October 6, Submitted Electronically Via Federal Rulemaking Portal:

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1 October 6, 2016 Submitted Electronically Via Federal Rulemaking Portal: Attention: CMS-9934-P Centers for Medicare & Medicaid Services Department of Health and Human Services Room 445-G Hubert H. Humphrey Building 200 Independence Avenue, S.W. Washington, DC RE: HHS Notice of Benefit and Payment Parameters for 2018; Proposed Rule To Whom It May Concern: The U.S. Chamber of Commerce (the Chamber ) submits these comments to the Department of Health and Human Services in response to the Department s Notice of Benefit and Payment Parameters for 2018 Proposed Rule ( Proposed Rule ). This Proposed Rule sets forth payment parameters provisions related to the risk adjustment program; cost-sharing parameters and costsharing reductions; and user fees for Federally-facilitated Exchanges ( FFE ) and State-based Exchanges on the Federal platform. It also provides additional guidance relating to standardized options; qualified health plans ( QHPs ); consumer assistance tools; network adequacy; the Small Business Health Options Program ( SHOP ); stand-alone dental plans; fair health insurance premiums; guaranteed renewability; the medical loss ratio program; eligibility and enrollment; appeals; and other related topics. The Proposed Rule was published in the Federal Register on September 6, 2016, by the Department of Health and Human Services ( HHS and the Department ). 1 The Proposed Rule offers possible implementation approaches for a multitude of different statutory sections of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively referred to as ACA ). 2 The Chamber is the world s largest business federation, representing the interests of more than three million businesses and organizations of every size, sector and region, with substantial membership in all 50 states. More than 96 percent of the Chamber s members are small businesses with 100 or fewer employees, 70 percent of which have 10 or fewer employees. Yet, 1 Proposed Rule, 81 Fed. Reg. 61,456-61,536. (September 6, 2016) (to be codified at 45 C.F.R. pts. 144, 146, 147, 148 et al.) [hereinafter referred to as the Proposed Rule ] 06/pdf/ pdf. 2 The Patient Protection and Affordable Care Act, Pub. L. No , amended by Health Care and Education Reconciliation Act of 2010, Pub. L. No (2010).

2 virtually all of the nation s largest companies are also active members. Therefore, we are particularly cognizant of the problems of smaller businesses, as well as issues facing the business community at large. Besides representing a cross-section of the American business community in terms of number of employees, the Chamber represents a wide management spectrum by type of business and location. Each major classification of American business manufacturing, retailing, services, construction, wholesaling, and finance is represented. These comments have been developed with the input of member companies with an interest in improving the health care system. As in years past, this annual Proposed Rule which addresses at least fifteen different highly technical issues affords the public a measly thirty-day comment period. For the fourth year in a row, the administration has chosen to ignore regulatory procedural requirements shortchanging the public from a meaningful opportunity to review and comment on the Proposed Rule. This cavalier approach to regulating with regard to this particular annual proposed rule on Benefit and Payment Parameters again reflects not just procedural indifference, but also substantive trickery. We also are concerned that many of the proposed regulatory changes are set out not in the regulatory text, but rather as a discussion in the preamble to the NBPP. While we appreciate your effort to provide background and context regarding proposed changes, it is important that affected stakeholders have a clear understanding of exactly what you are considering changes that are best illustrated by specific regulatory language. To the extent that we were able to review and assess the 80-page rule in the 30 days since it was published in the Federal Register, our comments here will focus on our support for some of the proposals that will increase flexibility for carriers and create more choices and options for consumers. We also have concerns with some of the proposals which will limit choice and innovation for consumers and urge the Department to reconsider these provisions. I. SUPPORT PROVISIONS TO IMPROVE FLEXIBILITY AND INCREASE CHOICE While there are likely many more areas of interest, with the exceedingly brief comment period, we have received feedback to date on several issues. Our members and the Chamber support several proposals in the Proposed Rule to permit additional flexibility for insurers and to afford consumers additional choice. We believe it is important to advance and adopt policy changes that will promote a more stable market going forward. Despite the rosy statement in the Proposed Rule s Executive Summary that the ACA reforms include the creation of competitive marketplaces called Affordable Insurance Exchanges, the viability of these exchanges is currently extremely tenuous. As the Proposed Rule s updates suggest, these marketplaces are in dire need of significant changes to stabilize and bolster the competitiveness of these marketplaces. Several of the proposed updates to further promote stable premiums in the individual and small group markets will be helpful. The Chamber supports the proposal to broaden the de minimis range for the actuarial value of bronze plans as well as the proposal to remove the requirement tying participation in the individual market FFE to participation in the Federally-facilitated SHOP. We support changes to permit insurers to remain in an applicable market rather than triggering the 5-year prohibition on re-entering an applicable market under previous guaranteed renewability requirements. We support efforts to more accurately assess the risk of enrollees in different plans and urge HHS to continue to focus on ways to address partial year enrollments and improper use of special enrollment periods. We share concerns about unexpected out-of- 2

3 network provider bills when an insured individual seeks care at a participating in-network facility. The creation of multiple child age bands with a corresponding increase in the overall child age is also a welcome modification which will help smooth the change in premiums for young adults when they turn 21. Finally, we encourage the Department to permit issuers to coordinate benefits for Medicare eligible individuals enrolled in private individual coverage as the Medicare Secondary Payer Act requires in the large group market. A. Expand the De Minimis Range The Chamber supports the proposal to increase the de minimis range to ensure flexibility in bronze plan design. Issuers should have the flexibility to develop bronze plans that address the varying needs of their enrollees and we support modifications that would permit an issuer to elect to cover and pay for additional services before the deductible. We appreciate the recognition that flexibility is important to permit more generous as well as more modest offerings before the deductible. Not only should bronze plans be permitted to remain at least as generous as catastrophic coverage and cover three primary care services or a major service under the deductible but they should also be permitted to remain eligible to be a high deductible health plan which would entail different coverage requirements before the deductible outside of certain preventive services. B. Remove the Tying Provision The Chamber supports removing the tying provision which requires plans that offer coverage in the federally facilitated exchange ( FFE ) to also offer coverage in the federally facilitated SHOP. We believe that removing this mandate will encourage more plans to provide coverage in the FFE which will improve choice for consumers and may drive down premiums as more carriers and products compete for enrollees. C. Loosen the 5-Year Prohibition on Re-Entering an Applicable Market The Chamber supports the proposal to loosen the current 5-year prohibition on re-entering an applicable market. We believe that the current prohibition may improperly classify issuer efforts to modify products as a decision to exit the market. Modifications such as this which will permit carriers to continue to remain active in a particular market are especially critical in preserving coverage options for consumers, and thus, it is appropriate to consider a product transferred to another issuer within a controlled group to be a previously offered product. D. Modify the Risk Adjustment Methodology While the Chamber appreciates the acknowledgement in the Proposed Rule that modifications to the risk adjustment methodology is necessary, the small changes proposed while somewhat helpful are not sufficient. We encourage the Department to work with issuers to develop a new risk adjustment model using the actual claims to assess the costs associated with various conditions. There must be balanced incentives for issuers to enroll all populations. E. Verify Special Enrollment Periods ( SEP ) In order to truly address improper manipulation of the special enrollment periods, the Department must develop a pre-enrollment verification process. Without pre-enrollment 3

4 verification, the current guaranteed issue requirement will continue to force carriers to enroll individuals who choose to wait to buy health insurance until they need services driving up premiums for everyone and destabilizing risk pools and markets. This issue is one which the Chamber has commented on in prior Notice of Benefit and Payment Parameter ( NBPP ) Proposed Rules and remains a serious concern. The Chamber urges the Department to adopt an SEP verification process similar to the process used for Medicare enrollees. Note here the comment made last year in response to the NBPP: Under the new insurance reform rules in the ACA, individuals are able to obtain health insurance regardless of preexisting conditions. While this is an important reform that the Chamber supports generally, other necessary protections and requirements must continue to be enforced. As a variety of provisions in the ACA intended to do, it is critical that individuals maintain continuous coverage and not simply enroll and retain health insurance when they need health care services. Current rules allow some people to misuse special enrollment and grace periods to purchase coverage only when they need medical care. Moreover, the proposed rules could make it easier for some people to remain uninsured and exacerbate the unbalanced risk pool by permitting third parties to pay premiums and cost-sharing only for people who need expensive care. The final rules must address these issues, which further destabilize the risk pool, causing higher premiums. As premiums increase, it becomes increasingly difficult to enroll younger and healthier people. We remain concerned that the existing special enrollment periods do not sufficiently guard against abuse. SEPs should only exist for life changing events such as a change in marital status, having a baby, adopting a child, or placing a child in foster care, loss of coverage, or a permanent move. The Exchange should require documentation of the life event from the individual enrolling during an SEP. The Exchange should also be required to provide that documentation to the issuer, as well as confirming that the individual does not owe premium on a prior plan. If the individual does not provide such documentation, or the Exchange is unable to verify the life event within a reasonable timeframe then the consumer should not be eligible to enroll in the SEP. F. Address Surprise Out of-network Provider Bills The Chamber continues to share concerns about surprise out-of-network physician bills that insured consumers receive despite obtaining health care services at an in-network facility. This scenario continues to frustrate providers, issuers, consumers and employers alike. This issue is one that the Chamber also commented on last year when responding to the NBPP for 2017 and our comments remain relevant and applicable to this Proposed Rule: HHS proposes to require for a network to be deemed adequate, each QHP that uses a provider network must count cost sharing paid by an enrollee for an Essential Health Benefit ( EHB ) provided by an out-of-network ( OON ) ancillary provider in an in-network ( INN ) setting under certain 4

5 circumstances toward the enrollee s annual limitation on cost-sharing, unless at least 10 business days before the provision of the benefit written notice is provided by the issuer to the enrollee. 3 The Chamber and our members understand the frustration of consumers and employees that inadvertently, and through no fault of their own, receive services from an out-of-network hospital based provider despite going to an in-network facility. However, despite this problem, we have concerns with regulatory solutions proposed in this rule with no real authority or statutory basis. We also are mindful of unintended consequences that may result in regulating a solution. We dispute the authority of the regulators to create this new requirement and payment/benefit schema. Several unintended ramifications that HHS should at least be mindful of include the following: Any attempt to include balance billing as cost sharing an inevitable consequence of expanding this provision to QHPs that do not cover OON services will have a significant impact on health care costs and related premiums on QHPs. It could also lead providers to seek out-ofnetwork status in order to have the ability to charge consumers unlimited rates. The definition of an ancillary provider should specifically include hospital-based providers such as anesthesiologists, radiologists, and pathologists, as these are the providers often involved in services that lead to these surprise OON medical bills. As drafted, the proposed rule would apply to any OON provider who performs an EHB in an INN setting. This would allow a consumer to select an OON surgeon and avoid the OON cost-sharing if the surgeon agrees to perform the service at an INN setting. G. Expand the Child Age Band The Chamber supports the proposal to change the current single age band for individuals age 0 through 20 years old. Creating multiple child age bands and increasing the overall child age factor will mitigate the large premium disruptions that young adults currently face when they turn 21 and allow issuers to more accurately price premiums to reflect claim costs in this currently broad age bracket. H. Permit Coordination of Benefits With Medicare When Eligible Beneficiaries Enrollee in Individual Insurance Coverage The Chamber submitted comments in response to the Request for Information on improper steering of individuals eligible for and or receiving Medicare and/or Medicaid benefits to individual market plans. It seems that this Proposed Rule is requesting comments on a similar 3 Proposed Rule, 80 Fed. Reg. at 75,551. 5

6 situation from a slightly different perspective that of guaranteed renewability. While the payment of premiums by third party payers to obtain higher reimbursement rates is a significantly more nefarious motivation, the same coverage challenges and potential harms exist when a Medicare-eligible individual enrolls in a plan in the individual insurance market but does not availing himself/herself of Medicare coverage. If a Medicare-eligible individual chooses to enroll in an individual insurance market plan and pay the premium, he/she should also be required to enroll in Medicare so that benefit coordination is possible. As the individual market struggles to stabilize ahead of the fourth open enrollment period since the ACA was enacted, it is essential to focus on ways to stabilize the risk pool for all consumers and sure-up the viability of this market. We urge the Department to allow issuers of individual market plans to coordinate benefits with Medicare. Re-enrolling Medicare eligible individuals into individual market plans without facilitating payment coordination will drive up costs for the overall health care system unnecessarily. II. OPPOSE PROPOSALS THAT LIMIT CHOICE AND INNOVATION As the federal government takes an ever growing role in regulating the offering of health insurance on the FFE, the Chamber is concerned with proposals to display and describe products in a way that conveys a value judgement. The Chamber is troubled by proposals to delineate the network breadth of exchange products with words that unfairly carry negative connotations. The Chamber is also concerned with the proposal to differentially display the standardized options. A. Network Delineations While we appreciate the importance in educating consumers as to different network offerings that exist among insurance products, the Chamber is concerned that the comparative wording proposed to describe network breadth will confuse consumers and convey certain subjective value judgements based on words the Department is proposing to use. We urge HHS to work with stakeholders to develop evaluation criteria now on which the pilot results will be assessed. Only after these criteria are carefully developed and vetted would it be appropriate and feasible to carefully review the results of the pilot in the four states where the network-breadth ratings are being used. HHS should also solicit feedback from issuers, consumers and providers about appropriate ways to delineate network-breadth in an objective way. B. Standardized Options The Chamber continues to have concerns about the Department s standardized options and believes that the law and current rules already require tremendous plan standardization, including Essential Health Benefits, cost-sharing specifics, and four levels of actuarial value. There are already significant administrative requirements on issuers as they market their plans in an effort to help consumers make comparisons such as summary of benefit and coverage documents, and meaningful difference requirements to differentiate plans and ensure variety. Further standardization should be avoided as it would undermine private sector innovation to meet all consumers needs. In addition to remaining concerned about the inflexibility of standardized options, the Chamber is concerned about the proposal to require a differential display for these plans. 6

7 III. PROCEDURAL CONCERNS As we were with the prior four annual publications of the Proposed Rules for the Notices of Benefit and Payment Parameters in 2014, 2015, 2016, and 2017, the Chamber is disheartened by this Proposed Rule s procedural failures which include: a woefully inadequately comment period given the Proposed Rule s complexities and length; incomplete economic analysis, and; inadequate regulatory flexibility analysis. We continue to find it disturbing that so many seemingly unrelated provisions are routinely addressed in what has become a cats and dogs catch-all rule making exercise that encompasses a laundry list of more than 20 distinct items as well as other related topics. A. Inadequate Comment Period for an Overly Complex Proposed Rule This is the latest edition of the annual NBPP Proposed Rule and it addresses at least 12 distinct items. Combining so many items into a single regulatory notice with a mere 30 day comment period undermines the public s right to participate in the rulemaking process as guaranteed by the Administrative Procedure Act. Meaningful comment is hindered by the combination of so many distinct matters in a single notice, and the short comment period adds to the problem. B. Incomplete Economic Analysis Federal agencies are required by Executive Orders and statutes to assess the economic impacts of proposed rules and of alternatives considered in order to show that the regulatory approach proposed is the least costly means of achieving a needed benefit. To the extent possible, agencies must quantify the costs and benefits of the proposed rule and each of the alternatives considered, including the alternative of no regulation. In Section VI of the Proposed Rule, the Department admits that the Office of Management and Budget has classified this as an economically significant rulemaking. That means that its expected cost or transfers impacts exceed $100 million per year. Elsewhere in connection with discussion of the impacts of the rulemaking relative to the Unfunded Mandates Act, the Department acknowledges that the combined administrative and user fee impacts of the combined rule proposals likely exceed $146 million. 4 In Table 17, however, the Department has quantified only $3.68 million in annual cost impacts and $22 million in economic transfer impacts. 5 The Department s inability to present credible quantitative accounting for the likely costs of this rulemaking is an indication of the lack of thoroughness and deliberation in arriving at these regulatory proposals. The only elements of the rulemaking for which the Department has presented a quantitative cost estimate is for annual administrative costs ($3.68 million) to be incurred by issuers and webbrokers to comply with the proposed requirements for differential display of standardized option on web sites of agents, brokers, or QHP issuers. The $3.68 million estimate reflects only costs associated with five information collection burden estimates under the Paperwork Reduction Act described in Section IV and Table The Department has ignored familiarization, training and operational procedures adjustment costs that are outside the scope of direct information 4 Proposed Rule, 81 Fed. Reg. at 61, Proposed Rule, 81 Fed. Reg. at 61, Proposed Rule, 81 Fed. Reg. at

8 collection burdens but that are, nevertheless, real costs that regulated entities will incur to comply with the proposed rules. Within the narrow scope of information collection burdens, the Department s cost estimates appear to be based on speculation rather than credible empirical evidence. The following are examples of speculative assertions that the Department should replace with experience-based data that could be obtained from review and analysis of existing program records or from surveys of affected entities: 1. In Section IV(B), the Department believes that approximately half of all enrollees have pharmacy claims, and of those that do we would expect approximately six pharmacy claims per enrollee. What is the basis of this belief? The Department should present reliable statistical data based on program experience or other credible sources rather than beliefs as a basis for regulatory cost analysis. 2. Also in Section IV(B), the Department expects that it would require 30 minutes for an auditor to validate a claim. What is the empirical basis for this expectation? It is within the capability of the Department to conduct an experiment using live HHS staff auditors and real data to obtain a statistically credible estimate of this key time parameter. An expectation without a foundation in empirical data is merely wishful thinking and purely speculative. 3. What is the basis of the Department s assumption that an initial validation audit would be performed on 165,000 enrollees? What is the likelihood that the number will be greater or less, and how would such variation affect the estimated cost burden? 4. In Section IV(C), what is the basis of the Department s estimate that it would take a business operations specialist (at a rate of $78 per hour) approximately 2 hours to respond to an interim report and 6 hours to respond to the interim and final discrepancy reporting process? The Department asserts that there are only 825 QHP issuers who will be subject to this requirement. Rather than speculating about compliance time, a better approach would have been for the Department to conduct a field survey to ask affected issuers what their experience indicates are appropriate parameters for burden calculation. The Department should also have considered whether there may be alternatives that would reduce the compliance burden. 5. In Section IV(E), what is the basis for the Department s estimate that it would take a mid-level software developer (at a rate of $96.82 per hour) approximately 2 hours annually to develop a differential display for standardized options? An appropriate approach would have been for the Department, using its own extensive information technology staff expertise, to have conducted an experiment to determine this critical compliance time parameter, or to have conducted a survey of affected companies to ascertain an estimate based on their practical experience in similar matters. This appears to be another example of the Department basing important regulatory decisions on groundless speculation instead of readily obtainable facts. The above are examples of needless speculation underpinning this rulemaking. The Department s negligent approach to regulatory impact analysis is an indication of lack of concern about the proper balancing of regulatory benefits versus costs. It is the duty of the 8

9 Department under Executive Order to consider the costs and benefits of all alternative approaches, including the approach of no regulation. Furthermore, in a rulemaking like this that combines many distinct elements, it is necessary that each element meet the test of benefit-cost analysis separately. When a given benefit can be obtained in several ways, it is the obligation of the Department to propose the least costly alternative. The Department seems not to have done any of these fundamental things. In summary, this is a hastily drawn and ill-considered rulemaking that throws together a mixed bag of disparate elements without proper consideration of cost, benefits, or the public s right to participate in the process. C. Inadequate Regulatory Flexibility Analysis HHS s Regulatory Flexibility Analysis is wholly inadequate. It is vague in terms of its identification of affected small entities. The analysis is rife with statements of HHS beliefs, but lacking in quantitative data to support the assertions. The Proposed Rule directly affects health insurers, but indirectly the rule also affects employers who whose employees participate in affected insurance plans. Many of these indirectly affected employers are small entities. The Proposed Rule also affects health service providers either directly or indirectly, and many of these may be small entities. HHS needs to compile and present detailed data on health insurers and other affected entities. HHS needs to compile and analyze data regarding revenues and profit margins relative to revenue of potentially affected entities (directly or indirectly). III. CONCLUSION We urge HHS to continue to work carefully, pragmatically and cooperatively with the numerous stakeholders to minimize unnecessary costs for, and burdens on, employers and to provide flexibility as employers work to comply with the law. Again, we urge the Department to do this by extending the comment period to permit meaningful and comprehensive review. We look forward to continuing to work together in the future. Sincerely, Randel K. Johnson Senior Vice President Labor, Immigration, & Employee Benefits U.S. Chamber of Commerce Katie Mahoney Executive Director Health Policy U.S. Chamber of Commerce 9