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Each Exchange must establish its own recertification process for certified application counselors and designated certified application counselor organizations. We expect that establishing a process for recertification will include updating recertification training materials in all Exchanges. We estimate that up to 18 State Exchanges will develop their own training materials. We expect that an Exchange will develop training materials for recertification on an annual basis. We assume that it will take a mid-level health insurance analyst (with an hourly labor cost of $49.35) 8 hours to update the training, 4 hours for a computer programmer (at $52.50 per hour) to update the online training module and 1 hour by a senior manager (at $79.08 per hour) to review. The total cost for each State Exchange is estimated to be approximately
The requirement for appeals entities to dismiss an appeal if the request is received via telephonic signature (if the appeals entity is capable of accepting telephonic withdrawals) will make the process more efficient and may reduce costs to the appellant.
The ESS will impact enrollees responding to the survey, survey vendors and QHP issuers offering coverage in the Exchanges. In 2014, a psychometric test of the survey will be carried out, while in 2015 a beta test will be performed. The cost to issuers is addressed in section VI.
We anticipate that in 2014, 4,200 enrollees will participate in the psychometric test and in 2015 onwards, 6,000,040 enrollees will complete the survey. The total cost in 2014 of administering the survey to enrollees is estimated to be approximately $45,549 and the total cost to enrollees and survey vendors is estimated to be approximately $6,507,964 in 2015 and future years. In 2014, only one survey vendor will conduct the psychometric test and in the following years, about 40 vendors are expected to conduct the survey.42 In addition, each QHP issuer will have to contract with an ESS vendor. We estimate approximately $16,000 as the annual cost for a QHP issuer to contract with an ESS vendor, for a total annual cost of $9.2 million for 575 QHP issuers.
The Marketplace survey will be administered by a survey vendor under contract with HHS. A psychometric test will be conducted in 2014 with a beta test in 2015. Consumers will incur burden to respond to the survey. We estimate that each response will take 0.4 hours for a total of 3,150 responses requiring 1,260 hours in 2014 and a total of 61,200 responses requiring Detailed burden estimates can be found in the Supporting Statement for the Health Insurance Marketplace Consumer Experience Surveys: Enrollee Satisfaction Survey and Marketplace Survey Data Collection, found at https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html.
CMS-9949-F 345 24,480 hours in 2015 onwards. Total costs will be approximately $30,366 in 2014 and $589,968 in following years.43 Issuers that provide EHB should already have procedures in place that allow an enrollee to request and gain access to clinically appropriate drugs not covered by the plan. This final rule includes standards for a health plan’s exception process that includes an expedited process for exigent circumstances. This final rule requires issuers to provide a decision on an exception request based on exigent circumstances and notify the enrollee or the enrollee’s designee and the prescribing physician (or other prescriber as appropriate) of the determination no later than 24 hours after receiving the request. Depending on their current formulary exceptions processes, some issuers may incur costs to modify them to comply with these requirements.
Transfers Previously, the MLR regulation permitted inclusion of ICD-10 conversion costs in quality improving activity expenses only through the 2013 MLR reporting year. However, the date by which issuers are required to adopt ICD-10 as the standard medical code has been postponed past 2013. Therefore, this final rule permits issuers to include their ICD-10 conversion costs through the MLR reporting year in which the Secretary requires conversion to be completed. Based on the 2012 MLR data, we estimate that the ICD-10 provision reduced total rebates for 2012 by less than 2 percent.
This final rule also accounts for the special circumstances of issuers affected by the CMS November 2013 transitional policy by allowing those issuers to multiply the incurred claims and expenses for quality improving activities incurred in 2014 in the MLR numerator by 1.0001.
Detailed burden estimates can be found in the Supporting Statement for the Health Insurance Marketplace Consumer Experience Surveys: Enrollee Satisfaction Survey and Marketplace Survey Data Collection, found at https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html.
CMS-9949-F 346 This adjustment is limited to issuers that provided transitional coverage in the individual or small group markets in States that adopted the transitional policy. In addition, this final rule accounts for the special circumstances of the issuers that provided coverage through the State and Federal Exchanges by allowing those issuers to multiply the incurred claims and expenses for quality improving activities incurred in 2014 in the numerator by 1.0004. This adjustment is limited to issuers offering coverage in the individual or small group markets through the Exchanges. Based on the 2012 MLR data, we estimate that the adjustment for issuers affected by the transitional policy and for issuers affected by the Exchanges rollout may reduce the total rebates by 0.5 percent for 2014.
In addition, this final rule amends the MLR methodology to clarify how issuers must calculate MLRs in States that require the small group market and individual market to be merged for MLR calculation purposes. This will improve the consistency of MLR calculations among issuers in those States and improve the accuracy of rebate payments. Currently, only Massachusetts and Vermont require the small group market and individual market to be merged Vermont requirements take effect in 2014). If an issuer met the respective MLR standards in the separate markets, then this provision will not have any impact on rebates. However, if an issuer met the MLR standards only in one market and merging the two markets results in the issuer meeting (or being unable to meet) the MLR standards in the merged market, the issuer may have to pay lower (or higher) rebates and there will be a transfer from enrollees to issuers (or from issuers to enrollees). Based on the 2012 MLR data, we anticipate that this change may result in issuers paying an additional $3.8 million in rebates.
This rule revises the allocation of reinsurance contributions collected for the 2014 and
collections are allocated first to the reinsurance pool, and second to administrative expenses and the U.S. Treasury on a pro rata basis. We expect that this policy will not have a significant effect on transfers, because we estimate that we will collect the full amount of reinsurance contributions to fully fund the reinsurance payment pool. This policy may lower premiums by reducing the uncertainty associated with reinsurance payments to individual market plans eligible for reinsurance payments. The Affordable Care Act creates a temporary risk corridors program for the years 2014, 2015, and 2016 that applies to QHPs, as defined in §153.500. The risk corridors program creates a mechanism for sharing gains and losses between the Federal government and QHP issuers. The Affordable Care Act establishes the risk corridors program as a Federal program; consequently, HHS will operate the risk corridors program under Federal rules. The risk corridors program will help protect against inaccurate rate setting in the early years of the Exchanges by limiting the extent of issuer losses and gains. For the 2015 benefit year, we are adjusting the risk corridors formula to help mitigate QHP issuers’ unexpected administrative costs. Although our initial modeling suggests that this adjustment can increase the total risk corridors payment amount made by the Federal government and decrease risk corridors receipts, we believe that this temporary program will be budget neutral on the net over three years.
C. Regulatory Alternatives Under the Executive Order, CMS is required to consider alternatives to issuing rules and
alternative regulatory approaches. CMS considered the regulatory alternatives below:
1. Collecting ESS Data at the Product Level Instead of Each Product Per Metal Tier Under this alternative, HHS would have required QHPs to collect ESS data from a single
reduced the cost for issuers who offer the same product in multiple tiers. However, collecting data at the product level would have prevented consumers from understanding differences in enrollee satisfaction at the individual product per tier level, which may vary with differences in cost sharing. This would have reduced the benefits that consumers derive from ESS data.
2. Using Medicaid CAHPS® As Is Instead of Adding Additional and New Questions to the ESS Under this alternative, HHS would have required QHPs to collect enrollee satisfaction information using the Medicaid CAHPS® instrument without further enhancement. The ESS will include more questions than the Medicaid CAHPS®—including detailed questions about the patient’s costs—that are particularly appropriate to Exchange enrollees. Eliminating these questions would have reduced the cost to issuers, but also would have reduced benefits that consumers derive from the ESS data.
3. Collecting QRS Data for Each Product Per Metal Tier Instead of at the Product Level Under this alternative, HHS would have required QHPs to collect the QRS data at the same level (individual product per metal tier) as they collect ESS information. Assuming that QHPs offer each product in two metal tiers this option would have doubled the cost to QHPs of collecting QRS data. However, it might not have appreciably increased consumer information about QHPs in the early years of the Exchanges if the quality of care in the same product does not differ significantly within tiers (that is, the variation should only be by the configuration of cost sharing within a limited range of actuarial value). Further, a QHP’s enrollment size at the product metal level may be too small in the early years of Exchange implementation to ensure reliable results.
Under this alternative, HHS would have required QHPs to collect enrollee satisfaction information from Exchange enrollees using the MA CAHPS® instrument. The ESS presently includes 29 more questions than MA CAHPS®. Use of the MA CAHPS® would have reduced the cost to consumers and also the QHP cost of data entry. However, the MA CAHPS® instrument and Star ratings are designed for a different population and are not necessarily suitable to measure experience among Exchange enrollees. It also would have had limited applicability for use by consumers for QHP comparison and selection purposes.
CMS believes that the options adopted for this final rule will be more efficient ways to extend the protections of the Affordable Care Act to enrollees without imposing significant burden on issuers and States.
D. Regulatory Flexibility Act The Regulatory Flexibility Act (RFA) requires agencies that issue a rule to analyze options for regulatory relief of small businesses if a rule has a significant 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 nonprofit organization that is not dominant in its field, or (3) a small government jurisdiction with a population of less than 50,000 (States and individuals are not included in the definition of “small entity”). HHS uses as its measure of significant economic impact on a substantial number of small entities a change in revenues of more than 3 percent to 5 percent.
As discussed in the Web Portal interim final rule with comment period published on May 5, 2010 (75 FR 24481), HHS examined the health insurance industry in depth in the RIA we prepared for the proposed rule on establishment of the Medicare Advantage program (69 FR
firms underwriting comprehensive health insurance policies (in contrast, for example, to travel insurance policies or dental discount policies) that fell below the size thresholds for “small entity” established by the SBA. Based on data from MLR annual report submissions for the 2012 MLR reporting year,44 out of 510 companies offering comprehensive health insurance policies nationwide, there are 58 small entities, each with less than $35.5 million in earned premiums, that offer individual or group health insurance coverage and will therefore be subject to the provisions of this final rule.45 Forty three percent of these small entities belong to holding groups, and many if not all of these small entities are likely to have other lines of business (for example, insurance business other than health insurance, and business other than insurance) that will result in their revenues exceeding $35.5 million. Based on this analysis, HHS expects that the provisions of this final rule will not affect a substantial number of small issuers.
The amendments to the annual employer and employee election periods in the SHOPs, including removing the required minimum lengths of both the employer election period and the employee open enrollment period will benefit State-based SHOPs and employers. HHS does not anticipate that this will impose any costs on small employers.
Some of the entities that voluntarily act as Navigators and non-Navigator assistance personnel subject to §155.215, or as designated certified application counselor organizations, may be small entities and will incur costs to comply with the provisions of this final rule. It should be noted that HHS, in its role as the operator of the FFEs, does not impose any fees on these entities for participating in their respective programs, nor are there fees for taking the These data can be accessed at http://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html.