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11700 Federal Register / Vol. 77, No. 38/ Monday, February 27, 2012/ Rules and Regulations

from those other changes occurring inthe State at the same time through theuse of comparison or control groups toidentify the impact of significant aspectsof the demonstration.

(v) A proposed date by which a finalreport on findings from evaluationactivities conducted under theevaluation plan must be submitted to

CMS.(vi) Any other information pertinent

to the State’s research on the policyoperations of the demonstrationoperations.

(d) Evaluations for demonstrationextensions. (1) In the event that the Staterequests to extend the demonstration

beyond the current approval periodunder the authority of section 1115(a),(e), or (f) of the Act, the State mustsubmit an interim evaluation report aspart of the State’s request for asubsequent renewal of thedemonstration.

(2) State evaluations must bepublished on the State’s public Web sitewithin 30 days of submission to CMS.

(e) Approved evaluation designs. TheState must publish the CMS-approveddemonstration evaluation design on theState’s public Web site within 30 daysof CMS approval.

(f) Federal evaluations. The Statemust comply with all requirements setforth in this subpart.

(g) Federal public notice. CMS willpost, or provide a link to the State’spublic Web site, all evaluationmaterials, including research and datacollection, on its Web site for purposesof sharing findings with the publicwithin 30 days of receipt of materials.

§ 431.428 Reporting requirements.

(a) Annual reports. The State mustsubmit an annual report to CMSdocumenting all of the following:

(1) Any policy or administrativedifficulties in the operation of thedemonstration.

(2) The status of the health caredelivery system under thedemonstration with respect to issuesand/or complaints identified by

beneficiaries.

(3) The impact of the demonstrationin providing insurance coverage to beneficiaries and uninsuredpopulations.

(4) Outcomes of care, quality of care,cost of care and access to care fordemonstration populations.

(5) The results of beneficiarysatisfaction surveys, if conducted duringthe reporting year, grievances andappeals.

(6) The existence or results of anyaudits, investigations or lawsuits thatimpact the demonstration.

(7) The financial performance of thedemonstration.

(8) The status of the evaluation andinformation regarding progress inachieving demonstration evaluationcriteria.

(9) Any State legislative developmentsthat may impact the demonstration.

(10) The results/impact of any

demonstration programmatic areadefined by CMS that is unique to thedemonstration design or evaluationhypothesis.

(11) A summary of the annual post-award public forum, including allpublic comments received regarding theprogress of the demonstration project.

(b) Submitting and publishing annualreports. States must submit a draftannual report to CMS no later than 90days after the end of each demonstrationyear, or as specified in thedemonstration’s STCs. The State mustpublish its draft annual report on its

public Web site within 30 days ofsubmission to CMS.

(1) Within 60 days of receipt ofcomments from CMS, the State mustsubmit to CMS the final annual reportfor the demonstration year.

(2) The final annual report is to bepublished on the State’s public Web sitewithin 30 days of approval by CMS.

Authority: Catalog of Federal DomesticAssistance Program No. 93.778, MedicalAssistance Program.

Dated: March 9, 2011.

Donald M. Berwick,

Administrator, Centers for Medicare &

Medicaid Services.Approved: July 15, 2011.

Kathleen Sebelius,

Secretary, Department of Health and HumanServices.

[FR Doc. 2012–4354 Filed 2–22–12; 11:15 am]

BILLING CODE 4120–01–P

DEPARTMENT OF THE TREASURY

31 CFR Part 33

RIN 1505–AC30

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

45 CFR Part 155

[CMS–9987–F]

RIN 0938–AQ75

Application, Review, and ReportingProcess for Waivers for StateInnovation

AGENCY: Centers for Medicare &Medicaid Services (CMS), HHS;Department of the Treasury.

ACTION: Final rule.

SUMMARY: This final rule sets forth aprocedural framework for submissionand review of initial applications for aWaiver for State Innovation described insection 1332 of the Patient Protectionand the Affordable Care Act includingprocesses to ensure opportunities for

public input in the development of suchapplications by States and in theFederal review of the applications.DATES: These regulations are effectiveon April 27, 2012.FOR FURTHER INFORMATION CONTACT:Department of the Treasury: CameronArterton, (202) 622–0044.

Centers for Medicare & MedicaidServices: Ben Walker, (301) 492–4430.SUPPLEMENTARY INFORMATION:

I. Executive Summary:

A. Purpose of the Regulatory Action

Section 1332(a)(4)(B) of the Patient

Protection and Affordable Care Act (theAffordable Care Act) (Pub. L. 111–148,enacted on March 23, 2010), requiresthe Secretary of Health and HumanServices (HHS) and the Secretary of theTreasury (the Secretaries) to issueregulations regarding procedures forWaivers for State Innovation undersection 1332 of the Affordable Care Act.On March 14, 2011, the Secretariespublished proposed rules to satisfy thisrequirement. This finalizes thoseproposed rules.

B. Summary of the Major Provisions ofthe Regulatory Action in Question

These final rules make a smallnumber of changes to the proposed rules

based on comments received from thepublic. We have removed a requirementfor applications to be submitted inprinted format, to reduce administrative

burden. We have clarified that evidenceof the State public notice and commentmust include, ‘‘a description of the keyissues raised * * *’’ during suchperiod, to provide the Secretaries witha summary of public consultation todate. We have added a provision tospecify that States must submit waiver

applications sufficiently in advance ofthe requested effective date to ensurethat an appropriate amount of time isavailable for implementation if thewaiver is approved. We have also addeda provision to specify that a completeapplication must include animplementation timeline, to facilitate ananalysis by States and the Secretariesregarding the feasibility of the proposedimplementation schedule. We have alsoclarified that a State does not have toenact a new law in support of a section1332 waiver if the State already has a

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1Although section 1332 of the Affordable CareAct does not authorize waivers for related programslike Medicaid (title XIX of the Act) or the Children’sHealth Insurance Program (title XXI of the Act),those programs have existing waiver authorities.

law in place, to eliminate the need forredundant legislative activities.

Lastly, we have made some structuralchanges to one section of the rules toreduce complexity, without modifyingthe content.

C. Costs and Benefits

These regulations are not

economically significant, under section3(f) of Executive Order 12866.

II. Background

Section 1332 of the Affordable CareAct creates a new Waiver for StateInnovation and authorizes theSecretaries to waive all or any of thefollowing requirements falling undertheir respective jurisdictions for healthinsurance coverage within a State forplan years beginning on or after January1, 2017:

• Part I of subtitle D of Title I of theAffordable Care Act (relating to theestablishment of qualified health plans);

• Part II of subtitle D of Title I of theAffordable Care Act (relating toconsumer choices and insurancecompetition through health benefitexchanges);

• Section 1402 of the Affordable CareAct (relating to reduced cost sharing forindividuals enrolling in qualified healthplans); and

• Sections 36B (relating to refundablecredits for coverage under a qualifiedhealth plan), 4980H (relating to sharedresponsibility for employers regardinghealth coverage), and 5000A (relating totax penalties for the failure to maintain

minimum essential coverage) of theInternal Revenue Code.

Section 1332 of the Affordable CareAct provides that references in thatsection to ‘‘Secretary’’ refer to theSecretary of HHS for waivers relating toParts I and II of subtitle D of Title I ofthe Affordable Care Act and section1402 of the Affordable Care Act, andrefer to the Secretary of the Treasury forwaivers relating to sections 36B, 4980H,and 5000A of the Internal RevenueCode.

Section 1332(a)(4)(B) of theAffordable Care Act requires the

Secretaries to issue regulations thatprovide the following:• A process for public notice and

comment at the State level, includingpublic hearings, that is sufficient toensure a meaningful level of publicinput (section 1332(a)(4)(B)(i) of theAffordable Care Act);

• A process for the submission of anapplication that ensures the disclosureof (A) the provisions of law that theState involved seeks to waive, and (B)the specific plans of the State to ensurethat the waiver will be in compliance

with specified statutory requirementsrelating to the comprehensiveness ofcoverage, affordability of coverage,scope of coverage, and the effect on theFederal deficit (as described below)(section 1332(a)(4)(B)(ii) of theAffordable Care Act);

• A process for providing publicnotice and comment after the

application is received by the Secretarythat is sufficient to ensure a meaningfullevel of public input and that does notimpose requirements that are inaddition to, or duplicative of,requirements imposed under theAdministrative Procedure Act (APA), orrequirements that are unreasonable orunnecessarily burdensome with respectto State compliance (section1332(a)(4)(B)(iii) of the Affordable CareAct);

• A process for the submission to theapplicable Secretary or Secretaries ofperiodic reports by the State concerning

the implementation of the programunder a waiver (section 1332(a)(4)(B)(iv)of the Affordable Care Act); and

• A process for the periodicevaluation by the applicable Secretaryor Secretaries of the program under awaiver (section 1332(a)(4)(B)(v) of theAffordable Care Act).

Although section 1332 of theAffordable Care Act does not authorizewaivers for related programs likeMedicaid (title XIX of the SocialSecurity Act (the Act)) or the Children’sHealth Insurance Program (CHIP, titleXXI of the Act), those programs have

existing waiver authorities. Section1332(a)(5) of the Affordable Care Actrequires the Secretaries to develop aprocess for coordinating andconsolidating the State waiver processesapplicable under the provisions ofsection 1332 of the Affordable Care Actwith the existing waiver processesapplicable under titles XVIII (Medicare),XIX (Medicaid), and XXI (CHIP) of theAct, and any waiver processes underother Federal laws relating to theprovision of health care items orservices. Section 1332(a)(5) of theAffordable Care Act further requires theprocess developed by the Secretaries topermit a State to submit a singleapplication for a waiver under any or allof those provisions.

Proposed rules were issued on March14, 2011, to implement the proceduralrequirements of section 1332 of theAffordable Care Act. The proposed ruleswere also intended to provide for awaiver application process that can becoordinated and consolidated with theprocesses for the submission ofapplications for waivers under titlesXVIII, XIX, and XXI of the Act.

III. Summary of the Provisions of theProposed Regulations and Analysis ofand Responses to Public Comments

In the March 14, 2011 FederalRegister (76 FR 13553), we publishedproposed rules addressing theprocedural requirements of section 1332of the Affordable Care Act. We receiveda total of 32 timely comments on theproposed rules. The modifications to theproposed regulations that are includedin these final regulations reflectconsideration of the commentssubmitted.

A. Basis and Purpose (31 CFR 33.100and 45 CFR 155.1300)

To implement the provisions ofsection 1332 of the Affordable Care Act,the Department of the Treasuryproposed to add new part 33 to 31 CFRSubtitle A and the CMS, on behalf ofHHS, proposed to add new part 155 to45 CFR Subtitle A. These new parts

address procedures for Statedevelopment and submission of anapplication for a Waiver for StateInnovation under section 1332 of theAffordable Care Act (referred to in theproposed regulations as a section 1332waiver), a process for providing publicnotice and opportunity for comment atthe State and Federal levels, a processfor the review of applications by theSecretaries, and processes for themonitoring and evaluation of approvedsection 1332 waivers by the States andthe Secretaries, including the periodicsubmission of reports by the States to

the Secretaries.The final regulations make no changeto the proposed regulations regardingthese provisions.

B. Coordinated Waiver Process (31 CFR33.102 and 45 CFR 155.1302)

The proposed regulations at 31 CFR33.102 and 45 CFR 155.1302 permitted,

but did not require, States to submit asingle application for a section 1332waiver and a waiver under one or moreof the existing waiver processesapplicable under titles XVIII, XIX, andXXI of the Act, or under any otherFederal law relating to the provision ofhealth care items or services, providedthat the application is consistent withthe procedures described in theseproposed regulations, the procedures forsection 1115 demonstrations, ifapplicable, and the procedures underany other applicable Federal law underwhich the State seeks a waiver.1



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The proposed regulations required aState seeking a section 1332 waiver tosubmit a waiver application to theSecretary of HHS. Upon receipt, theSecretary of HHS would transmit anyapplication that includes a request for awaiver of provisions under thejurisdiction of the Secretary of theTreasury (sections 36B, 4980H and

5000A of the Internal Revenue Code) to be reviewed in accordance with theprovisions of the regulations. TheSecretaries would coordinate the reviewof any application that includes arequest for a waiver of provisions fallingunder the jurisdiction of each of theDepartments of HHS and the Treasury(the Departments).

We received the following commentsconcerning the proposed coordinatedwaiver process.

Comment: Commenters supported theproposal to permit the submission of asingle, coordinated application for a

section 1332 waiver and a waiver underone or more of the existing waiverprocesses. Several commenters askedthat we provide more detail on thecoordinated waiver process, and alignprocedures and timelines. Onecommenter also asked that we allowStates to submit a single analysis of costand coverage to satisfy both processes.

Response: The Departments plan towork closely with States that areconsidering submitting multiple waiversto craft a process that meets a State’sspecific circumstances. We anticipatethat there may be opportunities to

streamline and align the processes. Wealso are mindful that each of the specificwaiver provisions has unique statutoryrequirements. We encourage any Statethat is considering a coordinatedsubmission to approach theDepartments as soon as is practicable todiscuss how best to proceed tominimize administrative complexitywhile ensuring that the integrity of thereview and approval processes ismaintained.

Comment: One commenter requestedthat the Secretaries require publiccomment on the market impacts of a

combined waiver application.Response: We agree that publiccomment of this sort is useful, and we

believe that 31 CFR 33.112 and 45 CFR155.1312 of the proposed regulations, asfinalized, allow stakeholders to providesuch comments.

C. Application Procedures (31 CFR33.108 and 45 CFR 155.1308)

The proposed regulations establishedprocedures for the submission ofapplications for an initial section 1332waiver.

Under 31 CFR 33.108(a) and 45 CFR155.1308(a) of the proposed regulations,each application for an initial section1332 waiver will undergo a preliminaryreview by the Secretaries that will becompleted within 45 days after theapplication is submitted.

During this preliminary reviewperiod, the Secretaries would make a

preliminary determination as to whethera State’s application complies with therequirements set forth in 31 CFR33.108(a)(2) and 45 CFR 155.1308(a)(2).If the Secretaries determined that anapplication is incomplete, the Secretaryof HHS would send the State a writtennotice of the elements missing from theapplication. The proposed regulationsprovided that a preliminarydetermination that an application iscomplete does not preclude a findingduring the 180-day Federal decision-making period that a necessary elementof the application is missing or

insufficient, rendering the applicationincomplete.

The proposed regulations providedthat a submitted application would not

be considered received until theSecretaries have made this preliminarydetermination that the application iscomplete.

The proposed regulations providedthat, upon a preliminary determination

by the Secretaries that an applicationthey have received is complete, asdefined under the proposed regulations,the Secretary of HHS would send theState a written notice informing the

State that the Secretaries have madesuch a preliminary determination, andthe date upon which they have madethat preliminary determination. Thatdate would also mark the beginning ofthe Federal public notice and commentperiod and the 180-day Federaldecision-making period.

Under the proposed regulations, anapplication for initial approval of asection 1332 waiver would not beconsidered complete unless theapplication: (1) Complies with theapplication procedures of 31 CFR33.108(a)(2)(iv) and 45 CFR155.1308(a)(2)(iv); (2) provides writtenevidence of the State’s compliance withthe public notice requirements set forthin 31 CFR 33.112 and 45 CFR 155.1312;and (3) provides all of the following:

• A comprehensive description of theenacted State legislation and program toimplement a plan meeting therequirements for a waiver under section1332, as required under section1332(a)(1)(B)(i) of the Affordable CareAct;

• A copy of the enacted Statelegislation authorizing such waiver

request, as required under section1332(a)(1)(C) of the Affordable Care Act;

• A list of the provisions of law thatthe State seeks to waive including a

brief description of the reason for thespecific requests; and

• The analyses, actuarialcertifications, data, assumptions, targetsand other information sufficient to

provide the Secretaries with thenecessary data to determine that theState’s proposed waiver:

+ As required under section1332(b)(1)(A) of the Affordable Care Act(the comprehensive coveragerequirement), would provide coveragethat is at least as comprehensive as thecoverage defined in section 1302(b) ofthe Affordable Care Act and offeredthrough Exchanges established underTitle I of the Affordable Care Act ascertified by the Office of the Actuary ofthe Centers for Medicare & MedicaidServices based on sufficient data fromthe State and from comparable Statesabout their experience with programscreated by the Affordable Care Act andthe provisions of the Affordable CareAct that would be waived;

+ As required under section1332(b)(1)(B) of the Affordable Care Act(the affordability requirement), wouldprovide coverage and cost sharingprotections against excessive out-of-pocket spending that are at least asaffordable as the provisions of Title I ofthe Affordable Care Act would provide;

+ As required under section1332(b)(1)(B)(C) of the Affordable CareAct (the scope of coverage requirement),

would provide coverage to at least acomparable number of its residents asthe provisions of Title I of theAffordable Care Act would provide; and

+ As prohibited under section1332(b)(1)(D) of the Affordable Care Act(the Federal deficit requirement), wouldnot increase the Federal deficit.

Section 1332(a)(3) of the AffordableCare Act requires that the Secretariesprovide for an alternative means bywhich the aggregate amount of taxcredits or cost-sharing reductions thatwould have been paid had the State notreceived a waiver, be paid to the State

for purposes of implementing thewaiver. This amount will be determinedannually by the Secretaries, on a percapita basis, taking into considerationthe experience of other States forparticipation in an Exchange and taxcredits and cost-sharing reductionsprovided in such other States.

To provide information necessary forthe Secretaries to determine (1) that theState’s proposed waiver meets thecomprehensive coverage requirement,the affordability requirement, the scopeof coverage requirement and the Federal



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deficit requirement and (2) the annualamount, if any, of foregone tax creditsand cost-sharing reductions that will bepaid to the State for purposes ofimplementing the waiver pursuant tosection 1332(a)(3) of the Affordable CareAct, the proposed regulations requiredthat a State’s application contain:

(1) Actuarial analyses and actuarial

certifications to support the State’sestimates that the proposed waiver willcomply with the comprehensivecoverage requirement, the affordabilityrequirement and the scope of coveragerequirement.

(2) Economic analyses to support theState’s estimates that the proposedwaiver will comply with thecomprehensive coverage requirement,the affordability requirement, the scopeof coverage requirement and the Federaldeficit requirement, including:

• A detailed 10-year budget plan thatis deficit neutral to the Federal

government, as prescribed in section1332(a)(1)(B)(ii) of the Affordable CareAct, and includes all costs under thewaiver, including administrative costsand other costs to the Federalgovernment, if applicable; and

• A detailed analysis regarding theestimated impact of the waiver onhealth insurance coverage in the State.

(3) The data and assumptions used todemonstrate that the State’s proposal isin compliance with the comprehensivecoverage requirement, the affordabilityrequirement, the scope of coveragerequirement and the Federal deficitrequirement, including:

• Information on the age, income,health expenses and current healthinsurance status of the relevant Statepopulation; the number of employers,categorized by number of employeesand by whether the employer offershealth insurance; cross-tabulations ofthese variables; and an explanation ofdata sources and quality; and

• An explanation of the keyassumptions and methodology used todevelop the estimates of the effect of thewaiver on health insurance coverage inthe State and on the Federal budget,such as individual and employer

participation rates, behavioral changes,premium and price effects, and otherrelevant factors.

(4) Additional information supportingthe State’s proposed waiver, including:

• An explanation as to whether thewaiver increases or decreases theadministrative burden on individuals,insurers, and employers, and if so, howand why;

• An explanation of whether and howthe waiver will affect theimplementation of the provisions of theAffordable Care Act which the State is

not requesting to waive in the State andat the Federal level;

• An explanation of how the waiverwill affect residents who need to obtainhealth care services out-of-State, as wellas the States in which such residentsmay seek such services;

• If applicable, an explanation of howthe State will provide the Federal

government with all informationnecessary to administer the waiver atthe Federal level; and

• An explanation of how the State’sproposal will address potentialindividual, employer, insurer, orprovider compliance, waste, fraud andabuse within the State or in other States.

(5) For purposes of post-awardmonitoring, suggested quarterly, annual,and cumulative targets for thecomprehensive coverage requirement,the affordability requirement, the scopeof coverage requirement and the Federaldeficit requirement of section 1332(b) ofthe Affordable Care Act.

(6) Other information consistent withguidance provided by the Secretaries.

Under the proposed regulations, thereis no minimum time specified betweenthe submission of an application andstart date of the waiver. However, wesolicited comments on whether a Stateshould be required to submit anapplication at least 12 months inadvance of the requested effective date,to allow for the effectiveimplementation of approved waivers atthe State level.

The requirement in the proposedregulations that a State provide certain

analysis, certifications, data,assumptions, targets and otherinformation as part of a section 1332waiver application was designed toensure that a State’s development of awaiver proposal addresses majorrelevant issues for the State andprovides the Secretaries with sufficientinformation to fully assess the projectedimpact of section 1332 waiver proposalsfor the statutory requirements and toaccurately determine the amount to bepaid to the State for purposes ofimplementing the waiver under section1332(a)(3) of the Affordable Care Act.

The Secretaries also solicited commentsregarding these proposed requirements,as well as what other types of analysis,certifications, data, assumptions, targetsand information States would consideruseful in supporting an application fora section 1332 waiver and whether theseregulations should specifically requiresuch additional analyses, certifications,data, assumptions, targets andinformation to be included as part of asection 1332 waiver application.

Lastly, during the Federal reviewprocess, the proposed regulation

provided that the Secretaries mayrequest additional supportinginformation from the State as needed toaddress public comments or to addressissues that arise in reviewing theapplication.

We received the following commentsconcerning application procedures.

1. Application Contents

Comment: In general, commenterssupported the proposed applicationcontents. Several commenters asked thatthe Secretaries require additionalinformation to be submitted with theapplication, including backgroundinformation on the State’s insurancemarket; the types of health plans orother arrangements a State will utilize toprovide coverage and the criteria forparticipation in the plan; the health

benefits that will be covered and howthose compare to the essential health

benefits specified in section 1302(b) ofthe Affordable Care Act; whether andhow the waiver will affect age ratingand the value of financial assistance forindividuals of different ages; how thewaiver will affect children and youthwith special health care needs andwomen with high-risk pregnancies; howthe State will select the plans andmonitor their performance; howpayment rates for health plans and/orproviders would be determined; howstandards for provider networkadequacy would be determined andmet; how quality and appropriateness ofcare would be assessed; and howtransparency in coverage and consumer

choice and access to essentialcommunity providers would bemonitored.

Commenters also requested that theSecretaries require a State to providespecific information for specific waiverrequests. For example, one commenterasked that the Secretaries require a Stateseeking a waiver that would affectFederally Qualified Health Centers(FQHCs) or essential communityproviders (ECPs) to provide a set ofdetailed information about the rationalefor such a proposal and the financialimpact of it on FQHCs and ECPs.

Another made a similar request withrespect to waivers that affect essentialhealth benefits.

Response: We recognize thatadditional information may be neededto determine whether a proposal meetsthe statutory criteria for approval. As setforth in 31 CFR 33.108(a)(2)(iv)(D)(6)and 45 CFR 155.1308(a)(2)(iv)(D)(6), aState must also submit informationconsistent with guidance provided bythe Secretaries, in addition to theenumerated data and analyses. Thisprovision of the regulations allows the



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Secretaries to request additionalinformation, including informationsuggested by commenters, which isrelevant to determine whether a waiverproposal meets the statutory criteria forapproval. As such, we finalized theseprovisions of the proposed regulationswithout change.

Comment: One commenter requested

that States provide an implementationtimeline as part of a waiver application.

Response: We agree with thiscomment and have added language tothe final regulation in 31 CFR33.108(f)(4)(iv) and 45 CFR155.1308(f)(4)(iv). We believe that theinclusion of an implementation timelinewill help the Secretaries work withStates to address the concern raised byanother commenter that Statesimplement a waiver in a manner thatdoes not leave its residents withoutaffordable coverage during theimplementation period.

Comment: Several commenters askedthe Secretaries to require States toprovide a description of why therequested waivers are needed.

Response: We agree that a discussionof the reasons for requesting the waiveris important and should be more thancursory. Accordingly, the finalregulation at 31 CFR 33.108(a)(2)(iv)(C)and 45 CFR 155.1308(a)(2)(iv)(C) nolonger characterizes the requireddescription as ‘‘brief.’’

Comment: One commenter asked thatthe Secretaries permit the application touse existing reports and data sourcesavailable to the Federal government.

Response: We agree that the processshould be minimally burdensome for allinvolved entities, while still ensuringthat the Secretaries are able to completethe analyses required by statute. Weencourage States to utilize existing datawherever possible to facilitate thewaiver approval process and we lookforward to working closely with Statesto ensure that the proposed data sourcesare reliable and acceptable.

Comment: Several commenters askedthat the Secretaries require applicationsto include a description of the keyissues raised during the State public

notice and comment period, along withhow the State considered thosecomments in developing theapplication.

Response: The provisions of 31 CFR33.108(a)(2)(iv)(B) and 45 CFR155.1308(a)(2)(iv)(B) of the proposedregulations require an application toprovide, ‘‘* * * written evidence of theState’s compliance with the publicnotice requirements * * *’’ We agreewith the commenter that this evidenceshould include a description of the keyissues raised during the State public

notice and comment period, and areadding this clarification to 31 CFR33.108(f)(2) and 45 CFR 155.1308(f)(2)of the final rule. We believe that thesubstantive contents of the applicationwill allow the Secretaries and interestedparties to discern how the Stateconsidered the comments inconstructing the proposal.

Comment: Commenters asked that theSecretaries clarify that in addition toproviding the proposed actuarial andeconomic analyses, a State must alsoprovide the underlying data andassumptions used to develop theanalyses.

Response: We believe that theprovisions of the proposed regulationsrequire the State to submit theunderlying data and assumption used todevelop the analysis. The proposedregulations at 31 CFR33.108(a)(2)(iv)(D)(3) and 45 CFR155.1308(a)(2)(iv)(D)(3) specified that an

application must include, ‘‘The data andassumptions used to demonstrate thatthe State’s proposed waiver is incompliance with the comprehensivecoverage requirement, the affordabilityrequirement, the scope of coveragerequirement and the Federal deficitrequirement.’’ We are maintaining thislanguage in the final regulations.

Comment: One commenter suggestedthat the Secretaries limit the amount ofdocumentation required to be submittedif the waiver proposal does notsignificantly impact the stability of theinsurance market.

Response: The statute requires theSecretaries to determine whether anapplication meets all the statutoryapproval criteria, regardless of its scope.Consequently, the Secretaries mustreceive and review the data andanalyses required to be included in theapplication as provided in theregulations. We have no interest inrequiring States to submit unnecessaryinformation, and will work with Statesto ensure that the application process isappropriately tailored to the specificproposal and to the State’scircumstances.

Comment: One commenter asked thatthe Secretaries require that all actuarialestimates of coverage and marketstability be performed by independentexperts.

Response: The Secretaries plan toevaluate the analyses submitted with aState’s application. We expect the Stateanalyses to adhere to generally acceptedstandards for quality and the regulationsrequire the States to submit the data andassumptions underlying such analyses,which will enable the Secretaries toconduct a thoughtful review. As such,

the final regulations follow theproposed regulations without change.

Comment: One commenter asked theSecretaries to clarify that there isinteraction between the statutoryrequirements for approval of a section1332 waiver, for example, that theaffordability of coverage will affect thenumber of individuals who will be

covered.Response: We agree with the

comment. We expect States to addresssuch connections in the analysessupporting an application.

Comment: One commenter asked thatthe Secretaries require that anyapplication that requested a waiver ofthe minimum coverage provision beaccompanied by detailed projectionsdemonstrating that comparable levels ofcoverage and affordability will beattained and maintained over at least a10-year period in the individual market.

Response: We appreciate thiscomment. The Secretaries intend towork with States to ensure that therequired analyses are consistent withone another. For future guidance, wewill consider requiring an analysis forapplications requesting a waiver ofspecific provisions to be provided overa specific time frame.

Comment: One commenter objected toproposed questions regarding theimpact of a proposed waiver onunwaived provisions and how the Statewill provide the Federal governmentwith information necessary toadminister the waiver at the Federallevel.

Response: We believe that thesequestions are important to assesswhether the proposal complies with thestatutory criteria for approval. Inparticular, we believe that the questionabout Federal administration isimportant to understand the impact ofthe proposal on the Federal deficit.

Comment: One commenter suggestedthat the Secretaries require States toprovide analysis to ensure that proposedinnovations do not have the unintendedeffect of increasing the cost of insurancefor the remaining market and decreasingenrollment.

Response: The analyses in 31 CFR33.108(a)(2)(iv)(C)(4) and 45 CFR155.1308(a)(2)(iv)(C)(4) of the proposedrules were based on the statutorycriteria for waiver approval, as specifiedin section 1332(b)(1) of the AffordableCare Act. In describing the scope ofcoverage and affordability requirements,the statute specifies that comparisonsare to be made with respect to theprovisions of title I of the AffordableCare Act, which contains the marketreform provisions that affect theindividual and small group markets—



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inside and outside the Exchange.Consequently, we believe that theprovisions of the proposed regulationsspecified that a State must provide thetype of analysis that is requested by thecommenter. We maintain this languagein the final regulations.

2. Timing of Applications

Comment: We received a number ofcomments regarding whether theSecretaries should require a State tosubmit an application for a section 1332waiver 12 months (or some otheramount of time) in advance of therequested effective date, to allow for thecareful implementation of what may becomplex waivers. In general,commenters supported a timingrequirement of either 12 or 24 monthsin advance. However, some commentersopposed any timing requirement. Inaddition, one commenter asked that theSecretaries require at least 18 months

between approval and implementation.Response: In recognition of the rangeof time standards recommended bycommenters, along with the likelihoodthat the scope of section 1332 waiverswill vary widely based on theprovisions a State proposes to waiveand other related factors, we areamending the proposed language tospecify that applications must besubmitted sufficiently in advance of therequested effective date to allow for anappropriate implementation timeline. Inaddition, as discussed previously, thefinal regulations adopt arecommendation to include an

implementation timeline as part of thewaiver application. We believe this newtimeline requirement will help ensureapplications are submitted sufficientlyin advance of the effective date. Wefurther encourage States to contact theSecretaries during the conceptual phaseof a section 1332 waiver to establish areasonable timeframe for the submissionof an application and the effective dateof an approved proposal.

Comment: One commenter asked theSecretaries to clarify that there can only

be one 45-day preliminary reviewperiod per application.

Response: We agree with thecommenter’s clarification. We note thatto the extent that a State’s application isdenied and the State resubmits theapplication, the Secretaries will treat theapplication as a new application that issubject to a 45-day preliminary reviewperiod.

3. Approval Standards

We received a number of commentsregarding standards a section 1332waiver proposal must meet to beapproved by the Secretaries. The

proposed regulations covered only theprocedural standards for section 1332waivers, and did not address thesubstantive standards for approval

beyond restating the statutory criteria.Comment: Several commenters asked

that the Secretaries define thecomprehensive-coverage, affordability,and scope of coverage requirements

specified in sections 1332(b)(1)(A), (B),and (C) of the Affordable Care Act. Onecommenter proposed a specificframework for the comprehensive-coverage standard based on the servicecategories specified in section 1302(b) ofthe Affordable Care Act, along withother analyses. Another commenterasked that the Secretaries clarify thataffordability benchmarks will take intoaccount the income of eligibleindividuals and the premium and cost-sharing subsidies they would receive.Another commenter asked thataffordability analyses include

consideration of services that areexcluded from the proposed waiver.Lastly, one commenter asked that theSecretaries provide benchmarks for thescope of coverage analysis and allowpublic comment on such benchmarks.

Commenters suggested that theSecretaries should expand the criteriafor approval to include providing asufficient choice of health plans. Onecommenter specified that the Secretariesshould require the State to ensure aselection of health plans that meet theneeds of low-income individuals.Another commenter asked that States be

required to demonstrate the adequacy ofprovider networks as a condition ofapproval.

Commenters also suggested that theSecretaries condition waiver approvalon the inclusion of specific services andcategories of services in the benefitpackage; the coordination of private andpublic delivery systems; the integrationof enrollment and renewal processes;and the ability of delivery systems tomeasure acuity and severity and adjustcost structures appropriately.

One commenter asked the Secretariesto specify that if any waiver altersMedicaid and CHIP, a State mustmaintain Medicaid and CHIPprotections and ‘‘enabling services’’(such as transportation and translation)for the Medicaid and CHIP population.Another commenter asked theSecretaries to require States todemonstrate adequate protections forMedicaid beneficiaries who areincluded in a section 1332 waiver.Another commenter asked theSecretaries to require that States providechildren who are currently covered byCHIP with coverage, cost-sharing

protections, and benefits comparable toCHIP.

A commenter asked that theSecretaries require States seeking awaiver to provide for a similar age ratingrule to the rule in section 1334 of theAffordable Care Act.

Commenters also asked that theSecretaries require States to comply

with other provisions of the AffordableCare Act as a condition of waiverapproval. These included thenondiscrimination provisions of section1557 of the Affordable Care Act and themarket reform rules that take effect in2014.

One commenter said that States andthe Secretaries must consider whether aproposal meets the statutoryrequirements for approval for both theoverall population and specifically forAmerican Indians and Alaska Natives.

Lastly, one commenter asked theSecretaries to require the CMS actuary

to certify whether a State’s proposalwould provide coverage to a comparablenumber of residents purchasingindividual insurance policies.

Response: We appreciate thecomments submitted on standards forapproval and will consider them as wedevelop the substantive component ofthe waiver approval process. Further,we clarify that section 1332(a)(2) of theAffordable Care Act clearly defines thescope of authority under section 1332,and does not extend to subtitle A of titleI of the Affordable Care Act, whichincludes the market reform provisions,

or section 1557 of the Affordable CareAct, which includes thenondiscrimination provisions.

4. General

Comment: Commenters asked theSecretaries to clarify that a State doesnot have to enact a new law andestablish new programs if a sufficientlaw or program already exists.

Response: We agree with thiscomment. The final regulations at 31CFR 33.108(f)(3)(ii) and 45 CFR155.1308(f)(3)(ii) were modified to makeclear that States with an existing law orprogram that addresses the waiverprocess and requirements are notrequired to enact a new law.

Comment: One commenter suggestedthat the Secretaries consider notrequiring applications to be submittedin printed format.

Response: We agree with thecommenter’s suggestion, and areremoving this requirement from thefinal rules.

Comment: One commenter asked theSecretaries to specify that they willprocess all submitted applications.



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Response: We agree with thecomment and believe that the proposedregulations address it. As set forth in 31CFR 33.108(a)(2) and 45 CFR155.1308(a)(2), the Secretaries will makea determination as to whether eachsubmitted application is complete, and31 CFR 33.116(c) and 45 CFR155.1316(c) of the proposed rules

specified that the Secretaries will makea final decision regarding allapplications that are found to becomplete. We are maintaining theseprovisions in the final regulations.

D. State Public Notice Requirements (31CFR 33.112 and 45 CFR 155.1312)

Consistent with the provisions ofsection 1332 of the Affordable Care Act,to facilitate public involvement in thereview and approval of section 1332waiver applications, 31 CFR 33.112(a)(1)and 45 CFR 155.1312(a)(1) of theproposed regulations required a State to

provide a public notice and commentperiod sufficient to ensure a meaningfullevel of public input for a section 1332waiver application prior to thesubmission of that application to theSecretary of HHS for review andconsideration. In addition, the proposedregulations required a State with one ormore Federally-recognized Indian tribeswithin its borders to consult with thoseIndian tribes in accordance withExecutive Order 13175.

Because meaningful input requiresnotice of the nature of the section 1332waiver application, as part of the Statepublic notice and comment period, the

proposed regulations required a State toprovide the public with the followinginformation prior to the submission ofan application:

• A comprehensive description of thesection 1332 waiver application to besubmitted to the Secretary of HHS,including information and assurancesrelated to all statutory requirements andother information consistent withguidance provided by the Secretaries;

• Where copies of the section 1332waiver application are available forpublic review and comment;

• How and where written comments

may be submitted and reviewed by thepublic, and the timeframe during whichpublic comments may be submitted; and

• The location, date and time ofpublic hearings that will be convened

by the State to seek public input on thesection 1332 waiver application.

31 CFR 33.112(a)(2) and 45 CFR155.1312(a)(2) of the proposedregulations required States to conductpublic hearings that provide interestedparties with the opportunity to learnabout and comment on the contents ofthe section 1332 waiver application.

The State public notice and commentprocess must comply with applicablecivil rights rules for accessibility, whichrequire, for example—

• The provision of auxiliary aids andservices such as interpreters for personswith disabilities where necessary foreffective communication;

• The use of accessible meeting

places for the hosting of public forumsprovided for in the Rule;

• Reasonable steps to providemeaningful access for limited Englishproficient (LEP) persons, such as theinclusion of ‘‘tag lines’’ on State websites containing phone numbers for LEPpersons to call to reach ‘‘language line’’interpreters for assistance; and

• Other civil rights requirementsapplicable to the States under theAmericans with Disabilities Act, section504 of the Rehabilitation Act of 1973and Title VI of the Civil Rights Act of1964, among others.

We received the following commentsconcerning the proposed State publicnotice and comment process.

1. Timing

Comment: In general, commentersexpressed support for a robust Statepublic notice and comment process.Several commenters suggested that theSecretaries should specify a minimumamount of time for the State publicnotice and comment process, rangingfrom 45 to 90 days.

Response: We agree with commentersthat the State public notice andcomment period is an important

element of a transparent approach. Theproposed regulations require that theState public notice period be, ‘‘sufficientto ensure a meaningful level of publicinput’’. Because section 1332 waiverapplications may take on a wide rangeof proposals, we believe that thisapproach better suits section 1332waivers. To the extent that a proposal isparticularly wide-ranging, the proposedregulations will support a longer Statepublic notice and comment period, andif the proposal is minor, it can supporta shorter period. As such, we aremaintaining the language of the

proposed regulations in the final rules.We further encourage States to contactthe Secretaries during the conceptualphase of a section 1332 waiver toestablish a reasonable timeframe for theState public notice and commentperiod.

2. Tribal Consultation

Comment: One commenter suggestedthat the Secretaries encourage States touse Medicaid tribal consultationprocedures in the section 1332 waiverprocess.

Response: As set forth in 31 CFR33.112(a)(2) and 45 CFR 155.1312(a)(2),a State with one or more Federally-recognized tribes within its bordersmust conduct a separate process formeaningful consultation with suchtribes as part of the State public noticeand comment process. In the preambleassociated with this section, the

Secretaries noted that such process is inaccordance with Executive Order 13175,which mandated the establishment ofregular and meaningful consultationand collaboration with tribal officials inthe development of Federal policies thathave ‘‘tribal implications,’’ which aredefined as policies or actions ‘‘withsubstantial direct effects on one or moreIndian tribes, on the relationship

between the Federal Government andIndian tribes, or on the distribution ofpower and responsibilities between theFederal Government and Indian tribes.’’As this executive order also applies to

Medicaid, a State could use a Medicaidconsultation process to satisfy theconsultation needed for a section 1332waiver. We agree with the commenterand encourage States to considerwhether the use of such a process would

be appropriate for section 1332proposals.

3. Public Hearings

Comment: Commenters supported therequirement for public hearings.Commenters suggested allowing Statesto determine the appropriate number ofpublic hearings, with a minimum of oneor two. One commenter asked the

Secretaries to specify that hearings musthappen in multiple geographiclocations.

Response: As set forth in 31 CFR33.112(c)(1) and 45 CFR 155.1312(c)(1),‘‘* * * a State must conduct publichearings regarding the State’sapplication.’’ We believe that theproposed regulation permits a State todetermine the appropriate number ofhearings, but, by definition, ‘‘hearings’’means no less than two. As such, thefinal regulations were not changed.

31 CFR 33.112(c)(2) and 45 CFR155.1312(c)(2) provides that ‘‘Such

public hearings shall provide aninterested party the opportunity to learnabout and comment on the contents ofthe application for a section 1332waiver.’’ We interpret this to mean thata State must provide the opportunity forparties throughout a State to comment,either through multiple hearings indifferent locations, or through the use ofphone or videoconferencing. We willmaintain this provision in the finalregulations.

Comment: Commenters supported theprovisions in 31 CFR 33.112(c)(2) and



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45 CFR 155.1312(c)(2) that specify thatpublic hearings must provide anopportunity for an interested party tocomment on the contents of anapplication for a section 1332 waiver.One commenter recommended that theSecretaries specify that legislativehearings can substitute for the Statepublic notice and comment process.

Other commenters opposed thisrecommendation, noting that legislativehearings may provide only limitedopportunities for members of the publicto comment.

Response: While the proposed rulesdo not specifically address whetherlegislative hearings may satisfy thepublic hearing requirement, 31 CFR33.112(c)(2) and 45 CFR 155.1312(c)(2)of the proposed regulation provide that,‘‘Such public hearings shall provide aninterested party the opportunity to learnabout and comment on the contents ofthe application for a section 1332

waiver.’’ If a legislative hearing providesan opportunity for interested parties tocomment on the contents of a waiverapplication, then it meets the publichearing requirement; if, however, alegislative hearing does not allow thepublic to contribute, it does not meetthe requirement. Specifically, we

believe that to use a legislative hearingtowards meeting this requirement, aState would need to provide a concreteproposal for comment well in advanceof the hearing, as well as an opportunityfor the public to speak at the hearing.We are maintaining this approach in thefinal regulations to provide States with

flexibility but at the same time ensurethat the public has a meaningfulopportunity to comment.

4. General

Comment: One commenterrecommended that the Secretariesrequire consumers to be full participantsas waivers are designed, implemented,and monitored, and that suchparticipation should include serving onan advisory board and a governing

board.Response: We agree with the

commenter that States should involve

consumers in the development,implementation, and monitoring ofsection 1332 waivers. We believe thatthe proposed State and Federal publicnotice and comment processes, alongwith the post-award public forumprovision, ensure formal opportunitiesfor participation. To ensure thatconsumers can participate, we clarifythat the State public notice andcomment process, the post-award publicforum, and the draft and final annualreports published on a State’s publicWeb site must comply with applicable

civil rights requirements foraccessibility, which are discussed in thepreamble to this section. We also notethat we expect that States will informconsumers and other interested partiesregarding the availability of auxiliaryaids and services for public forums.

We encourage States to considerwhere other opportunities for consumer

involvement exist. Given that section1332 waivers may be broad or narrow inscope, we have not modified theproposed regulation to add a provisionrequiring the establishment of advisoryor governing boards. We believe thatsuch a requirement would be overly

burdensome for a State seeking a waiverthat is limited in scope. We will workclosely with States to ensure that theState public notice and commentprocess is sufficient to ensure ameaningful level of public input, asproposed in 31 CFR 33.112(a)(1) and 45CFR 155.1312(a)(1).

Comment: A commenter asked thatthe Secretaries require that a State senda copy of any waiver proposal affectingFQHCs or ECPs directly to each FQHCin the State as well as to the Stateprimary care association, and that theState allow the primary care associationand at least two FQHCs time to speak atthe public hearing.

Response: We acknowledge thecritical role that FQHCs and ECPs havein providing services to low-income andother vulnerable populations. Given thepotentially broad scope of section 1332waivers, the Secretaries opted to take a

broad approach to describing the State

public notice and comment process inthe proposed rules, to ensure that itwould remain flexible to accommodatecomments from all key stakeholders.The provisions of 31 CFR 33.112(a)(1)and 45 CFR 155.1312(a)(1) specify that,‘‘a State must provide public notice andcomment period sufficient to ensure ameaningful level of public input * * *’’ This will give FQHCs, ECPs, and otherinterested or affected stakeholders anopportunity for engagement.

Comment: A few commenters askedthe Secretaries to clarify that thedescription of the proposal that is

shared with the public must includespecific details of the proposal,including analyses of financing andenrollment.

Response: We agree with thecommenters that this information isimportant to ensuring that stakeholdershave an opportunity to providemeaningful input. As set forth in 31 CFR33.112(b)(1) and 45 CFR 155.1312(b)(1),the public notice must include thefollowing: ‘‘A comprehensivedescription of the application for asection 1332 waiver to be submitted to

the Secretary including information andassurances related to all statutoryrequirements and other informationconsistent with guidance provided bythe Secretary and the Secretary of theTreasury.’’ We believe that thisprovision addresses the commenters’recommendations by ensuring that thepublic will have access to in-depth

information needed to assess the impactof the proposal. We also retain theflexibility to clarify this provision infuture guidance to address any areas inwhich additional information is neededto ensure that the State public noticeand comment period is sufficient toensure a meaningful level of publicinput.

E. Federal Public Notice and ApprovalProcess (31 CFR 33.116 and 45 CFR155.1316)

Consistent with section 1332 of theAffordable Care Act and the Secretaries’

desire to implement a State waiverapplication process that promotestransparency, facilitates publicinvolvement and input, and encouragessound decision-making at all levels ofgovernment, 31 CFR 33.116 and 45 CFR155.1316 of the proposed regulationsprovided for a Federal public notice andcomment period following apreliminary determination by theSecretaries that a State’s application fora section 1332 waiver is complete.

To facilitate public participation inthe section 1332 waiver applicationprocess, the proposed regulations

required the Secretary of HHS toprovide the public with notice of asection 1332 waiver application that has

been preliminarily determined to becomplete, including any supplementalmaterials received from a State duringthe Federal public notice and commentperiod, as well as regular updates for thestatus of a State’s section 1332 waiverapplication. In addition, the Secretary ofHHS would provide the public withinformation relating to (A) where copiesof the section 1332 waiver applicationare available for public review andcomment; (B) how and where writtencomments may be submitted andreviewed by the public, and thetimeframe during which comments may

be submitted; and (C) any publiccomments received during the Federalpublic notice and comment period.

Following the conclusion of theFederal notice and comment period, butin no event later than 180 daysfollowing the preliminary determination

by the Secretaries that a State’sapplication for a section 1332 waiver iscomplete, the final decision of theSecretaries on a State’s section 1332



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waiver application would be issued bythe Secretary of HHS.

We received the following commentsconcerning the proposed Federal publicnotice and approval process.

1. Federal Public Notice Process

Comment: Commenters suggested thatthe Secretaries post applications and

supporting materials on a dedicatedWeb site.

Response: As set forth in 31 CFR33.116(b)(2) and 45 CFR 155.1316(b)(2),the Secretary of HHS, ‘‘ * * * will makeavailable through its Web site andotherwise, and shall update asappropriate, public notice * * *.’’ Theproposed rules list the contents of thispublic notice, which includeapplications and supporting materials.We will consider whether to implementthis requirement through a dedicatedWeb site, or through a page on the mainHHS or CMS Web site.

Comment: Several commenters askedthat the Secretaries require a specificlength for the Federal public notice andcomment period. One commentersuggested 45 days.

Response: We agree with commentersthat the Federal public notice andcomment period is an importantelement of a transparent approach. Theproposed regulations require that theFederal public notice period be,‘‘sufficient to ensure a meaningful levelof public input.’’ Because the waiverapplications may cover a wide range ofproposals, we believe that this approach

better suits section 1332 waivers. To theextent that a proposal is particularlywide-ranging, the proposed regulationwill support a longer Federal publicnotice and comment period, and if theproposal is minor, it can support ashorter period. As such, we aremaintaining the language of theproposed regulations in the final rules.

Comment: Commenters suggested thatthe Secretaries create an electronicmailing list to notify interested partiesof the submission of an application andother actions taken.

Response: We will consider thissuggestion as we develop the details ofthe Federal public notice and commentprocess.

Comment: Commenters asked that theSecretaries specify that the Secretarieswill electronically publish all commentsreceived during the Federal publicnotice and comment process.

Response: We agree with thecommenter’s suggestion. This provisionwas included in 31 CFR 33.116(b)(2)(iv)and 45 CFR 155.1316(b)(2)(iv) of theproposed regulations, and we willmaintain this in the final regulations.

Comment: One commenter suggestedthat the Secretaries modify the proposedprocess to incorporate a notification ofthe State primary care association in anyState that is requesting to waiveprovisions related to FQHCs, and torequire the Secretaries to providewritten responses related to commentson this topic, as well as explanations

and supporting information related tothe approval of any proposal thatcontains such provisions.

Response: We acknowledge thecritical role that FQHCs have inproviding services to low-income andother vulnerable populations. Given thepotentially broad scope of section 1332waivers, the Secretaries opted to take a

broad approach to describing theFederal public notice and commentprocess in the proposed rules, to ensurethat it would remain flexible toaccommodate comments from all keystakeholders. 31 CFR 33.116(b)(1) and

45 CFR 155.1316(b)(1) specified that,‘‘the Secretary and the Secretary of theTreasury will provide for a public noticeand comment period that is sufficient toensure a meaningful level of publicinput * * *’’ This will give FQHCs,ECPs, and other interested or affectedstakeholders an opportunity forengagement.

Comment: One commenter expressedconcerns as to whether comments fromentities outside a State requesting awaiver would be applicable to theState’s proposal.

Response: We recognize that entities

within a State requesting a waiver arewell positioned to contributemeaningful comments; we alsorecognize that there are entitiesthroughout the country that will have aninterest in and expertise in the topics ofwaiver proposals, particularly to theextent that a State’s waiver proposalcould affect other States. In the interestsof creating a transparent process, theSecretaries will consider all commentssubmitted during the Federal publicnotice and comment period, and makedecisions in accordance with thestatutory criteria for approval.

2. Approval ProcessComment: One commenter suggested

that the Secretaries establish a waiverreview panel that consists of consumers,providers, and federal andnongovernmental technical experts toreview testimony and comments andmake recommendations regarding theapproval of a waiver.

Response: We will consider thissuggestion, along with other approachesto creating an efficient and transparentprocess, as we move closer to the point

at which States will begin to developsection 1332 proposals.

Comment: Commenters asked forclarification on how the Secretarieswould implement the 180-day Federaldecision-making period. Onecommenter suggested that theSecretaries should allow reasonableadjustments to an application without

affecting timeframes, when theadjustments are the result of State-Federal negotiations. Anothercommenter asked the Secretaries toclarify whether the provision allowingthe Secretaries to determine anapplication incomplete after firstdetermining it complete was purposeful,and asked for the Secretaries to revisethis provision such that it would notaffect the 180-day Federal decision-making period.

Response: The Secretaries intend todevelop protocols related to the Federaldecision-making process that areresponsive to the needs of each Stateand promote efficiency andtransparency. These protocols may varyfrom proposal to proposal, and willcertainly evolve as States and theSecretaries gain additional expertise innavigating the process. We will strive toensure clear and open lines ofcommunication between a State and theSecretaries throughout the Federaldecision-making process.

We agree with the comment regardingthe allowance to modify an applicationwithout affecting the timeframe as aresult of negotiation. We anticipate thatthis will be a regular occurrence during

the Federal decision-making period, andthat making agreed-upon changes as theprocess moves forward will facilitate anefficient process for all involved parties.

We clarify that the provision in 31CFR 33.108(a)(2)(i)(C) and 45 CFR155.1308(a)(2)(i)(C) of the proposedregulations was indeed purposeful inspecifying that a preliminary findingthat an application is complete does notpreclude the Secretaries from laterfinding that an application is notcomplete. We anticipate thatconversations between a State and theSecretaries may reveal additionalinformation that is needed to evaluatewhether an application meets thestatutory requirements for approval.When such a situation occurs withoutsufficient time for the State to respond

before the end of the 180-day Federaldecision-making period, the Secretariescan either deny the application or findthe application incomplete; we believethat the latter option provides greaterflexibility to States, and reducesduplicate burden that would be placedon States and on the Federalgovernment if an application must be



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resubmitted. As such, we aremaintaining this provision in the finalregulations. As noted above, we intendto work closely with States to create anefficient process for waiver approval,and preserve timeframes whereverpossible.

F. Monitoring and Compliance (31 CFR

33.120 and 45 CFR 155.1320)As section 1332 waivers are likely to

a have a significant impact onindividuals, States and the Federalgovernment, the proposed regulationsestablished processes andmethodologies to ensure that theSecretaries receive adequate andappropriate information regardingsection 1332 waivers (consistent withsection 1332(a)(4)(B)(iv) of theAffordable Care Act).

Under 31 CFR 33.120(a) and 45 CFR155.1320(a) of the proposed regulations,a State is required to comply with allapplicable Federal laws, regulations,policy statements and Departmentalguidance unless a law or regulation hasspecifically been waived. Further, theproposed regulations required a State tocome into compliance with any changesin Federal law, regulation, or policyaffecting section 1332 waivers withinthe timeframes specified in law,regulation, interpretive policy, orguidance, unless the provision beingchanged is expressly waived, and tocomply with the terms and conditionsof the agreement entered into betweenthe Secretaries and the State toimplement a section 1332 waiver, or the

section 1332 waiver would besuspended or terminated in whole or inpart by the Secretaries.

Under 31 CFR 33.120(b) and 45 CFR155.1320(b) of the proposed regulations,as part of the terms and conditions ofany section 1332 waiver, a State mustconduct periodic reviews related to theimplementation of the waiver. TheSecretaries would review, and whenappropriate investigate, documentedcomplaints that a State is failing tomaterially comply with requirementsspecified in the terms and conditions ofthe section 1332 waiver. In addition, the

Secretaries would share with the Stateany complaint that has been receivedand notify the State of any applicablemonitoring and compliance issues.

Under 31 CFR 33.120(c) and 45 CFR155.1320(c) of the proposed regulations,to ensure continued public input afterthe initial six months of the waiver’simplementation, and annuallythereafter, States were required to holda public forum at which members of thepublic have an opportunity to providecomments on the progress of the section1332 waiver. The proposed regulation

further required States to include asummary of this forum to the Secretaryof HHS as part of the quarterly andannual reporting requirements under 31CFR 33.124 and 45 CFR 155.1324.

Under 31 CFR 33.120(c)(1) and 45CFR 155.1320(c)(1) of the proposedregulations, States were required topublish the date, time, and location of

the public forum in a prominentlocation on the State’s public Web siteat least 30 days prior to the date of theplanned public forum.

Under 31 CFR 33.120(d) and 45 CFR155.1320(d) of the proposed regulations,the Secretaries reserved the right tosuspend or terminate a section 1332waiver, in whole or in part, any time

before the date of expiration, if theSecretaries determined that the Statematerially failed to comply with theterms and conditions of the section 1332waiver. In the event that all or a portionof a section 1332 waiver is terminated

or suspended by the Secretaries, or if allor a portion of a section 1332 waiver iswithdrawn, Federal funding would belimited to normal closeout costsassociated with an orderly terminationof the section 1332 waiver, as describedin 31 CFR 33.120(e) and 45 CFR155.1320(e).

Under 31 CFR 33.120(f) and 45 CFR155.1320(f) of the proposed regulations,in the event that the Secretariesundertook an independent evaluation ofany component of the section 1332waiver, the State must cooperate fullywith the Secretaries or the independentevaluator selected by the Secretaries.

This cooperation would include, but isnot limited to, the submission of allnecessary data and information to theSecretaries or the independentevaluator.

We received the following commentsconcerning the proposed provisionsregarding monitoring and compliance.

1. Post-Award Public Forum

Comment: In general, commenterssupported the proposal for an annualpublic forum. Some commentersrequested that the Secretaries provideadditional detail on the post-award

public forum requirement, includingrequiring the development of a formaladvisory body similar to the MedicalCare Advisory Committee (MCAC).Commenters also asked the Secretariesto clarify that the public must have anopportunity to comment at a post-awardpublic forum, and that the Secretariesshould require States to publish thedate, time, and location of publicforums in the State equivalent of theFederal Register.

Response: We believe that it isappropriate to provide a State with

flexibility to determine the appropriatepublic forums. Consequently, we havenot added a provision requiring a Stateto establish an advisory board. Further,given the possibility for section 1332waivers to be broad or narrow in scope,we want to avoid requiring the creationof burdensome structures.

We agree with commenters that the

public should have an opportunity tocomment at a post-award public forum,which was reflected in 31 CFR 33.120(c)and 45 CFR 155.1320(c) of the proposedregulations. We are maintaining thisprovision in the final regulations.

We also agree that the public shouldhave notice of a public forum. As setforth in 31 CFR 33.120(c)(1) and 45 CFR155.1320(c)(1), a State must publish thedate, time, and location of a post-awardpublic forum in a prominent location onthe State’s public Web site at least 30days prior to the forum. We believe thata State’s public web site is a moreeffective means of communication to thepublic than a State’s equivalent of theFederal Register, and as such, willmaintain this provision in the finalregulation. With that said, we encourageStates to publish the notice of a post-award forum in other locations that willensure appropriate public notice.

Comment: One commenter asked thatthe Secretaries consider delaying theinitial post-award public forum andremoving the requirement after 2 to 3years of operation, with the potential totrigger forums when changes occur.

Response: We support thecommenter’s desire to reduce burden on

States. However, we believe that post-award forums will be critical toensuring that public has a regularopportunity to learn about and commenton the progress of a waiver. As such, weare maintaining this provision in thefinal regulations.

2. General

Comment: One commenter suggestedthat 31 CFR 33.120(a) be modified toremove the term ‘‘interpretiveguidance.’’ The commenter stated thatStates should be subject only to ‘‘laws,regulations, and interpretive policy that

have been published and are of generalapplicability.Response: We believe that the

authority available to States undersection 1332 demands that the Federalgovernment have a broad set of tools forensuring ongoing compliance with thestatutory criteria for the approval ofwaivers and providing neededclarifications to States, includinginterpretive guidance. With that noted,we will work closely with States toprovide as much advance notice aspossible of upcoming guidance that



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affects waivers, as well as to incorporateState input in crafting such guidancewhere possible.

Comment: A commenter asked theSecretaries to reduce Federaldiscretionary authority to discontinuewaivers.

Response: As set forth in 31 CFR33.120(d) and 45 CFR 155.1320(d), the

Secretaries’ authority to terminate orsuspend a waiver is limited to situationsin which the Secretaries find, ‘‘* * *that a State has materially failed tocomply with the terms of a section 1332waiver.’’ We believe that this provisionis sufficiently limited and is critical toensuring that Federal dollars are spentin accordance with applicable rules. Assuch, we will maintain this provision inthe final regulations.

Comment: One commenter asked thatthe Secretaries require States to developa transition plan that would allow thepublic to continue to have access to

quality, affordable health care should aState’s waiver be terminated orsuspended.

Response: We agree that it would beuseful for States to develop a transitionplan, depending on the scope of theapproved section 1332 waiver. We willconsider including this as a standardcomponent of the terms and conditionsof an approved waiver.

Comment: One commenter asked theSecretaries to closely monitor approvedwaivers to ensure fair and adequateaccess to and payment for FQHCservices.

Response: We believe that there aremany areas in which monitoring will beparticularly important to ensure thatapproved waivers continue to meet thestatutory criteria for approval. To theextent possible, we will align thismonitoring with each State’s waiverdesign to reduce administrative burden.

G. State Reporting Requirements (31CFR 33.124 and 45 CFR 155.1324)

Section 1332 of the Affordable CareAct requires that the Secretaries providefor a process for the periodic submissionof reports by a State concerning theimplementation of the program under asection 1332 waiver.

For the Secretaries to effectivelymonitor the implementation of a waiver,the proposed regulations required aState to submit a quarterly progressreport in accordance with the terms andconditions of the State’s section 1332waiver. States were also required tosubmit an annual report, as described in31 CFR 33.124(b) and 45 CFR155.1324(b), documenting the following:

• The progress of the section 1332waiver;

• Data on compliance with section1332(b)(1)(A) through (D) of theAffordable Care Act;

• A summary of the annual post-award public forum, including allpublic comments received regarding theprogress of the section 1332 waiver andaction taken in response to suchconcerns or comments; and

• Other information consistent withthe State’s approved terms andconditions.

Under 31 CFR 33.124(c) and 45 CFR155.1324(c) of the proposed regulations,States were required to submit a draftannual report to the Secretary of Healthand Human Services no later than 90days after the end of each waiver year.Within 60 days of receipt of commentsfrom the Secretary of Health and HumanServices, a State would be required tosubmit a final annual report for thewaiver year to the Secretary of Healthand Human Services. Finally, a State

would be required to publish the draftand final annual reports on the State’spublic web site.

The Secretaries noted that theyintended to issue future guidance undersection 1332 regarding periodic reports.

We received the following commentsconcerning the proposed process forState reporting on approved waivers.

Comment: Several commentersrequested that the Secretaries requireStates and the Federal government topublish quarterly and annual reports onState and Federal web sites in a timelyfashion.

Response: The provisions of 31 CFR

33.124(c)(2) and 45 CFR 155.1324(c)(2)specify that a State must publish bothdraft and final annual reports on itspublic web site. We are maintaining thisprovision in the final regulations. Wewill consider the other elements of thiscomment in developing future guidanceon reporting.

Comment: In general, commenterssupported the proposed quarterly andannual reporting provisions. Somecommenters requested that theSecretaries add specific reporting topicsand analyses in regulation, as opposedto addressing this in future guidance.

Response: We appreciate thecommenters’ detailed suggestions. Weare not including additional specificityin the final regulations at this time,given that the rules regarding theunderlying provisions are not yet final.We will consider the specificsuggestions in developing futureguidance on reporting, as well as incrafting the reporting provisions thatmay be specific to an approved waiver.

Comment: One commenterrecommended that the frequency ofreporting be reduced from quarterly to

semi-annual for the first 2 to 3 years ofa waiver period, with annual reportingafter that. The commenter alsosuggested that annual reports bereplaced with high-level summariesafter the first 2 to 3 years of a waiverperiod.

Response: We support thecommenter’s desire to reduce burden on

States. However, we believe that giventhe potentially broad scope of section1332 waivers, quarterly and annualreporting will be critical to ensuring thatthe Secretaries can exercise appropriateoversight of approved waivers, andStates can formally communicate areasin which best practices have emerged ortechnical assistance may be needed. Wealso believe that such reporting isimportant to enable the Secretaries tocalibrate future budgetary estimates.Within this construct, we intend towork with States to ensure thatquarterly and annual reporting do not

include duplicative or unnecessaryinformation, and are closely aligned tothe design of a State’s waiver.

Comment: One commenter objected tothe provision that allows the Secretariesto review a draft version of the annualreport prior to its release to the public.

Response: Consistent with thepractice that we are adopting for section1115 waivers, which is specified in aconcurrently issued final rule in 42 CFR431.428(b), the provisions of 31 CFR33.124(c)(2) and 45 CFR 155.1324(c)(2)specify that a State must publish thedraft annual report on a public Web sitewithin 30 days of submission to the

Secretary of HHS. We believe that thisis appropriate to allow the State tocomplete any internal process it has forpreparing the document for publication(for example, ensuring that thedocument meets electronic accessibilitystandards) and posting it electronically.We are maintaining this provision in thefinal rules.

H. Periodic Evaluation Requirements(31 CFR 33.128 and 45 CFR 155.1328)

Section 1332 of the Affordable CareAct requires that the Secretaries providefor a process for the periodic evaluation

of section 1332 waivers by the Secretaryor Secretaries with jurisdiction over theprovisions for which the waiver wasgranted. The proposed regulationsrequired that each periodic evaluationinclude a review of all annual reportssubmitted by the State in accordancewith 45 CFR 155.1324 and 31 CFR33.124 that relate to the period of timecovered by the evaluation.

As part of this proposed regulation,the Secretaries solicited publiccomments regarding specificcomponents of the periodic evaluation



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of a section 1332 waiver. TheSecretaries noted that potentialcomponents of a periodic evaluationcould include, but not be limited to, theimpact of the waiver on the following:

• Choice of health plans forindividuals and employers;

• Stability of coverage for individualsand employers;

• Small businesses, individuals withpre-existing conditions, and the low-income population;

• The overall health care system inthe State; and

• Other States and the FederalGovernment.

The Secretaries noted that theyintended to issue future guidance undersection 1332 regarding periodicevaluations.

We received the following commentsconcerning the proposals regarding theevaluation of approved waivers.

Comment: Several commenters askedthe Secretaries to include additionalspecific evaluation criteria in regulation,including, the use of HealthcareEffectiveness Data and Information Set(HEDIS) and the Consumer Assessmentof Healthcare Providers and Systems(CAHPS); system-wide, audited qualityoutcome measures; and metrics onaccessibility, cost, health and wellness,administrative expenses, evidence-

based practices, and the impact of thewaiver on individuals with pre-existingconditions and low-income populations.

Commenters also offered additionalsuggestions for the evaluation process,including requiring comparisons with

States without waivers; requiring thatevaluations be conducted by objective,independent, peer-reviewed evaluatorsat least every 3 years; and allowingStates flexibility in constructingevaluations.

Response: We have carefully reviewedthe submitted comments and willconsider them as we develop guidanceon this topic. We intend to work closelywith States and stakeholders to ensurethat evaluations are aligned with thedesign and goals of a State’s waiver andsection 1332.

Comment: Commenters asked that

evaluation criteria not necessarilyinclude choice of health plans, to allowevaluation criteria to accommodatedifferent approaches that States maytake in section 1332 waivers.

Response: The potential evaluationcriteria offered in the preamble to theproposed regulations represents astarting point for the development ofguidance on the evaluation of approvedsection 1332 waivers. We anticipate thatthe primary focus of the evaluation will

be the four statutory criteria forapproval specified in section 1332(b)(1)

of the Affordable Care Act. As notedabove, we intend to work closely withStates to ensure that evaluations arealigned with the design and goals of aState’s waiver and section 1332.

Comment: Commenters asked that theSecretaries, and not the States, conductevaluations.

Response: We are maintaining thelanguage in 31 CFR 33.128(a)(1) and 45CFR 155.1328(a)(1), as the law requiresperiodic evaluations by the Secretaries.We will consider how best to carry outthis responsibility as we develop futureguidance related to the evaluationprocess.

I. Other Comments

We received the following comments,which were not related to a specificsection of the proposed regulation.

1. Scope of Waivers

Comment: We received a number ofcomments that requested that theSecretaries clarify or restrict waiverauthority in various ways, includingprohibiting States from: imposing morestringent coverage requirements onemployers; waiving the minimumcoverage provision; waiving provisionsrelated to essential communityproviders; granting exceptions from themedical loss ratio requirement; oraffecting employer-sponsored insurance.One commenter also asked that theSecretaries emphasize the importance ofpreserving employer-based coverage.

In particular, a number of commentersasked the Secretaries to clarify theinteraction between section 1332waivers and the Employee RetirementIncome Security Act (ERISA).

In addition, one commenter askedwhether States will be permitted to useredirected premium tax credits and cost-sharing reductions to fund HealthSavings Accounts (HSAs).

Response: Section 1332(a)(2) of theAffordable Care Act specifies thatwaiver authority is limited to parts I andII of subtitle D of the Affordable CareAct; section 1402 of the Affordable CareAct; and sections 36B, 4980H, and5000A of the Internal Revenue Code.Further, section 1332(c) of theAffordable Care Act states while theSecretaries have broad discretion todetermine the scope of a waiver, noFederal laws or requirements may bewaived that are not within theSecretaries’ authority. As previouslynoted, we encourage States to contactthe Secretaries to discuss specificwaiver proposals, particularly after thesubstantive rules subject to section 1332waivers are finalized.

2. General

Comment: One commenter asked thatthe Secretaries include provisions forwaiver amendments and renewals, andclarify which requirements apply inthese situations. Another commenterrecommended that the renewal processinclude a thorough reevaluation.

Response: We acknowledge thatinformation regarding waiveramendments and renewals will beneeded as we move closer to the date onwhich section 1332 waivers could beeffective. However, amendments andrenewals are beyond the purview of theproposed rules, which were limited inaccordance with section 1332(a)(4)(B) ofthe Affordable Care Act.

Comment: A commenter asked thatthe Secretaries clarify that waivers areapproved for a fixed timeframe.

Response: We note that section1332(e) of the Affordable Care Act

specifies that the initial term of asection 1332 waiver may not extendlonger than five years.

Comment: One commenter asked howHHS will determine the total amount ofFederal funding under an approvedwaiver.

Response: We will provide additionalinformation on this issue as we movecloser to the date on which section 1332waivers could be effective andregulations regarding the underlyingprovisions are promulgated.

IV. Provisions of the Final Regulations

For the most part, these final rulesincorporate the provisions of theproposed rules. Those provisions ofthese final rules that differ from theproposed rules are as follows:

A. Coordinated Waiver Process (31 CFR33.102 and 45 CFR 155.1302)

We have clarified that ‘‘section 1115demonstration’’ in 31 CFR 33.102(a) and45 CFR 155.1302(a) refers to ademonstration under section 1115 of theAct.

We have replaced the word ‘‘and’’with the word ‘‘or’’ in 31 CFR 33.102(b)and 45 CFR 155.1302(b) to clarify thatthe Secretary of Health and HumanServices will transmit any proposal thatrequests to waive one or more of theprovisions under the authority of theSecretary of the Treasury to theSecretary of the Treasury.

B. Definitions (31 CFR 33.104 and 45CFR 155.1304)

We have revised the definition of‘‘Complete application’’

final rule section 1332 waiver.pdf

Documents