Basic Health Program; Federal Funding Methodology for Program Year 2022

Published date03 November 2020
Citation85 FR 69525
Record Number2020-24147
SectionProposed rules
CourtCenters For Medicare & Medicaid Services
69525
Federal Register / Vol. 85, No. 213 / Tuesday, November 3, 2020 / Proposed Rules
(d) Subject
Air Transport Association (ATA) of
America Code 05, Time Limits/Maintenance
Checks.
(e) Reason
This AD was prompted by a determination
that new or more restrictive airworthiness
limitations are necessary. The FAA is issuing
this AD to address reduced structural
integrity of the airplane.
(f) Compliance
Comply with this AD within the
compliance times specified, unless already
done.
(g) Retained Maintenance or Inspection
Program Revision, With No Changes
This paragraph restates the requirements of
paragraph (i) of AD 2020–04–22, with no
changes. For airplanes an original
airworthiness certificate or original export
certificate of airworthiness issued on or
before January 15, 2019: Within 90 days after
May 4, 2020 (the effective date of AD 2020–
04–22), revise the existing maintenance or
inspection program, as applicable, to
incorporate the information specified in
Chapter 5–40, Airworthiness Limitations,
DGT 113877, Revision 12, dated November
2018, of the Dassault Falcon 2000EX
Maintenance Manual. The initial compliance
times for doing the tasks are at the time
specified in Chapter 5–40, Airworthiness
Limitations, DGT 113877, Revision 12, dated
November 2018, of the Dassault Falcon
2000EX Maintenance Manual, or within 90
days after May 4, 2020, whichever occurs
later; except for task number 52–20–00–610–
801–01, the initial compliance time is within
24 months after October 8, 2014 (the effective
date of AD 2014–16–12, Amendment 39–
17936 (79 FR 52187, September 3, 2014)).
The term ‘‘LDG’’ in the ‘‘First Inspection’’
column of any table in the service
information specified in this paragraph
means total airplane landings. The term
‘‘FH’’ in the ‘‘First Inspection’’ column of any
table in the service information specified in
this paragraph means total flight hours. The
term ‘‘FC’’ in the ‘‘First Inspection’’ column
of any table in the service information
specified in this paragraph means total flight
cycles. Accomplishing the maintenance or
inspection program revision required by
paragraph (i) of this AD terminates the
requirements of this paragraph.
(h) Retained Provision: No Alternative
Actions or Intervals, With a New Exception
This paragraph restates the requirements of
paragraph (j) of AD 2020–04–22, with a new
exception. Except as required by paragraph
(k) of this AD, after the existing maintenance
or inspection program has been revised as
required by paragraph (g) of this AD, no
alternative actions (e.g., inspections) or
intervals may be used unless the actions or
intervals are approved as an AMOC in
accordance with the procedures specified in
paragraph (m)(1) of this AD.
(i) New Maintenance or Inspection Program
Revision
Except as specified in paragraph (j) of this
AD: Comply with all required actions and
compliance times specified in, and in
accordance with, European Union Aviation
Safety Agency (EASA) AD 2020–0114, dated
May 20, 2020 (‘‘EASA AD 2020–0114’’).
Accomplishing the maintenance or
inspection program revision required by this
paragraph terminates the requirements of
paragraph (g) of this AD.
(j) Exceptions to EASA AD 2020–0114
(1) The requirements specified in
paragraphs (1) and (2) of EASA AD 2020–
0114 do not apply to this AD.
(2) Paragraph (3) of EASA AD 2020–0114
specifies revising ‘‘the approved AMP’’
within 12 months after its effective date, but
this AD requires revising the existing
maintenance or inspection program, as
applicable, to incorporate the ‘‘limitations,
tasks and associated thresholds and
intervals’’ specified in paragraph (3) of EASA
AD 2020–0114 within 90 days after the
effective date of this AD.
(3) The initial compliance time for doing
the tasks specified in paragraph (3) of EASA
AD 2020–0114 is at the applicable
‘‘associated thresholds’’ specified in
paragraph (3) of EASA AD 2020–0114, or
within 90 days after the effective date of this
AD, whichever occurs later.
(4) The provisions specified in paragraphs
(4) and (5) of EASA AD 2020–0114 do not
apply to this AD.
(5) The ‘‘Remarks’’ section of EASA AD
2020–0114 does not apply to this AD.
(k) New Provisions for Alternative Actions
and Intervals
After the maintenance or inspection
program has been revised as required by
paragraph (i) of this AD, no alternative
actions (e.g., inspections), and intervals are
allowed unless they are approved as
specified in the provisions of the ‘‘Ref.
Publications’’ section of EASA AD 2020–
0114.
(l) Terminating Action for Certain Actions in
AD 2010–26–05
Accomplishing the actions required by
paragraph (g) or (i) of this AD terminates the
requirements of paragraph (g)(1) of AD 2010–
26–05, for Dassault Aviation Model FALCON
2000EX airplanes only.
(m) Other FAA AD Provisions
The following provisions also apply to this
AD:
(1) Alternative Methods of Compliance
(AMOCs): The Manager, Large Aircraft
Section, International Validation Branch,
FAA, has the authority to approve AMOCs
for this AD, if requested using the procedures
found in 14 CFR 39.19. In accordance with
14 CFR 39.19, send your request to your
principal inspector or local Flight Standards
District Office, as appropriate. If sending
information directly to the Large Aircraft
Section, International Validation Branch,
send it to the attention of the person
identified in paragraph (n)(4) of this AD.
Information may be emailed to: 9-AVS-AIR-
730-AMOC@faa.gov. Before using any
approved AMOC, notify your appropriate
principal inspector, or lacking a principal
inspector, the manager of the local flight
standards district office/certificate holding
district office.
(2) Contacting the Manufacturer: For any
requirement in this AD to obtain instructions
from a manufacturer, the instructions must
be accomplished using a method approved
by the Manager, Large Aircraft Section,
International Validation Branch, FAA; or
EASA; or Dassault Aviation’s EASA Design
Organization Approval (DOA). If approved by
the DOA, the approval must include the
DOA-authorized signature.
(n) Related Information
(1) For information about EASA AD 2020–
0114, contact the EASA, Konrad-Adenauer-
Ufer 3, 50668 Cologne, Germany; telephone
+49 221 8999 000; email ADs@
easa.europa.eu; Internet
www.easa.europa.eu. You may find this
EASA AD on the EASA website at https://
ad.easa.europa.eu.
(2) For Dassault service information
identified in this AD, contact Dassault Falcon
Jet Corporation, Teterboro Airport, P.O. Box
2000, South Hackensack, NJ 07606; phone:
201–440–6700; internet: https://
www.dassaultfalcon.com.
(3) You may view this material at the FAA,
Airworthiness Products Section, Operational
Safety Branch, 2200 South 216th St., Des
Moines, WA. For information on the
availability of this material at the FAA, call
206–231–3195. This material may be found
in the AD docket on the internet at https://
www.regulations.gov by searching for and
locating Docket No. FAA–2020–0976.
(4) For more information about this AD,
contact Tom Rodriguez, Aerospace Engineer,
Large Aircraft Section, International
Validation Branch, FAA, 2200 South 216th
St., Des Moines, WA 98198; telephone and
fax 206–231–3226; email tom.rodriguez@
faa.gov.
Issued on October 26, 2020.
Lance T. Gant,
Director, Compliance & Airworthiness
Division, Aircraft Certification Service.
[FR Doc. 2020–24041 Filed 11–2–20; 8:45 am]
BILLING CODE 4910–13–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Part 600
[CMS–2438–PN]
RIN 0938–ZB64
Basic Health Program; Federal
Funding Methodology for Program
Year 2022
AGENCY
: Centers for Medicare &
Medicaid Services (CMS), Department
of Health and Human Services (HHS).
ACTION
: Proposed methodology.
SUMMARY
: This document proposes the
methodology and data sources necessary
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1
BHP program years span from January 1 through
December 31.
to determine Federal payment amounts
to be made for program year 2022 to
states that elect to establish a Basic
Health Program under the Patient
Protection and Affordable Care Act to
offer health benefits coverage to low-
income individuals otherwise eligible to
purchase coverage through Affordable
Insurance Exchanges.
DATES
: To be assured consideration,
comments must be received at one of
the addresses provided below, no later
than 5 p.m. on December 3, 2020.
ADDRESSES
: In commenting, refer to file
code CMS–2438–PN.
Comments, including mass comment
submissions, must be submitted in one
of the following three 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–2438–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–2438–PN,
Mail Stop C4–26–05, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
For information on viewing public
comments, see the beginning of the
SUPPLEMENTARY INFORMATION
section.
FOR FURTHER INFORMATION CONTACT
:
Christopher Truffer, (410) 786–1264; or
Cassandra Lagorio, (410) 786–4554.
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
website as soon as possible after they
have been received: http://
www.regulations.gov. Follow the search
instructions on that website to view
public comments.
I. Background
A. Overview of the Basic Health
Program
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 to as the
Patient Protection and Affordable Care
Act) provides states with an option to
establish a Basic Health Program (BHP).
In the states that elect to operate a BHP,
the 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).
A BHP provides another option for
states in providing affordable health
benefits to individuals with incomes in
the ranges described above. States may
find a BHP a useful option for several
reasons, including the ability to
potentially coordinate standard health
plans in the BHP with their Medicaid
managed care plans, or to potentially
reduce the costs to individuals by
lowering premiums or cost-sharing
requirements.
Federal funding for a BHP under
section 1331(d)(3)(A) of the Patient
Protection and Affordable Care Act is
based on the amount of premium tax
credit (PTC) and cost-sharing reductions
(CSRs) that would have been provided
for the fiscal year to eligible individuals
enrolled in BHP standard health plans
in the state if such eligible individuals
were allowed to enroll in a qualified
health plan (QHP) through Affordable
Insurance Exchanges (‘‘Exchanges’’).
These funds are paid to trusts
established by the states and dedicated
to the BHP, and the states then
administer the payments to standard
health plans within the 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
Patient Protection and Affordable Care
Act), which governs the establishment
of BHPs. The BHP final rule established
the standards for state and Federal
administration of BHPs, including
provisions regarding eligibility and
enrollment, benefits, cost-sharing
requirements and oversight activities.
While the BHP final rule codified 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 BHPs, as well as the
operation of the Exchanges. 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, 2 years
prior to the applicable program year,
and would describe the proposed
funding methodology for the relevant
BHP year,
1
including how the Secretary
considered the factors specified in
section 1331(d)(3) of the Patient
Protection and Affordable Care Act,
along with the proposed data sources
used to determine the Federal BHP
payment rates for the applicable
program year. 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 applicable
BHP program year. For example,
payment rates in the final BHP Payment
Notice published in February 2015
applied to BHP program year 2016,
beginning in January 2016. As discussed
in section II.D. 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.
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‘‘Metal tiers’’ refer to the different actuarial
value plan levels offered on the Exchanges. Bronze-
level plans generally must provide 60 percent
actuarial value; silver-level 70 percent actuarial
value; gold-level 80 percent actuarial value; and
platinum-level 90 percent actuarial value. See 45
CFR 156.140.
As described in the BHP final rule,
once the final methodology for the
applicable program year has been
published, we will generally 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
applicable final BHP Payment Notice.
For example, the population health
factor adjustment described in section
II.D.3. of this proposed methodology
allows for a retrospective adjustment (at
the state’s option) to account for the
impact that BHP may have had on the
risk pool and QHP premiums in the
Exchange. 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
Patient Protection and 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 BHP Blueprint eligibility and
verification methodologies in coverage
through the state BHP. A state that is
approved to implement a BHP must
provide data showing quarterly
enrollment of eligible individuals in the
various Federal BHP payment rate cells.
Such data must include the following:
Personal identifier;
Date of birth;
County of residence;
Indian status;
Family size;
Household income;
Number of persons in household
enrolled in BHP;
Family identifier;
Months of coverage;
Plan information; and
Any other data required by CMS to
properly calculate the payment.
B. The 2018 Final Administrative Order,
2019 Payment Methodology, 2020
Payment Methodology, and 2021
Payment Methodology
On October 11, 2017, the Attorney
General of the United States provided
the Department of Health and Human
Services and the Department of the
Treasury with a legal opinion indicating
that the permanent appropriation at 31
U.S.C. 1324, from which the
Departments had historically drawn
funds to make CSR payments, cannot be
used to fund CSR payments to insurers.
In light of this opinion—and in the
absence of any other appropriation that
could be used to fund CSR payments—
the Department of Health and Human
Services directed us to discontinue CSR
payments to issuers until Congress
provides for an appropriation. In the
absence of a Congressional
appropriation for Federal funding for
CSRs, we cannot provide states with a
Federal payment attributable to CSRs
that BHP enrollees would have received
had they been enrolled in a QHP
through an Exchange.
Starting with the payment for the first
quarter (Q1) of 2018 (which began on
January 1, 2018), we stopped paying the
CSR component of the quarterly BHP
payments to New York and Minnesota
(the states), the only states operating a
BHP in 2018. The states then sued the
Secretary for declaratory and injunctive
relief in the United States District Court
for the Southern District of New York.
See State of New York, et al., v. U.S.
Department of Health and Human
Services, 18–cv–00683 (S.D.N.Y. filed
Jan. 26, 2018). On May 2, 2018, the
parties filed a stipulation requesting a
stay of the litigation so that HHS could
issue an administrative order revising
the 2018 BHP payment methodology. As
a result of the stipulation, the court
dismissed the BHP litigation. On July 6,
2018, we issued a Draft Administrative
Order on which New York and
Minnesota had an opportunity to
comment. Each state submitted
comments. We considered the states’
comments and issued a Final
Administrative Order on August 24,
2018 (Final Administrative Order)
setting forth the payment methodology
that would apply to the 2018 BHP
program year.
In the November 5, 2019 Federal
Register (84 FR 59529 through 59548)
(hereinafter referred to as the November
2019 final BHP Payment Notice), we
finalized the payment methodologies for
BHP program years 2019 and 2020. The
2019 payment methodology is the same
payment methodology described in the
Final Administrative Order. The 2020
payment methodology is the same
methodology as the 2019 payment
methodology with one additional
adjustment to account for the impact of
individuals selecting different metal tier
level plans in the Exchange, referred to
as the Metal Tier Selection Factor
(MTSF).
2
In the August 13, 2020
Federal Register (85 FR 49264 through
49280) (hereinafter referred to as the
August 2020 final BHP Payment Notice),
we finalized the payment methodology
for BHP program year 2021. The 2021
payment methodology is the same
methodology as the 2020 payment
methodology, with one adjustment to
the income reconciliation factor (IRF).
The 2022 proposed payment
methodology is the same as the 2021
payment methodology, except for using
more recent data for developing the
value of the Metal Tier Selection Factor
(MTSF).
II. Provisions of the Proposed
Methodology
A. Overview of the Funding
Methodology and Calculation of the
Payment Amount
Section 1331(d)(3) of the Patient
Protection and Affordable Care Act
directs the Secretary to 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 Exchange. Thus, the
BHP funding methodology is designed
to calculate the PTC and CSRs as
consistently as possible and in general
alignment with the methodology used
by Exchanges to calculate the advance
payments of the PTC (APTC) and CSRs,
and by the Internal Revenue Service
(IRS) to calculate final PTCs. In general,
we have relied on values for factors in
the payment methodology specified in
statute or other regulations as available,
and have developed 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 Exchange. In
accordance with section
1331(d)(3)(A)(iii) of the Patient
Protection and Affordable Care Act, the
final funding methodology must be
certified by the Chief Actuary of CMS,
in consultation with the Office of Tax
Analysis (OTA) of the Department of the
Treasury, as having met the
requirements of section 1331(d)(3)(A)(ii)
of the Patient Protection and Affordable
Care Act.
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Section 1331(d)(3)(A)(ii) of the Patient
Protection and Affordable Care Act
specifies that the payment
determination shall take into account all
relevant factors necessary to determine
the value of the PTCs and CSRs that
would have been provided to eligible
individuals, including but not limited
to, 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 QHP through
an Exchange, and whether any
reconciliation of PTC and CSR would
have occurred if the enrollee had been
so enrolled. Under the payment
methodologies for 2015 (79 FR 13887
through 14151) (published on March 12,
2014), for 2016 (80 FR 9636 through
9648) (published on February 24, 2015),
for 2017 and 2018 (81 FR 10091 through
10105) (published on February 29,
2016), for 2019 and 2020 (84 FR 59529
through) (published on November 5,
2019), and for 2021 (85 FR 49264
through 49280) (published on August
13, 2020) (hereinafter referred to as the
August 2020 final BHP Payment Notice),
the total Federal BHP payment amount
has been calculated using multiple rate
cells in each state. Each rate cell
represents a unique combination of age
range (if applicable), geographic area,
coverage category (for example, self-
only or two-adult coverage through the
BHP), household size, and income range
as a percentage of FPL, and there is a
distinct rate cell 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. The
BHP payment rates developed also are
consistent with the state’s rules on age
rating. Thus, in the case of a state that
does not use age as a rating factor on an
Exchange, the BHP payment rates would
not vary by age.
Under the methodology finalized in
the August 2020 final BHP Payment
Notice, the rate for each rate cell is
calculated in two parts. The first part is
equal to 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 an Exchange. The
second part is equal to 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 an
Exchange. These two parts are added
together and the total rate for that rate
cell would be equal to the sum of the
PTC and CSR rates. As noted in the
November 2019 final BHP Payment
Notice, we currently assign a value of
zero to the CSR portion of the BHP
payment rate calculation, because there
is presently no available appropriation
from which we can make the CSR
portion of any BHP Payment.
We propose that Equation (1) would
be used to calculate the estimated PTC
for eligible individuals enrolled in the
BHP in each rate cell. We note that
throughout this proposed methodology,
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 (if applicable), 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 an Exchange, 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
this proposed methodology. In addition,
we describe in Equation (2a) and
Equation (2b) (below) how we propose
to calculate the adjusted reference
premium (ARP) that is used in Equation
(1).
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 (if
applicable), 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 5 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 (RP)
(described in section II.D.1. of this
proposed methodology) used to
calculate the PTC would be adjusted for
the BHP population health status, and
in the case of a state that elects to use
2021 premiums for the basis of the BHP
Federal payment, for the projected
change in the premium from 2021 to
2022, to which the rates announced in
the final payment methodology would
apply. These adjustments are described
in Equation (2a) and Equation (2b).
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 the BHP; this
adjustment, the IRF, as described in
section II.D.7. of this proposed
methodology, would account for the
impact on the PTC that would have
occurred had such reconciliation been
performed. Fourth, the PTC would be
adjusted to account for the estimated
impacts of plan selection; this
adjustment, the MTSF, would reflect the
effect on the average PTC of individuals
choosing different metal tier levels of
QHPs. Finally, the rate is multiplied by
95 percent, consistent with section
1331(d)(3)(A)(i) of the Patient Protection
and Affordable Care Act. We note that
in the situation where the average
income contribution of an enrollee
would exceed the ARP, we would
calculate the PTC to be equal to 0 and
would not allow the value of the PTC
to be negative.
We propose using Equation (1) to
calculate the PTC rate, consistent with
the methodology described above:
PTC
a,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)
ARP
a,g,c
= Adjusted reference premium
I
h,i,j
= Income (in dollars per month) at each
1 percentage-point increment of FPL
j = j
th
percentage-point increment FPL
n = Number of income increments used to
calculate the mean PTC
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PTCF
h,i,j
= Premium tax credit formula
percentage
IRF = Income reconciliation factor
MTSF = Metal tier selection factor
Equation (2a) and Equation (2b):
Adjusted Reference Premium (ARP)
Variable (Used in Equation 1)
As part of the calculations for the PTC
component, we propose to continue to
calculate the value of the ARP as
described below. Consistent with the
existing approach, we are proposing to
allow states to choose between using the
actual current year premiums or the
prior year’s premiums multiplied by the
premium trend factor (PTF) (as
described in section II.E. of this
proposed methodology). Below we
describe how we would continue to
calculate the ARP under each option.
In the case of a state that elected to
use the reference premium (RP) based
on the current program year (for
example, 2022 premiums for the 2022
program year), we propose to calculate
the value of the ARP as specified in
Equation (2a). The ARP would be equal
to the RP, which would be based on the
second lowest cost silver plan premium
in the applicable program year,
multiplied by the BHP population
health factor (PHF) (described in section
II.D.3. of this proposed methodology),
which would reflect the projected
impact that enrolling BHP-eligible
individuals in QHPs through an
Exchange would have had on the
average QHP premium, and multiplied
by the premium adjustment factor (PAF)
(described in section II.D of this
proposed methodology), which would
account for the change in silver-level
premiums due to the discontinuance of
CSR payments.
ARP
a,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
RP
a,g,c
= Reference premium
PHF = Population health factor
PAF = Premium adjustment factor
In the case of a state that elected to
use the RP based on the prior program
year (for example, 2021 premiums for
the 2022 program year, as described in
more detail in section II.E. of this
proposed methodology), we propose to
calculate the value of the ARP as
specified in Equation (2b). The ARP
would be equal to the RP, which would
be based on the second lowest cost
silver plan premium in 2021, multiplied
by the BHP PHF (described in section
II.D of this proposed methodology),
which would reflect the projected
impact that enrolling BHP-eligible
individuals in QHPs on an Exchange
would have had on the average QHP
premium, multiplied by the PAF
(described in section II.D. of this
proposed methodology), which would
account for the change in silver-level
premiums due to the discontinuance of
CSR payments, and multiplied by the
premium trend factor (PTF) (described
in section II.E. of this proposed
methodology), which would reflect the
projected change in the premium level
between 2021 and 2022.
ARP
a,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
RP
a,g,c
= Reference premium
PHF = Population health factor
PAF = Premium adjustment factor
PTF = Premium trend factor
Equation 3: 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 (3).
PMT = Total monthly BHP payment
PTC
a,g,c,h,i
= Premium tax credit portion of
BHP payment rate
CSR
a,g,c,h,i
= Cost sharing reduction portion of
BHP payment rate
E
a,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)
In this equation, we would assign a
value of zero to the CSR part of the BHP
payment rate calculation (CSR
a,g,c,h,i
)
because there is presently no available
appropriation from which we can make
the CSR portion of any BHP payment. In
the event that an appropriation for CSRs
for 2022 is made, we would determine
whether and how to modify the CSR
part of the BHP payment rate
calculation (CSR
a,g,c,h,i
) or the PAF and
the MTSF in the payment methodology.
B. Federal BHP Payment Rate Cells
Consistent with the previous payment
methodologies, we propose that a state
implementing a BHP provide us an
estimate of the number of BHP enrollees
it projects will enroll in the upcoming
BHP program quarter, 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, we will use
those estimates to calculate the
prospective payment for the first and
subsequent quarters of program
operation until the state provides us
with actual enrollment data for those
periods. The actual enrollment data is
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
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This curve is used to implement the Patient
Protection and 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 Exchange. The age bands capture
the principal allowed age-based variations in
premiums as permitted by this curve. The default
age curve was updated for plan or policy years
beginning on or after January 1, 2018 to include
different age rating factors between children 0–14
and for persons at each age between 15 and 20.
More information is available at https://
www.cms.gov/CCIIO/Programs-and-Initiatives/
Health-Insurance-Market-Reforms/Downloads/
StateSpecAgeCrv053117.pdf. Both children and
adults under age 21 are charged the same premium.
For adults age 21–64, the age bands in this
methodology 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 HHS-
Developed Risk Adjustment Model Algorithm ‘‘Do
It Yourself (DIY)’’ Software Instructions for the 2018
Benefit Year, April 4, 2019 Update, https://
www.cms.gov/CCIIO/Resources/Regulations-and-
Guidance/Downloads/Updated-CY2018-DIY-
instructions.pdf.
4
In this document, references to the ‘‘current
methodology’’ refer to the 2021 program year
methodology as outlined in the August 2020 final
BHP Payment Notice.
5
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 QHPs, as described in 45
CFR 155.1055, except that service areas smaller
than counties are addressed as explained in this
methodology.
6
The three lowest income ranges would be
limited to lawfully present immigrants who are
ineligible for Medicaid because of immigration
status.
submitted to us. Actual enrollment data
must be based on individuals enrolled
for the quarter 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 (if
applicable), 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 five factors described as
follows:
Factor 1—Age: We propose to
continue separating enrollees into rate
cells by age (if applicable), using the
following age ranges that capture the
widest variations in premiums under
HHS’s Default Age Curve:
3
Ages 0–20.
Ages 21–34.
Ages 35–44.
Ages 45–54.
Ages 55–64.
This proposed provision is unchanged
from the current methodology.
4
Factor 2—Geographic area: For each
state, we propose separating enrollees
into rate cells by geographic areas
within which a single RP is charged by
QHPs offered through the state’s
Exchange. Multiple, non-contiguous
geographic areas would be incorporated
within a single cell, so long as those
areas share a common RP.
5
This
proposed provision is also unchanged
from the current methodology.
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
the BHP, as provided in section
1331(d)(3)(A)(ii) of the Patient
Protection and Affordable Care Act.
Among recipients of family coverage
through the BHP, separate rate cells, as
explained below, would apply based on
whether such coverage involves two
adults alone or whether it involves
children. This proposed provision is
unchanged from the current
methodology.
Factor 4—Household size: We
propose to continue the current
methods for separating enrollees into
rate cells by household size that states
use to determine BHP enrollees’
household income as a percentage of the
FPL under 42 CFR 600.320
(Determination of eligibility for and
enrollment in a standard health plan).
We propose 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. This
proposed provision is unchanged from
the current methodology.
Factor 5—Household 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 through an Exchange
varies by household income, both in
level and as a ratio to the 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
percentage of the FPL:
0 to 50 percent of the FPL.
51 to 100 percent of the FPL.
101 to 138 percent of the FPL.
6
139 to 150 percent of the FPL.
151 to 175 percent of the FPL.
176 to 200 percent of the FPL.
This proposed provision is unchanged
from the current methodology.
These rate cells would only be used
to calculate the Federal BHP payment
amount. A state implementing a 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
the BHP or to help define BHP
enrollees’ covered benefits, premium
costs, or out-of-pocket cost-sharing
levels.
Consistent with the current
methodology, we propose using
averages to define Federal payment
rates, both for income ranges and age
ranges (if applicable), rather than
varying such rates to correspond to each
individual BHP enrollee’s age (if
applicable) 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 also
believe 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, and in the interest of
administrative simplification, we will
consider whether to combine or
eliminate certain rate cells, once we are
certain that the effect on payment would
be insignificant.
C. Sources and State Data
Considerations
To the extent possible, unless
otherwise provided, we intend to
continue to use data submitted to the
Federal Government by QHP issuers
seeking to offer coverage through the
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See 81 FR at 10097.
Exchange in the relevant BHP state to
perform the calculations that determine
Federal BHP payment cell rates.
States operating a State-based
Exchange (SBE) 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 Exchange
interested in obtaining the applicable
2022 program year Federal BHP
payment rates for its state must submit
such data accurately, completely, and as
specified by CMS, by no later than
October 15, 2021. 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 us 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 are published in CMS
guidance and are available in the
Federal Policy Guidance section at
https://www.medicaid.gov/federal-
policy-Guidance/index.html.
States operating a BHP must submit
enrollment data to us on a quarterly
basis and should be technologically
prepared to begin submitting data at the
start of their BHP, starting with the
beginning of the first program year. This
differs from the enrollment estimates
used to calculate the initial BHP
payment, which states would generally
submit to CMS 60 days before the start
of the first quarter of the program start
date. This requirement is necessary for
us to implement the payment
methodology that is tied to a quarterly
reconciliation based on actual
enrollment data.
We propose to continue the policy
first adopted in the 2016 final BHP
Payment Notice that in states that have
BHP enrollees who do not file Federal
tax returns (non-filers), the state must
develop a methodology to determine the
enrollees’ household income and
household size consistently with
Marketplace requirements.
7
The state
must submit this methodology to us at
the time of their Blueprint submission.
We reserve the right to approve or
disapprove the state’s methodology to
determine household income and
household size for non-filers if the
household composition and/or
household income resulting from
application of the methodology are
different than what typically would be
expected to result if the individual or
head of household in the family were to
file a tax return. States currently
operating a BHP that wish to change the
methodology for non-filers must submit
a revised Blueprint outlining the
revisions to its methodology, consistent
with § 600.125.
In addition, as the Federal payments
are determined quarterly and the
enrollment data is required to be
submitted by the states to us 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 the BHP in each quarter).
Thus, if an enrollee were to experience
a change in county of residence,
household 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 (or their first month of
enrollment in the BHP in the applicable
quarter). Payments would still be made
only for months that the person is
enrolled in and eligible for the 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.
Consistent with § 600.610 (Secretarial
determination of BHP payment amount),
the state is required to submit certain
data in accordance with this
methodology. We require that this data
be collected and validated by states
operating a 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 BHP-eligible
individuals enrolled in QHPs through
an Exchange, we must calculate a RP
because the PTC is based, in part, on the
premiums for the applicable second
lowest cost silver plan as explained in
section II.D.5. of this proposed
methodology, regarding the premium
tax credit formula (PTCF). The proposal
is unchanged from the current
methodology 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 RP, 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 that is offered through the same
Exchange. We propose to use the
adjusted monthly premium for an
applicable second lowest cost silver
plan in the applicable program year
(2022) as the RP (except in the case of
a state that elects to use the prior plan
year’s premium as the basis for the
Federal BHP payment for 2022, as
described in section II.E. of this
proposed methodology).
The RP 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 Exchange, 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 RP,
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 (if applicable), geographic area,
and self-only or applicable category of
family coverage obtained through the
BHP.
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 Exchange, the
applicable plan may differ for various
reasons. For example, a different second
lowest cost silver plan may apply to a
family consisting of two adults, their
child, and their niece than to a family
with two adults and their children,
because one 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
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CMCS. ‘‘State Medicaid, CHIP and BHP Income
Eligibility Standards Effective October 1, 2020.’’
9
Some examples of outliers or unreasonable
adjustments include (but are not limited to) values
over 100 percent (implying the premiums doubled
or more as a result of the adjustment), values more
than double the otherwise highest adjustment, or
non-numerical entries.
believe that in the 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 RP relies on an
assumption about enrollment in the
Exchanges. In the payment
methodologies for program years 2015
through 2019, we had assumed that all
persons enrolled in the BHP would have
elected to enroll in a silver level plan if
they had instead enrolled in a QHP
through an Exchange (and that the QHP
premium would not be lower than the
value of the PTC). In the November 2019
final BHP Payment Notice, we
continued to use the second-lowest cost
silver plan premium as the RP, but for
the 2020 payments we changed the
assumption about which metal tier
plans enrollees would choose (see
section II.D.6. on the MTSF in this
proposed methodology). In the 2021
payment methodology, we continued to
account for how enrollees may choose
other metal tier plans by applying the
MTSF. For the 2022 payment
methodology, we propose to continue
accounting for how enrollees may
choose other metal tier plans by
proposing the continued application of
the MTSF as described in section II.D.6.
of this proposed methodology.
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
Patient Protection and Affordable Care
Act requires the calculation of such
rates as if the enrollee had enrolled in
a QHP through an Exchange.
The applicable age bracket (if any)
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 total monthly
payment for BHP enrollees. 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
Exchanges. We propose to define each
geographic area so that the RP is the
same throughout the geographic area.
When the RP varies within a rating area,
we propose defining geographic areas as
aggregations of counties with the same
RP. Although plans are allowed to serve
geographic areas smaller than counties
after obtaining our approval, we propose
that no geographic area, for 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 simplify both the
calculation of BHP payment rates and
the operation of the 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 the 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 (MAGI)), children in households
with incomes between that threshold
and 200 percent of FPL would be
potentially eligible for the BHP.
Currently, the only states in this
category are Idaho and North Dakota.
8
Second, the BHP would include
lawfully present immigrant children
with household incomes at or below 200
percent of FPL in states that have not
exercised the option under 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 a BHP, Idaho
children with household 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 live in
households with incomes at or below
200 percent of FPL will qualify for
Medicaid or CHIP, and thus be
ineligible for a BHP under section
1331(e)(1)(C) of the Patient Protection
and Affordable Care Act, which limits a
BHP to individuals who are ineligible
for minimum essential coverage (as
defined in 26 U.S.C. 5000A(f)).
2. Premium Adjustment Factor (PAF)
The PAF considers the premium
increases in other states that took effect
after we discontinued payments to
issuers for CSRs provided to enrollees in
QHPs offered through Exchanges.
Despite the discontinuance of Federal
payments for CSRs, QHP issuers are
required to provide CSRs to eligible
enrollees. As a result, many QHP issuers
increased the silver-level plan
premiums to account for those
additional costs; adjustments and how
those were applied (for example, to only
silver-level plans or to all metal tier
plans) varied across states. For the states
operating BHPs in 2018, the increases in
premiums were relatively minor,
because the majority of enrollees
eligible for CSRs (and all who were
eligible for the largest CSRs) were
enrolled in the BHP and not in QHPs on
the Exchanges, and therefore issuers in
BHP states did not significantly raise
premiums to cover unpaid CSR costs.
In the Final Administrative Order, the
November 2019 final BHP Payment
Notice, and the August 2020 final BHP
Payment Notice, we incorporated the
PAF into the BHP payment
methodologies for 2018, 2019, 2020, and
2021 to capture the impact of how other
states responded to us ceasing to pay
CSRs. We propose to include the PAF in
the 2022 payment methodology and to
calculate it in the same manner as in the
Final Administrative Order. In the event
that an appropriation for CSRs for 2022
is made, we would determine whether
and how to modify the PAF in the
payment methodology.
Under the Final Administrative
Order, we calculated the PAF by using
information sought from QHP issuers in
each state and the District of Columbia,
and determined the premium
adjustment that the responding QHP
issuers made to each silver level plan in
2018 to account for the discontinuation
of CSR payments to QHP issuers. Based
on the data collected, we estimated the
median adjustment for silver level QHPs
nationwide (excluding those in the two
BHP states). To the extent that QHP
issuers made no adjustment (or the
adjustment was zero), this would be
counted as zero in determining the
median adjustment made to all silver
level QHPs nationwide. If the amount of
the adjustment was unknown—or we
determined that it should be excluded
for methodological reasons (for
example, the adjustment was negative,
an outlier, or unreasonable)—then we
did not count the adjustment towards
determining the median adjustment.
9
The median adjustment for silver level
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10
See Kaiser Family Foundation, ‘‘Average
Marketplace Premiums by Metal Tier, 2018–2020,’’
https://www.kff.org/health-reform/state-indicator/
average-marketplace-premiums-by-metal-tier/.
11
See Basic Health Program: Federal Funding
Methodology for Program Years 2019 and 2020;
Final Methodology, 84 FR 59529 at 59532
(November 5, 2019).
12
See Sanford Health Plan v. United States, 969
F.3d 1370 (Fed. Cir. 2020) and Community Health
Choice, Inc. v. United States, 970 F.3d 1364 (Fed.
Cir. 2020).
QHPs is the nationwide median
adjustment.
For each of the two BHP states, we
determined the median premium
adjustment for all silver level QHPs in
that state, which we refer to as the state
median adjustment. The PAF for each
BHP state equaled one plus the
nationwide median adjustment divided
by one plus the state median adjustment
for the BHP state. In other words,
PAF = (1 + Nationwide Median
Adjustment) ÷ (1 + State Median
Adjustment)
To determine the PAF described
above, we sought to collect QHP
information from QHP issuers in each
state and the District of Columbia to
determine the premium adjustment
those issuers made to each silver level
plan offered through the Exchange in
2018 to account for the end of CSR
payments. Specifically, we sought
information showing the percentage
change that QHP issuers made to the
premium for each of their silver level
plans to cover benefit expenditures
associated with the CSRs, given the lack
of CSR payments in 2018. This
percentage change was a portion of the
overall premium increase from 2017 to
2018.
According to our records, there were
1,233 silver-level QHPs operating on
Exchanges in 2018. Of these 1,233
QHPs, 318 QHPs (25.8 percent)
responded to our request for the
percentage adjustment applied to silver-
level QHP premiums in 2018 to account
for the discontinuance of the CSRs.
These 318 QHPs operated in 26 different
states, with 10 of those states running
State-based Exchanges (SBEs) (while we
requested information only from QHP
issuers in states serviced by an FFE,
many of those issuers also had QHPs in
states operating SBEs and submitted
information for those states as well).
Thirteen of these 318 QHPs were in
New York (and none were in
Minnesota). Excluding these 13 QHPs
from the analysis, the nationwide
median adjustment was 20.0 percent. Of
the 13 QHPs in New York that
responded, the state median adjustment
was 1.0 percent. We believe that this is
an appropriate adjustment for QHPs in
Minnesota, as well, based on the
observed changes in New York’s QHP
premiums in response to the
discontinuance of CSR payments (and
the operation of the BHP in that state)
and our analysis of expected QHP
premium adjustments for states with
BHPs. We calculated the proposed PAF
as (1 + 20%) ÷ (1 + 1%) (or 1.20/1.01),
which results in a value of 1.188.
We propose that the PAF continue to
be set to 1.188 for program year 2022.
We believe that this value for the PAF
continues to reasonably account for the
increase in silver-level premiums
experienced in non-BHP states that took
effect after the discontinuance of the
CSR payments. We believe that the
impact of the increase in silver-level
premiums in 2022 can reasonably be
expected to be similar to that in 2018,
because the discontinuation of CSR
payments has not changed. Moreover,
we believe that states and QHP issuers
have not significantly changed the
manner and degree to which they are
increasing QHP silver-level premiums to
account for the discontinuation of CSR
payments since 2018, and we expect the
same for 2022.
In addition, the percentage difference
between the average second lowest-cost
silver level QHP and the bronze-level
QHP premiums has not changed
significantly since 2018, and we do not
expect a significant change for 2022. In
2018, the average second lowest-cost
silver level QHP premium was 41.1
percent higher than the average lowest-
cost bronze-level QHP premium ($481
and $341, respectively). In 2020 (the
latest year for which premiums have
been published), the difference is
similar; the average second lowest-cost
silver-level QHP premium is 39.6
percent higher than the average lowest-
cost bronze-level QHP premium ($462
and $331, respectively).
10
In contrast,
the average second lowest-cost silver-
level QHP premium was only 23.8
percent higher than the average lowest-
cost bronze-level QHP premium in 2017
($359 and $290, respectively).
11
If there
were a significant difference in the
amounts that QHP issuers were
increasing premiums for silver-level
QHPs to account for the discontinuation
of CSR payments over time, then we
would expect the difference between the
bronze-level and silver-level QHP
premiums to change significantly over
time, and that this would be apparent in
comparing the lowest-cost bronze-level
QHP premium to the second lowest-cost
silver-level QHP premium.
We request comments on our proposal
that the PAF continue to be set to 1.188
for program year 2022. We request
comments on whether sources of data
other than what we sought in 2018 are
available to account for the adjustment
to the silver-level QHP premiums to
account for the discontinuation of CSRs
beyond 2018.
We also generally seek comment on
what impact (if any) the recent court
decisions
12
regarding the government’s
obligation to make CSR payments may
have on the observed trends regarding
adjustments to the silver-level QHP
premiums to account for the
discontinuation of CSRs, as well as the
potential continuation of these trends
for the 2022 plan year. We also
generally seek comment on whether, in
the event an appropriation for CSRs for
2022 is made, we should determine if
and how to modify the PAF in the
payment methodology, including
whether to eliminate it in light of the
purpose for which it was initially
included in the payment methodology.
3. Population Health Factor (PHF)
We propose that the PHF be included
in the methodology to account for the
potential differences in the average
health status between BHP enrollees
and persons enrolled through the
Exchanges. To the extent that BHP
enrollees would have been enrolled
through an Exchange in the absence of
a BHP in a state, the exclusion of those
BHP enrollees in the Exchange may
affect the average health status of the
overall population and the expected
QHP premiums.
We currently do not believe that there
is evidence that the BHP population
would have better or poorer health
status than the Exchange population. At
this time, there continues to be a lack
of data on the experience in the
Exchanges that limits the ability to
analyze the potential health differences
between these groups of enrollees. More
specifically, Exchanges have been in
operation since 2014, and 2 states have
operated BHPs since 2015, but data is
not available to do the analysis
necessary to determine if there are
differences in the average health status
between BHP and Exchange enrollees.
In addition, differences in population
health may vary across states. We also
do not believe that sufficient data would
be available to permit us to make a
prospective adjustment to the PHF
under § 600.610(c)(2) for the 2022
program year.
Given these analytic challenges and
the limited data about Exchange
coverage and the characteristics of BHP-
eligible consumers, we propose that the
PHF continue to be 1.00 for program
year 2022.
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13
See 79 FR at 14131.
14
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’’), 153.230(a) (reinsurance payments
under the national reinsurance parameters are
available only for ‘‘Reinsurance-eligible plans’’).
15
These income ranges and this analysis of
income apply to the calculation of the PTC.
16
See Table IV A1 from the 2020 Annual Report
of the Boards of Trustees of the Federal Hospital
Insurance and Federal Supplementary Medical
Insurance Trust Funds, available at https://
www.cms.gov/files/document/2020-medicare-
trustees-report.pdf.
In previous years BHP payment
methodologies, we included an option
for states to include a retrospective
population health status adjustment. We
propose that states be provided with the
same option for 2022 to include a
retrospective population health status
adjustment in the certified
methodology, which is subject to our
review and approval. This option is
described further in section II.F. of this
proposed methodology. Regardless of
whether a state elects to include a
retrospective population health status
adjustment, we anticipate that, in future
years, when additional data becomes
available about Exchange coverage and
the characteristics of BHP enrollees, we
may propose a different PHF.
While the statute requires
consideration of risk adjustment
payments and reinsurance payments
insofar as they would have affected the
PTC that would have been provided to
BHP-eligible individuals had they
enrolled in QHPs, we are not proposing
to require that a BHP’s standard health
plans receive such payments. As
explained in the BHP final rule, BHP
standard health plans are not included
in the federally-operated risk
adjustment program.
13
Further, standard
health plans did not qualify for
payments under the transitional
reinsurance program established under
section 1341 of the Patient Protection
and Affordable Care Act for the years
the program was operational (2014
through 2016).
14
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.
4. Household Income (I)
Household income is a significant
determinant of the amount of the PTC
that is provided for persons enrolled in
a QHP through an Exchange.
Accordingly, both the current and
proposed BHP payment methodologies
incorporate household income into the
calculations of the payment rates
through the use of income-based rate
cells. We propose defining household
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). 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:
15
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 BHP
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 the
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.D.5. of
this proposed methodology.
As the APTC for persons enrolled in
QHPs would be calculated based on
their household 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.
16
5. 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 Exchange 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 Exchange), 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 (that is, the monthly
premium adjusted for the age of the
enrollee) 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
Exchange 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 Table
1. We propose to continue to use
applicable percentages to calculate the
estimated PTC that would be paid on
behalf of a person enrolled in a QHP on
an Exchange as part of the BHP payment
methodology as part of Equation 1. We
propose that the applicable percentages
in Table 1 for calendar year (CY) 2021
would be effective for BHP program year
2022. The applicable percentages will
be updated in future years in
accordance with 26 U.S.C.
36B(b)(3)(A)(ii).
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T
ABLE
1—A
PPLICABLE
P
ERCENTAGE
T
ABLE FOR
CY 2021
a
In the case of household income (expressed as a percent of poverty line) within the following
income tier: The initial premium
percentage is— The final premium
percentage is—
Up to 133% .............................................................................................................................................. 2.07 2.07
133% but less than 150% ....................................................................................................................... 3.10 4.14
150% but less than 200% ....................................................................................................................... 4.14 6.52
200% but less than 250% ....................................................................................................................... 6.52 8.33
250% but less than 300% ....................................................................................................................... 8.33 9.83
300% but not more than 400% ............................................................................................................... 9.83 8.83
a
IRS Revenue Procedure 2020–36. https://www.irs.gov/pub/irs-drop/rp-20–36.pdf.
6. Metal Tier Selection Factor (MTSF)
On the Exchange, if an enrollee
chooses a QHP and the value of the
APTC to which the enrollee is entitled
is greater than the premium of the plan
selected, then the APTC is reduced to be
equal to the premium. This usually
occurs when enrollees eligible for larger
APTCs choose bronze-level QHPs,
which typically have lower premiums
on the Exchange than silver-level QHPs.
Prior to 2018, we believed that the
impact of these choices and plan
selections on the amount of PTCs that
the Federal Government paid was
relatively small. During this time, most
enrollees in income ranges up to 200
percent FPL chose silver-level QHPs,
and in most cases where enrollees chose
bronze-level QHPs, the premium was
still more than the PTC. Based on our
analysis of the percentage of persons
with incomes below 200 percent FPL
choosing bronze-level QHPs and the
average reduction in the PTCs paid for
those enrollees, we believe that the total
PTCs paid for persons with incomes
below 200 percent FPL were reduced by
about 1 percent in 2017. Therefore, we
did not seek to make an adjustment
based on the effect of enrollees choosing
non-silver-level QHPs in developing the
BHP payment methodology applicable
to program years prior to 2018.
However, after the discontinuance of the
CSR payments in October 2017, several
changes occurred that increased the
expected impact of enrollees’ plan
selection choices on the amount of PTC
the government paid. These changes led
to a larger percentage of individuals
choosing bronze-level QHPs, and for
those individuals who chose bronze-
level QHPs, these changes also generally
led to larger reductions in PTCs paid by
the Federal Government per individual.
The combination of more individuals
with incomes below 200 percent of FPL
choosing bronze-level QHPs and the
reduction in PTCs had an impact on
PTCs paid by the Federal Government
for enrollees with incomes below 200
percent FPL.
Silver-level QHP premiums for the
2018 benefit year increased
substantially relative to other metal tier
plans in many states (on average, by
about 20 percent). We believe this
contributed to an increase in the
percentage of enrollees with lower
incomes choosing bronze-level QHPs,
despite being eligible for CSRs in silver-
level QHPs, because many were able to
purchase bronze-level QHPs and pay $0
in premium; according to CMS data, the
percentage of persons with incomes
between 0 percent and 200 percent of
FPL eligible for CSRs (those who would
be eligible for the BHP if the state
operated a BHP) selecting bronze-level
QHPs increased from about 11 percent
in 2017 to about 13 percent in 2018. In
addition, the likelihood that a person
choosing a bronze-level QHP would pay
$0 premium increased, and the
difference between the bronze-level
QHP premium and the available PTC
widened. Between 2017 and 2018, the
ratio of the average silver-level QHP
premium to the average bronze-level
QHP premium increased: The average
silver-level QHP premium was 17
percent higher than the average bronze-
level QHP premium in 2017, whereas
the average silver-level QHP premium
was 33 percent higher than the average
bronze-level QHP premium in 2018.
Similarly, the average estimated
reduction in APTC for enrollees with
incomes between 0 percent and 200
percent FPL that chose bronze-level
QHPs increased from about 11 percent
in 2017 to about 23 percent in 2018
(after adjusting for the average age of
bronze-level QHP and silver-level QHP
enrollees); that is, in 2017, enrollees
with incomes in this range who chose
bronze-level QHPs received 11 percent
less than the full value of the APTC, and
in 2018, those enrollees who chose
bronze-level QHPs received 23 percent
less than the full value of the APTC.
The discontinuance of the CSR
payments led to increases in silver-level
QHP premiums (and thus in the total
potential PTCs), but did not generally
increase the bronze-level QHP
premiums in most states; we believe this
is the primary reason for the increase in
the percentage reduction in PTCs paid
by the government for those who
enrolled in bronze-level QHPs between
2017 and 2018. Therefore, we now
believe that the impacts on the amount
of PTC the government would pay due
to enrollees’ plan selection choices are
larger and thus more significant, and we
are proposing to include an adjustment
(the MTSF) in the BHP payment
methodology to account for the effects
of these choices. Section 1331(d)(3) of
the Patient Protection and Affordable
Care Act requires that the BHP
payments to states be based on what
would have been provided if such
eligible individuals were allowed to
enroll in QHPs, and we believe that it
is appropriate to consider how
individuals would have chosen different
plans—including across different metal
tiers—as part of the BHP payment
methodology.
We finalized the application of the
MTSF for the first time in the 2020
payment methodology, and here we
propose to calculate the MTSF using the
same approach as finalized there (84 FR
59543). First, we would calculate the
percentage of enrollees with incomes
below 200 percent of the FPL (those
who would be potentially eligible for
the BHP) in non-BHP states who
enrolled in bronze-level QHPs. Second,
we would calculate the ratio of the
average PTC paid for enrollees in this
income range who selected bronze-level
QHPs compared to the average PTC paid
for enrollees in the same income range
who selected silver-level QHPs. Both of
these calculations would be done using
CMS data on Exchange enrollment and
payments. For 2022, we propose to use
2019 data, as it is the latest year of data
available at this time. In the 2021 final
BHP Payment Notice, we used 2018
data, as it was the latest year of data
available at that time.
The MTSF would then be set to the
value of 1 minus the product of the
percentage of enrollees who chose
bronze-level QHPs and 1 minus the ratio
of the average PTC paid for enrollees in
bronze-level QHPs to the average PTC
paid for enrollees in silver-level QHPs:
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17
See Sanford Health Plan v. United States, 969
F.3d 1370 (Fed. Cir. 2020) and Community Health
Choice, Inc. v. United States, 970 F.3d 1364 (Fed.
Cir. 2020).
MTSF = 1¥(percentage of enrollees in
bronze-level QHPs × (1¥average
PTC paid for bronze-level QHP
enrollees/average PTC paid for
silver-level QHP enrollees))
We have calculated that 16.14 percent
of enrollees in households with incomes
below 200 percent of the FPL selected
bronze-level QHPs in 2019. We also
have calculated that the ratio of the
average PTC paid for those enrollees in
bronze-level QHPs to the average PTCs
paid for enrollees in silver-level QHPs
was 79.41 percent after adjusting for the
average age of bronze-level and silver-
level QHP enrollees. The MTSF is equal
to 1 minus the product of the percentage
of enrollees in bronze-level QHPs (16.14
percent) and 1 minus the ratio of the
average PTC paid for bronze-level QHP
enrollees to the average PTC paid for
silver-level QHP enrollees (79.41
percent). Thus, the MTSF would be
calculated as:
MTSF = 1¥(16.14% × (1¥79.41%))
Therefore, we propose that the value
of the MTSF for 2022 would be 96.68
percent.
We believe it is reasonable to update
the value for the MTSF from the value
that was used in the 2021 payment
methodology. In general, we believe it is
appropriate to update the calculation of
the MTSF (and other factors) as more
recent data becomes available. At this
time, we have complete data for 2019,
and only for several months of 2020.
Therefore, we propose to use 2019 data
to calculate the 2022 MTSF. Therefore,
we believe that our proposal to update
the value of the MTSF to 96.68 percent
is reasonable for program year 2022.
We request comments on this
proposal. In particular, we welcome
comments on whether other sources of
data beyond 2019 are available and
should be used to calculate the MTSF
for 2022. One potential alternative
would be to update the MTSF with
partial 2020 data collected by CMS for
Exchange plan selection and enrollment
(by income and by metal tier selection)
and for APTC paid for 2021 (based on
the number of months available at the
time the final payment methodology is
published).
We also seek comment on what
impact (if any) the recent court
decisions
17
regarding the government’s
obligation to make CSR payments may
have on the observed trends regarding
adjustments to the silver-level QHP
premiums to account for the
discontinuation of CSRs and consumer
plan selection behaviors, as well as the
potential continuation of these trends
for the 2022 plan year. We also seek
comment on the potential for
Congressional action on CSR
appropriations.
7. Income Reconciliation Factor (IRF)
For persons enrolled in a QHP
through an Exchange who receive
APTC, there will be an annual
reconciliation following the end of the
year to compare the APTC 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
APTC paid 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 paid, subject to any
limitations in statute or regulation), as
provided in 26 U.S.C. 36B(f).
Section 1331(e)(2) of the Patient
Protection and Affordable Care Act
specifies that an individual eligible for
the BHP may not be treated as a
‘‘qualified individual’’ under section
1312 of the Patient Protection and
Affordable Care Act who is eligible for
enrollment in a QHP offered through an
Exchange. We are defining ‘‘eligible’’ to
mean anyone for whom the state agency
or the Exchange assesses or determines,
based on the single streamlined
application or renewal form, as eligible
for enrollment in the BHP. Because
enrollment in a QHP is a requirement
for individuals to receive APTC,
individuals determined or assessed as
eligible for a BHP are not eligible to
receive APTC for coverage in the
Exchange. Because they do not receive
APTC, BHP enrollees, on whom the
BHP payment methodology is generally
based, are not subject to the same
income reconciliation as Exchange
consumers.
Nonetheless, there may still be
differences between a BHP enrollee’s
household income reported at the
beginning of the year and the actual
household 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 household incomes of BHP
enrollees during the year. Even if the
BHP 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
Exchange and received APTC.
Therefore, in accordance with current
practice, we propose including in
Equation 1 an adjustment, the IRF, that
would account for the difference
between calculating estimated PTC
using: (a) Household income relative to
FPL as determined at initial application
and potentially revised mid-year under
§ 600.320, for purposes of determining
BHP eligibility and claiming Federal
BHP payments; and (b) actual
household 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 for coverage provided
through QHPs. Consistent with the
methodology used in past years, 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 OTA maintains a model that
combines detailed tax and other data,
including Exchange enrollment and PTC
claimed, to project Exchange 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 the
BHP. Consistent with prior years, we
propose to use the ratio of the
reconciled PTC to the initial estimation
of PTC as the IRF in Equations (1a) and
(1b) for estimating the PTC portion of
the BHP payment rate.
For 2022, OTA has estimated that the
IRF for states that have implemented the
Medicaid eligibility expansion to cover
adults up to 133 percent of the FPL will
be 99.01 percent. We believe that it is
appropriate to refine the calculation of
the IRF and only use data regarding
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Exchange enrollees with incomes
between 133 percent and 200 percent
FPL, as in Medicaid expansion states,
instead of an average that also includes
data regarding Exchange enrollees with
incomes between 100 percent and 200
percent FPL, as in non-Medicaid
expansion states. This is the same
approach that we finalized in the 2021
BHP Payment Notice. For other factors
used in the BHP payment methodology,
it may not always be possible to
separate the experiences between
different types of states and there may
not be meaningful differences between
the experiences of such states.
Therefore, we propose to set the value
of the IRF equal to the value of the IRF
for states that have expanded Medicaid
eligibility, which would be 99.01
percent for program year 2022.
We propose to use this value for the
IRF in Equations (1a) and (1b) for
calculating the PTC portion of the BHP
payment rate.
E. State Option To Use Prior Program
Year QHP Premiums for BHP Payments
In the interest of allowing states
greater certainty in the total BHP
Federal payments for a given plan year,
we have given states the option to have
their final Federal BHP payment rates
calculated using a projected ARP (that
is, using premium data from the prior
program year multiplied by the
premium trend factor (PTF), as
described in Equation (2b). We propose
to require states to make their election
to have their final Federal BHP payment
rates calculated using a projected ARP
by the later of (1) May 15 of the year
preceding the applicable program year
or (2) 60 days after the publication of
the final methodology. Therefore, we
propose states inform CMS in writing of
their election for the 2022 program year
by the later of May 15, 2021 or 60 days
after the publication of the final
methodology.
For Equation (2b), we propose to
continue to define the PTF, with minor
proposed changes in calculation sources
and methods, as follows:
PTF: In the case of a state that would
elect to use the 2021 premiums as the
basis for determining the 2022 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 program year. 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.
For the PTF we propose to use the
annual growth rate in private health
insurance expenditures per enrollee
from the National Health Expenditure
(NHE) projections, developed by the
Office of the Actuary in CMS (https://
www.cms.gov/Research-Statistics-Data-
and-Systems/Statistics-Trends-and-
Reports/NationalHealthExpendData/
NationalHealth
AccountsProjected.html). Based on
these projections, for BHP program year
2022, we propose that the PTF would be
4.7 percent.
We note that the increase in
premiums for QHPs from 1 year to the
next may differ from the PTF developed
for the BHP funding methodology for
several reasons. In particular, we note
that the second lowest cost silver plan
may be different from one year to the
next. This may lead to the PTF being
greater than or less than the actual
change in the premium of the second
lowest cost silver plan.
F. 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 an Exchange
would affect the PTC and risk
adjustment payments that would have
otherwise been made had BHP enrollees
been enrolled in coverage through an
Exchange, 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 that program year for each rate
cell.
We acknowledge that there is
uncertainty with respect to this factor
due to the lack of available data to
analyze potential health differences
between the BHP and QHP populations,
which is why, absent a state election,
we propose to use a value for the PHF
(see section II.D.3. of this proposed
methodology) 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, the potential effect such risk would
have had on PTC, and risk adjustment
that would have otherwise been made
had BHP enrollees been enrolled in
coverage through an Exchange. 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
of PTCs and CSRs, we propose to
continue 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 as part of the
BHP payment methodology applicable
to the state, 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 OTA. We
propose to apply the same protocol for
the population health status adjustment
as what is set forth 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 for the 2022 program year by
August 1, 2021 or 60 days after the
publication of the final methodology.
We propose that this submission would
also need to 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, as
requested. To implement the population
health status adjustment, we propose
that we must approve the state’s
protocol by December 31, 2021 for the
2022 program year. Finally, we propose
that the state be required to complete
the population health status adjustment
at the end of the program year based on
the approved protocol. After the end of
the program year, and once data is made
available, we propose 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
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deposit. If we determine that the Federal
BHP payments were more than they
would have been using the final
reconciled factor, we would subtract the
difference from the next quarterly BHP
payment to the state.
III. Collection of Information
Requirements
Although our Federal funding
methodology’s information collection
requirements and burden had at one
time been approved by OMB under
control number 0938–1218 (CMS–
10510), the approval was discontinued
on August 31, 2017, since we adjusted
our estimated number of respondents to
be below the Paperwork Reduction Act
of 1995 (PRA) (44 U.S.C. 3501 et seq.)
threshold of ten or more respondents.
Since we continue to estimate fewer
than ten respondents (only New York
and Minnesota operate a BHP at this
time), the proposed program year 2022
methodology is not subject to the
requirements of the PRA.
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 Analysis
A. Statement of Need
Section 1331 of the Patient Protection
and Affordable Care Act (42 U.S.C.
18051) requires the Secretary to
establish a BHP, and section 1331(d)(1)
specifically provides that if the
Secretary finds that a state meets the
requirements of the program established
under section 1331(a) of the Patient
Protection and Affordable Care Act, the
Secretary shall transfer to the state
Federal BHP payments described in
section 1331(d)(3). This proposed
methodology provides for the funding
methodology to determine the Federal
BHP payment amounts required to
implement these provisions for program
year 2022.
B. Overall Impact
We have examined the impacts of this
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 (March
22, 1995; Pub. L. 104–4), Executive
Order 13132 on Federalism (August 4,
1999), the Congressional Review Act (5
U.S.C. 804(2) and Executive Order
13771 on Reducing Regulation and
Controlling Regulatory Costs (January
30, 2017).
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, the BHP provides
states the flexibility to establish an
alternative coverage program for low-
income individuals who would
otherwise be eligible to purchase
coverage on an Exchange. Because we
make 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
Payment 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.
Moreover, the proposed regulation is
not economically significant within the
meaning of section 3(f)(1) of the
Executive Order.
C. Anticipated Effects
The provisions of this proposed
methodology 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 Federal financial
assistance for coverage purchased on the
Exchange. 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 state-
specific factors and conditions. 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 RP 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
methodology, like the methodology
used in 2021, accounts for these
variations to ensure accurate BHP
payment transfers are made to each
state.
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) (RFA) requires
agencies to prepare a final regulatory
flexibility analysis to describe the
impact of the final 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 RFA generally defines a ‘‘small
entity’’ as (1) a proprietary firm meeting
the size standards of the Small Business
Administration (SBA); (2) a not-for-
profit organization that is not dominant
in its field; or (3) a small government
jurisdiction with a population of less
than 50,000. 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 methodology.
Because this 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 methodology, like the previous
methodology and the final rule that
established the BHP program, will not
have a significant economic impact on
a substantial number of small entities.
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Section 1102(b) of the Act requires us
to prepare a regulatory impact analysis
if a 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 methodology
will not have a significant impact on a
substantial number of small rural
hospitals.
Section 202 of the Unfunded
Mandates Reform Act (UMRA) of 2005
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
2020, that threshold is approximately
$156 million. States have the option, but
are not required, to establish a BHP.
Further, the methodology would
establish Federal payment rates without
requiring states to provide the Secretary
with any data not already required by
other provisions of the Patient
Protection and 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.
Executive Order 13132 establishes
certain requirements that an agency
must meet when it issues a 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
Executive Order 13132 do not apply to
this proposed methodology.
D. Alternative Approaches
We considered several alternatives in
developing the proposed BHP payment
methodology for 2022, and we discuss
some of these alternatives below.
We considered alternatives as to how
to calculate the PAF in the proposed
methodology for 2022. The proposed
value for the PAF is 1.188, which is the
same as was used for 2018, 2019, 2020,
and 2021. We believe it would be
difficult to obtain the updated
information from QHP issuers
comparable to what was used to develop
the 2018 factor, because QHP issuers
may not distinctly consider the impact
of the discontinuance of CSR payments
on the QHP premiums any longer. We
do not have reason to believe that the
value of the PAF would change
significantly between program years
2018 and 2022. We are continuing to
consider whether or not there are other
methodologies or data sources we may
be able to use to calculate the PAF.
We also considered alternatives as
how to calculate the MTSF in the
proposed methodology for 2022. The
proposed value for the MTSF for
program year 2022 is 96.68 percent. We
considered whether other sources of
data that include data after 2019 should
be used to calculate the MTSF for 2022,
including calculating the MTSF with
partial 2020 data collected by CMS for
Exchange plan selection and enrollment
(by income and by metal tier selection)
and for APTC paid for 2021 (based on
the number of months available at the
time the final payment methodology is
published).
We also considered whether to
continue to provide states the option to
develop a protocol for a retrospective
adjustment to the population health
factor (PHF) as we did in previous
payment methodologies. We believe that
continuing to provide this option is
appropriate and likely to improve the
accuracy of the final payments.
We also considered whether to
require the use of the program year
premiums to develop the Federal BHP
payment rates, rather than allow the
choice between the program year
premiums and the prior year premiums
trended forward. We believe that the
payment rates can still be developed
accurately using either the prior year
QHP premiums or the current program
year premiums and that it is appropriate
to continue to provide the states these
options.
Many of the factors proposed in this
proposed methodology are specified in
statute; therefore, for these factors we
are limited in the alternative approaches
we could consider. One area in which
we previously had and still have a
choice is in selecting the data sources
used to determine the factors included
in the proposed methodology. Except
for state-specific RPs 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. For RPs 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.
We request public comment on these
alternative approaches.
E. Regulatory Reform Analysis Under
E.O. 13771
Executive Order 13771, titled
Reducing Regulation and Controlling
Regulatory Costs, was issued on January
30, 2017 and requires that the costs
associated with significant new
regulations ‘‘shall, to the extent
permitted by law, be offset by the
elimination of existing costs associated
with at least two prior regulations.’’
This proposed methodology, if finalized
as proposed, is expected to be neither an
E.O. 13771 regulatory action nor an E.O.
13771 deregulatory action.
F. Conclusion
We believe that this proposed BHP
payment methodology is effectively the
same methodology as finalized for 2021.
BHP payment rates may change as the
values of the factors change, most
notably the QHP premiums for 2021 or
2022. We do not anticipate this
proposed methodology to have any
significant effect on BHP enrollment in
2022.
In accordance with the provisions of
Executive Order 12866, this regulation
was reviewed by the Office of
Management and Budget.
Dated: October 8, 2020.
Seema Verma,
Administrator, Centers for Medicare &
Medicaid Services.
Dated: October 15, 2020.
Alex M. Azar II,
Secretary, Department of Health and Human
Services.
[FR Doc. 2020–24147 Filed 10–30–20; 11:15 am]
BILLING CODE 4120–01–P
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