80 FR 63936 - Basic Health Program; Federal Funding Methodology for Program Years 2017 and 2018
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services Federal Register Volume 80, Issue 204 (October 22, 2015)
Centers for Medicare & Medicaid Services
Federal Register Volume 80, Issue 204 (October 22, 2015)
| Page Range | 63936-63950 | |
| FR Document | 2015-26907 |
[Federal Register Volume 80, Number 204 (Thursday, October 22, 2015)] [Proposed Rules] [Pages 63936-63950] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-26907] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Part 600 [CMS-2396-PN] RIN 0938-ZB21 Basic Health Program; Federal Funding Methodology for Program Years 2017 and 2018 AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Proposed methodology. ----------------------------------------------------------------------- SUMMARY: This document provides the methodology and data sources necessary to determine federal payment amounts made in program years 2017 and 2018 to states that elect to establish a Basic Health Program under the Affordable Care Act to offer health benefits coverage to low- income individuals otherwise eligible to purchase coverage through Affordable Insurance Marketplaces. DATES: To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on November 23, 2015. ADDRESSES: In commenting, refer to file code CMS-2396-PN. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission. You may submit comments in one of four ways (please choose only one of the ways listed): 1. Electronically. You may submit electronic comments on this regulation to http://www.regulations.gov. Follow the ``Submit a comment'' instructions. 2. By regular mail. You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS 2396-PN, P.O. Box 8016, Baltimore, MD 21244-8016. Please allow sufficient time for mailed comments to be received before the close of the comment period. 3. By express or overnight mail. You may send written comments to the following address only: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-2396-PN, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850. 4. By hand or courier. Alternatively, you may deliver (by hand or courier) your written only to the following addresses: a. For delivery in Washington, DC--Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201. (Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without Federal government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp- in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.) b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850. If you intend to deliver your comments to the Baltimore address, call telephone number (410) 786-7195 in advance to schedule your arrival with one of our staff members. Comments erroneously mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period. Submission of comments on paperwork requirements. You may submit comments on this document's paperwork requirements by following the instructions at the end of the ``Collection of Information Requirements'' section in this document. For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section. FOR FURTHER INFORMATION CONTACT: Christopher Truffer, (410) 786-1264; Stephanie Kaminsky (410) 786-4653. SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to view public comments. Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1-800-743-3951. Table of Contents I. Background II. Provisions of the Proposed Methodology A. Overview of the Funding Methodology and Calculation of the Payment Amount B. Federal BHP Payment Rate Cells C. Sources and State Data Considerations D. Discussion of Specific Variables Used in Payment Equations E. Adjustments for American Indians and Alaska Natives F. State Option to Use 2016 or 2017 QHP Premiums for BHP Payments G. State Option to Include Retrospective State-Specific Health Risk Adjustment in Certified Methodology H. Example Application of the BHP Funding Methodology III. Collection of Information Requirements IV. Response to Comments V. Regulatory Impact Statement A. Overall Impact B. Unfunded Mandates Reform Act C. Regulatory Flexibility Act D. Federalism I. Background Section 1331 of the Patient Protection and Affordable Care Act (Pub. L. 111-148, enacted on March 23, 2010), as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L. 111-152, enacted on March 30, 2010) (collectively referred as the Affordable Care Act) provides states with an option to establish a Basic Health Program (BHP). In the states that [[Page 63937]] elect to operate BHP, BHP will make affordable health benefits coverage available for individuals under age 65 with household incomes between 133 percent and 200 percent of the federal poverty level (FPL) who are not otherwise eligible for Medicaid, the Children's Health Insurance Program (CHIP), or affordable employer-sponsored coverage, or for individuals whose income is below these levels but are lawfully present non-citizens ineligible for Medicaid. (For those states that have expanded Medicaid coverage under section 1902(a)(10)(A)(i)(VIII) of the Social Security Act (the Act), the lower income threshold for BHP eligibility is effectively 138 percent due to the application of a required 5 percent income disregard in determining the upper limits of Medicaid income eligibility (section 1902(e)(14)(I) of the Act). BHP provides another option for states in providing affordable health benefits to individuals with incomes in the ranges described above. States may find BHP a useful option for several reasons, including the ability to potentially coordinate standard health plans in BHP with their Medicaid managed care plans, or to potentially reduce the costs to individuals by lowering premiums or cost-sharing requirements. Federal funding will be available for BHP based on the amount of PTC and cost-sharing reductions (CSRs) that BHP enrollees would have received had they been enrolled in QHPs through Marketplaces. These funds are paid to the states through trust funds dedicated to BHP, and the states then administer the payments to standard health plans within BHP. In the March 12, 2014 Federal Register (79 FR 14112), we published a final rule entitled the ``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'' (hereinafter referred to as the BHP final rule) implementing section 1331 of the Affordable Care Act), which directs the establishment of BHP. The BHP final rule establishes the standards for state and federal administration of BHP, including provisions regarding eligibility and enrollment, benefits, cost-sharing requirements and oversight activities. While the BHP final rule codifies the overall statutory requirements and basic procedural framework for the funding methodology, it does not contain the specific information necessary to determine federal payments. We anticipated that the methodology would be based on data and assumptions that would reflect ongoing operations and experience of BHP programs as well as the operation of the Marketplaces. For this reason, the BHP final rule indicated that the development and publication of the funding methodology, including any data sources, would be addressed in a separate annual BHP Payment Notice. In the BHP final rule, we specified that the BHP Payment Notice process would include the annual publication of both a proposed and final BHP Payment Notice. The proposed BHP Payment Notice would be published in the Federal Register each October, and would describe the proposed methodology for the upcoming BHP program year, including how the Secretary considered the factors specified in section 1331(d)(3) of the Affordable Care Act, along with the proposed data sources used to determine the federal BHP payment rates. The final BHP Payment Notice would be published in the Federal Register in February, and would include the final BHP funding methodology, as well as the federal BHP payment rates for the next BHP program year. For example, payment rates published in February 2016 would apply to BHP program year 2017, beginning in January 2017. As discussed in section II.C of this proposed methodology, and as referenced in 42 CFR 600.610(b)(2), state data needed to calculate the federal BHP payment rates for the final BHP Payment Notice must be submitted to CMS. As described in the BHP final rule, once the final methodology has been published, we will only make modifications to the BHP funding methodology on a prospective basis with limited exceptions. The BHP final rule provided that retrospective adjustments to the state's BHP payment amount may occur to the extent that the prevailing BHP funding methodology for a given program year permits adjustments to a state's federal BHP payment amount due to insufficient data for prospective determination of the relevant factors specified in the payment notice. Additional adjustments could be made to the payment rates to correct errors in applying the methodology (such as mathematical errors). Under section 1331(d)(3)(ii) of the Affordable Care Act, the funding methodology and payment rates are expressed as an amount per eligible individual enrolled in a BHP standard health plan (BHP enrollee) for each month of enrollment. These payment rates may vary based on categories or classes of enrollees. Actual payment to a state would depend on the actual enrollment of individuals found eligible in accordance with a state's certified blueprint eligibility and verification methodologies in coverage through the state BHP. A state that is approved to implement BHP must provide data showing quarterly enrollment of eligible individuals in the various federal BHP payment rate cells. Such data should include the following: 1. Personal identifier; 2. Date of birth; 3. County of residence; 4. Indian status; 5. Family size; 6. Household income; 7. Number of person in household enrolled in BHP; 8. Family identifier; 9. Months of coverage; 10. Plan information; and 11. Any other data required by CMS to properly calculate the payment. In the February 24, 2015 Federal Register (80 FR 9636), we published the final payment methodology entitled ``Basic Health Program; Federal Funding Methodology for Program Year 2016'' (hereinafter referred to as the 2016 payment methodology) that sets forth the methodology that will be used to calculate the federal BHP payments for the 2016 program year. In this proposed payment notice, we are proposing that the methodology described within be for program years 2017 and 2018 for states that elect to establish a BHP under the Affordable Care Act to offer health benefits coverage to low-income individuals otherwise eligible to purchase coverage through Affordable Insurance Marketplaces. We are proposing that the payment methodology be for 2 years because after 2 years of publishing single year methodologies, few year-to-year changes are needed at this point. If we find, based on additional data that is generated from 2015 operations, that we would like to further analyze enrollment data for another year before finalizing the methodology for 2018, we will only finalize for 2017 and then either finalize later or repropose our payment methodology for 2018. II. Provisions of the Proposed Methodology A. Overview of the Funding Methodology and Calculation of the Payment Amount Section 1331(d)(3) of the Affordable Care Act directs the Secretary to [[Page 63938]] consider several factors when determining the federal BHP payment amount, which, as specified in the statute, must equal 95 percent of the value of the PTC and CSRs that BHP enrollees would have been provided had they enrolled in a QHP through an Marketplace. Thus, the proposed BHP funding methodology is designed to calculate the PTC and CSRs as consistently as possible and in general alignment with the methodology used by Marketplaces to calculate the advance payments of the PTC and CSRs, and by the Internal Revenue Service (IRS) to calculate final PTCs. In general, we propose to rely on values for factors in the payment methodology specified in statute or other regulations as available, and we propose to develop values for other factors not otherwise specified in statute, or previously calculated in other regulations, to simulate the values of the PTC and CSRs that BHP enrollees would have received if they had enrolled in QHPs offered through an Marketplace. In accordance with section 1331(d)(3)(A)(iii) of the Affordable Care Act, the final funding methodology must be certified by the Chief Actuary of CMS, in consultation with the Office of Tax Analysis of the Department of the Treasury, as having met the requirements of section 1331(d)(3)(A)(ii) of the Affordable Care Act. Section 1331(d)(3)(A)(ii) of the Affordable Care Act specifies that the payment determination shall take into account all relevant factors necessary to determine the value of the premium tax credits and cost- sharing reductions that would have been provided to eligible individuals, including the age and income of the enrollee, whether the enrollment is for self-only or family coverage, geographic differences in average spending for health care across rating areas, the health status of the enrollee for purposes of determining risk adjustment payments and reinsurance payments that would have been made if the enrollee had enrolled in a qualified health plan through an Marketplace, and whether any reconciliation of PTC and CSR would have occurred if the enrollee had been so enrolled. This proposed payment methodology takes each of these factors into account. We propose a methodology that is the same as the 2016 payment methodology, with minor changes to update the value of certain factors used to calculate the payments, but with no changes in methods. These updates are explained in later sections of this notice. Accordingly, while this notice uses the term ``proposed methodology'' throughout, the methodology proposed is essentially identical to that already in place for the BHP. In this proposed methodology, we are proposing to establish a payment methodology for the 2017 and 2018 BHP program years. The same methodology would apply for both years, but the values of a number of factors would be updated for 2018, as noted throughout this notice. We reserve the right to specify a different methodology for 2018. We propose that the total federal BHP payment amount would be based on multiple rate cells in each state. Each rate cell would represent a unique combination of age range, geographic area, coverage category (for example, self-only or two-adult coverage through BHP), household size, and income range as a percentage of FPL. Thus, there would be distinct rate cells for individuals in each coverage category within a particular age range who reside in a specific geographic area and are in households of the same size and income range. We would develop BHP payment rates that would be consistent with those states' rules on age rating. Thus, in the case of a state that does not use age as a rating factor on the Marketplace, the BHP payment rates would not vary by age. The proposed rate for each rate cell would be calculated in two parts. The first part (as described in Equation (1)) would equal 95 percent of the estimated PTC that would have been paid if a BHP enrollee in that rate cell had instead enrolled in a QHP in the Marketplace. The second part (as described in Equation (2)) would equal 95 percent of the estimated CSR payment that would have been made if a BHP enrollee in that rate cell had instead enrolled in a QHP in the Marketplace. These 2 parts would be added together and the total rate for that rate cell would be equal to the sum of the PTC and CSR rates. We propose that Equation (1) would be used to calculate the estimated PTC for eligible individuals enrolled in the BHP in each rate cell and Equation (2) would be used to calculate the estimated CSR payments for eligible individuals enrolled in the BHP in each rate cell. (Indeed, we note that throughout the payment notice, when we refer to enrollees and enrollment data, we mean data regarding individuals who are enrolled in the BHP who have been found eligible for the BHP using the eligibility and verification requirements that are applicable in the state's most recent certified Blueprint.) By applying the equations separately to rate cells based on age, income and other factors, we would effectively take those factors into account in the calculation. In addition, the equations would reflect the estimated experience of individuals in each rate cell if enrolled in coverage through the Marketplace, taking into account additional relevant variables. Each of the variables in the equations is defined in this section, and further detail is provided later in this section of the payment notice. In addition, we describe how we propose to calculate the adjusted reference premium (described later in this section of the payment notice) that is used in Equations (1) and (2). This is defined in Equation (3a) and Equation (3b). Equation 1: Estimated PTC by Rate Cell We propose that the estimated PTC, on a per enrollee basis, would continue to be calculated for each rate cell for each state based on age range, geographic area, coverage category, household size, and income range. The PTC portion of the rate would be calculated in a manner consistent with the methodology used to calculate the PTC for persons enrolled in a QHP, with 3 adjustments. First, the PTC portion of the rate for each rate cell would represent the mean, or average, expected PTC that all persons in the rate cell would receive, rather than being calculated for each individual enrollee. Second, the reference premium used to calculate the PTC (described in more detail later in the section) would be adjusted for BHP population health status, and in the case of a state that elects to use 2016 premiums for the basis of the BHP federal payment, for the projected change in the premium from the 2016 to 2017, to which the rates announced in the final payment methodology would apply. These adjustments are described in Equation (3a) and Equation (3b). Third, the PTC would be adjusted prospectively to reflect the mean, or average, net expected impact of income reconciliation on the combination of all persons enrolled in BHP; this adjustment, as described in section II.D.5. of this proposed methodology, would account for the impact on the PTC that would have occurred had such reconciliation been performed. Finally, the rate is multiplied by 95 percent, consistent with section 1331(d)(3)(A)(i) of the Affordable Care Act. We note that in the situation where the average income contribution of an enrollee would exceed the adjusted reference premium, we would calculate the PTC to be equal to 0 and would not allow the value of the PTC to be negative. [[Page 63939]] We propose using Equation (1) to calculate the PTC rate, consistent with the methodology described above: [GRAPHIC] [TIFF OMITTED] TP22OC15.014 PTCa,g,c,h,i = Premium tax credit portion of BHP payment rate a = Age range g = Geographic area c = Coverage status (self-only or applicable category of family coverage) obtained through BHP h = Household size i = Income range (as percentage of FPL) ARPa,g,c = Adjusted reference premium Ih,i,j = Income (in dollars per month) at each 1 percentage-point increment of FPL j = jth percentage-point increment FPL n = Number of income increments used to calculate the mean PTC PTCFh,i,j = Premium Tax Credit Formula percentage IRF = Income reconciliation factor Equation 2: Estimated CSR Payment by Rate Cell We propose that the CSR portion of the rate would continue to be calculated for each rate cell for each state based on age range, geographic area, coverage category, household size, and income range defined as a percentage of FPL. The CSR portion of the rate would be calculated in a manner consistent with the methodology used to calculate the CSR advance payments for persons enrolled in a QHP, as described in the ``HHS Notice of Benefit and Payment Parameters for 2016'' final rule published in the February 27, 2015 Federal Register (80 FR 10749), with 3 principal adjustments. (We further propose a separate calculation that includes different adjustments for American Indian/Alaska Native BHP enrollees, as described in section II.D.1 of this proposed methodology.) For the first adjustment, the CSR rate, like the PTC rate, would represent the mean expected CSR subsidy that would be paid on behalf of all persons in the rate cell, rather than being calculated for each individual enrollee. Second, this calculation would be based on the adjusted reference premium, as described in section II.A.3. of this proposed methodology. Third, this equation uses an adjusted reference premium that reflects premiums charged to non- tobacco users, rather than the actual premium that is charged to tobacco users to calculate CSR advance payments for tobacco users enrolled in a QHP. Accordingly, we propose that the equation include a tobacco rating adjustment factor that would account for BHP enrollees' estimated tobacco-related health costs that are outside the premium charged to non-tobacco-users. Finally, the rate would be multiplied by 95 percent, as provided in section 1331(d)(3)(A)(i) of the Affordable Care Act. We propose using Equation (2) to calculate the CSR rate, consistent with the methodology described above: [GRAPHIC] [TIFF OMITTED] TP22OC15.015 CSRa,g,c,h,i = Cost-sharing reduction subsidy portion of BHP payment rate a = Age range g = Geographic area c = Coverage status (self-only or applicable category of family coverage) obtained through BHP h = Household size i = Income range (as percentage of FPL) ARPa,g,c = Adjusted reference premium TRAF = Tobacco rating adjustment factor FRAC = Factor removing administrative costs AV = Actuarial value of plan (as percentage of allowed benefits covered by the applicable QHP without a cost-sharing reduction subsidy) IUFh,i = Induced utilization factor [Delta]AVh,i = Change in actuarial value (as percentage of allowed benefits) Equation 3a and Equation 3b: Adjusted Reference Premium Variable (Used in Equations 1 and 2) As part of these calculations for both the PTC and CSR components, we propose to continue to calculate the value of the adjusted reference premium as described below. Consistent with the approach last year, we are proposing to allow states to choose between using the actual 2017 and 2018 QHP premiums or the 2016 and 2017 QHP premiums multiplied by the premium trend factor (for the 2017 and 2018 program years, respectively, and as described in section II.F). Therefore, we are proposing how we would calculate the adjusted reference premium under each option. In the case of a state that elected to use the reference premium based on the 2017 premiums for the 2017 program year, we propose to calculate the value of the adjusted reference premium as specified in Equation (3a). The adjusted reference premium would be equal to the reference premium, which would be based on the second lowest cost silver plan premium in 2017, multiplied by the BHP population health factor (described in section II.D of this proposed methodology), which would reflect the projected impact that enrolling BHP-eligible individuals in QHPs on an Marketplace would have had on the average QHP premium. ARPa,g,c = Adjusted reference premium a = Age range g = Geographic area c = Coverage status (self-only or applicable category of family coverage) obtained through BHP RPa,g,c = Reference premium PHF = Population health factor In the case of a state that elected to use the reference premium based on the 2016 premiums for the 2017 program year (as described in section II.F of this proposed methodology), we propose to calculate the value of the adjusted reference premium as specified in Equation (3b). The adjusted reference premium would be equal to the reference premium, which would be based on the second lowest cost silver plan premium in 2016, multiplied by the BHP population health factor (described in section II.D of this proposed methodology), which would reflect the projected impact that enrolling BHP-eligible individuals in QHPs on an Marketplace would have had on the average QHP premium, and by the premium trend factor, which would reflect the projected change in the premium level between 2016 and 2017 (including the estimated impact of changes resulting from the transitional [[Page 63940]] reinsurance program established in section 1341 of the Affordable Care Act). [GRAPHIC] [TIFF OMITTED] TP22OC15.016 ARPa,g,c = Adjusted reference premium a = Age range g = Geographic area c = Coverage status (self-only or applicable category of family coverage) obtained through BHP RPa,g,c = Reference premium PHF = Population health factor PTF = Premium trend factor This methodology would also apply for the 2018 program year, using either actual 2018 QHP premiums or the 2017 QHP premiums multiplied by a premium trend factor. Equation 4: Determination of Total Monthly Payment for BHP Enrollees in Each Rate Cell In general, the rate for each rate cell would be multiplied by the number of BHP enrollees in that cell (that is, the number of enrollees that meet the criteria for each rate cell) to calculate the total monthly BHP payment. This calculation is shown in Equation 4. [GRAPHIC] [TIFF OMITTED] TP22OC15.017 PMT = Total monthly BHP payment PTCa,g,c,h,i = Premium tax credit portion of BHP payment rate CSRa,g,c,h,i = Cost-sharing reduction subsidy portion of BHP payment rate Ea,g,c,h,i = Number of BHP enrollees a = Age range g = Geographic area c = Coverage status (self-only or applicable category of family coverage) obtained through BHP h = Household size i = Income range (as percentage of FPL) B. Federal BHP Payment Rate Cells Consistent with the 2015 and 2016 payment methodologies, we propose that a state implementing BHP provide us an estimate of the number of BHP enrollees it projects will enroll in the upcoming BHP program year, by applicable rate cell, prior to the first quarter and each subsequent quarter of program operations until actual enrollment data is available. Upon our approval of such estimates as reasonable, they would be used to calculate the prospective payment for the first and subsequent quarters of program operation until the state has provided us actual enrollment data. These data would be required to calculate the final BHP payment amount, and make any necessary reconciliation adjustments to the prior quarters' prospective payment amounts due to differences between projected and actual enrollment. Subsequent, quarterly deposits to the state's trust fund would be based on the most recent actual enrollment data submitted to us. Actual enrollment data must be based on individuals enrolled for the quarter submitted who the state found eligible and whose eligibility was verified using eligibility and verification requirements as agreed to by the state in its applicable BHP Blueprint for the quarter that enrollment data is submitted. Procedures will ensure that federal payments to a state reflect actual BHP enrollment during a year, within each applicable category, and prospectively determined federal payment rates for each category of BHP enrollment, with such categories defined in terms of age range, geographic area, coverage status, household size, and income range, as explained above. We propose requiring the use of certain rate cells as part of the proposed methodology. For each state, we propose using rate cells that separate the BHP population into separate cells based on the 5 factors described as follows: Factor 1--Age: We propose to continue separating enrollees into rate cells by age, using the following unchanged age ranges that capture the widest variations in premiums under HHS's Default Age Curve: \1\ --------------------------------------------------------------------------- \1\ This curve is used to implement the Affordable Care Act's 3:1 limit on age-rating in states that do not create an alternative rate structure to comply with that limit. The curve applies to all individual market plans, both within and outside the Marketplace. The age bands capture the principal allowed age-based variations in premiums as permitted by this curve. More information can be found at http://www.cms.gov/CCIIO/Resources/Files/Downloads/market-reforms-guidance-2-25-2013.pdf. Both children and adults under age 21 are charged the same premium. For adults age 21-64, the age bands in this notice divide the total age-based premium variation into the three most equally-sized ranges (defining size by the ratio between the highest and lowest premiums within the band) that are consistent with the age-bands used for risk-adjustment purposes in the HHS- Developed Risk Adjustment Model. For such age bands, see Table 5, ``Age-Sex Variables,'' in HHS-Developed Risk Adjustment Model Algorithm Software, June 2, 2014, http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/ra-tables-03-27-2014.xlsx. ---------------------------------------------------------------------------Ages 0-20. Ages 21-34. Ages 35-44. Ages 45-54. Ages 55-64. Factor 2--Geographic area: For each state, we propose separating enrollees into rate cells by geographic areas within which a single reference premium is charged by QHPs offered through the state's Marketplace. Multiple, non-contiguous geographic areas would be incorporated within a single cell, so long as those areas share a common reference premium.\2\ This provision would also be unchanged from the current method. --------------------------------------------------------------------------- \2\ For example, a cell within a particular state might refer to ``County Group 1,'' ``County Group 2,'' etc., and a table for the state would list all the counties included in each such group. These geographic areas are consistent with the geographic areas established under the 2014 Market Reform Rules. They also reflect the service area requirements applicable to qualified health plans, as described in 45 CFR 155.1055, except that service areas smaller than counties are addressed as explained below. --------------------------------------------------------------------------- Factor 3--Coverage status: We propose to continue separating enrollees into rate cells by coverage status, reflecting whether an individual is enrolled in self-only coverage or persons are enrolled in family coverage through BHP, as provided in section 1331(d)(3)(A)(ii) of the Affordable Care Act. Among recipients of family coverage through BHP, separate rate cells, as explained below, would apply based on whether such coverage involves two adults alone or whether it involves children. Factor 4--Household size: We propose to continue the current [[Page 63941]] methods for separating enrollees into rate cells by household size that states use to determine BHP enrollees' income as a percentage of the FPL under Sec. 600.320 (Administration, eligibility, essential health benefits, performance standards, service delivery requirements, premium and cost sharing, allotments, and reconciliation; Determination of eligibility for and enrollment in a standard health plan). We are proposing to require separate rate cells for several specific household sizes. For each additional member above the largest specified size, we propose to publish instructions for how we would develop additional rate cells and calculate an appropriate payment rate based on data for the rate cell with the closest specified household size. We propose to publish separate rate cells for household sizes of 1 through 10. In previous methodologies, we stated that we would publish rate cells for household sizes of 1 through 5. We believe that publishing rate cells for larger household sizes would be beneficial to states operating BHP. We have worked with states in 2015 to publish rate cells for household sizes 1 through 10. Factor 5--Income: For households of each applicable size, we propose to continue the current methods for creating separate rate cells by income range, as a percentage of FPL. The PTC that a person would receive if enrolled in a QHP varies by income, both in level and as a ratio to the FPL, and the CSR varies by income as a percentage of FPL. Thus, we propose that separate rate cells would be used to calculate federal BHP payment rates to reflect different bands of income measured as a percentage of FPL. We propose using the following income ranges, measured as a ratio to the FPL: 0 to 50 percent of the FPL. 51 to 100 percent of the FPL. 101 to 138 percent of the FPL.\3\ --------------------------------------------------------------------------- \3\ The three lowest income ranges would be limited to lawfully present immigrants who are ineligible for Medicaid because of immigration status. --------------------------------------------------------------------------- 139 to 150 percent of the FPL. 151 to 175 percent of the FPL. 176 to 200 percent of the FPL. These rate cells would only be used to calculate the federal BHP payment amount. A state implementing BHP would not be required to use these rate cells or any of the factors in these rate cells as part of the state payment to the standard health plans participating in BHP or to help define BHP enrollees' covered benefits, premium costs, or out- of-pocket cost-sharing levels. We propose using averages to define federal payment rates, both for income ranges and age ranges, rather than varying such rates to correspond to each individual BHP enrollee's age and income level. We believe that the proposed approach will increase the administrative feasibility of making federal BHP payments and reduce the likelihood of inadvertently erroneous payments resulting from highly complex methodologies. We believe that this approach should not significantly change federal payment amounts, since within applicable ranges, the BHP-eligible population is distributed relatively evenly. The number of factors contributing to rate cells, when combined, can result in over 350,000 rate cells which can increase the complexity when generating quarterly payment amounts. In future years, we will consider whether to combine or eliminate certain rate cells, once we are certain that the effect on payment would be insignificant in the interest of administrative simplification. C. Sources and State Data Considerations To the extent possible, we intend to continue to use data submitted to the federal government by QHP issuers seeking to offer coverage through an Marketplace to perform the calculations that determine federal BHP payment cell rates. We propose that the current methodology would not change, but we also propose clarifications regarding the submission of state data in this section. States operating a State Based Marketplace in the individual market, however, must provide certain data, including premiums for second lowest cost silver plans, by geographic area, for CMS to calculate the federal BHP payment rates in those states. We propose that a State Based Marketplace interested in obtaining the applicable federal BHP payment rates for its state must submit such data accurately, completely, and as specified by CMS, by no later than October 15, 2016, for CMS to calculate the applicable rates for 2017 and by October 15, 2017 for 2018. If additional state data (that is, in addition to the second lowest cost silver plan premium data) are needed to determine the federal BHP payment rate, such data must be submitted in a timely manner, and in a format specified by CMS to support the development and timely release of annual BHP payment notices. The specifications for data collection to support the development of BHP payment rates will be published in CMS guidance and will be available at http://www.medicaid.gov/Federal-Policy-Guidance/Federal-Policy-Guidance.html. States must submit to CMS enrollment data on a quarterly basis and should be technologically prepared to begin submitting data at the start of their BHP. This requirement is necessary for us to implement the payment methodology that is tied to a quarterly reconciliation based on actual enrollment data. We newly propose 2 additional clarifications regarding state- submitted data. First, for states that have BHP enrollees who do not file federal tax returns (non-filers), the state must develop a methodology which they must submit to CMS as the time of their Blueprint submission to determine the enrollees' household income and household size consistently with Marketplace requirements. We reserve the right to approve or disapprove the state's methodology to determine income and household size for non-filers. Second, as the federal payments are determined quarterly and the enrollment data is required to be submitted by the states to CMS quarterly, we propose that the quarterly payment would be based on the characteristics of the enrollee at the beginning of the quarter (or their first month of enrollment in BHP in each quarter). Thus, if an enrollee were to experience a change in county of residence, income, household size, or other factors related to the BHP payment determination during the quarter, the payment for the quarter would be based on the data as of the beginning of the quarter. Payments would still be made only for months that the person is enrolled in and eligible for BHP. We do not anticipate that this would have a significant effect on the federal BHP payment. The states must maintain data that are consistent with CMS' verification requirements, including auditable records for each individual enrolled, indicating an eligibility determination and a determination of income and other criteria relevant to the payment methodology as of the beginning of each quarter. As described in Sec. 600.610 (Secretarial determination of BHP payment amount), the state is required to submit certain data in accordance with this Notice. We require that this data be collected and validated by states operating BHP and that this data be submitted to CMS. D. Discussion of Specific Variables Used in Payment Equations 1. Reference Premium (RP) To calculate the estimated PTC that would be paid if individuals enrolled in QHPs through the Marketplace, we must [[Page 63942]] calculate a reference premium (RP) because the PTC is based, in part, on the premiums for the applicable second lowest cost silver plan as explained in section II.C.4 of this proposed methodology, regarding the Premium Tax Credit Formula (PTCF). The proposal is unchanged from the current method except to update the reference years, and to provide additional methodological details to simplify calculations and to deal with potential ambiguities. Accordingly, for the purposes of calculating the BHP payment rates, the reference premium, in accordance with 26 U.S.C. 36B(b)(3)(C), is defined as the adjusted monthly premium for an applicable second lowest cost silver plan. The applicable second lowest cost silver plan is defined in 26 U.S.C. 36B(b)(3)(B) as the second lowest cost silver plan of the individual market in the rating area in which the taxpayer resides, which is offered through the same Marketplace. We propose to use the adjusted monthly premium for an applicable second lowest cost silver plan in 2017 and 2018 as the reference premium (except in the case of a state that elects to use the 2016 or 2017 premium, respectively, as the basis for the federal BHP payment, as described in section II.F of this final notice). The reference premium would be the premium applicable to non- tobacco users. This is consistent with the provision in 26 U.S.C. 36B(b)(3)(C) that bases the PTC on premiums that are adjusted for age alone, without regard to tobacco use, even for states that allow insurers to vary premiums based on tobacco use in accordance with 42 U.S.C. 300gg(a)(1)(A)(iv). Consistent with the policy set forth in 26 CFR 1.36B-3(f)(6) to calculate the PTC for those enrolled in a QHP through an Marketplace, we propose not to update the payment methodology, and subsequently the federal BHP payment rates, in the event that the second lowest cost silver plan used as the reference premium, or the lowest cost silver plan, changes (that is, terminates or closes enrollment during the year). The applicable second lowest cost silver plan premium will be included in the BHP payment methodology by age range, geographic area, and self-only or applicable category of family coverage obtained through BHP. American Indians and Alaska Natives with household incomes between 100 percent and 300 percent of the FPL are eligible for a full cost sharing subsidy regardless of the plan they select (as described in sections 1402(d) and 2901(a) of the Affordable Care Act). We assume that American Indians and Alaska Natives would be more likely to enroll in bronze plans as a result, as it would reduce the amount of the premium they would pay compared to the costs of enrolling in a silver plan; thus, for American Indian/Alaska Native BHP enrollees, we propose to use the lowest cost bronze plan as the basis for the reference premium for the purposes of calculating the CSR portion of the federal BHP payment as described further in section II.E of this proposed methodology. We note that the choice of the second lowest cost silver plan for calculating BHP payments would rely on several simplifying assumptions in its selection. For the purposes of determining the second lowest cost silver plan for calculating PTC for a person enrolled in a QHP through an Marketplace, the applicable plan may differ for various reasons. For example, a different second lowest cost silver plan may apply to a family consisting of 2 adults, their child, and their niece than to a family with 2 adults and their children, because 1 or more QHPs in the family's geographic area might not offer family coverage that includes the niece. We believe that it would not be possible to replicate such variations for calculating the BHP payment and believe that in aggregate they would not result in a significant difference in the payment. Thus, we propose to use the second lowest cost silver plan available to any enrollee for a given age, geographic area, and coverage category. This choice of reference premium relies on 2 assumptions about enrollment in the Marketplaces. First, we assume that all persons enrolled in BHP would have elected to enroll in a silver level plan if they had instead enrolled in a QHP through the Marketplaces. It is possible that some persons would have chosen not to enroll at all or would have chosen to enroll in a different metal-level plan (in particular, a bronze level plan with a premium that is less than the PTC for which the person was eligible). We do not believe it is appropriate to adjust the payment for an assumption that some BHP enrollees would not have enrolled in QHPs for purposes of calculating the BHP payment rates, since section 1331(d)(3)(A)(ii) of the Affordable Care Act requires the calculation of such rates as if the enrollee had enrolled in a qualified health plan through an Marketplace. Second, we assume that, among all available silver plans, all persons enrolled in BHP would have selected the second-lowest cost plan. Both this and the prior assumption allow an administratively feasible determination of federal payment levels. They also have some implications for the CSR portion of the rate. If persons were to enroll in a bronze level plan through the Marketplace, they would not be eligible for CSRs, unless they were an eligible American Indian or Alaska Native; thus, assuming that all persons enroll in a silver level plan, rather than a plan with a different metal level, would increase the BHP payment. Assuming that all persons enroll in the second lowest cost silver plan for the purposes of calculating the CSR portion of the rate may result in a different level of CSR payments than would have been paid if the persons were enrolled in different silver level plans on the Marketplaces (with either lower or higher premiums). We believe that it would be difficult to project how many BHP enrollees would have enrolled in different silver level QHPs, and thus propose to use the second lowest cost silver plan as the basis for the reference premium and calculating the CSR portion of the rate. While some data is available from the Marketplaces, developing projections of how persons in different income ranges choose plans and extrapolating that to other states, with different numbers of plans and different premiums, would not be an improvement upon the current methodology. For American Indian/Alaska Native BHP enrollees, we propose to use the lowest cost bronze plan as the basis for the reference premium as described further in section II.E. of this proposed methodology. The applicable age bracket will be one dimension of each rate cell. We propose to assume a uniform distribution of ages and estimate the average premium amount within each rate cell. We believe that assuming a uniform distribution of ages within these ranges is a reasonable approach and would produce a reliable determination of the PTC and CSR components. We also believe this approach would avoid potential inaccuracies that could otherwise occur in relatively small payment cells if age distribution were measured by the number of persons eligible or enrolled. We propose to use geographic areas based on the rating areas used in the Marketplaces. We propose to define each geographic area so that the reference premium is the same throughout the geographic area. When the reference premium varies within a rating area, we propose defining geographic areas as aggregations of counties with the same reference premium. Although plans are allowed to serve geographic areas smaller than counties after obtaining our approval, we propose that no geographic area, for [[Page 63943]] purposes of defining BHP payment rate cells, will be smaller than a county. We do not believe that this assumption will have a significant impact on federal payment levels and it would likely simplify both the calculation of BHP payment rates and the operation of BHP. Finally, in terms of the coverage category, we propose that federal payment rates only recognize self-only and two-adult coverage, with exceptions that account for children who are potentially eligible for BHP. First, in states that set the upper income threshold for children's Medicaid and CHIP eligibility below 200 percent of FPL (based on modified adjusted gross income), children in households with incomes between that threshold and 200 percent of FPL would be potentially eligible for BHP. Currently, the only states in this category are Arizona, Idaho, and North Dakota.\4\ Second, BHP would include lawfully present immigrant children with incomes at or below 200 percent of FPL in states that have not exercised the option under the sections 1903(v)(4)(A)(ii) and 2107(e)(1)(E) of the Act to qualify all otherwise eligible, lawfully present immigrant children for Medicaid and CHIP. States that fall within these exceptions would be identified based on their Medicaid and CHIP State Plans, and the rate cells would include appropriate categories of BHP family coverage for children. For example, Idaho's Medicaid and CHIP eligibility is limited to families with MAGI at or below 185 percent FPL. If Idaho implemented BHP, Idaho children with incomes between 185 and 200 percent could qualify. In other states, BHP eligibility will generally be restricted to adults, since children who are citizens or lawfully present immigrants and who live in households with incomes at or below 200 percent of FPL will qualify for Medicaid or CHIP and thus be ineligible for BHP under section 1331 (e)(1)(C) of the Affordable Care Act, which limits BHP to individuals who are ineligible for minimum essential coverage (as defined in section 5000A(f) of the Internal Revenue Code of 1986). --------------------------------------------------------------------------- \4\ CMCS. ``State Medicaid and CHIP Income Eligibility Standards Effective January 1, 2014.'' --------------------------------------------------------------------------- 2. Population Health Factor (PHF) We propose that the population health factor be included in the methodology to account for the potential differences in the average health status between BHP enrollees and persons enrolled in the Marketplace. To the extent that BHP enrollees would have been enrolled in the Marketplace in the absence of BHP in a state, the exclusion of those BHP enrollees in the Marketplace may affect the average health status of the overall population and the expected QHP premiums. Our proposal continues the methodology currently in place, except to update reference years. We currently do not believe that there is evidence that the BHP population would have better or poorer health status than the Marketplace population. At this time, there is a lack of experience available in the Marketplace that limits the ability to analyze the health differences between these groups of enrollees. Marketplaces have been in operation since 2014, and 2 states have operated BHP in 2015, but we do not have the data available to do the analysis necessary to make this adjustment at this time. In addition, differences in population health may vary across states. Thus, at this time, we believe that it is not feasible to develop a methodology to make a prospective adjustment to the population health factor that is reliably accurate. Given these analytic challenges and the limited data about Marketplace coverage and the characteristics of BHP-eligible consumers that will be available by the time we establish federal payment rates for 2017 and 2018, we believe that the most appropriate adjustment for 2017 and 2018 would be 1.00. In the 2015 and 2016 payment methodologies, we included an option for states to include a retrospective population health status adjustment. Similarly, we propose for the 2017 and 2018 payment methodology to provide states with the same option, as described further in section II.G of this proposed methodology, to include a retrospective population health status adjustment in the certified methodology, which is subject to our review and approval. Regardless of whether a state elects to include a retrospective population health status adjustment, we anticipate that, in future years, when additional data become available about Marketplace coverage and the characteristics of BHP enrollees, we may estimate this factor differently. While the statute requires consideration of risk adjustment payments and reinsurance payments insofar as they would have affected the PTC and CSRs that would have been provided to BHP-eligible individuals had they enrolled in QHPs, we are not proposing to require that a BHP program's standard health plans receive such payments. As explained in the BHP final rule, BHP standard health plans are not included in the risk adjustment program operated by HHS on behalf of states. Further, standard health plans do not qualify for payments from the transitional reinsurance program established under section 1341 of the Affordable Care Act.\5\ To the extent that a state operating a BHP determines that, because of the distinctive risk profile of BHP- eligible consumers, BHP standard health plans should be included in mechanisms that share risk with other plans in the state's individual market, the state would need to use other methods for achieving this goal. --------------------------------------------------------------------------- \5\ See 45 CFR 153.400(a)(2)(iv) (BHP standard health plans are not required to submit reinsurance contributions), 153.20 (definition of ``Reinsurance-eligible plan'' as not including ``health insurance coverage not required to submit reinsurance contributions''), Sec. 153.230(a) (reinsurance payments under the national reinsurance parameters are available only for ``Reinsurance-eligible plans''). --------------------------------------------------------------------------- 3. Income (I) Household income is a significant determinant of the amount of the PTC and CSRs that are provided for persons enrolled in a QHP through the Marketplace. Accordingly, both the current and proposed BHP payment methodology incorporates income into the calculations of the payment rates through the use of income-based rate cells. We propose defining income in accordance with the definition of modified adjusted gross income in 26 U.S.C. 36B(d)(2)(B) and consistent with the definition in 45 CFR 155.300. Income would be measured relative to the FPL, which is updated periodically in the Federal Register by the Secretary under the authority of 42 U.S.C. 9902(2), based on annual changes in the consumer price index for all urban consumers (CPI-U). In our proposed methodology, household size and income as a percentage of FPL would be used as factors in developing the rate cells. We propose using the following income ranges measured as a percentage of FPL: \6\ --------------------------------------------------------------------------- \6\ These income ranges and this analysis of income apply to the calculation of the PTC. Many fewer income ranges and a much simpler analysis apply in determining the value of CSRs, as specified below. --------------------------------------------------------------------------- 0-50 percent. 51-100 percent. 101-138 percent. 139-150 percent. 151-175 percent. 176-200 percent. We further propose to assume a uniform income distribution for each federal BHP payment cell. We believe that assuming a uniform income distribution for the income ranges proposed would be reasonably accurate for the purposes of calculating the PTC and CSR components of the BHP [[Page 63944]] payment and would avoid potential errors that could result if other sources of data were used to estimate the specific income distribution of persons who are eligible for or enrolled in BHP within rate cells that may be relatively small. Thus, when calculating the mean, or average, PTC for a rate cell, we propose to calculate the value of the PTC at each one percentage point interval of the income range for each federal BHP payment cell and then calculate the average of the PTC across all intervals. This calculation would rely on the PTC formula described in section II.4 of this proposed methodology. As the PTC for persons enrolled in QHPs would be calculated based on their income during the open enrollment period, and that income would be measured against the FPL at that time, we propose to adjust the FPL by multiplying the FPL by a projected increase in the CPI-U between the time that the BHP payment rates are calculated and the QHP open enrollment period, if the FPL is expected to be updated during that time. We propose that the projected increase in the CPI-U would be based on the intermediate inflation forecasts from the most recent OASDI and Medicare Trustees Reports.\7\ --------------------------------------------------------------------------- \7\ See Table IV A1 from the 2013 reports in http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/TR2014.pdf. --------------------------------------------------------------------------- 4. Premium Tax Credit Formula (PTCF) In Equation 1 described in section II.A.1 of this proposed methodology, we propose to use the formula described in 26 U.S.C. 36B(b) to calculate the estimated PTC that would be paid on behalf of a person enrolled in a QHP on an Marketplace as part of the BHP payment methodology. This formula is used to determine the contribution amount (the amount of premium that an individual or household theoretically would be required to pay for coverage in a QHP on an Marketplace), which is based on (A) the household income; (B) the household income as a percentage of FPL for the family size; and (C) the schedule specified in 26 U.S.C. 36B(b)(3)(A) and shown below. The difference between the contribution amount and the adjusted monthly premium for the applicable second lowest cost silver plan is the estimated amount of the PTC that would be provided for the enrollee. The PTC amount provided for a person enrolled in a QHP through an Marketplace is calculated in accordance with the methodology described in 26 U.S.C. 36B(b)(2). The amount is equal to the lesser of the premium for the plan in which the person or household enrolls, or the adjusted premium for the applicable second lowest cost silver plan minus the contribution amount. The applicable percentage is defined in 26 U.S.C. 36B (b)(3)(A) and 26 CFR 1.36B-3(g) as the percentage that applies to a taxpayer's household income that is within an income tier specified in Table 1, increasing on a sliding scale in a linear manner from an initial premium percentage to a final premium percentage specified in the table (see Table 1). The methodology is unchanged, but we propose to update the percentages: [GRAPHIC] [TIFF OMITTED] TP22OC15.018 --------------------------------------------------------------------------- \8\ Examination of returns and claims for refund, credit, or abatement; determination of correct tax liability. http://www.irs.gov/pub/irs-drop/rp-14-62.pdf. --------------------------------------------------------------------------- These are the applicable percentages for calendar year (CY) 2016 and would be used for the 2017 payment methodology. We plan to use the CY 2017 percentages when they become available for the 2018 payment methodology, as the percentages are indexed annually and published by the Internal Revenue Service (IRS). The applicable percentages will be updated in future years in accordance with 26 U.S.C. 36B(b)(3)(A)(ii). 5. Income Reconciliation Factor (IRF) For persons enrolled in a QHP through an Marketplace who receive an advance payment of the premium tax credit (APTC), there will be an annual reconciliation following the end of the year to compare the advance payments to the correct amount of PTC based on household circumstances shown on the federal income tax return. Any difference between the latter amounts and the advance payments made during the year would either be paid to the taxpayer (if too little APTC was paid) or charged to the taxpayer as additional tax (if too much APTC was made, subject to any limitations in statute or regulation), as provided in 26 U.S.C. 36B(f). Section 1331(e)(2) of the Affordable Care Act specifies that an individual eligible for BHP may not be treated as a qualified individual under section 1312 eligible for enrollment in a QHP offered through an Marketplace. We are defining ``eligible'' to mean anyone for whom the state agency or the Marketplace assesses or determines, based on the single streamlined application or renewal form, as eligible for enrollment in the BHP. Because [[Page 63945]] enrollment in a QHP is a requirement for PTC for the enrolled individual's coverage, individuals determined or assessed as eligible for a BHP are not eligible to receive APTC assistance for coverage in the Marketplace. Because they do not receive APTC assistance, BHP enrollees, on whom the 2017 and 2018 payment methodology is based, are not subject to the same income reconciliation as Marketplace consumers. Nonetheless, there may still be differences between a BHP enrollee's household income reported at the beginning of the year and the actual income over the year. These may include small changes (reflecting changes in hourly wage rates, hours worked per week, and other fluctuations in income during the year) and large changes (reflecting significant changes in employment status, hourly wage rates, or substantial fluctuations in income). There may also be changes in household composition. Thus, we believe that using unadjusted income as reported prior to the BHP program year may result in calculations of estimated PTC that are inconsistent with the actual incomes of BHP enrollees during the year. Even if the BHP program adjusts household income determinations and corresponding claims of federal payment amounts based on household reports during the year or data from third- party sources, such adjustments may not fully capture the effects of tax reconciliation that BHP enrollees would have experienced had they been enrolled in a QHP through an Marketplace and received APTC assistance. Therefore, in accordance with current practice, we propose including in Equation 1 an income adjustment factor that would account for the difference between calculating estimated PTC using: (a) Income relative to FPL as determined at initial application and potentially revised mid-year, under proposed Sec. 600.320, for purposes of determining BHP eligibility and claiming federal BHP payments; and (b) actual income relative to FPL received during the plan year, as it would be reflected on individual federal income tax returns. This adjustment would seek prospectively to capture the average effect of income reconciliation aggregated across the BHP population had those BHP enrollees been subject to tax reconciliation after receiving APTC assistance for coverage provided through QHPs. Consistent with the methodology used in 2015 (and that will be used in 2016), for 2017 and 2018, we propose estimating reconciliation effects based on tax data for 2 years, reflecting income and tax unit composition changes over time among BHP-eligible individuals. The Office of Tax Analysis in the U.S. Department of Treasury (OTA) maintains a model that combines detailed tax and other data, including Marketplace enrollment and PTC claimed, to project Marketplace premiums, enrollment, and tax credits. For each enrollee, this model compares the APTC based on household income and family size estimated at the point of enrollment with the PTC based on household income and family size reported at the end of the tax year. The former reflects the determination using enrollee information furnished by the applicant and tax data furnished by the IRS. The latter would reflect the PTC eligibility based on information on the tax return, which would have been determined if the individual had not enrolled in BHP. We propose that the ratio of the reconciled PTC to the initial estimation of PTC would be used as the income reconciliation factor in Equation (1) for estimating the PTC portion of the BHP payment rate. For 2016, OTA estimated that the income reconciliation factor for states that have implemented the Medicaid eligibility expansion to cover adults up to 133 percent of the FPL will be 100.25 percent, and for states that have not implemented the Medicaid eligibility expansion and do not cover adults up to 133 percent of the FPL will be 100.24 percent. In the 2016 payment methodology, the IRF was set equal to 100.25 percent. We propose updating this calculation and the IRF for 2017 and 2018. 6. Tobacco Rating Adjustment Factor (TRAF) As described previously, the reference premium is estimated, for purposes of determining both the PTC and related federal BHP payments, based on premiums charged for non-tobacco users, including in states that allow premium variations based on tobacco use, as provided in 42 U.S.C. 300gg (a)(1)(A)(iv). In contrast, as described in 45 CFR 156.430, the CSR advance payments are based on the total premium for a policy, including any adjustment for tobacco use. Accordingly, we propose to continue our current methodology and to incorporate a tobacco rating adjustment factor into Equation 2 that reflects the average percentage increase in health care costs that results from tobacco use among the BHP-eligible population and that would not be reflected in the premium charged to non-users. This factor will also take into account the estimated proportion of tobacco users among BHP- eligible consumers. To estimate the average effect of tobacco use on health care costs (not reflected in the premium charged to non-users), we propose to calculate the ratio between premiums that silver level QHPs charge for tobacco users to the premiums they charge for non-tobacco users at selected ages. To calculate estimated proportions of tobacco users, we propose to use data from the Centers for Disease Control and Prevention to estimate tobacco utilization rates by state and relevant population characteristic.\9\ For each state, we propose to calculate the tobacco usage rate based on the percentage of persons by age who use cigarettes and the percentage of persons by age that use smokeless tobacco, and calculate the utilization rate by adding the two rates together. The data is available for 3 age intervals: 18-24; 25-44; and 45-64. For the BHP payment rate cell for persons ages 21-34, we would calculate the factor as (4/14 * the utilization rate of 18-24 year olds) plus (10/14 * the utilization rate of 25-44 year olds), which would be the weighted average of tobacco usage for persons 21-34 assuming a uniform distribution of ages; for all other age ranges used for the rate cells, we would use the age range in the CDC data in which the BHP payment rate cell age range is contained. --------------------------------------------------------------------------- \9\ Centers for Disease Control and Prevention, Tobacco Control State Highlights 2012: http://www.cdc.gov/tobacco/data_statistics/state_data/state_highlights/2012/index.htm. --------------------------------------------------------------------------- We propose to provide tobacco rating factors that may vary by age and by geographic area within each state. To the extent that the second lowest cost silver plans have a different ratio of tobacco user rates to non-tobacco user rates in different geographic areas, the tobacco rating adjustment factor may differ across geographic areas within a state. In addition, to the extent that the second lowest cost silver plan has a different ratio of tobacco user rates to non-tobacco user rates by age, or that there is a different prevalence of tobacco use by age, the tobacco rating adjustment factor may differ by age. 7. Factor for Removing Administrative Costs (FRAC) The Factor for Removing Administrative Costs represents the average proportion of the total premium that covers allowed health benefits, and we propose to continue including this factor in our calculation of estimated CSRs in Equation 2. The product of the reference premium and the Factor for Removing Administrative Costs would [[Page 63946]] approximate the estimated amount of Essential Health Benefit (EHB) claims that would be expected to be paid by the plan. This step is needed because the premium also covers such costs as taxes, fees, and QHP administrative expenses. We are proposing to set this factor equal to 0.80, which is the same percentage for the factor to remove administrative costs for calculating CSR advance payments for established in the 2016 HHS Notice of Benefit and Payment Parameters. 8. Actuarial Value (AV) The actuarial value is defined as the percentage paid by a health plan of the total allowed costs of benefits, as defined under 45 CFR 156.20. (For example, if the average health care costs for enrollees in a health insurance plan were $1,000 and that plan has an actuarial value of 70 percent, the plan would be expected to pay on average $700 ($1,000 x 0.70) for health care costs per enrollee.) By dividing such estimated costs by the actuarial value in the proposed methodology, we would calculate the estimated amount of total EHB-allowed claims, including both the portion of such claims paid by the plan and the portion paid by the consumer for in-network care. (To continue with that same example, we would divide the plan's expected $700 payment of the person's EHB-allowed claims by the plan's 70 percent actuarial value to ascertain that the total amount of EHB-allowed claims, including amounts paid by the consumer, is $1,000.) For the purposes of calculating the CSR rate in Equation 2, we propose to continue to use the standard actuarial value of the silver level plans in the individual market, which is equal to 70 percent. 9. Induced Utilization Factor (IUF) The induced utilization factor is proposed to continue to be a factor in calculating estimated CSRs in Equation 2 to account for the increase in health care service utilization associated with a reduction in the level of cost sharing a QHP enrollee would have to pay, based on the cost-sharing reduction subsidies provided to enrollees. The 2016 HHS Notice of Benefit and Payment Parameters provided induced utilization factors for the purposes of calculating cost- sharing reduction advance payments for 2016. In that Notice, the induced utilization factors for silver plan variations ranged from 1.00 to 1.12, depending on income. Using those utilization factors, the induced utilization factor for all persons who would qualify for BHP based on their household income as a percentage of FPL is 1.12; this would include persons with household income between 100 percent and 200 percent of FPL, lawfully present non-citizens below 100 percent of FPL who are ineligible for Medicaid because of immigration status, and American Indians and Alaska Natives with household income between 100 and 300 percent of FPL, not subject to any cost-sharing. Thus, consistent with last year, we propose to set the induced utilization factor equal to 1.12 for the BHP payment methodology. We note that for CSRs for QHPs, there will be a final reconciliation at the end of the year and the actual level of induced utilization could differ from the factor proposed in the rule. Our proposed methodology for BHP funding would not include any reconciliation for utilization and thus may understate or overstate the impact of the effect of the subsidies on health care utilization. 10. Change in Actuarial Value ([Delta]AV) The increase in actuarial value would account for the impact of the cost-sharing reduction subsidies on the relative amount of EHB claims that would be covered for or paid by eligible persons, and we propose including it as a factor in calculating estimated CSRs in Equation 2. The actuarial values of QHPs for persons eligible for cost-sharing reduction subsidies are defined in 45 CFR 156.420(a), and eligibility for such subsidies is defined in 45 CFR 155.305(g)(2)(i) through (iii). For QHP enrollees with household incomes between 100 percent and 150 percent of FPL, and those below 100 percent of FPL who are ineligible for Medicaid because of their immigration status, CSRs increase the actuarial value of a QHP silver plan from 70 percent to 94 percent. For QHP enrollees with household incomes between 150 percent and 200 percent of FPL, CSRs increase the actuarial value of a QHP silver plan from 70 percent to 87 percent. We propose to continue to apply this factor by subtracting the standard AV from the higher AV allowed by the applicable cost-sharing reduction. For BHP enrollees with household incomes at or below 150 percent of FPL, this factor would be 0.24 (94 percent minus 70 percent); for BHP enrollees with household incomes more than 150 percent but not more than 200 percent of FPL, this factor would be 0.17 (87 percent minus 70 percent). E. Adjustments for American Indians and Alaska Natives There are several exceptions made for American Indians and Alaska Natives enrolled in QHPs through an Marketplace to calculate the PTC and CSRs. Thus, we propose adjustments to the payment methodology described above to be consistent with the Marketplace rules. We propose the following adjustments, unchanged from the current methodology: 1. We propose that the adjusted reference premium for use in the CSR portion of the rate would use the lowest cost bronze plan instead of the second lowest cost silver plan, with the same adjustment for the population health factor (and in the case of a state that elects to use the 2016 or 2017 premiums as the basis of the federal BHP payment, the same adjustment for the premium trend factor). American Indians and Alaska Natives are eligible for CSRs with any metal level plan, and thus we believe that eligible persons would be more likely to select a bronze level plan instead of a silver level plan. (It is important to note that this would not change the PTC, as that is the maximum possible PTC payment, which is always based on the applicable second lowest cost silver plan.) 2. We propose that the actuarial value for use in the CSR portion of the rate would be 0.60 instead of 0.70, which is consistent with the actuarial value of a bronze level plan. 3. We propose that the induced utilization factor for use in the CSR portion of the rate would be 1.15 for 2017/2018, which is consistent with the 2016 HHS Notice of Benefit and Payment Parameters induced utilization factor for calculating advance CSR payments for persons enrolled in bronze level plans and eligible for CSRs up to 100 percent of actuarial value. 4. We propose that the change in the actuarial value for use in the CSR portion of the rate would be 0.40. This reflects the increase from 60 percent actuarial value of the bronze plan to 100 percent actuarial value, as American Indians and Alaska Natives with household incomes between 100 and 300 percent FPL are eligible to receive CSRs up to 100 percent of actuarial value. F. State Option To Use 2016 or 2017 QHP Premiums for BHP Payments In the interest of allowing states greater certainty in the total BHP federal payments for 2017 or 2018, we propose providing states the option to have their final 2017 and 2018 federal BHP [[Page 63947]] payment rates, respectively, calculated using the projected 2017 and 2018 adjusted reference premium (that is, using 2016 or 2017 premium data multiplied by the premium trend factor defined below), as described in Equation (3b). For a state that would elect to use the 2016 or 2017 premiums as the basis for the 2017 and 2018 BHP federal payments, respectively, we propose requiring that the state inform us no later than May 15, 2016 for the 2017 program year and May 15, 2017 for the 2018 program year. Our experience to date has been that states have elected to use the premium data that correlates to the year of payment. If this trend continues, we will consider in future payment notices whether to eliminate the choice of the premium from the prior year moving forward. For Equation (3b), we propose to continue to define the premium trend factor, with minor changes in calculation sources and methods, as follows: Premium Trend Factor (PTF): In Equation (3b), we propose to calculate an adjusted reference premium (ARP) based on the application of certain relevant variables to the reference premium (RP), including a premium trend factor (PTF). In the case of a state that would elect to use the 2016 or 2017 premiums as the basis for determining the BHP payment, it would be appropriate to apply a factor that would account for the change in health care costs between the year of the premium data and the BHP plan year. We are proposing to define this as the premium trend factor in the BHP payment methodology. This factor would approximate the change in health care costs per enrollee, which would include, but not be limited to, changes in the price of health care services and changes in the utilization of health care services. This would provide an estimate of the adjusted monthly premium for the applicable second lowest cost silver plan that would be more accurate and reflective of health care costs in the BHP program year, which would be the year following issuance of the final federal payment notice. In addition, we believe that it would be appropriate to adjust the trend factor for the estimated impact of changes to the transitional reinsurance program on the average QHP premium. For the trend factor we propose to use the annual growth rate in private health insurance expenditures per enrollee from the National Health Expenditure projections, developed by the Office of the Actuary in CMS (https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/proj2014.pdf). We propose to also include an adjustment for changes in the transitional reinsurance program. We propose that this adjustment would be developed from analysis by CMS' Center for Consumer Information and Insurance Oversight (CCIIO). States may want to consider that the increase in premiums for QHPs from 2016 to 2017 or from 2017 to 2018 may differ from the premium trend factor developed for the BHP funding methodology for several reasons. In particular, states may want to consider that the second lowest cost silver plan for 2016 or 2017 may not be the same as the second lowest cost silver plan in 2017 or 2018, respectively. This may lead to the premium trend factor being greater than or less than the actual change in the premium of the second lowest cost silver plan in 2016 compared to the premium of the second lowest cost silver plan in 2017 (or from 2017 to 2018). G. State Option To Include Retrospective State-Specific Health Risk Adjustment in Certified Methodology To determine whether the potential difference in health status between BHP enrollees and consumers in the Marketplace would affect the PTC, CSRs, risk adjustment and reinsurance payments that would have otherwise been made had BHP enrollees been enrolled in coverage on the Marketplace, we propose to continue to provide states implementing the BHP the option to propose and to implement, as part of the certified methodology, a retrospective adjustment to the federal BHP payments to reflect the actual value that would be assigned to the population health factor (or risk adjustment) based on data accumulated during program years 2017 and 2018 for each rate cell. We acknowledge that there is uncertainty with respect to this factor due to the lack of experience of QHPs on the Marketplace and other payments related to the Marketplace, which is why, absent a state election, we propose to use a value for the population health factor to determine a prospective payment rate which assumes no difference in the health status of BHP enrollees and QHP enrollees. There is considerable uncertainty regarding whether the BHP enrollees will pose a greater risk or a lesser risk compared to the QHP enrollees, how to best measure such risk, and the potential effect such risk would have had on PTC, CSRs, risk adjustment and reinsurance payments that would have otherwise been made had BHP enrollees been enrolled in coverage on the Marketplace. To the extent, however, that a state would develop an approved protocol to collect data and effectively measure the relative risk and the effect on federal payments, we propose to permit a retrospective adjustment that would measure the actual difference in risk between the two populations to be incorporated into the certified BHP payment methodology and used to adjust payments in the previous year. For a state electing the option to implement a retrospective population health status adjustment, we propose requiring the state to submit a proposed protocol to CMS, which would be subject to approval by us and would be required to be certified by the Chief Actuary of CMS, in consultation with the Office of Tax Analysis, as part of the BHP payment methodology. We describe the protocol for the population health status adjustment in guidance in Considerations for Health Risk Adjustment in the Basic Health Program in Program Year 2015 (http://www.medicaid.gov/Basic-Health-Program/Downloads/Risk-Adjustment-and-BHP-White-Paper.pdf). We propose requiring a state to submit its proposed protocol by August 1, 2016 for our approval for the 2017 program year, and by August 1, 2017 for the 2018 program year. This submission would also include descriptions of how the state would collect the necessary data to determine the adjustment, including any contracting contingences that may be in place with participating standard health plan issuers. We would provide technical assistance to states as they develop their protocols. To implement the population health status, we propose that we must approve the state's protocol no later than December 31, 2016 for the 2017 program year, and by December 31, 2017 for the 2018 program year. Finally, we propose that the state be required to complete the population health status adjustment at the end of 2017 (or 2018) based on the approved protocol. After the end of the 2017 and 2018 program years, and once data is made available, we proposed to review the state's findings, consistent with the approved protocol, and make any necessary adjustments to the state's federal BHP payment amounts. If we determine that the federal BHP payments were less than they would have been using the final adjustment factor, we would apply the difference to the state's next quarterly BHP trust fund deposit. If we determine that the federal BHP payments were more than they [[Page 63948]] would have been using the final reconciled factor, we would subtract the difference from the next quarterly BHP payment to the state. H. Example Application of the BHP Funding Methodology In the 2015 proposed payment methodology, we included an example of how the BHP funding methodology would be applied (Proposed Basic Health Program 2015 Funding Methodology, (78 FR 77399), published in the Federal Register on December 23, 2013). For those interested in this example, we would refer to the 2015 proposed payment methodology and note the following changes since that time. In the final BHP payment methodology, we provided the option for states to elect to use the 2015 premiums to calculate the BHP payment rates instead of the 2014 premiums multiplied by the premium trend factor. The example in the previous proposed payment methodology used the 2014 premiums multiplied by the premium trend factor only. In addition, we provided the option for the state to develop a risk adjustment protocol to revise the population health factor in the final payment methodology. The example in the previous proposed payment methodology did not assume any adjustment to the population health factor. Furthermore, we modified the age ranges used to develop the rate cells after the proposed payment methodology was published. The age range for persons ages 21-44 was divided into age ranges of 21-34 and 35-44. III. Collection of Information Requirements This 2017 and 2018 proposed methodology is mostly unchanged from the 2016 final methodology published on February 24, 2015 (80 FR 9636). For states that have BHP enrollees who do not file federal tax returns (``non-filers''), this methodology notice clarifies that the state must develop a methodology to determine the enrollee's household income and household size consistent with Marketplace requirements. Since the requirement applies to fewer than 10 states, the 2017 and 2018 methodology does not require additional OMB review under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). Otherwise, the methodology's information collection requirements and burden estimates are not affected by this action and are approved by OMB under control number 0938-1218 (CMS-10510). With regard to state elections, protocols, certifications, and status adjustments, this action would not revise or impose any additional reporting, recordkeeping, or third-party disclosure requirements or burden on qualified health plans or on states operating State Based Marketplaces. IV. Response to Comments Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the DATES section of this preamble, and, when we proceed with a subsequent document, we will respond to the comments in the preamble to that document. V. Regulatory Impact Statement A. Overall Impact We have examined the impacts of this proposed methodology as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, March 22, 1995) (UMRA), Executive Order 13132 on Federalism (August 4, 1999) and the Congressional Review Act (5 U.S.C. 804(2)). Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Section 3(f) of Executive Order 12866 defines a ``significant regulatory action'' as an action that is likely to result in a rule: (1) Having an annual effect on the economy of $100 million or more in any 1 year, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities (also referred to as ``economically significant''); (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). As noted in the BHP final rule, BHP provides states the flexibility to establish an alternative coverage program for low-income individuals who would otherwise be eligible to purchase coverage through the Marketplace. Because we propose no changes in methodology that would have a consequential effect on state participation incentives, or on the size of either the BHP program or offsetting PTC and CSR expenditures, the effects of the changes made in this methodology notice would not approach the $100 million threshold, and hence it is neither an economically significant rule under E.O. 12866 nor a major rule under the Congressional Review Act. The size of the BHP program depends on several factors, including the number of and which particular states choose to implement or continue BHP in 2017 or 2018, the level of QHP premiums in 2016 and 2017, the number of enrollees in BHP, and the other coverage options for persons who would be eligible for BHP. In particular, while we generally expect that many enrollees would have otherwise been enrolled in a QHP through the Marketplace, some persons may have been eligible for Medicaid under a waiver or a state health coverage program. For those who would have enrolled in a QHP and thus would have received PTCs or CSRs, the federal expenditures for BHP would be expected to be more than offset by a reduction in federal expenditures for PTCs and CSRs. For those who would have been enrolled in Medicaid, there would likely be a smaller offset in federal expenditures (to account for the federal share of Medicaid expenditures), and for those who would have been covered in non-federal programs or would have been uninsured, there likely would be an increase in federal expenditures. None of these factors or incentives would be materially affected by the updates we propose. In accordance with the provisions of Executive Order 12866, this notice was reviewed by the Office of Management and Budget. 1. Need for the Proposed Methodology Notice Section 1331 of the Affordable Care Act (codified at 42 U.S.C. 18051) [[Page 63949]] requires the Secretary to establish a BHP, and section (d)(1) specifically provides that if the Secretary finds that a state meets the requirements of the program established under section (a) [of section 1331 of the Affordable Care Act], the Secretary shall transfer to the State federal BHP payments described in section (d)(3). This proposed methodology provides for the funding methodology to determine the federal BHP payment amounts required to implement these provisions in program years 2017 and 2018. 2. Alternative Approaches Many of the factors proposed in this notice are specified in statute; therefore, we are limited in the alternative approaches we could consider. One area in which we had a choice was in selecting the data sources used to determine the factors included in the proposed methodology. Except for state-specific reference premiums and enrollment data, we propose using national rather than state-specific data. This is due to the lack of currently available state-specific data needed to develop the majority of the factors included in the proposed methodology. We believe the national data will produce sufficiently accurate determinations of payment rates. In addition, we believe that this approach will be less burdensome on states. In many cases, using state-specific data would necessitate additional requirements on the states to collect, validate, and report data to CMS. By using national data, we are able to collect data from other sources and limit the burden placed on the states. To reference premiums and enrollment data, we propose using state-specific data rather than national data as we believe state-specific data will produce more accurate determinations than national averages. In addition, we considered whether or not to provide states the option to develop a protocol for a retrospective adjustment to the population health factor in 2017 and 2018 as we did in the 2015 and 2016 payment methodologies. We believe that providing this option again in 2017 and 2018 is appropriate and likely to improve the accuracy of the final payments. We also considered whether or not to require the use of 2017 and 2018 QHP premiums to develop the 2017 and 2018 federal BHP payment rates. We believe that the payment rates can still be developed accurately using either the 2016 and 2017 QHP premiums (for the 2017 and 2018 program years, respectively) or the 2017 and 2018 program year premiums and that it is appropriate to provide the states the option, given the interests and specific considerations each state may have in operating the BHP. 3. Transfers The provisions of this notice are designed to determine the amount of funds that will be transferred to states offering coverage through a BHP rather than to individuals eligible for premium and cost-sharing reductions for coverage purchased on the Marketplace. We are uncertain what the total federal BHP payment amounts to states will be as these amounts will vary from state to state due to the varying nature of state composition. For example, total federal BHP payment amounts may be greater in more populous states simply by virtue of the fact that they have a larger BHP-eligible population and total payment amounts are based on actual enrollment. Alternatively, total federal BHP payment amounts may be lower in states with a younger BHP-eligible population as the reference premium used to calculate the federal BHP payment will be lower relative to older BHP enrollees. While state composition will cause total federal BHP payment amounts to vary from state to state, we believe that the proposed methodology, like the current methodology, accounts for these variations to ensure accurate BHP payment transfers are made to each state. B. Unfunded Mandates Reform Act Section 202 of the UMRA requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation, by state, local, or tribal governments, in the aggregate, or by the private sector. In 2015, that threshold is approximately $144 million. States have the option, but are not required, to establish a BHP. Further, the proposed methodology would establish federal payment rates without requiring states to provide the Secretary with any data not already required by other provisions of the Affordable Care Act or its implementing regulations. Thus, neither the current nor the proposed payment methodologies mandate expenditures by state governments, local governments, or tribal governments. C. Regulatory Flexibility Act The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) requires agencies to prepare an initial regulatory flexibility analysis to describe the impact of the proposed rule on small entities, unless the head of the agency can certify that the rule will not have a significant economic impact on a substantial number of small entities. The Act generally defines a ``small entity'' as (1) a proprietary firm meeting the size standards of the Small Business Administration (SBA); (2) a not-for-profit organization that is not dominant in its field; or (3) a small government jurisdiction with a population of less than 50,000. Individuals and states are not included in the definition of a small entity. Few of the entities that meet the definition of a small entity as that term is used in the RFA would be impacted directly by this proposed methodology. Because this proposed methodology is focused solely on federal BHP payment rates to states, it does not contain provisions that would have a direct impact on hospitals, physicians, and other health care providers that are designated as small entities under the RFA. Accordingly, we have determined that the proposed methodology, like the current methodology and the final rule that established the BHP program, will not have a significant economic impact on a substantial number of small entities. Section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a proposed methodology may have a significant economic impact on the operations of a substantial number of small rural hospitals. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a metropolitan statistical area and has fewer than 100 beds. For the preceding reasons, we have determined that the proposed methodology will not have a significant impact on a substantial number of small rural hospitals. D. Federalism Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct effects on states, preempts state law, or otherwise has federalism implications. The BHP is entirely optional for states, and if implemented in a state, provides access to a pool of funding that would not otherwise be available to the state. Accordingly, the requirements of the Executive Order do not apply to this proposed methodology notice. [[Page 63950]] Dated: August 27, 2015. Andrew M. Slavitt, Acting Administrator, Centers for Medicare & Medicaid Services. Dated: October 9, 2015. Sylvia Burwell, Secretary, Department of Health and Human Services. [FR Doc. 2015-26907 Filed 10-21-15; 8:45 am] BILLING CODE 4120-01-P
![63936 Federal Register / Vol. 80, No. 204 / Thursday, October 22, 2015 / Proposed Rules
FOR FURTHER INFORMATION CONTACT: For You may submit comments in one of For information on viewing public
additional information, contact Greg four ways (please choose only one of the comments, see the beginning of the
Nizich, Air Quality Policy Division, ways listed): SUPPLEMENTARY INFORMATION section.
Office of Air Quality Planning and 1. Electronically. You may submit FOR FURTHER INFORMATION CONTACT:
Standards (C504–03), Environmental electronic comments on this regulation Christopher Truffer, (410) 786–1264;
Protection Agency, Research Triangle to http://www.regulations.gov. Follow Stephanie Kaminsky (410) 786–4653.
Park, North Carolina 27711; telephone the ‘‘Submit a comment’’ instructions. SUPPLEMENTARY INFORMATION:
number (919) 541–3078; fax number 2. By regular mail. You may mail Inspection of Public Comments: All
(919) 541–5509; email address: written comments to the following comments received before the close of
nizich.greg@epa.gov. address ONLY: Centers for Medicare & the comment period are available for
SUPPLEMENTARY INFORMATION: After Medicaid Services, Department of viewing by the public, including any
considering the request received from Health and Human Services, Attention: personally identifiable or confidential
16 trade and business organizations to CMS 2396–PN, P.O. Box 8016, business information that is included in
extend the public comment period, the Baltimore, MD 21244–8016. a comment. We post all comments
EPA has decided to reopen the public Please allow sufficient time for mailed received before the close of the
comment period until November 3, comments to be received before the comment period on the following Web
2015. This extension will help ensure close of the comment period. site as soon as possible after they have
3. By express or overnight mail. You
that the public has additional time to been received: http://
may send written comments to the
review the proposed changes to the www.regulations.gov. Follow the search
following address only: Centers for
existing rule. instructions on that Web site to view
Medicare & Medicaid Services,
Dated: October 16, 2015. public comments.
Department of Health and Human Comments received timely will also
Mary E. Henigin, Services, Attention: CMS–2396–PN, be available for public inspection as
Acting Director, Office of Air Quality Planning Mail Stop C4–26–05, 7500 Security they are received, generally beginning
and Standards. Boulevard, Baltimore, MD 21244–1850. approximately 3 weeks after publication
[FR Doc. 2015–26942 Filed 10–21–15; 8:45 am] 4. By hand or courier. Alternatively,
of a document, at the headquarters of
BILLING CODE 6560–50–P you may deliver (by hand or courier)
the Centers for Medicare & Medicaid
your written only to the following
Services, 7500 Security Boulevard,
addresses:
Baltimore, Maryland 21244, Monday
a. For delivery in Washington, DC—
DEPARTMENT OF HEALTH AND through Friday of each week from 8:30
Centers for Medicare & Medicaid
HUMAN SERVICES a.m. to 4 p.m. To schedule an
Services, Department of Health and
appointment to view public comments,
Centers for Medicare & Medicaid Human Services, Room 445–G, Hubert
phone 1–800–743–3951.
Services H. Humphrey Building, 200
Independence Avenue SW., Table of Contents
42 CFR Part 600 Washington, DC 20201. I. Background
(Because access to the interior of the II. Provisions of the Proposed Methodology
[CMS–2396–PN] Hubert H. Humphrey Building is not A. Overview of the Funding Methodology
readily available to persons without and Calculation of the Payment Amount
RIN 0938–ZB21 Federal government identification, B. Federal BHP Payment Rate Cells
commenters are encouraged to leave C. Sources and State Data Considerations
Basic Health Program; Federal their comments in the CMS drop slots D. Discussion of Specific Variables Used in
Funding Methodology for Program located in the main lobby of the Payment Equations
Years 2017 and 2018 building. A stamp-in clock is available E. Adjustments for American Indians and
Alaska Natives
AGENCY: Centers for Medicare & for persons wishing to retain a proof of F. State Option to Use 2016 or 2017 QHP
Medicaid Services (CMS), HHS. filing by stamping in and retaining an Premiums for BHP Payments
ACTION: Proposed methodology.
extra copy of the comments being filed.) G. State Option to Include Retrospective
b. For delivery in Baltimore, MD— State-Specific Health Risk Adjustment in
SUMMARY: This document provides the Centers for Medicare & Medicaid Certified Methodology
methodology and data sources necessary Services, Department of Health and H. Example Application of the BHP
Human Services, 7500 Security Funding Methodology
to determine federal payment amounts III. Collection of Information Requirements
made in program years 2017 and 2018 Boulevard, Baltimore, MD 21244–1850.
If you intend to deliver your IV. Response to Comments
to states that elect to establish a Basic V. Regulatory Impact Statement
Health Program under the Affordable comments to the Baltimore address, call A. Overall Impact
Care Act to offer health benefits telephone number (410) 786–7195 in B. Unfunded Mandates Reform Act
coverage to low-income individuals advance to schedule your arrival with C. Regulatory Flexibility Act
otherwise eligible to purchase coverage one of our staff members. D. Federalism
through Affordable Insurance Comments erroneously mailed to the
addresses indicated as appropriate for I. Background
Marketplaces.
hand or courier delivery may be delayed Section 1331 of the Patient Protection
DATES: To be assured consideration, and received after the comment period. and Affordable Care Act (Pub. L. 111–
comments must be received at one of
tkelley on DSK3SPTVN1PROD with PROPOSALS
Submission of comments on 148, enacted on March 23, 2010), as
the addresses provided below, no later paperwork requirements. You may amended by the Health Care and
than 5 p.m. on November 23, 2015. submit comments on this document’s Education Reconciliation Act of 2010
ADDRESSES: In commenting, refer to file paperwork requirements by following (Pub. L. 111–152, enacted on March 30,
code CMS–2396–PN. Because of staff the instructions at the end of the 2010) (collectively referred as the
and resource limitations, we cannot ‘‘Collection of Information Affordable Care Act) provides states
accept comments by facsimile (FAX) Requirements’’ section in this with an option to establish a Basic
transmission. document. Health Program (BHP). In the states that
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![Federal Register / Vol. 80, No. 204 / Thursday, October 22, 2015 / Proposed Rules 63949
requires the Secretary to establish a appropriate to provide the states the can certify that the rule will not have a
BHP, and section (d)(1) specifically option, given the interests and specific significant economic impact on a
provides that if the Secretary finds that considerations each state may have in substantial number of small entities.
a state meets the requirements of the operating the BHP. The Act generally defines a ‘‘small
program established under section (a) entity’’ as (1) a proprietary firm meeting
3. Transfers
[of section 1331 of the Affordable Care the size standards of the Small Business
Act], the Secretary shall transfer to the The provisions of this notice are
Administration (SBA); (2) a not-for-
State federal BHP payments described designed to determine the amount of
profit organization that is not dominant
in section (d)(3). This proposed funds that will be transferred to states
offering coverage through a BHP rather in its field; or (3) a small government
methodology provides for the funding jurisdiction with a population of less
methodology to determine the federal than to individuals eligible for premium
and cost-sharing reductions for coverage than 50,000. Individuals and states are
BHP payment amounts required to
implement these provisions in program purchased on the Marketplace. We are not included in the definition of a small
years 2017 and 2018. uncertain what the total federal BHP entity. Few of the entities that meet the
payment amounts to states will be as definition of a small entity as that term
2. Alternative Approaches these amounts will vary from state to is used in the RFA would be impacted
Many of the factors proposed in this state due to the varying nature of state directly by this proposed methodology.
notice are specified in statute; therefore, composition. For example, total federal Because this proposed methodology is
we are limited in the alternative BHP payment amounts may be greater focused solely on federal BHP payment
approaches we could consider. One area in more populous states simply by rates to states, it does not contain
in which we had a choice was in virtue of the fact that they have a larger provisions that would have a direct
selecting the data sources used to BHP-eligible population and total
impact on hospitals, physicians, and
determine the factors included in the payment amounts are based on actual
other health care providers that are
proposed methodology. Except for state- enrollment. Alternatively, total federal
specific reference premiums and BHP payment amounts may be lower in designated as small entities under the
enrollment data, we propose using states with a younger BHP-eligible RFA. Accordingly, we have determined
national rather than state-specific data. population as the reference premium that the proposed methodology, like the
This is due to the lack of currently used to calculate the federal BHP current methodology and the final rule
available state-specific data needed to payment will be lower relative to older that established the BHP program, will
develop the majority of the factors BHP enrollees. While state composition not have a significant economic impact
included in the proposed methodology. will cause total federal BHP payment on a substantial number of small
We believe the national data will amounts to vary from state to state, we entities.
produce sufficiently accurate believe that the proposed methodology, Section 1102(b) of the Act requires us
determinations of payment rates. In like the current methodology, accounts to prepare a regulatory impact analysis
addition, we believe that this approach for these variations to ensure accurate if a proposed methodology may have a
will be less burdensome on states. In BHP payment transfers are made to each significant economic impact on the
many cases, using state-specific data state. operations of a substantial number of
would necessitate additional
B. Unfunded Mandates Reform Act small rural hospitals. For purposes of
requirements on the states to collect,
validate, and report data to CMS. By Section 202 of the UMRA requires section 1102(b) of the Act, we define a
using national data, we are able to that agencies assess anticipated costs small rural hospital as a hospital that is
collect data from other sources and limit and benefits before issuing any rule located outside of a metropolitan
the burden placed on the states. To whose mandates require spending in statistical area and has fewer than 100
reference premiums and enrollment any 1 year of $100 million in 1995 beds. For the preceding reasons, we
data, we propose using state-specific dollars, updated annually for inflation, have determined that the proposed
data rather than national data as we by state, local, or tribal governments, in methodology will not have a significant
believe state-specific data will produce the aggregate, or by the private sector. In impact on a substantial number of small
more accurate determinations than 2015, that threshold is approximately rural hospitals.
national averages. $144 million. States have the option, but
In addition, we considered whether or D. Federalism
are not required, to establish a BHP.
not to provide states the option to Further, the proposed methodology Executive Order 13132 establishes
develop a protocol for a retrospective would establish federal payment rates certain requirements that an agency
adjustment to the population health without requiring states to provide the must meet when it promulgates a
factor in 2017 and 2018 as we did in the Secretary with any data not already proposed rule (and subsequent final
2015 and 2016 payment methodologies. required by other provisions of the rule) that imposes substantial direct
We believe that providing this option Affordable Care Act or its implementing
again in 2017 and 2018 is appropriate effects on states, preempts state law, or
regulations. Thus, neither the current
and likely to improve the accuracy of otherwise has federalism implications.
nor the proposed payment
the final payments. The BHP is entirely optional for states,
methodologies mandate expenditures by
We also considered whether or not to state governments, local governments, and if implemented in a state, provides
require the use of 2017 and 2018 QHP or tribal governments. access to a pool of funding that would
not otherwise be available to the state.
tkelley on DSK3SPTVN1PROD with PROPOSALS
premiums to develop the 2017 and 2018
federal BHP payment rates. We believe C. Regulatory Flexibility Act Accordingly, the requirements of the
that the payment rates can still be The Regulatory Flexibility Act (5 Executive Order do not apply to this
developed accurately using either the U.S.C. 601 et seq.) (RFA) requires proposed methodology notice.
2016 and 2017 QHP premiums (for the agencies to prepare an initial regulatory
2017 and 2018 program years, flexibility analysis to describe the
respectively) or the 2017 and 2018 impact of the proposed rule on small
program year premiums and that it is entities, unless the head of the agency
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![63950 Federal Register / Vol. 80, No. 204 / Thursday, October 22, 2015 / Proposed Rules
Dated: August 27, 2015. the Bering Sea and Aleutian Islands SUPPLEMENTARY INFORMATION: NMFS
Andrew M. Slavitt, (BSAI) crab fisheries, and to improve manages the king and Tanner crab
Acting Administrator, Centers for Medicare the administration of the CR Program. fisheries in the exclusive economic zone
& Medicaid Services. These actions are intended to promote of the Bering Sea and Aleutian Islands
Dated: October 9, 2015. the goals and objectives of the (BSAI) under the FMP. The North
Sylvia Burwell, Magnuson-Stevens Fishery Pacific Fishery Management Council
Secretary, Department of Health and Human Conservation and Management Act, the (Council) prepared the FMP under the
Services. FMP, and other applicable laws. Magnuson-Stevens Fishery
[FR Doc. 2015–26907 Filed 10–21–15; 8:45 am] DATES: Submit comments on or before Conservation and Management Act
BILLING CODE 4120–01–P November 23, 2015. (Magnuson-Stevens Act), 16 U.S. C.
ADDRESSES: You may submit comments, 1801 et seq. Regulations governing U.S.
identified by NOAA–NMFS–2013–0057, fisheries and implementing the FMP
by any one of the following methods. appear at 50 CFR part 680.
DEPARTMENT OF COMMERCE NMFS published the final rule to
• Electronic Submission: Submit all
National Oceanic and Atmospheric electronic public comments via the implement the Crab Rationalization (CR)
Federal e-Rulemaking Portal. Go to Program on March 2, 2005 (70 FR
Administration
www.regulations.gov/ 10174). Fishing under the CR Program
#!docketDetail;D=NOAA-NMFS-2013- started with the 2005/2006 crab fishing
50 CFR Part 680
0057, click the ‘‘Comment Now!’’ icon, year.
[Docket No. 150313268–5268–01] The Council submitted Amendment
complete the required fields, and enter
44 for review by the Secretary of
RIN 0648–BE98 or attach your comments.
• Mail: Submit written comments to Commerce. A notice of availability of
Fisheries of the Exclusive Economic Glenn Merrill, Assistant Regional Amendment 44 was published in the
Zone Off Alaska; Bering Sea and Administrator, Sustainable Fisheries Federal Register on October 9, 2015 (80
Aleutian Islands Crab Rationalization FR 61150), with comments invited
Division, Alaska Region NMFS, Attn:
Program through December 8, 2015. All relevant
Ellen Sebastian. Mail comments to P.O.
written comments received by that time,
AGENCY: National Marine Fisheries Box 21668, Juneau, AK 99802–1668.
Instructions: Comments sent by any whether specifically directed to
Service (NMFS), National Oceanic and Amendment 44, or to the proposed rule,
Atmospheric Administration (NOAA), other method, to any other address or
individual, or received after the end of will be considered in the approval/
Commerce. disapproval decision on Amendment
the comment period, may not be
ACTION: Proposed rule; request for 44.
considered by NMFS. All comments
comments. The CR Program is a catch share
received are a part of the public record
program for nine BSAI crab fisheries
SUMMARY: NMFS issues a proposed rule and will generally be posted for public that allocates those resources among
to implement Amendment 44 to the viewing on www.regulations.gov harvesters, processors, and coastal
Fishery Management Plan for Bering without change. All personal identifying communities. Under the CR Program,
Sea/Aleutian Islands King and Tanner information (e.g., name, address), NMFS issued quota share (QS) to
Crabs (FMP) and a regulatory confidential business information, or eligible harvesters based on their
amendment that would modify otherwise sensitive information historical participation during a set of
regulations governing the Crab submitted voluntarily by the sender will qualifying years in one or more of the
Rationalization (CR) Program. The be publicly accessible. NMFS will nine CR Program fisheries. QS is an
proposed rule would modify regulations accept anonymous comments (enter ‘‘N/ exclusive, revocable privilege allowing
to reflect that a Right of First Refusal A’’ in the required fields if you wish to the holder to harvest a specific
(ROFR) may continue with the current remain anonymous). percentage of the annual total allowable
ROFR holder or a new ROFR holder Written comments regarding the catch (TAC) in a CR Program fishery.
when processor quota share (PQS) is burden-hour estimates or other aspects A QS holder’s annual allocation,
transferred and would require PQS of the collection-of-information called individual fishing quota (IFQ), is
holders to make specific certifications requirements contained in this rule may expressed in pounds and is based on the
regarding ROFR contracts when be submitted to NMFS at the above amount of QS held in relation to the
annually applying for individual address; emailed to OIRA_Submission@ total QS pool for that fishery. NMFS
processor quota (IPQ) and when omb.eop.gov or faxed to 202–395–7285. issues IFQ in three classes: Class A IFQ,
transferring PQS that are subject to a Electronic copies of Amendment 44 to Class B IFQ, and Class C IFQ. Three
ROFR. In addition, this proposed rule the FMP, the Regulatory Impact Review percent of IFQ is issued as Class C IFQ
would amend CR Program regulations to (RIR), the Initial Regulatory Flexibility for captains and crew. Of the remaining
separate the annual individual fishing Analysis (IRFA), and the Categorical IFQ, 90 percent is issued as Class A IFQ
quota (IFQ)/IPQ application into two Exclusion prepared for this action may and 10 percent is issued as Class B IFQ.
separate applications, and would be obtained from http:// NMFS issued processor quota share
require that crab harvesting cooperatives www.regulations.gov or from the Alaska (PQS) to qualified individuals and
list the name of each member of the Region Web site at http:// entities based on processing activities in
cooperative in its application for IFQ alaskafisheries.noaa.gov. The CR Program fisheries during a period of
Environmental Impact Statement (EIS),
tkelley on DSK3SPTVN1PROD with PROPOSALS
rather than provide NMFS with copies qualifying years. PQS is an exclusive,
of each member’s IFQ application. RIR, and Social Impact Assessment revocable privilege to receive deliveries
These actions are necessary to improve prepared for the CR Program are of a fixed percentage of the annual TAC
available information concerning available from the NMFS Alaska Region from a CR Program fishery. A PQS
transfer and use of PQS and IPQ subject Web site at http:// holder’s annual allocation is known as
to a ROFR, thereby enhancing the ability alaskafisheries.noaa.gov. individual processing quota (IPQ).
of eligible crab communities to retain FOR FURTHER INFORMATION CONTACT: NMFS issues IPQ at a one-to-one
their historical processing interests in Rachel Baker, 907–586–7228. correlation with the amount of Class A
VerDate Sep<11>2014 17:42 Oct 21, 2015 Jkt 238001 PO 00000 Frm 00019 Fmt 4702 Sfmt 4702 E:\FR\FM\22OCP1.SGM 22OCP1](https://thefederalregister.org/doc/80_FR_64140/page/15.svg)
Document Created: 2015-12-14 15:34:35
Document Modified: 2015-12-14 15:34:35
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Proposed Rules | |
| Action | Proposed methodology. | |
| Dates | To be assured consideration, comments must be received at one of | |
| Contact | Christopher Truffer, (410) 786-1264; Stephanie Kaminsky (410) 786-4653. | |
| FR Citation | 80 FR 63936 | |
| RIN Number | 0938-ZB21 |
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