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The product covers a majority of the same counties in its service area;
The product has the same cost-sharing structure, except for variation in cost sharing solely related to changes in cost and utilization of medical care, or to maintain the same level of coverage described in sections 1302(d) and (e) of the Affordable Care Act (for example, bronze, silver, gold, platinum or catastrophic); and The product provides the same covered benefits, except for changes in benefits that cumulatively impact the rate for the product by no more than 2 percent (not including changes required by applicable Federal or State law).
These proposed criteria were intended to provide flexibility for issuers to make reasonable adjustments to coverage, while ensuring predictability and continuity for consumers and minimizing unnecessary terminations of coverage.
We proposed that States have flexibility to apply additional criteria that broaden the scope of what is considered a uniform modification, but that narrower State standards would be preempted.
We also proposed to add a provision in §147.106(e)(1) to restate the uniform modification of coverage provision for individual health insurance coverage under §148.122(g).
This was proposed for ease of reference and to facilitate issuer compliance.
To provide clear information to consumers and help ensure they understand the changes
provide standard notices in a form and manner prescribed by the Secretary when discontinuing or renewing coverage. Contemporaneously with the proposed rule, we released draft standard notices that issuers would be required to use in each of these situations, and requested public comment.13 In the standard notices guidance, we noted that States would have the option of developing State-required notices for issuers to use in place of the Federal notices, if approved by CMS. State notices approved for use could not be modified in any way by the issuer.
Finally, we stated that HHS or the applicable State will review rate increases for existing products that an issuer withdrew and attempted to re-file within a 12-month period as new products in order to avoid rate review as if they were simply renewed, if the changes to the discontinued product do not differ from the uniform modification criteria outlined above. We indicated that the same criteria set forth under the guaranteed renewability standards will be used to determine whether the re-filed product is considered to be the same “product” for purposes of determining whether the rate filing is subject to submission and review under 45 CFR Part 154.
We requested comment on whether this clarification, or a reference to the uniform modification criteria, should be incorporated into the rate review regulations.
Comment: Some commenters recommended the proposed uniform modification of coverage provisions and standard notice requirements not apply in the large group market. They noted that large employers are sophisticated purchasers that typically negotiate customized products for their employees and that will receive little value from these protections. One commenter recommended the requirements not apply to grandfathered health plans, noting that
grandfathered plans are already, as part of the requirements related to maintaining grandfathered status, subject to restrictions on benefit changes that make the proposed provisions unnecessary.
Response: We recognize that purchasers in the large group market have greater leverage than those in the individual and small group markets. The guaranteed renewability statute contemplates these market differences by placing the requirement that modifications must be “consistent with State law and effective on a uniform basis” only on products in the individual and small group markets, but not on products in the large group market.14 For these reasons, we do not believe that the same interpretation, providing additional protection of renewability, is necessary in the large group market and are finalizing the regulation to apply only to coverage in the individual and small group markets.
We also note that, based on the statutory language requiring the changes to be “effective on a uniform basis,” we are adding regulation text explicitly stating that the interpretation of uniform modification provided for in this rule also requires that the modifications be made uniformly.
Because the guaranteed renewability statutes applicable to grandfathered individual market policies and group health insurance plans, PHS Act sections 2742 and 2712, respectively, use the same terms as the statute enacted under the Affordable Care Act at PHS Act section 2703, we decline to interpret the requirements differently for grandfathered plans. We note that in proposing to amend §146.152, we unintentionally proposed to replace paragraph (g) with the new paragraph regarding notice of renewal of coverage, rather than adding a new paragraph (h).
The PHS Act guaranteed renewability sections enacted under HIPAA, section 2712 for the group market and 2742 for the individual market, both include exceptions for uniform modifications of coverage. We recognize that PHS Act section 2703 excludes reference in some paragraphs to the individual market. However, we note that the provisions of PHS Act section 2742 still apply, and we believe that the uniform modification exception is still applicable in the individual market.
CMS-9949-F 38 In this final rule, we correctly add the new paragraph as paragraph (h). Similarly, we note that in proposing to amend §148.122, we unintentionally proposed to replace paragraph (h) with the new paragraph regarding notice of renewal of coverage, rather than adding a new paragraph (i).
In this final rule, we correctly add the new paragraph as paragraph (i).
Comment: The proposed rule provided that coverage modifications made “solely pursuant to applicable Federal or State law” would be considered a uniform modification of coverage. Some commenters requested clarification that references to Federal or State law also include Federal or State regulations or guidance. Another commenter urged HHS to allow issuers to increase out-of-pocket maximums based on annual index adjustments to the annual limitation on cost sharing without triggering a product discontinuance.
Response: The regulation text of the proposed rule specified that modifications made “solely pursuant to applicable Federal or State law” would be considered uniform modifications of coverage. We did not intend the word “law” to limit the scope of this provision to statutory requirements. Therefore, we are modifying the regulation text to explicitly state that, for coverage modifications to meet this standard, they must be made “solely pursuant to applicable Federal or State requirements.” Such requirements could be based on statutes, rules, regulations and any other applicable authority imposing binding requirements on issuers.
In response to the comment addressing the example we provided in the proposed rule of what would be considered “solely pursuant to applicable Federal or State law,” we also are adding language providing more detail on what constitutes a modification “made solely pursuant to applicable Federal and State requirements.” Specifically, the modification must be made
it must also be directly related to the imposition or modification of a Federal or State requirement. For example, if State legislation newly requires a minimum level of benefits (for example, imposing a new minimum visit limit on specific benefits) reducing covered benefits to meet the minimum requirement would not be directly related to the new requirement because the lesser coverage of the benefit coverage was previously permissible, and the modification did not have to be made in order for the issuer to comply with the State law. Accordingly, the modification would not be considered to have been “made solely pursuant to” the new requirement. Such a modification would have to meet the other criteria in the final rule to be considered a uniform modification of coverage.
Comment: We received comments that requested clarification about whether and how the guaranteed renewability provisions apply to stand-alone dental plans (SADPs).
Response: Pursuant to §146.145(b)(3) and §148.220(b)(1), if an SADP is provided under a separate policy, certificate, or contract of insurance or is otherwise not an integral part of a group health plan, it would constitute excepted benefits and, therefore, generally would not be subject to the requirements of the PHS Act, including the guaranteed renewability requirements.
However, in the 2015 Letter to Issuers in the Federally-facilitated Marketplaces (2015 Letter to Issuers),15 we indicated that we will apply the guaranteed renewability standards to determine whether a plan offered in 2014 is the same plan for purposes of recertifying the plan for sale in 2015 through the Federally-facilitated Exchange, and that this standard would also apply to the determination of whether SADPs are being renewed for purposes of recertification.
This does not in any way change the status of SADPs as excepted benefits. We are merely using
the uniform modification standard for the purpose of identifying SADPs that can be recertified and renewed, rather than certified as different plans from those that were Exchange-certified in 2014.
In the 2015 Payment Notice, we established the national annual limit on cost sharing for the pediatric dental EHB when offered through an SADP of $350 for one covered child and $700 for two or more covered children. We acknowledge that, given the change to the annual limit on cost sharing, SADP issuers may need to modify the cost sharing of their currently certified plans in order to meet the annual limit established for implementation in 2015.
We interpret any uniform cost-sharing changes made to conform to the new national annual limit on cost sharing as meeting the uniform modification standard, because these modifications would meet the requirements under §147.106(e)(2) of this final rule, which provides that, “modifications made uniformly and solely pursuant to applicable Federal or State requirements are considered a uniform modification of coverage.” We further note that the general applicability of the annual limitation on cost sharing, if applied to all plans, would affect all consumers.
Therefore, we would consider an SADP that is uniformly modified to reduce its annual limitation on cost sharing pursuant to the change in regulations to meet the standards in paragraph (e)(2) as being a renewal with a uniform modification of the same plan for the purposes of recertification.
Comment: Several commenters urged HHS to more clearly distinguish whether the proposed uniform modification provisions would be applied to “products” or “plans.” Commenters explained that if our proposed rule were interpreted to apply to modifications made
order to make any plan-level changes (such as creating identical new plans to reflect network pricing)—causing significant market disruption and many unnecessary terminations of coverage for existing enrollees.
Response: We interpret the guaranteed renewability provisions of section 2703 of the PHS Act to apply at the product-level. This statute, which closely resembles the guaranteed renewability statutes enacted under HIPAA, uses the terms “health insurance coverage,” which, as defined at section 2791 of the PHS Act, means “benefits consisting of medical care (provided directly, through insurance or reimbursement, or otherwise and including items and services paid for as medical care) under any hospital or medical service policy or certificate, hospital or medical service plan contract, or health maintenance organization contract offered by a health insurance issuer.” We interpret the references to “health insurance coverage” throughout section 2703 of the PHS Act to mean what is referred to in the commercial health insurance context as a health insurance “product.” To clarify the application of these provisions in response to the above comments, we are codifying definitions of “product” and “plan” for purposes of this rule. Because similar language and concepts apply in the guaranteed availability statutes and regulations, we will apply these definitions to those regulations as well, by codifying the definitions at §144.103. These definitions are adopted largely from the Web portal and the rate review regulations.
Under this final rule, for purposes of guaranteed availability and guaranteed renewability, the term “product” means a discrete package of health insurance coverage benefits that a health insurance issuer offers using a particular product network type (for example, health maintenance organization (HMO), preferred provider organization (PPO), exclusive provider organization
the definition of “health insurance coverage” in the PHS Act, which primarily refers to a specific contract of covered benefits, rather than a specific level of cost-sharing imposed.16 For purposes of guaranteed availability and guaranteed renewability, the term “plan” means, with respect to an issuer and a product, the pairing of the health insurance coverage benefits under the product with a particular level of coverage (as described in sections 1302(d) and (e) of the Affordable Care Act) and service area. The combination of all plans within a product constitutes the total product that must be made available under guaranteed availability and renewed under guaranteed renewability to anyone in the service area of the plan in question, while the combined service areas of all plans constitute the service area of the product. If a product, or a plan under a product, does not have a defined service area, then the service area is the entire State in which the product is offered. To avoid any confusion, we also will change the reference to ‘termination of plan” to “termination of product” at §146.152.(b)(4), §147.106(b)(4), and §148.122(c)(3), and make a technical grammatical correction to §146.152.(b)(4) and §148.122(c)(3). This technical correction changes an “and” to an “or,” because an issuer is only required to comply with one and not both of the referenced paragraphs.