# Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2025; Updating Section 1332 Waiver Public Notice Procedures; Medicaid; Consumer Operated and Oriented Plan (CO-OP) Program; and Basic Health Program

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URL: https://www.frixlaw.com/law-library/documents/fr%3A2024-07274

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** April 15, 2024
- **Citation:** 89 FR 26218

## Text

DEPARTMENT OF THE TREASURY
31 CFR Part 33
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 600
Office of the Secretary
45 CFR Parts 153, 155, and 156
[CMS-9895-F]
RIN 0938-AV22
Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2025; Updating Section 1332 Waiver Public Notice Procedures; Medicaid; Consumer Operated and Oriented Plan (CO-OP) Program; and Basic Health Program

AGENCY:

Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS); Department of the Treasury.

ACTION:

Final rule.

SUMMARY:

This final rule includes payment parameters and provisions related to the HHS-operated risk adjustment program, as well as 2025 user fee rates for issuers offering qualified health plans (QHPs) through federally facilitated Exchanges (FFEs) and State-based Exchanges on the Federal platform (SBE-FPs). This final rule also includes requirements related to the auto re-enrollment hierarchy; essential health benefits; failure to file Federal income taxes to reconcile advance payments of the premium tax credit (APTC); non-standardized plan option limits in the FFEs and SBE-FPs and a related exceptions process; standardized plan options in the FFEs and SBE-FPs; special enrollment periods (SEPs); direct enrollment (DE) entities supporting Exchange applications and enrollments; the Insurance Affordability Program enrollment eligibility verification process; requirements for agents, brokers, web-brokers, and DE entities assisting Exchange consumers; network adequacy; public notice procedures for section 1332 waivers; prescription drug benefits; updates to the Consumer Operated and Oriented Plan (CO-OP) Program; and State flexibility on the effective date of coverage in the Basic Health Program (BHP).

DATES:

These regulations are effective on June 4, 2024.

FOR FURTHER INFORMATION CONTACT:

Jeff Wu, (301) 492-4305, Rogelyn McLean, (301) 492-4229, Grace Bristol, (410) 786-8437, for general information.

Debbie Noymer, (301) 448-3755, and John Barfield, (301) 492-4433 for matters related to HHS-operated risk adjustment.

John Barfield, (301) 492-4433, or Aaron Franz, (410) 786-8027, for matters related to user fees.

Brian Gubin, (410) 786-1659, for matters related to agent, broker, and web-broker guidelines.

Marisa Beatley, (301) 492-4307, for matters related to the verification process related to eligibility for insurance affordability programs and current sources of income.

Carolyn Kraemer, (301) 492-4197, for matters related to auto re-enrollment in the Exchanges.

Zarin Ahmed, (301) 492-4400, for matters related to enrollment of qualified individuals into QHPs and termination of Exchange enrollment or coverage for qualified individuals.

Claire Curtin, (301) 492-4400, for matters related to the monthly 150 percent Federal poverty level special enrollment period.

Alexandra Gribbin, (667) 290-9977, for matters related to dental coverage.

Nikolas Berkobien, (667) 290-9903, for matters related to standardized plan options and non-standardized plan option limits.

LeAnn Brodhead, (667) 290-8805, for matters related to the essential health benefits prescription drug benefit.

Carolyn Sabini, (667) 290-9750, for matters related to the essential health benefits benchmark plan policy.

Ken Buerger, (410) 786-1190, for matters related to mandates in addition to the essential health benefits.

Emily Martin, (301) 492-4423, Deborah Hunter, (443) 386-3651, or Emma Vasilak, (774) 551-6157, for matters related to establishment of Exchange network adequacy standards and ECPs.

Shilpa Gogna, (301) 492-4257, or Jenny Chen, (301) 492-5156, for matters related to approval of a State Exchange and State Exchange Blueprint requirements.

Joe Fitzpatrick, (410) 786-2761, for matters related to establishment of additional minimum standards for Exchange call center operations.

John Allison, (828) 513-1323, for matters related to Exchange operation of a centralized eligibility and enrollment platform.

Courtney De La Mater, (301) 492-4400, for matters related to the Failure to Reconcile process.

Robert Yates, (301) 492-5151, for matters related to State Exchange annual open enrollment periods.

Daniel Rosinsky-Larsson, (301) 492-4400, for matters related to SEP effective dates of coverage.

Lina Rashid, (443) 902-2823, or Kimberly Koch (202) 381-6934, for matters related to section 1332 waivers.

Jacquelyn Rudich, (301) 492-5211, for matters related to netting of payments.

Kevin Kendrick, (301) 509-6612, for matters related to the CO-OP program.

Carrie Grubert, (410) 786-8319, for matters related to the Basic Health Program (BHP) provision.

Gene Coffey, (410) 786-2234, for matters related to Medicaid eligibility.

Arshdeep Dhanoa, (301) 492-4400, for matters related to incarceration verification for QHP eligibility and periodic data matching for dual and deceased enrollees.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Executive Summary

II. Background

A. Legislative and Regulatory Overview

B. Summary of Major Provisions

III. Summary of the Provisions of the Proposed Regulations

A. 31 CFR Part 33 and 45 CFR part 155—Section 1332 Waivers

B. 42 CFR Parts 435 and 600—Medicaid Eligibility for the States, District of Columbia, the Northern Mariana Islands and American Samoa, and Administrative Practice and Procedure, Health Care, Health insurance, Intergovernmental Relations, Penalties, Reporting and Recordkeeping Requirements.

C. 45 CFR Part 153—Standards Related to Reinsurance, Risk Corridors, and HHS Risk Adjustment

D. 45 CFR Part 155—Exchange Establishment Standards and Other Related Standards under the Affordable Care Act

E. 45 CFR Part 156—Health Insurance Issuer Standards Under the Affordable Care Act, Including Standards Related to Exchanges

IV. Collection of Information Requirements

A. Wage Estimates

B. ICRs Regarding Proposed Amendments to Normal Public Notice Requirements (31 CFR 33.112, 31 CFR 33.120 and 45 CFR part 155.1312, and 45 CFR 155.1320)

C. ICRs Regarding Basic Health Program Regulations (42 CFR 600.320)

D. ICRs Regarding Election to Operate an Exchange After 2014 (45 CFR 155.106)

E. ICRs Regarding Adding and Amending Language To Ensure Web-Brokers Operating in State Exchanges Meet Certain Requirements Applicable in the FFEs and SBE-FPs (45 CFR 155.220)

F. ICRs Regarding Establishing Requirements for DE Entities Mandating HealthCare.gov Changes to Be Reflected on DE Entity Non-Exchange Websites Within a Notice Period Set by HHS (45 CFR 155.221(b)(6))

G. ICRs Regarding Ensuing DE Entities Operating in State Exchanges Meet Certain Standards Applicable in the FFEs and SBE-FPs (45 CFR 155.221)

H. ICRs Regarding Failure To File and Reconcile Process (45 CFR 155.305(f)(4))

I. ICRs Regarding Verification Process Related to Eligibility for Enrollment in a QHP Through the Exchange (45 CFR 155.315(e))

J. ICRs Regarding Eligibility Redetermination During a Benefit Year (45 CFR 155.330(d))

K. ICRs Regarding Establishment of Exchange Network Adequacy Standards (45 CFR 155.1050)

L. ICRs Regarding the State Selection of EHB-Benchmark Plans for Plan Years Beginning on or After January 1, 2026 (45 CFR 156.111)

M. ICRs Regarding Non-Standardized Plan Option Limits (45 CFR 156.202)

N. Summary of Annual Burden Estimates for Proposed Requirements

V. Response to Comments

VI. Regulatory Impact Analysis

A. Statement of Need

B. Overall Impact

C. Impact Estimates of the Payment Notice Provisions and Accounting Table

D. Regulatory Alternatives Considered

E. Regulatory Flexibility Act (RFA)

F. Unfunded Mandates Reform Act (UMRA)

G. Federalism

I. Executive Summary

We are finalizing changes to the provisions and parameters implemented through prior rulemaking to implement the Patient Protection and Affordable Care Act (ACA).
1

These proposals are published under the authority granted to the Secretary by the ACA and the Public Health Service (PHS) Act.
2

In this final rule, we are finalizing changes related to some of the ACA provisions and parameters we previously implemented and are implementing new provisions. Our goal with these requirements is to provide consumers access to quality, affordable coverage, while minimizing administrative burden and ensuring program integrity. The changes finalized in this rule are also intended to help increase transparency, advance health equity, and mitigate health disparities.

1
The Patient Protection and Affordable Care Act (Pub. L. 111-148) was enacted on March 23, 2010. The Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152), which amended and revised several provisions of the Patient Protection and Affordable Care Act, was enacted on March 30, 2010. In this rulemaking, the two statutes are referred to collectively as the “Patient Protection and Affordable Care Act,” “Affordable Care Act,” or “ACA.”

2
See sections 1311, 1312, 1313, 1321, 1332, and 1343 of the ACA and section 2792 of the PHS Act.

II. Background

A. Legislative and Regulatory Overview

Title I of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) added a new title XXVII to the Public Health Service (PHS) Act to establish various reforms to the group and individual health insurance markets.

These provisions of the PHS Act were later augmented by other laws, including the ACA. Subtitles A and C of title I of 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.

Section 2702 of the PHS Act, as added by the ACA, establishes requirements for guaranteed availability of coverage in the group and individual markets.

Section 1301(a)(1)(B) of the ACA directs all issuers of qualified health plans (QHPs) to cover the essential health benefit (EHB) package described in section 1302(a) of the ACA, including coverage of the services described in section 1302(b) of the ACA, adherence to the cost-sharing limits described in section 1302(c) of the ACA, and meeting the Actuarial Value (AV) levels established in section 1302(d) of the ACA. Section 2707(a) of the PHS Act, which is effective for plan or policy years beginning on or after January 1, 2014, extends the requirement to cover the EHB package to non-grandfathered individual and small group health insurance coverage, irrespective of whether such coverage is offered through an Exchange. In addition, section 2707(b) of the PHS Act directs non-grandfathered group health plans to ensure that cost sharing under the plan does not exceed the limitations described in section 1302(c)(1) of the ACA.

Section 1302 of the ACA provides for the establishment of an EHB package that includes coverage of EHBs (as defined by the Secretary of HHS), cost-sharing limits, and AV requirements. The law directs that EHBs be equal in scope to the benefits provided under a typical employer plan, and that they cover at least the following 10 general categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care. Section 1302(d) of the ACA describes the various levels of coverage based on AV. Consistent with section 1302(d)(2)(A) of the ACA, AV is calculated based on the provision of EHB to a standard population. Section 1302(d)(3) of the ACA directs the Secretary of HHS to develop guidelines that allow for
de minimis
variation in AV calculations. Sections 1302(b)(4)(A) through (D) of the ACA establish that the Secretary must define EHB in a manner that: (1) reflects appropriate balance among the 10 categories; (2) is not designed in such a way as to discriminate based on age, disability, or expected length of life; (3) takes into account the health care needs of diverse segments of the population; and (4) does not allow denials of EHBs based on age, life expectancy, disability, degree of medical dependency, or quality of life.

Section 1311(c) of the ACA provides the Secretary the authority to issue regulations to establish criteria for the certification of QHPs. Section 1311(c)(1)(B) of the ACA requires, among the criteria for certification that the Secretary must establish by regulation, that QHPs ensure a sufficient choice of providers. Section 1311(e)(1) of the ACA grants the Exchange the authority to certify a health plan as a QHP if the health plan meets the Secretary's requirements for certification issued under section 1311(c) of the ACA, and the Exchange determines that making the plan available through the Exchange is in the interests of qualified individuals and qualified employers in the State. Section 1311(c)(6)(C) of the ACA directs the Secretary of HHS to require an Exchange to provide for special enrollment periods and section 1311(c)(6)(D) of the ACA directs the Secretary of HHS to require an Exchange to provide for a monthly enrollment period for Indians, as defined by section 4 of the Indian Health Care Improvement Act.

Section 1311(d)(3)(B) of the ACA permits a State, at its option, to require QHPs to cover benefits in addition to EHB. This section also requires a State to make payments, either to the individual enrollee or to the issuer on behalf of the enrollee, to defray the cost of these additional State-required benefits.

Section 1312(c) of the ACA generally requires a health insurance issuer to consider all enrollees in all health plans (except grandfathered health plans) offered by such issuer to be members of

a single risk pool for each of its individual and small group markets. States have the option to merge the individual and small group market risk pools under section 1312(c)(3) of the ACA.

Section 1312(e) of the ACA provides the Secretary with the authority to establish procedures under which a State may allow agents or brokers to (1) enroll qualified individuals and qualified employers in QHPs offered through Exchanges and (2) assist individuals in applying for advance payments of the premium tax credit (APTC) and cost-sharing reductions (CSRs) for QHPs sold through an Exchange.

Section 1312(f)(1)(B) of the ACA provides that an individual shall not be treated as a qualified individual for enrollment in a QHP if, at the time of enrollment, the individual is incarcerated, other than incarceration pending the disposition of charges.

Sections 1313 and 1321 of the ACA provide the Secretary with the authority to oversee the financial integrity of State Exchanges, their compliance with HHS standards, and the efficient and non-discriminatory administration of State Exchange activities. Section 1313(a)(5)(A) of the ACA provides the Secretary with the authority to implement any measure or procedure that the Secretary determines is appropriate to reduce fraud and abuse in the administration of the Exchanges. Section 1321 of the ACA provides for State flexibility in the operation and enforcement of Exchanges and related requirements.

Section 1321(a) of the ACA provides broad authority for the Secretary to establish standards and regulations to implement the statutory requirements related to Exchanges, QHPs and other components of title I of the ACA, including such other requirements as the Secretary determines appropriate. When operating an FFE under section 1321(c)(1) of the ACA, HHS has the authority under sections 1321(c)(1) and 1311(d)(5)(A) of the ACA to collect and spend user fees. Office of Management and Budget (OMB) Circular A-25 Revised establishes Federal policy regarding user fees and specifies that a user charge will be assessed against each identifiable recipient for special benefits derived from Federal activities beyond those received by the public.

Section 1321(d) of the ACA provides that nothing in title I of the ACA must be construed to preempt any State law that does not prevent the application of title I of the ACA. Section 1311(k) of the ACA specifies that Exchanges may not establish rules that conflict with or prevent the application of regulations issued by the Secretary.

Section 1322 of the ACA establishes the Consumer Operated and Oriented Plan (CO-OP) program, which is a loan program that funds the establishment of private, non-profit, consumer-operated, consumer-oriented health plan issuers of QHPs. The ACA requires, among other requirements, that substantially all of a CO-OP's activities consist of issuing QHPs in the individual and small group markets, and that a CO-OP be governed by a board of directors where a majority is elected by members covered by policies issued by the CO-OP.

Section 1331 of the ACA provides States with the option to operate a Basic Health Program (BHP).

Section 1332 of the ACA provides the Secretary of HHS and the Secretary of the Treasury (collectively, the Secretaries) with the discretion to approve a State's proposal to waive specific provisions of the ACA, provided the State's section 1332 waiver plan meets certain requirements. Section 1332(a)(4)(B) of the ACA requires the Secretaries to issue regulations regarding procedures for the application and approval of section 1332 waivers.

Section 1343 of the ACA establishes a permanent risk adjustment program to provide payments to health insurance issuers that attract higher-than-average risk populations, such as those with chronic conditions, funded by charges collected from those issuers that attract lower-than-average risk populations, thereby reducing incentives for issuers to avoid higher-risk enrollees. Section 1343(b) of the ACA provides that the Secretary, in consultation with States, shall establish criteria and methods to be used in carrying out the risk adjustment activities under this section. Consistent with section 1321(c) of the ACA, the Secretary is responsible for operating the HHS risk adjustment program in any State that fails to do so.
3

3
In the 2014 through 2016 benefit years, HHS operated the risk adjustment program in every State and the District of Columbia, except Massachusetts. Beginning with the 2017 benefit year, HHS has operated the risk adjustment program in all 50 States and the District of Columbia.

Section 1401(a) of the ACA added section 36B to the Internal Revenue Code (the Code), which, among other things, requires that a taxpayer reconcile APTC for a year of coverage with the amount of the premium tax credit (PTC) the taxpayer is allowed for the year.

Section 1402 of the ACA provides for, among other things, reductions in cost sharing for EHB for qualified low- and moderate-income enrollees in silver level QHPs offered through the individual market Exchanges. This section also provides for reductions in cost sharing for Indians enrolled in QHPs at any metal level.

Section 1411(c) of the ACA requires the Secretary to submit certain information provided by applicants under section 1411(b) of the ACA to other Federal officials for verification, including income and family size information to the Secretary of the Treasury. Section 1411(d) of the ACA provides that the Secretary must verify the accuracy of information provided by applicants under section 1411(b) of the ACA, for which section 1411(c) of the ACA does not prescribe a specific verification procedure, in such manner as the Secretary determines appropriate.

Section 1411(f) of the ACA requires the Secretary, in consultation with the Secretary of the Treasury and the Secretary of Homeland Security, and the Commissioner of Social Security, to establish procedures for hearing and making decisions governing appeals of Exchange eligibility determinations. Section 1411(f)(1)(B) of the ACA requires the Secretary to establish procedures to redetermine eligibility on a periodic basis, in appropriate circumstances, including eligibility to purchase a QHP through the Exchange and for APTC and CSRs.

Section 1411(g) of the ACA allows the use of applicant information only for the limited purpose of, and to the extent necessary for ensuring the efficient operation of the Exchange, including by verifying eligibility to enroll through the Exchange and for APTC and CSRs, and limits the disclosure of such information.

Section 1413 of the ACA directs the Secretary to establish, subject to minimum requirements, a streamlined enrollment process for enrollment in QHPs and all insurance affordability programs.

Section 5000A of the Code, as added by section 1501(b) of the ACA, requires individuals to have minimum essential coverage (MEC) for each month, qualify for an exemption, or make an individual shared responsibility payment. Under the Tax Cuts and Jobs Act, which was enacted on December 22, 2017, the individual shared responsibility payment is reduced to $0, effective for months beginning after December 31, 2018. Notwithstanding that reduction, certain exemptions are still relevant to determine whether individuals aged 30 and above qualify to enroll in catastrophic coverage under §§ 155.305(h) and 156.155(a)(5).

Section 1902(r)(2)(A) of the Social Security Act (the Act), which permits

States to apply less restrictive methodologies than cash assistance program methodologies in determining eligibility for certain eligibility groups.

1. Premium Stabilization Programs

The premium stabilization programs refer to the HHS risk adjustment, risk corridors, and reinsurance programs established by the ACA.
4

For past rulemaking, we refer readers to the following rules:

4
See ACA section 1341 (transitional reinsurance program), ACA section 1342 (risk corridors program), and ACA section 1343 (HHS risk adjustment program).

• In the March 23, 2012
Federal Register
(77 FR 17219) (Premium Stabilization Rule), we implemented the premium stabilization programs.

• In the March 11, 2013
Federal Register
(78 FR 15409) (2014 Payment Notice), we finalized the benefit and payment parameters for the 2014 benefit year to expand the provisions related to the premium stabilization programs and set forth payment parameters in those programs.

• In the October 30, 2013
Federal Register
(78 FR 65046), we finalized the modification to the HHS risk adjustment methodology related to community rating States.

• In the November 6, 2013
Federal Register
(78 FR 66653), we published a correcting amendment to the 2014 Payment Notice to address how an enrollee's age for the risk score calculation would be determined under the HHS risk adjustment methodology.

• In the March 11, 2014
Federal Register
(79 FR 13743) (2015 Payment Notice), we finalized the benefit and payment parameters for the 2015 benefit year to expand the provisions related to the premium stabilization programs, set forth certain oversight provisions, and establish payment parameters in those programs.

• In the May 27, 2014
Federal Register
(79 FR 30240), we announced the 2015 fiscal year sequestration rate for the HHS-operated risk adjustment program.

• In the February 27, 2015
Federal Register
(80 FR 10749) (2016 Payment Notice), we finalized the benefit and payment parameters for the 2016 benefit year to expand the provisions related to the premium stabilization programs, set forth certain oversight provisions, and establish the payment parameters in those programs.

• In the March 8, 2016
Federal Register
(81 FR 12203) (2017 Payment Notice), we finalized the benefit and payment parameters for the 2017 benefit year to expand the provisions related to the premium stabilization programs, set forth certain oversight provisions, and establish the payment parameters in those programs.

• In the December 22, 2016
Federal Register
(81 FR 94058) (2018 Payment Notice), we finalized the benefit and payment parameters for the 2018 benefit year, added the high-cost risk pool parameters to the HHS risk adjustment methodology, incorporated prescription drug factors in the adult models, established enrollment duration factors for the adult models, and finalized policies related to the collection and use of enrollee-level External Data Gathering Environment (EDGE) data.

• In the April 17, 2018
Federal Register
(83 FR 16930) (2019 Payment Notice), we finalized the benefit and payment parameters for the 2019 benefit year, created the State flexibility framework permitting States to request a reduction in risk adjustment State transfers calculated by HHS, and adopted a new error rate methodology for HHS-RADV adjustments to transfers.

• In the May 11, 2018
Federal Register
(83 FR 21925), we published a correction to the 2019 HHS risk adjustment coefficients in the 2019 Payment Notice.

• On July 27, 2018, consistent with 45 CFR 153.320(b)(1)(i), we updated the 2019 benefit year final HHS risk adjustment model coefficients to reflect an additional recalibration related to an update to the 2016 enrollee-level EDGE data set.
5

5
CMS. (2018, July 27).
Updated 2019 Benefit Year Final HHS Risk Adjustment Model Coefficients. https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/2019-Updtd-Final-HHS-RA-Model-Coefficients.pdf.

• In the July 30, 2018
Federal Register
(83 FR 36456), we adopted the 2017 benefit year HHS risk adjustment methodology as established in the final rules published in the March 23, 2012 (77 FR 17220 through 17252) and March 8, 2016 (81 FR 12204 through 12352) editions of the
Federal Register
. The final rule set forth an additional explanation of the rationale supporting the use of Statewide average premium in the State payment transfer formula for the 2017 benefit year, including the reasons why the program is operated by HHS in a budget-neutral manner. The final rule also permitted HHS to resume 2017 benefit year HHS risk adjustment payments and charges. HHS also provided guidance as to the operation of the HHS-operated risk adjustment program for the 2017 benefit year in light of the publication of the final rule.

• In the December 10, 2018
Federal Register
(83 FR 63419), we adopted the 2018 benefit year HHS risk adjustment methodology as established in the final rules published in the March 23, 2012 (77 FR 17219) and the December 22, 2016 (81 FR 94058) editions of the
Federal Register
. In the rule, we set forth an additional explanation of the rationale supporting the use of Statewide average premium in the State payment transfer formula for the 2018 benefit year, including the reasons why the program is operated by HHS in a budget-neutral manner.

• In the April 25, 2019
Federal Register
(84 FR 17454) (2020 Payment Notice), we finalized the benefit and payment parameters for the 2020 benefit year, as well as the policies related to making the enrollee-level EDGE data available as a limited data set for research purposes and expanding the HHS uses of the enrollee-level EDGE data, approval of the request from Alabama to reduce HHS risk adjustment transfers by 50 percent in the small group market for the 2020 benefit year, and updates to HHS-RADV program requirements.

• On May 12, 2020, consistent with § 153.320(b)(1)(i), we published the 2021 Benefit Year Final HHS Risk Adjustment Model Coefficients on the CCIIO website.
6

6
CMS. (2020, May 12). Final 2021 Benefit Year Final HHS Risk Adjustment Model Coefficients.
https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Final-2021-Benefit-Year-Final-HHS-Risk-Adjustment-Model-Coefficients.pdf.

• In the May 14, 2020
Federal Register
(85 FR 29164) (2021 Payment Notice), we finalized the benefit and payment parameters for the 2021 benefit year, as well as adopted updates to the HHS risk adjustment models' hierarchical condition categories (HCCs) to transition to ICD-10 codes, approved the request from Alabama to reduce HHS risk adjustment transfers by 50 percent in the small group market for the 2021 benefit year, and modified the outlier identification process under the HHS-RADV program.

• In the December 1, 2020
Federal Register
(85 FR 76979) (Amendments to the HHS-Operated Risk Adjustment Data Validation Under the Patient Protection and Affordable Care Act's HHS-Operated Risk Adjustment Program (2020 HHS-RADV Amendments Rule)), we adopted the creation and application of Super HCCs in the sorting step that assigns HCCs to failure rate groups, finalized a sliding scale adjustment in HHS-RADV error rate calculation, and added a constraint for negative error rate outliers with a negative error rate. We also established a transition from the prospective application of HHS-RADV adjustments to apply HHS-RADV results to risk

scores from the same benefit year as that being audited.

• In the September 2, 2020
Federal Register
(85 FR 54820), we issued an interim final rule containing certain policy and regulatory revisions in response to the COVID-19 public health emergency (PHE), wherein we set forth HHS risk adjustment reporting requirements for issuers offering temporary premium credits in the 2020 benefit year.

• In the May 5, 2021
Federal Register
(86 FR 24140) (part 2 of the 2022 Payment Notice), we finalized a subset of proposals from the 2022 Payment Notice proposed rule, including policy and regulatory revisions related to the HHS-operated risk adjustment program, finalization of the benefit and payment parameters for the 2022 benefit year, and approval of the request from Alabama to reduce HHS risk adjustment transfers by 50 percent in the individual and small group markets for the 2022 benefit year. In addition, this final rule established a revised schedule of collections for HHS-RADV and updated the provisions regulating second validation audit (SVA) and initial validation audit (IVA) entities.

• On July 19, 2021, consistent with § 153.320(b)(1)(i), we released Updated 2022 Benefit Year Final HHS Risk Adjustment Model Coefficients on the CCIIO website, announcing some minor revisions to the 2022 benefit year final HHS risk adjustment adult model coefficients.
7

7

See
CMS. (2021, July 19). 2022 Benefit Year Final HHS Risk Adjustment Model Coefficients.
https://www.cms.gov/files/document/updated-2022-benefit-year-final-hhs-risk-adjustment-model-coefficients-clean-version-508.pdf.

• In the May 6, 2022
Federal Register
(87 FR 27208) (2023 Payment Notice), we finalized revisions related to the HHS-operated risk adjustment program, including the benefit and payment parameters for the 2023 benefit year, HHS risk adjustment model recalibration, and policies related to the collection and extraction of enrollee-level EDGE data. We also finalized the adoption of the interacted HCC count specification for the adult and child models, along with modified enrollment duration factors for the adult model models, beginning with the 2023 benefit year.
8

We also repealed the ability for States, other than prior participants, to request a reduction in HHS risk adjustment State transfers starting with the 2024 benefit year. In addition, we approved a 25 percent reduction to 2023 benefit year HHS risk adjustment transfers in Alabama's individual market and a 10 percent reduction to 2023 benefit year HHS risk adjustment transfers in Alabama's small group market. We also finalized further refinements to the HHS-RADV error rate calculation methodology beginning with the 2021 benefit year.

8
On May 6, 2022, we also published the 2023 Benefit Year Final HHS Risk Adjustment Model Coefficients at
https://www.cms.gov/files/document/2023-benefit-year-final-hhs-risk-adjustment-model-coefficients.pdf.

• In the April 27, 2023
Federal Register
(88 FR 25740) (2024 Payment Notice), we finalized the benefit and payment parameters for the 2024 benefit year, amended the EDGE discrepancy materiality threshold and data collection requirements, and reduced the risk adjustment user fee. For the 2024 benefit year, we repealed the State flexibility policy, including for prior participant States, and approved 50 percent reductions to HHS risk adjustment transfers for Alabama's individual and small group markets. In addition, we finalized several refinements to HHS-RADV program requirements, such as shortening the window to confirm SVA findings or file a discrepancy report, changing the HHS-RADV materiality threshold for random and targeted sampling, and no longer exempting exiting issuers from adjustments to risk scores and HHS risk adjustment transfers when they are negative error rate outliers. We also announced the discontinuance of the Lifelong Permanent Condition List (LLPC) and Non-EDGE Claims (NEC) in HHS-RADV beginning with the 2022 benefit year.

2. Program Integrity

We have finalized program integrity standards related to the Exchanges and premium stabilization programs in two rules: the “first Program Integrity Rule” published in the August 30, 2013
Federal Register
(78 FR 54069), and the “second Program Integrity Rule” published in the October 30, 2013
Federal Register
(78 FR 65045). We also refer readers to the 2019 Patient Protection and Affordable Care Act; Exchange Program Integrity final rule (2019 Program Integrity Rule) published in the December 27, 2019
Federal Register
(84 FR 71674).

In the April 27, 2023
Federal Register
(88 FR 25740) (2024 Payment Notice), we finalized a policy to implement improper payment pre-testing and assessment (IPPTA) requirements for State Exchanges to ensure adherence to the Payment Integrity Information Act of 2019. In addition, we finalized allowing additional time for HHS to review evidence submitted by agents and brokers to rebut allegations pertaining to Exchange agreement suspensions or terminations. We also introduced consent and eligibility documentation requirements for agents and brokers.

3. Market Rules

For past rulemaking related to the market rules, we refer readers to the following rules:

• In the April 8, 1997
Federal Register
(62 FR 16894), HHS, with the Department of Labor and Department of the Treasury, published an interim final rule relating to the HIPAA health insurance reforms. In the February 27, 2013
Federal Register
(78 FR 13406) (2014 Market Rules), we published the health insurance market rules.

• In the May 27, 2014
Federal Register
(79 FR 30240) (2015 Market Standards Rule), we published the Exchange and insurance market standards for 2015 and beyond.

• In the December 22, 2016
Federal Register
(81 FR 94058), we provided additional guidance on guaranteed availability and guaranteed renewability.

• In the April 18, 2017
Federal Register
(82 FR 18346) (Market Stabilization final rule), we further interpreted the guaranteed availability provision.

• In the April 17, 2018
Federal Register
(83 FR 17058) (2019 Payment Notice), we clarified that certain exceptions to the special enrollment periods only apply to coverage offered outside of the Exchange in the individual market.

• In the June 19, 2020
Federal Register
(85 FR 37160) (2020 section 1557 final rule), in which HHS discussed section 1557 of the ACA, HHS removed nondiscrimination protections based on gender identity and sexual orientation from the guaranteed availability regulation.

• In part 2 of the 2022 Payment Notice, in the May 5, 2021
Federal Register
(86 FR 24140), we made additional amendments to the guaranteed availability regulation regarding special enrollment periods and finalized new special enrollment periods related to untimely notice of triggering events, cessation of employer contributions or government subsidies to COBRA continuation coverage, and loss of APTC eligibility.

• In the September 27, 2021
Federal Register
(86 FR 53412) (part 3 of the 2022 Payment Notice), which was published by HHS and the Department of the Treasury, we finalized additional amendments to the guaranteed availability regulations regarding special enrollment periods.

• In the May 6, 2022
Federal Register
(87 FR 27208), we finalized a revision

to our interpretation of the guaranteed availability requirement to prohibit issuers from applying a premium payment to an individual's or employer's past debt owed for coverage and refusing to effectuate enrollment in new coverage.

4. Exchanges

We published a request for comment relating to Exchanges in the August 3, 2010
Federal Register
(75 FR 45584). We issued initial guidance to States on Exchanges on November 18, 2010. In the March 27, 2012
Federal Register
(77 FR 18310) (Exchange Establishment Rule), we implemented the Affordable Insurance Exchanges (Exchanges), consistent with title I of the ACA, to provide competitive marketplaces for individuals and small employers to directly compare available private health insurance options on the basis of price, quality, and other factors. This included implementation of components of the Exchanges and standards for eligibility for Exchanges, as well as network adequacy and essential community provider (ECP) certification standards.

In the August 17, 2011,
Federal Register
(76 FR 51201) we published a proposed rule regarding eligibility determinations, including the regulatory requirement to verify incarceration status. In the March 27, 2012,
Federal Register
(77 FR 18309) we finalized the regulatory requirement to verify incarceration attestation using an approved electronic data source that is current and accurate, and when attestations are not reasonably compatible with information in an approved data source, to resolve the inconsistency.

In the 2014 Payment Notice and the Amendments to the HHS Notice of Benefit and Payment Parameters for 2014 interim final rule, published in the March 11, 2013
Federal Register
(78 FR 15541), we set forth standards related to Exchange user fees. We established an adjustment to the FFE user fee in the Coverage of Certain Preventive Services under the Affordable Care Act final rule, published in the July 2, 2013
Federal Register
(78 FR 39869) (Preventive Services Rule).

In the 2016 Payment Notice, we also set forth the ECP certification standard at § 156.235, with revisions in the 2017 Payment Notice in the March 8, 2016
Federal Register
(81 FR 12203) and the 2018 Payment Notice in the December 22, 2016
Federal Register
(81 FR 94058).

In an interim final rule, published in the May 11, 2016
Federal Register
(81 FR 29146), we made amendments to the parameters of certain special enrollment periods (2016 Interim Final Rule). We finalized these in the 2018 Payment Notice, published in the December 22, 2016
Federal Register
(81 FR 94058).

In the Market Stabilization final rule, published in the April 18, 2017
Federal Register
(82 FR 18346), we amended standards relating to special enrollment periods and QHP certification. In the 2019 Payment Notice, published in the April 17, 2018
Federal Register
(83 FR 16930), we modified parameters around certain special enrollment periods. In the April 25, 2019
Federal Register
(84 FR 17454), the 2020 Payment Notice established a new special enrollment period.

We published the final rule in the May 14, 2020
Federal Register
(85 FR 29164) (2021 Payment Notice).

In the January 19, 2021
Federal Register
(86 FR 6138) (part 1 of the 2022 Payment Notice), we finalized only a subset of the proposals in the 2022 Payment Notice proposed rule. In the May 5, 2021
Federal Register
(86 FR 24140), we published part 2 of the 2022 Payment Notice. In the September 27, 2021
Federal Register
(86 FR 53412) (part 3 of the 2022 Payment Notice), in conjunction with the Department of the Treasury, we finalized amendments to certain policies in part 1 of the 2022 Payment Notice.

In the May 6, 2022
Federal Register
(87 FR 27208), we finalized changes to maintain the user fee rate for issuers offering plans through the FFEs and maintain the user fee rate for issuers offering plans through the SBE-FPs for the 2023 benefit year. We also finalized various policies to address certain agent, broker, and web-broker practices and conduct. We also finalized updates to the requirement that all Exchanges conduct special enrollment period verifications.

In the April 27, 2023
Federal Register
(88 FR 25740) (2024 Payment Notice), we revised Exchange Blueprint approval timelines, lowered the user rate fee for QHPs in the FFEs and SBE-FPs, and amended re-enrollment hierarchies for enrollees. We also finalized policies to update FFE and SBE-FP standardized plan options; further reduce the risk of plan choice overload on the FFEs and SBE-FPs by lowering the limit on non-standardized plan options that issuers may offer from four to two; introduce an exceptions process to the limitation on non-standardized plan options in FFEs and SBE-FPs; and ensure correct QHP information. In addition, to prevent gaps in coverage, we amended coverage effective date rules, lengthened the special enrollment period from 60 to 90 days to those who lose Medicaid coverage, and prohibited QHPs on FFEs and SBE-FPs from terminating coverage mid-year for dependent children who reach the applicable maximum age. We also finalized policies on verifying consumer income and permitting door-to-door assisters to solicit consumers. To ensure provider network adequacy, we finalized provider network and ECP policies for QHPs.

5. Essential Health Benefits

We established requirements relating to EHBs in the Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation Final Rule, which was published in the February 25, 2013
Federal Register
(78 FR 12834) (EHB Rule). In the 2019 Payment Notice, published in the April 17, 2018
Federal Register
(83 FR 16930), we added § 156.111 to provide States with additional options from which to select an EHB-benchmark plan for plan year (PY) 2020 and subsequent plan years. In the 2023 Payment Notice, published in the May 6, 2022
Federal Register
(87 FR 27208), we revised § 156.111 to require States to notify HHS of the selection of a new EHB-benchmark plan by the first Wednesday in May of the year that is 2 years before the effective date of the new EHB-benchmark plan, otherwise the State's EHB-benchmark plan for the applicable plan year will be that State's EHB-benchmark plan applicable for the prior year. We displayed the Request for Information; Essential Health Benefits (EHB RFI), published in the December 2, 2022
Federal Register
(87 FR 74097) to solicit public comment on a variety of topics related to the coverage of benefits in health plans subject to the EHB requirements of the ACA.

6. State Innovation Waivers

In the March 14, 2011
Federal Register
(76 FR 13553), HHS and the Department of the Treasury (collectively, the Departments) published the “Application, Review, and Reporting Process for Waivers for State Innovation” proposed rule to implement section 1332(a)(4)(B) of the ACA.

In the February 27, 2012
Federal Register
(77 FR 11700), the Departments published the “Application, Review, and Reporting Process for Waivers for State Innovation” final rule (2012 Final Rule).

In the October 24, 2018
Federal Register
(83 FR 53575), the Departments issued the 2018 Guidance, which superseded the previous guidance published in the December 16, 2015
Federal Register
(80 FR 78131) (2015 Guidance) and set forth requirements that States must meet for waivers,

application review procedures, pass-through funding determinations, certain analytical requirements, and operational considerations.

In the November 6, 2020
Federal Register
(85 FR 71142), the Departments issued an interim final rule (November 2020 IFC), which set forth flexibilities for waivers under section 1332 during the COVID-19 Public Health Emergency.

In the December 4, 2020
Federal Register
(85 FR 78572), the Departments published the “Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2022 and Pharmacy Benefit Manager Standards; Updates to State Innovation Waiver (Section 1332 Waiver) Implementing Regulations” proposed rule (2022 Payment Notice proposed rule) which proposed to codify certain policies and interpretations of the 2018 Guidance.

In the January 19, 2021
Federal Register
(86 FR 6138), the Departments published the “Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2022; Updates to State Innovation Waiver (Section 1332 Waiver) Implementing Regulations” final rule (part 1 of the 2022 Payment Notice) which codified many of the policies and interpretations of the 2018 Guidance.

In the September 27, 2021
Federal Register
(86 FR 53412), part 3 of the 2022 Payment Notice, the Departments published the “Patient Protection and Affordable Care Act; Updating Payment Parameters, Section 1332 Waiver Implementing Regulations, and Improving Health Insurance Markets for 2022 and Beyond” final rule (September 2021 Final Rule), which superseded and rescinded the policies and interpretations outlined in the 2018 Guidance and repealed the previous codification of the interpretations of statutory guidelines in part 1 of the 2022 Payment Notice. The Departments also finalized flexibilities in the public notice requirements and post-award public participation requirements for section 1332 waivers under certain emergent situations and processes and procedures for amendments and extensions for approved waiver plans.

7. Consumer Operated and Oriented Plans (CO-OPs)

In the December 13, 2011
Federal Register
(76 FR 77392), we published the “Patient Protection and Affordable Care Act; Establishment of Consumer Operated and Oriented Plan (CO-OP) Program” final rule (2011 CO-OP Rule), which established the rules governing the CO-OP program to make loans to capitalize eligible prospective CO-OPs. In the May 11, 2016
Federal Register
(81 FR 29146), we amended several CO-OP standards related to governance requirements to provide greater flexibility, and to facilitate private market transactions that would assist efforts of CO-OPs to arrange access to new sources of needed capital.

8. Basic Health Program (BHP)

In the March 12, 2014,
Federal Register
(79 FR 14111), we published a final rule entitled “Basic Health Program: State Administration of Basic Health Programs; Eligibility and Enrollment in Standard Health Plans; Essential Health Benefits in Standard Health Plans; Performance Standards for Basic Health Programs; Premium and Cost Sharing for Basic Health Programs; Federal Funding Process; Trust Fund and Financial Integrity,” implementing section 1331 of the ACA, which governs the establishment of BHPs.

9. State Flexibility in the Use of Income and Resource Disregards in Medicaid Eligibility

In the January 19, 1993
Federal Register
(58 FR 4929), we published a final rule with comment period entitled “Medicaid Program; Eligibility and Coverage Requirements,” in which we prescribed, at 42 CFR 435.601, the financial methodologies State Medicaid agencies must apply in determining eligibility for Medicaid, with options to apply less restrictive income and resource methodologies for the eligibility groups specified in section 1902(r)(2) of the Act.

In the August 22, 1994
Federal Register
(59 FR 43052), we published a final rule entitled “Medicaid Program; Eligibility and Coverage Requirements,” in which we amended 42 CFR 435.601(f)(1) to delete cross-references to other regulatory provisions that had been removed from the CFR.

In the November 30, 2016
Federal Register
(81 FR 86456), we published a final rule entitled “Medicaid and Children's Health Insurance Programs: Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid and Other Provisions Related to Eligibility and Enrollment for Medicaid and CHIP,” in which we amended 42 CFR 435.601(b) to confirm that its provisions govern only individuals who are excepted from application of modified adjusted gross income financial methodologies (MAGI) in accordance with 42 CFR 435.603(j) (relating to “Eligibility Groups for which MAGI-based methods do not apply”). We also established in 42 CFR 435.601(d)(1) the authority for States to apply less restrictive methodologies for medically needy individuals whose income eligibility is determined under 42 CFR 435.831(b)(1) (including medically needy individuals whose eligibility is determined under MAGI-based methodologies that comply with certain rules relating to the financial responsibility of relatives and other individuals described in 42 CFR 435.602).

B. Summary of Major Provisions

The regulations outlined in this final rule will be codified in 31 CFR part 33, 42 CFR part 600, and 45 CFR parts 153, 155, and 156.

1. 31 CFR Part 33 and 45 CFR Part 155

This final rule amends section 1332 Waivers for State Innovation (referred to throughout this final rule as section 1332 waivers) implementing regulations regarding State public notice and comment procedures. The Departments are finalizing changes in 31 CFR part 33 and 45 CFR part 155 to allow States the flexibility to hold a State public hearing or post-award forum in a virtual format, or hybrid format, which would be considered as the equivalent of holding an in-person meeting. Specifically, the Departments are finalizing changes to 31 CFR 33.112(c) and 45 CFR 155.1312(c) and 31 CFR 33.120(c) and 45 CFR 155.1320(c). These changes are effective immediately upon publication of this final rule.

2. 42 CFR Part 435

We are not finalizing the proposed amendment to 42 CFR 435.601(d) to remove paragraph (d)(4) at this time. The removal of this paragraph would have provided States with greater flexibility to adopt income and/or resource disregards in determining Medicaid financial eligibility for individuals excepted from the application of financial methodologies based on MAGI (“non-MAGI” methodologies). States are already permitted to expand eligibility for individuals who are subject to non-MAGI methodologies by disregarding income and resources that would otherwise be required to be considered in determining an individual's eligibility. However, under current rules, States must apply such income and resource disregards to all individuals within each Medicaid eligibility group. Removing paragraph (d)(4) would have allowed States, when considering expanding eligibility for non-MAGI individuals, to target disregards at discrete individuals within an eligibility group. As described more fully below, many commenters raised

concerns about this proposal and recommended that we impose “safeguards,” “guardrails,” or “no-harm” requirements in expanding the States' disregard-related flexibility. These commenters asserted that such requirements are necessary to ensure that States do not use the flexibility to reduce eligibility or harm beneficiaries. We are not finalizing this proposal at this time to allow for further consideration of commenter concerns.

3. 42 CFR Part 600

We are finalizing the amendment, with modifications, to 42 CFR 600.320(c) to allow States a third option when choosing the effective date of eligibility for enrollment for BHP applicants. Under current rules, States have the option to choose between following: either the Medicaid rules at 42 CFR 435.915 or the Exchange rules at 45 CFR 155.420(b)(1). We are finalizing to add an option to the effective date of coverage rules that would allow States to start coverage on the first day of the month following the date of application. In addition, we are adding another option under 42 CFR 600.320(c) that, subject to HHS approval, a State may establish its own effective date of eligibility for enrollment policy.

4. 45 CFR Part 153

In accordance with the OMB Report to Congress on the Joint Committee Reductions for Fiscal Year 2024, the HHS-operated risk adjustment program is subject to the fiscal year 2024 sequestration.
9

Therefore, the HHS-operated risk adjustment program will sequester payments made from fiscal year 2024 resources (that is, funds collected during the 2024 fiscal year) at a rate of 5.7 percent.

9
OMB. (2023, March 13). OMB Report to the Congress on the BBEDCA 251A Sequestration for Fiscal Year 2024.
https://www.whitehouse.gov/wp-content/uploads/2023/03/BBEDCA_Sequestration_Report_and_Letter_3-13-2024.pdf.

We are finalizing the recalibration of the 2025 benefit year HHS risk adjustment models using the 2019, 2020, and 2021 benefit year enrollee-level EDGE data. For the 2025 benefit year, we are finalizing the continued application of a market pricing adjustment to the plan liability associated with Hepatitis C drugs in the HHS risk adjustment models (see, for example, 84 FR 17463 through 17466). We are finalizing a modification to the adjustment factors for the receipt of CSRs in the HHS risk adjustment models to improve predictive accuracy for the American Indian and Alaska Native (AI/AN) subpopulation who are enrolled in zero and limited cost-sharing plans and retaining the other CSR adjustment factors in HHS risk adjustment. We are also finalizing a risk adjustment user fee for the 2025 benefit year of $0.18 per member per month (PMPM). Additionally, we are finalizing that in certain cases, we may require a corrective action plan to address an observation identified in an HHS risk adjustment audit.

5. 45 CFR Part 155

In part 155, we are finalizing the amendment to § 155.105(b) to require that a State seeking to operate a State Exchange must first operate an SBE-FP for at least one plan year, including its open enrollment period. We believe this requirement will give States sufficient time to create, staff, and structure a State Exchange that could transition to operating its own platform and establish relationships with interested parties critical to a State Exchange's success in operating a Navigator and consumer outreach program, assuming plan management responsibilities, and communicating effectively with consumers to support enrollment and avoid health care coverage gaps.

We are finalizing the revision to § 155.106(a)(2) as it pertains to Exchange Blueprint requirements for States transitioning to a State Exchange. Specifically, we are finalizing the addition that we may require that a State submitting a Blueprint application seeking to operate a State Exchange provide, upon request, supplemental documentation to HHS detailing the State's implementation of its State Exchange functionality, including information regarding the State's ability to implement and comply with Federal requirements for operating an Exchange, as laid out in the State Exchange Blueprint. This could include a State submitting detailed plans regarding its State Exchange consumer assistance programs and activities, such as information on its direct outreach plans. Further, we are finalizing a requirement that a State applying to transition to a State Exchange must provide the public with a notice and copy of its State Exchange Blueprint application, as well as conduct periodic public engagements whereby interested parties can learn about the status of a State's transition to a State Exchange and provide input on that transition.

We are finalizing the amendment to § 155.170(a)(2) to codify that benefits covered in a State's EHB benchmark plan will not be considered in addition to EHB, even if they had been required by State action taking place after December 31, 2011, other than for purposes of compliance with Federal requirements. Under this policy, there would be no obligation for the State to defray the cost of a State mandate enacted after December 31, 2011, that requires coverage of a benefit if that benefit is included in the State's EHB-benchmark plan. Benefits that are covered in a State's EHB-benchmark plan will not be considered in addition to EHB and will remain subject to the various rules applicable to the EHB, including the prohibition on discrimination in accordance with § 156.125, limitations on cost sharing in accordance with § 156.130, and restrictions on annual or lifetime dollar limits in accordance with § 147.126. We believe that this change would promote consumer protections and facilitate compliance with the defrayal requirement by making the identification of benefits in addition to EHB more intuitive.

At § 155.205(a), we are finalizing, with modifications, the establishment of additional minimum standards for Exchange call center operations. Specifically, we are finalizing the requirement that all Exchange call centers, other than those of SBE-FPs and Small Business Health Options Program (SHOP) Exchanges that do not provide for enrollment in SHOP coverage through an online SHOP enrollment platform, provide consumer access to a live call center representative during an Exchange's published hours of operation to assist with submitting their Exchange application. We believe speaking to a live representative will help troubleshoot consumer Exchange application issues, provide a real time opportunity for a live representative to explain Exchange application terminology to a consumer, ensure the consumer provides the most correct information for the Exchange application, alleviate unnecessary follow-up, and provide greater overall consumer satisfaction.

We are finalizing the amendment to § 155.205(b)(4) to require that an Exchange operate a centralized eligibility and enrollment platform on the Exchange's website (or, for an SBE-FP, the Federal eligibility and enrollment platform) such that the Exchange allows for the submission of the single, streamlined application for enrollment in a QHP and insurance affordability programs through the Exchange's website and performs eligibility determinations for all consumers based on submissions of the single, streamlined application. Further, we are finalizing the amendment to § 155.302(a)(1) to clarify that the Exchange, through the centralized

eligibility and enrollment platform operated on the Exchange's website (or, for an SBE-FP, the Federal eligibility and enrollment platform), is the entity that is responsible for making all determinations regarding the eligibility for QHP coverage and insurance affordability programs regardless of whether an individual files an application for enrollment in a QHP on the Exchange's website (or, for SBE-FPs, on the Federal eligibility and enrollment platform), or on a website operated by a non-Exchange website allowed for under § 155.220 or § 155.221. We are also clarifying that only entities that an Exchange elects to contract with to operate its centralized eligibility and enrollment platform can perform this function on behalf of an Exchange, such that Exchanges will not be able to solely rely on non-Exchange entities, including a web-broker (defined at § 155.20) or other entities under § 155.220 or § 155.221, to make such eligibility determinations on behalf of the Exchanges.

We are also finalizing the amendment to § 155.205(b)(5) to require that an Exchange operate a centralized eligibility and enrollment platform on the Exchange's website (or, for an SBE-FP, the Federal eligibility and enrollment platform) so that the Exchange (or, for an SBE-FP, the Federal eligibility and enrollment platform) meets the requirement under § 155.400(c) to maintain record of all effectuated enrollments in QHPs, including changes in effectuated QHP enrollments.

We are finalizing the amendment to § 155.220(h) specifying that the CMS Administrator, who is a principal officer, is the entity responsible for handling requests by agents, brokers, and web-brokers for reconsideration of HHS' decision to terminate their Exchange agreement(s) for cause. This amendment will improve transparency by specifying who would review reconsideration requests under § 155.220(h).

We are finalizing changes to §§ 155.220 and 155.221 to apply certain standards to web-brokers and Direct Enrollment (DE) entities assisting consumers and applicants across all Exchanges, including State Exchanges, for both the State Exchange's Individual Exchange and SHOP. We seek to ensure that certain current minimum HHS standards applicable in the FFEs and SBE-FPs, related to web-broker website display of standardized QHP comparative information, disclaimer language, information on eligibility for APTC/CSRs, operational readiness, and access by downstream agents and brokers, also apply to web-brokers in State Exchanges. Similarly, we are finalizing the extension of certain DE entity requirements applicable in the FFEs and SBE-FPs related to marketing and display of QHPs, providing consumers with correct information and refraining from certain conduct, marketing of non-QHPs, website disclaimer language, and operational readiness to DE entities across all Exchanges, to newly apply to DE entities in State Exchanges. These policies will help establish greater general uniformity with respect to these requirements for web-brokers and DE entities operating in the Exchanges and establish minimum Federal consumer protections in all States, regardless of the Exchange model.

We are finalizing updates to § 155.221(b) to require that
HealthCare.gov
changes be reflected and prominently displayed on DE entity non-Exchange websites assisting consumers in FFEs and SBE-FPs within a notice period
10

set by HHS. We are also finalizing the requirement that DE entities make these display changes in a manner consistent with display changes made by HHS to
HealthCare.gov
by meeting standards communicated and defined by HHS within a time period set by HHS, unless HHS approves a deviation from those standards. This approach codifies our existing practice of communicating important changes to the
HealthCare.
gov display to EDE entities to ensure their EDE websites conform to those changes and provide the same vital information to consumers, expands our existing change request processes to permit entities to request deviations from the required display changes, and requires DE entities that do not participate in EDE to also comply with this practice. Additionally, this approach will also require that all display changes which affect the visual aspects of the website that users see and interact with must be prominently displayed on the non-Exchange websites. Finally, we are also finalizing the extension of this policy to require State Exchanges that choose to implement a DE program to require their DE entities to implement and prominently display website changes in a manner that is consistent with display changes made by State Exchanges to State Exchanges' websites on their non-Exchange websites, unless the State Exchange approves a deviation from those standards should the State Exchange elect to permit deviation requests.

10
“Notice period” refers to the time period that DE entities have to reflect and prominently display
HealthCare.gov
changes communicated to them by HHS pursuant to this proposal.

We are finalizing, in connection with the failure to file and reconcile process at § 155.305(f)(4), that Exchanges be required to send notices to tax filers for the first year in which they have been determined to have failed to reconcile APTC as an initial warning to inform and educate tax filers that they need to file and reconcile, or risk being determined ineligible for APTC if they fail to file and reconcile for a second consecutive year. We clarify in the rule that an Exchange must either send a direct notice to a tax filer as described above or send a more general notice to an enrollee or their tax filer explaining that they are at risk of losing APTC. Currently, the regulation does not detail notification procedures for tax filers who have failed to reconcile for 1 year. We intend to provide implementation guidance and sample notices prior to the restart of FTR processes. We are finalizing the requirement that all Exchanges be required to send informative notices for the first year in which tax filers have been identified as failing to file and reconcile.

We are finalizing the amendment to § 155.315(e) to provide that all Exchanges can accept applicant incarceration status attestations without further verification, and Exchanges may verify applicant incarceration status using an HHS-approved verification data source. HHS would approve an alternative electronic data source for State Exchanges to use for incarceration verification if it provides data that are current and accurate, and if its use minimizes administrative costs and burdens.

We are finalizing the proposal to reinterpret State Exchange and State Medicaid and Children's Health Insurance Program (CHIP) agency use of the Federal Data Services Hub to access and use the income data provided by the Verify Current Income (VCI) Hub service as a State Exchange or a State Medicaid and CHIP agency function because these State entities use this optional service to implement eligibility verification requirements applicable to them. More specifically, State Exchanges and State Medicaid and CHIP agencies have the option to use this information to verify a tax household's annual income attestation for Exchange QHP eligibility and the Medicaid applicant's current household income as required to make insurance affordability program eligibility determinations. We are also finalizing that these State agencies must pay for their use of the VCI Hub Service, and HHS will invoice

them monthly for the amount they must pay to reimburse HHS for the costs of their access and actual utilization of CSI income data from the prior month, including an administrative fee amount. In accordance with these policies, we are finalizing the amendment to § 155.320(c) to reflect this reinterpretation for the Exchanges but did not propose to amend the Medicaid regulations as the Medicaid regulations already address Medicaid agency verification requirements and are not typically used to delineate Medicaid agency operations in this manner.

We are finalizing the revision to § 155.330(d) to require Exchanges to conduct periodic checks for deceased enrollees twice yearly and subsequently end deceased enrollees' QHP coverage. Additionally, we are finalizing the revision to § 155.330(d)(3) to grant the Secretary the authority to temporarily suspend the periodic data matching (PDM) requirement during certain situations or circumstances that lead to the limited availability of data needed to conduct PDM or of documentation needed for an enrollee to notify the Exchange that the result of PDM is inaccurate, as described in § 155.330(e)(2)(i)(C). These policies will align § 155.330(d) with current Federal Exchange policy and operations, prevent overpayment of QHP premiums, and accurately capture household QHP eligibility based on household size.

We are finalizing, as proposed, the amendment to § 155.335(j)(1) and (2) to require Exchanges to re-enroll individuals who are enrolled in catastrophic coverage, as defined in section 1302(e) of the ACA, into a new QHP for the coming plan year, except that we are amending the new language that we proposed at § 155.335(j)(1)(v) and (j)(2)(iv) to incorporate the phrase, “to the extent permitted by applicable State law.” Incorporating these individuals enrolled in catastrophic coverage into the auto re-enrollment hierarchy rules at § 155.335(j) will help ensure continuity of coverage in cases where the issuer does not continue to offer a catastrophic plan for the new plan year, or these individuals are no longer eligible for enrollment in a catastrophic plan for the new year, and these individuals do not actively select a different QHP. We are also finalizing the addition of a new paragraph (j)(5) to § 155.335 to establish that an Exchange may not newly auto re-enroll into catastrophic coverage an enrollee who is currently enrolled in coverage of a metal level as defined in section 1302(d) of the ACA. This change reflects our current practice for Exchanges on the Federal platform.

We are finalizing the amendment to § 155.400(e)(2) to codify that the flexibility for issuers experiencing billing or enrollment problems due to high volume or technical errors is not limited to extensions of the binder payment.

We are finalizing, with modifications, the amendment to § 155.410(e)(4)(ii) to revise parameters around the adoption of an alternative open enrollment period by a State Exchange. Specifically, we are finalizing that for benefit years beginning on or after January 1, 2025, State Exchanges must adopt an open enrollment period that begins on November 1 of the calendar year preceding the benefit year and ends January 15 of the applicable benefit year or later. Additionally, as a modification, we are finalizing new paragraph (e)(4)(iii), which provides flexibility for any State Exchange that held an open enrollment period that began before November 1, 2023, and ended before January 15, 2024, for the 2024 benefit year to continue to begin open enrollment before November 1 for consecutive future benefit years, so long as the open enrollment period continues uninterrupted for at least 11 weeks. If the State Exchange changes the dates of the annual open enrollment period after the effective date of this rule, it must comply with paragraphs (e)(4)(i) and (ii) for all future annual open enrollment periods. Finally, we have also finalized a modification to amend § 155.410(e)(4)(i) to reference new paragraph (e)(4)(iii). We believe these policies will give consumers ample time to enroll in coverage; provide Navigators, certified application counselors, and agents and brokers ample time to assist all interested applicants; balance consistency against providing State Exchanges with additional flexibility; reduce disruption to current Exchange operations; reduce consumer confusion; and improve access to health coverage.

At § 155.420(b), we are finalizing aligning the effective dates of coverage after selecting a plan during certain special enrollment periods across all Exchanges, including State Exchanges. We are requiring all State Exchanges to provide coverage that is effective on the first day of the month following plan selection, or an earlier date, if a consumer enrolls in a QHP during special enrollment periods that follow the regular effective dates of coverage in 45 CFR 155.420(b). This policy will prevent coverage gaps, particularly for consumers transitioning between different Exchanges or from other insurance coverage.

We are finalizing the amendment to paragraph § 155.420(d)(16) to revise the parameters around the availability of a special enrollment period for APTC-eligible qualified individuals with a projected annual household income no greater than 150 percent of the Federal Poverty Level (FPL). Specifically, we are finalizing to remove the limitation that this special enrollment period is only available to a consumer whose applicable taxpayer's applicable percentage, which is used to determine the amount of the consumer's premium not covered by APTC, is 0 percent, and to give Exchanges the option to permanently provide this special enrollment period. We believe this policy will provide affordable coverage to more uninsured people and additional enrollment opportunities to low-income consumers.

We are finalizing the addition of § 155.430(b)(1)(iv)(D) to permit an enrollee to retroactively terminate the enrollee's enrollment in a QHP through an Exchange on the Federal platform when the enrollee enrolls in Medicare Parts A or B (including enrollment in Parts A and B through a Medicare Advantage plan). The effective date of the retroactive termination must be no earlier than the later of (1) the day before the first day of coverage under Medicare Parts A or B or a Medicare Advantage plan, and (2) the day is 6 months before retroactive termination of QHP coverage is requested. Enrollees must request retroactive termination of coverage within 60 days of the date they retroactively enroll in Medicare (the date the enrollment occurs, not the Medicare coverage effective date). We are also finalizing that retroactive terminations are not permitted for stand-alone dental plans (SADPs). This policy will allow consumers to avoid overlapping coverage and paying unnecessary premiums. HHS has the option to elect whether to implement this provision for Exchanges on the Federal platform, and State Exchanges will have the option of implementing this policy.

Under § 155.1050(a)(2)(i)(A), we are finalizing that for plans years beginning on or after January 1, 2026, State Exchanges and SBE-FPs must establish and impose quantitative time and distance network adequacy standards for QHPs that are at least as stringent as standards for QHPs participating on the FFEs under § 156.230(a)(2)(i)(A). Additionally, we are finalizing that, for plans years beginning on or after January 1, 2026, State Exchanges and SBE-FPs must conduct quantitative network adequacy reviews prior to certifying any plan as a QHP, consistent

with the reviews conducted by the FFEs under § 156.230. Specifically, we are finalizing at § 155.1050(a)(2)(i)(B) that, for plans years beginning on or after January 1, 2026, State Exchanges and SBE-FPs must conduct network adequacy reviews to evaluate a plan's compliance with network adequacy standards under § 156.230(a)(1)(ii), (a)(1)(iii), and (a)(2)(i)(A) prior to certifying any plan as a QHP, while providing QHP certification applicants the flexibilities described under § 156.230(a)(2)(ii) and (a)(3) and (4). We are also finalizing § 155.1050(a)(2)(ii) to provide that, for plan years beginning on or after January 1, 2026, HHS may grant an exception to the requirements described under § 155.1050(a)(2)(i) to a State Exchange or SBE-FP that demonstrates with evidence-based data, in a form and manner specified by HHS, that (1) the Exchange applies and enforces alternate quantitative network adequacy standards that are reasonably calculated to ensure a level of access to providers that is as great as that ensured by the Federal network adequacy standards established for QHPs under § 156.230(a)(1)(iii), (a)(2)(i)(A), and (a)(4); and (2) the Exchange evaluates whether plans comply with applicable network adequacy standards prior to certifying any plan as a QHP. Lastly, we are finalizing § 155.1050(a)(2)(i)(C) to provide that, for plan years beginning on or after January 1, 2026, State Exchanges and SBE-FPs must require that all issuers seeking certification of a plan as a QHP submit information to the Exchange reporting whether or not network providers offer telehealth services.

6. 45 CFR Part 156

In part 156, after reviewing the public comments and revising our projections based on newly available data that impacted our enrollment projections, we are finalizing an FFE user fee rate of 1.5 percent of total monthly premiums and an SBE-FP user fee rate of 1.2 percent of total monthly premiums. On November 15, 2023, we issued the 2025 benefit year premium adjustment percentage index and related payment parameters in guidance, consistent with the policy finalized in part 2 of the 2022 Payment Notice.
11

11

https://www.cms.gov/files/document/2025-papi-parameters-guidance-2023-11-15.pdf.

For benefit years beginning on or after January 1, 2026, we are finalizing three revisions to the standards for State selection of EHB-benchmark plans at § 156.111. First, we are finalizing our proposal to consolidate the options for States to change EHB-benchmark plans at § 156.111(a) to reduce the burden on States to decide between three functionally identical choices. Second, we are finalizing revisions to the typicality standard at § 156.111(b)(2) so that, in demonstrating that a State's new EHB-benchmark plan provides a scope of benefits that is equal to the scope of benefits of a typical employer plan in the State, the scope of benefits of a typical employer plan in the State will be defined as any scope of benefits that is as or more generous than the scope of benefits in the State's least generous typical employer plan (supplemented by the State as necessary to provide coverage within each EHB category at § 156.110(a)), and as or less generous than the scope of benefits in the State's most generous typical employer plan (supplemented by the State as necessary to provide coverage within each EHB category at § 156.110(a)), among the typical employer plans currently defined at § 156.111(b)(2)(i)(A) and (B). We are also finalizing the removal of the generosity standard at § 156.111(b)(2)(ii) and a technical revision to the language regarding supplementation at § 156.111(b)(2)(i). Third, we are finalizing revisions to § 156.111(e)(3) to require States to submit a formulary drug list as part of their application to change EHB-benchmark plans only if the State is seeking to change its prescription drug EHB.

We are finalizing the removal of the regulatory prohibition at § 156.115(d) on issuers from including routine non-pediatric dental services as an EHB beginning with PY 2027, which would provide States the option to add routine adult dental services as an EHB by updating their EHB-benchmark plans pursuant to § 156.111.

We are finalizing the amendment to § 156.122 to codify that prescription drugs in excess of those covered by a State's EHB-benchmark plan are considered EHB. As a result, they would be subject to requirements including the annual limitation on cost sharing and the restriction on annual and lifetime dollar limits, unless the coverage of the drug is mandated by State action and is in addition to EHB pursuant to § 155.170, in which case the drug will not be considered EHB. In addition, for plan years beginning on or after January 1, 2026, we are finalizing the amendment to § 156.122 to provide that the Pharmacy & Therapeutics (P&T) committee must include a patient representative. We also sought and received comments on a possible future policy proposal to replace the United States Pharmacopeia (USP) Medicare Model Guidelines (MMG) with the USP Drug Classification system (DC) to classify the prescription drugs required to be covered as EHB under § 156.122(a)(1).

For PY 2025, we are finalizing the proposal to follow the approach finalized in the 2024 Payment Notice concerning standardized plan option metal levels, and to otherwise maintain continuity with our approach to standardized plan options finalized in the 2023 and 2024 Payment Notices.
12

We are finalizing only minor updates to the plan designs for PY 2025 to ensure these plans have AVs within the permissible
de minimis
range for each metal level. Our updates to plan designs for PY 2025 are detailed in the discussion of § 156.201 in the preamble of this final rule, specifically in Tables 12 and 13.

12
This includes continuation of the differential display of standardized plan options on
HealthCare.gov
and enforcement of the standardized plan options display requirements for approved web-brokers and QHP issuers using a direct enrollment pathway to facilitate enrollment through an FFE or SBE-FP—including both the Classic Direct Enrollment (Classic DE) and Enhanced Direct Enrollment (EDE) Pathways.

We are finalizing an exceptions process at § 156.202 that will allow issuers in the FFEs and SBE-FPs to offer additional non-standardized plan options per product network type, metal level, inclusion of dental and vision benefit coverage, and service area for PY 2025 and subsequent plan years, if the issuer can demonstrate that these additional non-standardized plans have specific design features that will substantially benefit consumers with chronic and high-cost conditions and meet other requirements.

We are finalizing a new regulatory provision that would permit us to allow a CO-OP loan recipient to voluntarily terminate its loan agreement with us and cease to constitute a qualified non-profit health insurance issuer (QNHII), for the purpose of pursuing innovative business plans that are not otherwise consistent with the governance requirements and business standards applicable to a CO-OP borrower. Under the new regulatory provision, we will be able to consider a request by a CO-OP to voluntarily terminate its loan agreement for reasons other than financial viability, provided all outstanding CO-OP loans issued to the loan recipient are repaid in full prior to termination, and we believe granting the request would meaningfully enhance consumer access to quality, affordable, member-focused, non-profit health care options in affected markets.

We are finalizing conforming amendments to the payment and collections process set forth at

§ 156.1215 to align with the policies and regulations proposed in the Federal Independent Dispute Resolution Operations proposed rule (88 FR 75744) and that are contingent on their finalization. This provision will provide that administrative fees for utilizing the No Surprises Act Federal independent dispute resolution (IDR) process for health insurance issuers that participate in financial programs under the ACA would be subject to netting as part of HHS' integrated monthly payment and collections cycle. Additionally, we are finalizing the amendment to § 156.1215 to provide that any amount owed to the Federal Government by an issuer and its affiliates for unpaid administrative fees due to the Federal Government from these issuers and their affiliates for utilizing the Federal IDR process in accordance with § 149.510(d)(2), after HHS nets amounts owed by the Federal Government under these programs, would be the basis for calculating a debt owed to the Federal Government.

III. Summary of the Provisions of the Proposed Regulations

A. 31 CFR Part 33 and 45 CFR Part 155—Section 1332 Waivers

1. Background

Section 1332 of the ACA permits States to apply for a section 1332 waiver to pursue innovative strategies for providing their residents with access to higher value, more affordable health insurance coverage. To allow for greater flexibility in communicating with the public, we are finalizing updates to the public hearing process requirements for section 1332 waivers.

Under section 1332(b) of the ACA, the Secretary of HHS and the Secretary of the Treasury (collectively, the Secretaries) may exercise their discretion to approve a request for a section 1332 waiver only if the Secretaries determine that the proposal for the section 1332 waiver meets the following four requirements, referred to as the statutory guardrails: (1) the proposal provides coverage that is at least as comprehensive as coverage defined in section 1302(b) of the ACA and offered through Exchanges established under title I of the ACA, as certified by the Office of the Actuary of CMS, based on sufficient data from the State and from comparable States about their experience with programs created by the ACA and the provisions of the ACA that would be waived; (2) the proposal provides coverage and cost-sharing protections against excessive out-of-pocket spending that are at least as affordable for the State's residents as would be provided under title I of the ACA; (3) the proposal provides coverage to at least a comparable number of the State's residents as would be provided under title I of the ACA; and (4) the proposal does not increase the Federal deficit. The Secretaries retain their discretionary authority to deny requested section 1332 waivers when appropriate given consideration of the application, as a whole, even if a proposal for a section 1332 waiver meets the four statutory guardrails.

The Departments are responsible for monitoring an approved section 1332 waiver's compliance with the statutory guardrails and for conducting evaluations to determine the impact of the section 1332 waiver. Specifically, section 1332(a)(4)(B)(v) of the ACA requires the Secretaries to promulgate regulations that provide for a process for the periodic evaluation of approved section 1332 waivers. The Secretaries must also promulgate regulations that provide for a process under which States with approved section 1332 waivers submit to the Secretaries periodic reports concerning the implementation of the State's waiver program.
13

13
See ACA section 1332(a)(4)(B)(iv).

2. Finalized Amendments to Normal Public Notice Requirements (31 CFR 33.112, 31 CFR 33.120, 45 CFR 155.1312, and 45 CFR 155.1320)

Sections 1332(a)(4)(B)(i) and (iii) of the ACA provide that the Secretaries shall promulgate regulations that provide for a process for public notice and comment at the State level, including public hearings, and a process for providing public notice and comment at the Federal level after the section 1332 waiver application is received by the Secretaries, respectively, that are both sufficient to ensure a meaningful level of public input. Current regulations at 31 CFR 33.112 and 45 CFR 155.1312 specify State public notice and comment period and participation requirements for proposed section 1332 waiver requests, and 31 CFR 33.116(b) and 45 CFR 155.1316(b) specify the public notice and comment period and approval requirements under the accompanying Federal process.

In the November 2020 IFC (85 FR 71142), the Departments revised regulations to set forth flexibilities in the public notice requirements and post-award public participation requirements for section 1332 waivers during the COVID-19 PHE. In the September 2021 Final Rule (86 FR 53502), the Departments extended those changes beyond the COVID-19 PHE to allow similar flexibilities in the event of future natural disasters; PHEs; or other emergent situations that threaten consumers' access to health insurance coverage, consumers' access to health care, or human life. Currently, in such an event, States may submit a request to the Departments to modify, in part, the State public notice requirements specified in 31 CFR 33.112(a)(1), (b), (c), and (d) and 45 CFR 155.1312(a)(1), (b), (c), and (d), and the Federal public notice requirement specified in 31 CFR 33.116(b) and 45 CFR 155.1316(b), pursuant to 31 CFR 33.118(a) and 45 CFR 155.1318(a).

The criteria to request a modification from the normal public notice requirements during an emergent situation are set forth in 31 CFR 33.118(b)(1) through (5) and 45 CFR 155.1318(b)(1) through (5). Pursuant to 31 CFR 33.118(b)(3) and 45 CFR 155.1318(b)(3), the State's request to modify normal public notice procedures is required to include: the justification for the requested modification from the State public notice procedures as it relates to the emergent situation and the alternative public notice procedures, including public hearings, that it proposes to implement at the State level and that are designed to provide the greatest opportunity for and level of meaningful public input from impacted interested parties that is practicable given the emergent circumstances motivating the State's request for a modification.

Since the finalization of the flexibilities in 31 CFR 33.118(b)(1) through (5) and 45 CFR 155.1318(b)(1) through (5), almost all States with approved section 1332 waivers (“section 1332 waiver States”) submitted requests that were granted by the Departments to conduct their annual post-award forums virtually instead of in-person during the COVID-19 PHE to reduce the risk of transmission of COVID-19. Similarly, during the COVID-19 PHE, States submitting new section 1332 waiver applications, waiver extension requests, or waiver amendment requests also requested to host their State public hearings virtually and these requests were also granted by the Departments. However, with the recent expiration of the Federal COVID-19 PHE
14

(and many State COVID-19 PHEs)
15

and in

line with the requirements of 31 CFR 33.120(c) and 45 CFR 155.1320(c) and 31 CFR 33.112(c) and 45 CFR 155.1312(c), the Departments have ceased granting States' requests to hold public hearings or post-award forums virtually instead of in-person on the basis of the Federal COVID-19 PHE.

14
The Federal COVID-19 PHE ended on May 11, 2023.
https://www.hhs.gov/about/news/2023/05/09/fact-sheet-end-of-the-covid-19-public-health-emergency.html#:~:text=That%20means%20with%20the%20COVID,the%20expiration%20of%20the%20PHE.

15
For example, in Alaska the State's PHE ended on July 1, 2022 (
https://health.alaska.gov/PHE/Pages/default.aspx
); in Colorado the Disaster

Recovery Order ended on April 27, 2023 (
https://hcpf.colorado.gov/covid-19-phe-planning
); in Georgia the State of Emergency ended on May 11, 2023 (
https://dph.georgia.gov/press-releases/2023-05-11/dph-news-release-end-public-health-emergency-declaration
); and in Rhode Island the State's COVID-19 Disaster Emergency ended on May 11, 2023 (
https://governor.ri.gov/executive-orders/executive-order-23-05
).

Upon review and consideration of the lessons learned during the COVID-19 PHE, the Departments have determined that some current provisions regarding normal State public notice procedures are outdated given the increased accessibility that technology has provided for virtual and telephonic meetings. States have shared that their residents benefitted from the States' opportunity to host public hearings and post-award forums virtually, and that they would like to continue doing so to facilitate attendance. States have also reported to the Departments that hosting meetings virtually during the COVID-19 PHE did not decrease the amount or quality of meaningful input received. States' experiences during this time demonstrated that interested parties were able to virtually attend meetings and submit public comments verbally or in-writing, and States did not report any significant issues relating to virtual platforms that impeded public attendance or participation. States continued to share with the Departments summaries of their post-award forums, as well as all public comments received and actions taken in response to concerns or comments, in accordance with section 1332 waiver annual reporting requirements. In States' new waiver applications, waiver extension requests, and waiver amendment requests, States also shared with the Departments summaries of virtually conducted hearings from their State public comment periods and addressed public comments or concerns received.

Beyond mitigating the spread of COVID-19, information shared by section 1332 waiver States has demonstrated that the opportunity to host post-award forums and public hearings on virtual platforms facilitated comparable or higher levels of public attendance when compared to previously held in-person meetings. For example, at Maryland's annual post-award forums held in 2019 (in-person) and 2020-2022 (virtual), the State saw comparable participation across the years from interested parties. Minnesota also reported comparable attendance at its post-award forums across the years: 4 attendees in 2018 (in-person), 1 in 2019 (in-person), 4 in 2020 (virtual), 9 in 2021 (virtual),
16

and 2 in 2022 (virtual). Likewise, Wisconsin had 6 attendees at its post-award forum in 2019 (in-person), 24 in 2020 (virtual),
17

11 in 2021 (virtual), and 7 in 2022 (virtual). Wisconsin noted that using a virtual format has allowed individuals who would otherwise not be able to attend in-person to view the State's presentation and that this has proven to be a convenient means for individuals to attend the forum.

16
Note that this post-award hearing was also a hearing for the State's waiver extension application, which likely increased attendance.

17
Note that attendance was relatively higher in 2020 likely due to the forum following the State's first full year of implementing its reinsurance program.

States that began waiver implementation after the start of the COVID-19 PHE have also reported successfully hosting virtual post-award forums. For example, Colorado conducted its first post-award forum entirely virtually in 2020 and reported 79 attendees.
18

Pennsylvania had 2 attendees at its first post-award forum in 2021 (virtual) and 4 in 2022 (virtual). Pennsylvania noted that due to the expansiveness of the State's geography, there has historically been low in-person attendance, as observed at its in-person public hearings in 2019 for its waiver application, where no members of the public attended the first meeting, and two members of the public attended the second meeting.

18
Note that this post-award forum was also a hearing for the State's waiver extension application, which likely increased attendance.

States submitting new waiver applications, waiver extension requests, or waiver amendment requests during the COVID-19 PHE also reported successfully conducting their public hearings on virtual platforms. For example, in January 2022, Alaska held a combined post-award forum and State public hearing for its waiver extension application both in-person and with a telephonic option, which 3 members of the public attended either in-person or virtually. In April 2022, Washington held two State public hearings virtually, in which 9 representatives from organizations attended and shared public comments.

There are other Federal programs and agencies that permitted a virtual option in place of in-person public hearings prior to the COVID-19 PHE or that have more recently amended their policies for public input to continue virtual and telephonic options that were first implemented during the COVID-19 PHE. For example, States that are applying for Medicaid section 1115 demonstrations are permitted to use telephonic and web-based conference capabilities for public meetings. In fact, per 42 CFR 431.408(a)(3), a State must use telephonic and/or web conference capabilities for at least one of the two required public hearings to ensure Statewide accessibility to the public hearing, unless it can document it has afforded the public throughout the State the opportunity to provide comment, such as holding the two public hearings in geographically distinct areas of the State.

As another example, during the COVID-19 PHE, the Internal Revenue Service (IRS) began holding public hearings on notices of proposed rulemaking telephonically instead of in-person. Following the end of the Federal COVID-19 PHE, the IRS recently announced that, for proposed regulations published in the
Federal Register
after May 11, 2023,
19

public hearings would be conducted in-person but that a telephonic option would remain available for those who prefer to attend or testify by telephone.

19
Internal Revenue Service, Public Hearings on Proposed Regulations to Be Conducted in Person with Telephone Options Available, Announcement 2023-16. Accessed at
https://www.irs.gov/pub/irs-drop/a-23-16.pdf.

The Departments considered whether to propose requiring States to hold at least one of the required public hearings for waiver applications in-person. However, as explained above, States have successfully hosted post-award forums and public hearings for section 1332 waiver applications virtually to allow for meaningful public input over the last several years. Furthermore, by allowing States the ability to hold all of their meetings virtually, States may better allow for input across different geographies, communities, and populations. We also considered proposing the standard under section 1115 demonstrations where one hearing is required to be done virtually. However, given the successful hosting of virtual meetings with public participation by States for section 1332 waivers, it does not seem necessary to continue to require in-person meetings to solicit public input on section 1332 waivers.

The Departments believe that by allowing States the opportunity to hold post-award forums and public hearings virtually and through digital platforms, States would be able to continue

facilitating attendance and participation from interested parties and the public to provide meaningful input. As such, the Departments are of the view that updating the State public notice procedures would enhance public participation in the section 1332 waiver review and monitoring process. This approach would help remove barriers to participation and increase opportunities for engagement in policymaking for communities and local partners who may face barriers to in-person participation (for example, those in rural areas). This approach is also consistent with Executive Order 14094, Executive Order on Modernizing Regulatory Review, as it would affirm States' abilities to be inclusive in seeking public input from interested or affected parties, including members of underserved communities, and promote best practices for information accessibility and engagement with interested or affected parties through the use of alternative platforms and media for engaging the public.
20

Further, this approach may improve States' abilities to understand and eliminate barriers experienced by underserved or under-represented communities, and identify opportunities to advance health equity, while diminishing administrative burden related to the integration of in-person and virtual formats.

20
88 FR 21879.
https://www.govinfo.gov/content/pkg/FR-2023-04-11/pdf/2023-07760.pdf.

Therefore, in this final rule, the Departments are finalizing as proposed that a virtual (that is, one that uses telephonic, digital, and/or web-based platforms) or hybrid (that is, one that provides for both in-person and virtual attendance) public hearing or forum be considered as the equivalent of holding an in-person meeting. In the 2012 Final Rule (77 FR 11700), the Departments noted that as set forth in 31 CFR 33.112(c)(1) and (2) and 45 CFR 155.1312(c)(1) and (2), a State must hold at least two public hearings in distinct locations. Under this policy, States would still need to hold at least two public hearings in distinct locations. For example, the Departments clarify that under this final rule, a State would not be permitted to count a public hearing in which there is simultaneously an in-person location and virtual platform as two hearings (or two locations). Instead, one virtual or hybrid meeting would still count as one public hearing, and two virtual or hybrid meetings would count as two public hearings.

In this final rule, we are finalizing as proposed in the 2025 Payment Notice proposed rule (88 FR 82510, 82520), to amend 31 CFR 33.112(c) and 45 CFR 155.1312(c) and 31 CFR 33.120(c) and 45 CFR 155.1320(c). More specifically, the Departments are finalizing modifications to 31 CFR 33.112(c) and 45 CFR 155.1312(c) to permit States to conduct public hearings in a virtual or hybrid format in lieu of conducting an in-person meeting. The Departments also finalize as proposed amending 31 CFR 33.120(c) and 45 CFR 155.1320(c) to provide that for a State's annual post-award forum, the public forum shall be conducted in an in-person, virtual (that is, one that uses telephonic, digital, and/or web-based platforms), or hybrid (that is, one that provides for both in-person and virtual attendance) format. These changes will go into effect upon publication of this final rule.

This policy is limited to allowing flexibility to host required meetings virtually. States would still be required to continue to abide by all other public notice requirements, including public notice procedural requirements for waiver applications, waiver extension and waiver amendment requests, and post-award forums. For example, States would still be required to have a process to consult and collaborate with Federally-recognized tribes,
21

as applicable, as well as take reasonable steps to provide meaningful access for individuals with limited English proficiency (LEP) (for example, language assistance services that may include interpretation in non-English languages provided in-person or remotely by a qualified interpreter, translated written content in paper or electronic form into or from languages other than English, and written notice of availability of language assistance services), and appropriate steps to ensure effective access for and communication with individuals with disabilities (for example, accessibility of information and communication technology).
22

States should recognize that virtual meetings may present additional accessibility challenges for people with communications and other disabilities, as well as to those who lack broadband access. Complying with the requirement to ensure effective communication may entail providing American Sign Language interpretation and real-time captioning, as well as ensuring that the virtual platform is interoperable with assistive technology for people with disabilities.

21
See 31 CFR 33.112(a)(2) and 45 CFR 155.1312(a)(2).

22
See Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d, 45 CFR part 80), Section 1557 of the ACA (42 U.S.C. 18116, 45 CFR part 92), Section 504 of the Rehabilitation Act of 1973 (29 U.S.C 794, 45 CFR part 84), and Title II of the Americans with Disabilities Act (42 U.S.C. 1213
et seq.,
28 CFR part 35).

Finally, the Departments clarify that under this final rule, States shall have a process by which members of the public can request in-person meetings for the annual post-award forum or State public hearings on waiver applications, waiver extension requests, or waiver amendments requests, and that States shall accommodate those requests whenever possible. In addition, States with approved section 1332 waivers and States seeking approval for proposed waivers would continue to have flexibility to submit requests to the Departments during emergent situations to modify certain public participation requirements as set forth in 31 CFR 33.118(b)(1) through (5) and 45 CFR 155.1318(b)(1) through (5).

The Departments sought comment on these proposals and received 29 comments on the section 1332 waiver proposals from various interested parties, including States, health and disease advocacy organizations, general advocacy organizations, health care provider organizations, and research organizations. All comments generally expressed support for the proposed changes, though some raised additional considerations related to accessibility.

After consideration of comments and for the reasons outlined in the proposed rule and our responses to comments, we are finalizing these provisions as proposed. We summarize and respond to public comments received on the proposed amendments to normal public notice requirements (31 CFR 33.112, 31 CFR 33.120, 45 CFR 155.1312, and 45 CFR 155.1320) below.

Comment:
The Departments received comments supporting the additional flexibilities for States to conduct public hearings and post-award forums in a virtual or hybrid format. Commenters agreed that these updates would facilitate public participation on section 1332 waivers by increasing access to meetings for people who would otherwise face barriers to attending in-person meetings (for example, due to geographic distance, transportation, childcare, limited mobility, chronic health conditions). Commenters also agreed with the Departments' clarification that one meeting held in a hybrid format does not meet the existing requirement that States hold at least two such events in separate locations, and that States would still need to hold at least two public hearings in distinct locations (for example, one virtual or hybrid meeting counts as one meeting, and two virtual or hybrid meetings count as two meetings).

Several comments from States shared their own positive experiences with hosting public hearings and post-award forums virtually during the COVID-19 pandemic. They explained that public participation did not suffer because the meetings were held virtually. These States also noted that the ability to hold virtual public hearings and post-award forums without needing to request a modification from the normal public notice requirements due to an emergent situation (as they would have done under previous guidance) would reduce administrative hurdles. However, one State asserted that there is no benefit from requiring States to hold public forums in-person and that it is an inefficient use of State resources.

Response:
The Departments appreciate the support and have finalized the rule as proposed.

Comment:
We received several comments expressing concern that virtual or hybrid meetings may simultaneously pose additional challenges for States to comply with Federal civil rights protections and requirements for accessibility. These commenters voiced concern that people with disabilities, people with LEP, and people with limited broadband access may experience barriers to participation. These commenters encouraged the Departments to issue additional subregulatory guidance to States that clarify related Federal civil rights protections and requirements and to provide examples of compliance strategies to ensure that people with accessibility needs can meaningfully participate in the public comment process. Similarly, one commenter recommended that CMS include in the final rule accessibility standards for virtual and hybrid meetings, such as practices related to pre-event information, live captioning, assistive technology, and document and platform accessibility; and another commenter proposed that the Departments codify essential accessibility practices in the final rule, such as closed captioning, simultaneous interpretation, option to dial in to meetings, and ensuring that the technology used is compatible with assistive technologies used by people with disabilities. Finally, one commenter recommended that the Departments require States to include a virtual option when public hearings are held in-person, which would allow for participation from people who cannot safely attend in-person (for example, people who are immunocompromised). This commenter also requested that States posting public notice for these meetings should ensure the notices are easily accessible and prominently displayed on their websites.

Response:
The Departments agree with commenters that despite the additional flexibilities for States to host meetings in a virtual or hybrid format, it continues to be important for States to comply with applicable Federal civil rights law and ensure accessibility in the public notice and comment process. Regarding commenters' suggestion that the Departments issue additional subregulatory guidance and provide examples of compliance strategies, or to codify accessibility standards and practices into the final rule, we emphasize that the finalization of these provisions does not change requirements for States to ensure Federal civil rights protections and meet applicable accessibility needs. Indeed, in the 2021 Final Rule, the Departments reiterated that any public participation processes must comply with applicable Federal civil rights laws.
23

The Departments expect that States will continue to take accessibility considerations into account to ensure a meaningful level of public input during State notice and comment periods and post-award forums. States may reference the HHS Office for Civil Rights for information on Federal civil rights laws and protections.
24

Additionally, comments on issuing subregulatory guidance and codifying accessibility standards and practices are not directly in response to the proposed rule and are out-of-scope. As such we have finalized this rule as proposed.

23
Patient Protection and Affordable Care Act; Updating Payment Parameters, Section 1332 Waiver Implementing Regulations, and Improving Health Insurance Markets for 2022 and Beyond (86 FR 53412, 53457)
https://www.govinfo.gov/content/pkg/FR-2021-09-27/pdf/2021-20509.pdf.

24

https://www.hhs.gov/civil-rights/for-individuals/index.html.

Finally, the Departments remind States that they must publish the date, time, and location of the public forum in a prominent location on the State's public website, at least 30 days prior to the date of the planned public forum. Consistent with Federal civil rights law, including section 1557 of the ACA, section 504 of the Rehabilitation Act of 1973, and Title II of the Americans with Disabilities Act, section 1332 waiver applications must be accessible to individuals with disabilities, including when such applications are posted online. To assist with ensuring website accessibility, States may look to national standards issued by the Architectural and Transportation Barriers Compliance Board (often referred to as “section 508 standards”),
25

or alternatively, to standards issued by the World Wide Web Consortium's (W3C).
26

25
For more information on section 508 standards, see
https://www.section508.gov/develop/web-content/.

26
For more information, see
https://www.w3.org.

Comment:
One commenter who supported the proposed provisions also encouraged the Departments to consider the benefits of in-person meetings by gathering feedback from States to provide guidance on best practices, as in-person meetings may offer a greater level of participant engagement compared to virtual meetings (for example, in-person public testimonies during the State legislative process can have more meaningful impact than virtual testimonies).

Response:
As noted in the proposed rule, the Departments considered whether to propose requiring States to hold at least one of the required public hearings for waiver applications in-person. Some States had previously expressed to the Departments and in public comments on this proposed rule that they appreciated the flexibility to virtually conduct public hearings and forums. As demonstrated over the last several years, States have successfully hosted post-award forums and public hearings for section 1332 waiver applications virtually to allow for meaningful public input. Furthermore, States continue to have the option to conduct all public hearings or post-award forums in-person. We encourage States to consider where other opportunities for consumer involvement exist. We believe that the proposed State and Federal public notice and comment processes, along with the post-award public forum provision, ensure meaningful opportunities for participation.

Comment:
One commenter suggested that the Departments provide flexibility on whether or not to conduct post-award forums due to what the commenter asserts is a lack of statutory authority, a history of low attendance at post-award forums, the belief that this input could be gathered at a much lower cost with written comments, and the view that the forums are duplicative of other State evaluation processes.

Response:
The Departments require post-award forums under their authority under section 1332 (a)(4)(B)(iv) and (v), 31 CFR 33.120, and 45 CFR 155.1320 to require States to submit periodic reports and conduct periodic evaluations to monitor States' compliance with Federal and regulatory requirements for section 1332 waivers. Further, we believe that the public should have an opportunity

to comment at a post-award public forum as reflected in 31 CFR 33.120(c) and 45 CFR 155.1320(c) and note that the requirement for a post-award forum is part of the periodic monitoring and evaluation of waivers. This comment is outside the scope of this rulemaking.

B. 42 CFR Parts 435 and 600

1. Increase State Flexibility in the Use of Income and Resource Disregards for Non-MAGI Populations (42 CFR 435.601)

In the proposed rule, we proposed to provide States with greater flexibility to adopt income and/or resource disregards in determining financial eligibility under section 1902(r)(2) of the Act for individuals excepted from application of modified adjusted gross income financial methodologies (“MAGI-based methodologies”).

Specifically, we proposed to remove the current 42 CFR 435.601(d)(4), which was first adopted in 1993. As explained in the preamble to the proposed rule, the current rule describes the eligibility groups to which States may apply less restrictive methodologies and requires that any less restrictive methodologies elected by a State be “comparable for all persons within each category of assistance within an eligibility group.” As further explained in 42 CFR 435.601(d)(4), for example, if the agency chooses to apply a less restrictive income or resource methodology to an eligibility group of aged individuals, it must apply that methodology to all aged individuals within the selected group.

In the preamble to the proposed rule, we noted that, upon further review, we recognize that section 1902(r)(2)(A) of the Act does not expressly impose a comparability mandate, and that we did not identify a specific legal rationale for the mandate when we originally proposed and finalized 42 CFR 435.601(d)(4), 54 FR 39421, 39433 (September 26, 1989); 58 FR 4908, 4919 (January 19, 1993). We thus concluded that the inclusion of the mandate was a policy choice. We further considered that section (3)(b) of the Sustaining Excellence in Medicaid Act of 2019, Public Law 116-39, permits States to target income and/or resource disregards to people who need home and community-based services (HCBS).
27

In light of this analysis, and given that States over the years have expressed interest in targeting income and/or resource disregards to subpopulations within eligibility groups, we proposed to eliminate paragraph (4) from 42 CFR 435.601(d).

27
For further information, see CMS State Medicaid Director Letter 21-004, “State Flexibilities to Determine Financial Eligibility for Individuals in Need of Home and Community-Based Services.”
https://www.medicaid.gov/sites/default/files/2021-12/smd21004_0.pdf.

We explained that we believed that eliminating this provision would: increase State flexibility; provide States more options to extend eligibility to specific populations based on a State's circumstances; and enable States to achieve targeted expansions of coverage that best meet their needs, in contrast to the all-or-nothing approach for income and resource disregards that is effectively required by 42 CFR 435.601(d)(4). We acknowledged, however, that it was possible that eliminating the comparability requirement from 42 CFR 435.601(d)(4) might enable a State to narrow an existing disregard that is broadly available to an eligibility group at present to discrete members of the group instead. We indicated that we had not received inquiries from States on the permissibility of such an approach, and that we believed States would utilize the elimination of 42 CFR 435.601(d)(4) to expand eligibility. We invited comment on our proposal.

Comment:
We received many comments on our proposal. A majority of the commenters expressed either conditional or outright support for the proposal. Commenters agreed that the proposal would increase State flexibility and facilitate targeted expansions of Medicaid coverage. Commenters also indicated that the proposal would foster State development of innovative pathways to Medicaid eligibility and help low-income and vulnerable populations. Many commenters also agreed that States would most likely use the flexibility to increase Medicaid eligibility.

However, many commenters who expressed support for the proposal (and some who opposed it) emphasized that, as the proposal leaves open the possibility that States could use the offered flexibility to narrow existing disregards, CMS should impose “safeguards,” “guardrails,” or “no-harm” requirements that would effectively prohibit the States' use of the flexibility in this manner. Some of these commenters noted that the proposal should not be finalized without these requirements. A number of commenters suggested that States' exercise of the flexibility be closely monitored, with one recommending that the proposal, if finalized, should be reexamined if States use it in a manner that adversely affects beneficiaries. A few commenters suggested that we were underestimating the likelihood of States using the additional flexibility to reduce eligibility, and that, as an example, such a course of action might be attractive for States facing budget pressure.

Response:
We appreciate the support we received for the general concept of providing States with additional flexibility in this area. However, given the significant concerns and comments that we received, we have decided that we should consider this proposal further and any necessary beneficiary protections, and we are not finalizing it at this time. As we indicated in the preamble to the proposed rule, we believe the proposal would provide States more options to extend eligibility. It is not our intent, however, to offer methods by which States may be likely to reduce it in practice or otherwise harm beneficiaries. We therefore intend to further evaluate the comments regarding the additional flexibility we proposed for States. We will consider the commenters' recommendations regarding the use of “guardrails,” or other beneficiary protections as well as the need for other modifications to our proposal that would address these commenters' concerns regarding adequate beneficiary protections in a proposal in the future.

Comment:
Many commenters who supported the proposal specifically noted its potential to benefit “at-risk” or “vulnerable” populations, people 65 years old and older, people with blindness or disabilities, “dually eligible” individuals, and prospective medically needy individuals. Commenters also indicated that the proposal could: allow States to develop innovative pathways to Medicaid eligibility; potentially ease the application process for applicants and thereby allow access to coverage more quickly; stabilize coverage for individuals who may experience minor changes in income and/or resources that might otherwise render them ineligible; and possibly produce important information about current eligibility barriers that could lead to broader reforms. One commenter suggested that the flexibility offered by the proposal would be a “commonsense change” that would allow States both to improve care for non-MAGI populations and address “nonsensical, unintended situations that have resulted from different eligibility groups having different income and resource limits.”

Response:
We agree that the proposal could benefit the various populations described in these comments. We also agree that the proposal could facilitate State innovation in expanding Medicaid eligibility pathways and support more seamless transitions between eligibility groups. As explained above, however,

we are continuing to consider the comments we received and are not finalizing the proposal at this time.

Comment:
We received many comments that raised concerns with States using the additional flexibility offered by the proposal to reduce existing disregards. Nearly all commenters who raised these concerns recommended that, if we finalized the proposal, we should prohibit States from reducing or narrowing existing disregards for portions of eligibility groups. Some commenters also suggested that the regulatory text, if the proposal is finalized, should require that any targeting criteria be both grounded on a sound rationale and not discriminate based on race, gender, sexual orientation, disability, age, or health condition. A few other commenters recommended that, at the very least, we should include in the regulation a requirement that individuals who may lose eligibility due to a State reducing or narrowing existing disregards be offered a “transitional period” so that they are not immediately terminated and instead have time to potentially conform to new eligibility rules. A few commenters questioned the legal basis for our proposed change.

Response:
We appreciate this input. As we noted in the preamble to the proposed rule, State inquiries on the scope of the comparability rule in 42 CFR 435.601(d)(4) have generally centered on ideas on how to expand eligibility instead of reducing it. However, as we explained above, we are not finalizing our proposal at this time in order to further consider our proposal in light of these comments.

Comment:
A few com

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2024-07274. Public record. Not legal advice.