) a description of the contents of the draft report. Under current CMS market conduct examination practices and as reflected in the second sentence in proposed 45 CFR 150.313(h)(1), the draft report would include the scope of the examination, any findings of a PHS Act violation, and any proposed actions the entity would need to take to correct such violation. The entity then has an opportunity to respond to the draft report and either concur with the draft report findings or disagree. As reflected in proposed 45 CFR 150.313(h)(2)(i), if the responsible entity agrees with one or more of the findings in the draft report, the entity can inform CMS of any corrective action planned or already undertaken. If the entity disagrees with one or more of the findings, then the entity may provide evidence to CMS to support its disagreement. This is included in proposed 45 CFR 150.313(h)(2)(ii).

HHS further proposes to redesignate 45 CFR 150.313(e)(3), which currently addresses CMS's reply to a response to the market conduct examination report from the responsible entity, as a new 45 CFR 150.313(i) and revise it so it instead pertains to the final market conduct examination report. In the new proposed introductory sentence, HHS proposes that upon receipt of a response from the responsible entity under new paragraph (h)(2), CMS would provide a final examination report containing the agency's findings relevant to each examination issue, including the agency's reply to the responsible entity's responses to the findings in the draft report for each examination issue. HHS also proposes to replace the current references to issuer or non-Federal governmental plan with references to responsible entity in the redesignated 45 CFR 150.313(i)(1) through (4), currently codified at 45 CFR 150.313(e)(3)(i) through (iv), for consistency in terminology. HHS also proposes to clarify CMS's review and response to the responsible entity's corrective actions, if applicable, in 45 CFR 150.313(i)(3) and (4). Under current CMS market conduct examination practices and the proposed 45 CFR 150.313(i), this report finalizes the draft report and includes the entity's concurrence or disagreement with each cited PHS Act violation, and CMS's responses thereto. As detailed in 45 CFR 150.313(i)(1) through (5), CMS's reply would consist of one or more of the following: (1) Concurrence with the responsible entity's position; (2) disagreement with the responsible entity's position; (3) a determination that the corrective actions implemented by the responsible entity sufficiently addressed the identified PHS Act violation; (4) a determination that the corrective actions implemented by the responsible entity have not sufficiently addressed the identified PHS Act violation, and information on any further corrective actions deemed necessary by CMS; or (5) a notice to the responsible entity that has disagreed with a CMS finding and that has not undertaken corrective actions that there exists a violation of applicable PHS Act requirements and any actions the responsible entity must take to correct such violation. These changes are designed to align HHS regulations with industry standards for market conduct examinations. These industry standards, promulgated by NAIC, are used throughout the country by states and issuers and are generally followed by CMS. The adoption in regulation of the standard industry practices and procedures would bring uniformity to the framework CMS and the various states use to undertake market conduct examinations.

HHS proposes to add new text at 45 CFR 150.313(e) to provide that CMS would initiate a market conduct examination by providing written notice to the responsible entity and to describe the substance of the examination notice call letter CMS would send to an entity to initiate a market conduct examination. HHS proposes that this would be a written notice from CMS to the responsible entity and that it would include the following information: (1) A description of the information received under 45 CFR 150.303(a) that served as the basis for CMS's determination that a market conduct examination was warranted or notification that the entity was selected by CMS for a market conduct examination under 45 CFR 150.303(c); (2) a description of the scope of the examination; (3) the identification of the examiners; (4) a statement that a civil money penalty may be assessed; and (5) a statement that CMS may require a plan of corrective action. HHS is of the view that this set of core information, which is intended to mirror the information provided in the notice to responsible entities under 45 CFR 150.307 when CMS initiates an investigation, is the appropriate vehicle to commence a market conduct examination and is standard industry practice.

HHS also proposes to add 45 CFR 150.313(f) to generally describe the documentation collection and the initial directive for the responsible entity to submit the information that CMS identifies as relevant for the examination, the time frame for the entity's response, and to specify the penalties for failing to respond timely, which may include civil money penalties. This initial directive would provide the deadline by which responsible entities must forward the

requested documentation or request an extension. Any extension request would be required to be submitted in writing, detail the reasons for the extension request and show good cause. CMS would consider the following circumstances a non-exhaustive list of examples of good cause: (i) Limited staffing resources to prepare a response, or (ii) when a responsible entity requests clarification from CMS regarding its request for information. If CMS grants the extension, the responsible entity would be required to respond to the documentation request within the time frame specified in CMS's letter granting the extension request. The new proposed language in 45 CFR 150.313(f) also specifies that if the responsible entity fails to respond within the initial deadline provided or within the extended time frame (if granted by CMS), then CMS may impose a civil money penalty based on the information provided in the complaint or other information alleging or indicating a violation of PHS Act requirements. New proposed 45 CFR 150.313(f) would also capture the opportunity for the responsible entity to provide additional information, including documentation of compliance as described in 45 CFR 150.311, that the responsible entity believes would aid CMS in conducting the examination.

HHS also proposes to add 45 CFR 150.313(g) to describe the fieldwork CMS undertakes during a market conduct examination. Under current CMS practices and as reflected in new proposed 45 CFR 150.313(g), during the course of the examination, CMS may request additional information or documentation to support the review of the entity's data or other documents to assess the responsible entity's compliance with applicable PHS Act requirements. The request for additional information or documentation would specify the time frame allotted for the responsible entity to respond and forward the requested materials. Similar to the proposed initial documentation requests, HHS proposes to capture a similar framework that permits responsible entities to make a written request for an extension from CMS detailing the reason(s) for the request and showing good cause. Examples of what CMS would consider good cause include, but are not limited to, when a responsible entity indicates it has limited staffing resources to prepare a response, or when a responsible entity requests clarification from CMS regarding its request for information. If CMS grants the extension, the responsible entity would be required to respond to the documentation request within the time frame specified in CMS's letter granting the extension request. As detailed in the new proposed 45 CFR 150.313(g), the failure to respond and provide such additional requested documentation within the initial time frame, or within the extended time frame (if granted by CMS), may result in CMS's imposition of a civil money penalty based upon the complaint or other information when there is sufficient evidence indicating a violation of applicable PHS Act requirements. This new proposed rule also states that, during the examination, CMS may identify and notify the responsible entity of any potential PHS Act violations and, in such circumstances, would provide the entity an opportunity to respond and submit evidence of its compliance or other documentation the responsible entity believes would aid CMS in conducting the examination.

HHS seeks comment on these proposed changes.

13. Determining the Amount of the Penalty—Mitigating Circumstances (45 CFR 150.319)

HHS proposes to make a conforming edit to 45 CFR 150.319 to add reference to the notice to initiate a market conduct examination under the new proposed 45 CFR 150.313(e).

14. Determining the Amount of Penalty—Aggravating Circumstances (45 CFR 150.321)

HHS proposes to amend 45 CFR 150.321 to add a new paragraph (d), which would specify that an entity's failure to cooperate with an investigation or market conduct examination would be considered an aggravating circumstance for purposes of determining the aggregate amount of a penalty. HHS is proposing this additional aggravating circumstance based on CMS's experience conducting examinations and investigations. More specifically, HHS has experienced situations where responsible entities fail to respond to requests for information in a timely fashion or otherwise generally fail to cooperate in a CMS enforcement action. For example, in one market conduct examination, an issuer failed to respond to CMS's requests for information for 6 months thereby causing significant delay to the examination. HHS is of the view that it is appropriate and necessary to add this additional aggravating circumstance to provide CMS a vehicle to increase the amount of a civil money penalty (up to but not in excess of the statutory maximum) in situations when the responsible entity fails to cooperate with a CMS investigation or market conduct examination and there is sufficient evidence indicating a violation of an applicable PHS Act requirement to discourage these behaviors.

HHS seeks comment on this proposed change.

15. Settlement Authority (45 CFR 150.325)

HHS proposes to make a conforming edit to 45 CFR 150.325 to add reference to the notice to initiate a market conduct examination under the new proposed 45 CFR 150.313(e).

16. Definitions (45 CFR 150.401)

HHS proposes to make a conforming amendment to the definition of respondent to add a reference to a notice of proposed determination of a civil money penalty issued under the proposed new 45 CFR 150.515. This proposed amendment would provide for the same process for administrative hearings regarding civil money penalties assessed against providers and facilities as the process established for non-Federal governmental plans and issuers in states where CMS directly enforces PHS Act requirements.

17. Filing of Request for Hearing (45 CFR 150.405)

HHS proposes to make a conforming edit to 45 CFR 150.405(a) to add reference to a notice of proposed determination of a civil money penalty issued under the new proposed 45 CFR 150.515. This would provide providers and facilities 30 days from the date of such notice to request a hearing with an administrative law judge to appeal the proposed determination. This would align with the existing time frame provided to non-Federal governmental plans and issuers for such appeals in states where CMS directly enforces PHS Act requirements.

18. Issues To Be Heard and Decided by ALJ (45 CFR 150.417)

HHS proposes to make a conforming amendment to add a reference to proposed 45 CFR 150.513 for factors an Administrative Law Judge (ALJ) can apply to determine the reasonableness of a civil money penalty. This proposed amendment would provide for the same process for administrative hearings regarding civil money penalties assessed against providers and facilities as the process established for non-Federal governmental plans, and issuers in states where CMS directly enforces PHS Act requirements.

19. Evidence (45 CFR 150.445)

HHS proposes to make conforming amendments to 45 CFR 150.445(g), which pertains to admissibility of evidence of acts other than those at issue in the instant case, to add references to the proposed 45 CFR 150.513 (which describes factors and mitigating and aggravating circumstances considered in determination of the amount of civil money penalty assessed against a provider or facility), and proposed 45 CFR 150.505 and 150.515 (which describe notices sent by CMS to responsible entities regarding potential violations and civil money penalties against a provider or facility). HHS proposes to make a similar conforming amendment to 45 CFR 150.445(j), which pertains to admissibility of evidence of willingness and ability to enter into and complete a corrective action plan, to add a reference to proposed 45 CFR 150.505. These proposed amendments would provide for the same process for administrative hearings regarding civil money penalties assessed against providers and facilities as the process established for non-Federal governmental plans, and issuers in states where CMS directly enforces PHS Act requirements. In addition, HHS proposes to amend 45 CFR 150.445(h) to provide for cross-examination of witnesses, to conform to (i) the right to cross-examination already implicit in 45 CFR 150.419, and (ii) section 1128A(c)(2) of the SSA, as required in section 2799B-4 of the PHS Act. The right to cross-examine witnesses is fundamental and is being explicitly included here to ensure that the process for hearings is fair for all parties.

20. Sanctions (45 CFR 150.455)

HHS proposes to amend 45 CFR 150.455 to add the payment of an aggrieved party's attorneys' fees and other costs as an additional sanction for violations of 45 CFR part 149, to conform to section 1128A(c)(4) of the SSA. Section 2799B-4 of the PHS Act subjects civil money penalties assessed under that section to the requirements in section 1128A(c) of the SSA (with the exception of the first sentence of section 1128A(c)(1)). Section 1128A(c)(4) of the SSA provides that an ALJ may sanction parties and attorneys for “failing to comply with an order or procedure, failing to defend an action, or other misconduct as would interfere with the speedy, orderly, or fair conduct of the hearing.” Subsection (g) thereof specifically provides for ordering the party or attorney to pay attorneys' fees and other costs caused by the failure or misconduct.

D. 45 CFR Part 150, Subpart E—CMS Enforcement With Respect to Providers and Facilities

HHS proposes to add a new subpart E to 45 CFR part 150, to implement the requirements of section 2799B-4 of the PHS Act. This new subpart would specify the CMS enforcement processes with respect to the requirements of Part E of Title XXVII of the PHS Act (and its implementing regulations at 45 CFR part 149) that would be applicable to providers and facilities subject to CMS's enforcement authority. With respect to potential violations of these requirements, HHS proposes to follow a similar investigatory process to that which currently exists in subpart C of 45 CFR part 150, which applies to investigations of possible violations by plans and issuers. HHS is proposing to use that similar process to maximize efficiency. HHS believes that the general steps of reviewing complaints or o

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