20 F Street, N.W., Suite 610, Washington, D.C., 20001, (202) December 21, 2015

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1 20 F Street, N.W., Suite 610, Washington, D.C., 20001, (202) December 21, 2015 Andy Slavitt Acting Administrator Centers for Medicare & Medicaid Services Department of Health and Human Services Room 445-G, Hubert H. Humphrey Building 200 Independence Avenue, SW Washington, DC SUBMITTED VIA Re: Patient Protection and Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 2017 (File Code CMS-9937-P) Dear Acting Administrator Slavitt: In response to the proposed revisions to the health insurance exchange regulation published in the Federal Register on December 2, 2015, the Independent Insurance Agents and Brokers of America (IIABA) submits the following comments. IIABA is the largest association of insurance agents and brokers in the United States, and our members provide health insurance and related services to individuals and businesses in every state. Our comments discuss the proposed revisions to 45 CFR and , which are the provisions of the regulation that address navigator and insurance producer standards. We appreciate having the opportunity to comment on these important issues and thank you in advance for your consideration of our concerns and recommendations. Agent and Broker For Cause Termination Provisions Section (g) The proposed revisions to Section (g) would provide the Department of Health and Human Services (HHS) with broad new authority and unilateral discretion to immediately suspend or terminate an agent or broker s agreement and registration with a federally-facilitated exchange (FFE). The proposal would enable HHS to suspend one s ability to operate within an FFE if the department reasonably suspects that an agent or broker may have engaged in fraud or abusive conduct using personally identifiable information of an [e]xchange enrollee or applicant, or in connection with an [e]xchange enrollment or application. Similarly, the draft would empower HHS to immediately terminate an agent or broker s agreement and registration if the department reasonably confirms the credibility of an allegation [of such conduct]. IIABA agrees that bad actors who engage in criminal or fraudulent conduct should be removed from the insurance industry and appropriately punished, but we must note that the proposal fails to provide the measure of due process protections required by the U.S. Constitution. An insurance agent or broker authorized and registered to sell plans on a government-run exchange has a constitutionally-protected property interest. A health insurance agent or broker

2 that loses the ability to sell exchange-based plans to customers will be profoundly impacted by this event. Losing this access imposes economic hardship and significantly hinders a person s ability to serve clients and make a living in his/her chosen profession. These government established and operated marketplaces are the sole place where consumers can obtain financial subsidies, and having access to exchanges and the ability to enroll clients in qualified health plans is essential to the business of many health insurance professionals. Suspending the exchange registration of an agent or broker that is appropriately licensed and in good standing in the eyes of state insurance regulators without providing the accused party with an opportunity to respond to the accusations or to cure any alleged non-compliance is no trivial matter. Heightened due process protections are required in order to immediately suspend or revoke one s ability to operate within the exchange, and Section (g) should be deleted or substantially revised to ensure that agents and brokers are not improperly deprived of their constitutionally-protected interests. State Insurance Regulators HHS has repeatedly asserted that state insurance regulators are the primary regulators of the health insurance marketplace. State insurance officials are responsible for the regulation of agents and brokers, and they impose strict rules on any person or entity who engages in insurance sales, consulting, placement, or enrollment activities. State regulators ensure that individuals and firms who service the insurance needs of consumers are properly qualified to engage in those activities, and they make certain that industry actors remain accountable for their actions. Insurance regulators have a long and unparalleled record of protecting consumers. IIABA cannot imagine a scenario in which state insurance officials would fail to swiftly address the type of troubling criminal or fraudulent misconduct that is apparently contemplated by the proposed addition of Section (g)(5). Accordingly, we urge you to eliminate this paragraph from your final rule. This provision seems to offer a solution to a nonexistent problem, and enforcement actions of this type should be left to the officials that possess insurance marketplace experience, expertise, and meaningful regulatory authority. State officials the true regulators of the insurance marketplace should have the opportunity to act, and HHS should only step in if state regulators fail to take prompt action. At a minimum, HHS should be required to notify the appropriate state insurance regulator(s) of any conduct covered by Section (g)(5) and coordinate with said regulator(s) on any investigation or enforcement efforts. State officials also possess greater enforcement authority and can impose a broader array of potential penalties and other remedies. Delete the abusive conduct trigger The proposed termination authority assumed by HHS would apply when an agent or broker is believed to have engaged in fraud or abusive conduct using personally identifiable information of an [e]xchange enrollee or applicant, or in connection with an [e]xchange enrollment or application. Although HHS apparently intends for this extraordinary authority to only be available in certain exigent and rare situations, the term abusive conduct is nebulous, subjective, and undefined. It could even include conduct that does not violate any federal or state law or regulation. Agents and brokers need a clear and objective framework, and the deletion of this term will help ensure that there are no improper or unwarranted suspensions or revocations. In the alternative, we recommend that a clear and objective definition of abusive conduct be added to the regulation. 2

3 Standards for Imposing an Immediate Suspension or Termination The proposed rule would provide HHS with the sweeping authority to give immediate effect to a suspension or termination, and this extraordinary and irregular power is one that should only be utilized with extreme care and when the facts and circumstances warrant such action. The proposed rule would enable HHS to employ this drastic remedy when it reasonably suspects that fraud and certain other bad acts are occurring, but this is not a meaningful limitation. Accordingly, IIABA urges HHS to revise the standard for imposing an immediate suspension in at least two ways. First, HHS should be unable to suspend or revoke unless the department based on clear, unequivocal, and convincing evidence reasonably suspects (in the case of a suspension) or confirms (in the case of a revocation) that fraudulent or abusive conduct has occurred. IIABA recognizes there may be instances where federal officials must act swiftly to shield the public from the threat of immediate and irreparable harm, and there could theoretically be cases where the application of traditional due process protections may not be feasible due to exigent circumstances and time constraints. In such cases, the evidence supporting this exceptional action should be unequivocal and overwhelming. Second, in order to proceed with an immediate suspension or revocation, HHS should be required to find that the agent or broker poses a threat of immediate and irreparable harm to consumers and the public welfare and that no other less restrictive remedy is available. If the public is not endangered in this manner, then immediate suspension or revocation is not warranted, and HHS should adhere to the standard for cause termination procedures that already exist in Section (g). Notice to the Agent or Broker One of the most troubling aspects of the proposed termination provisions is the lack of meaningful notice to the affected agent or broker, and the notification requirements must be bolstered in order to achieve compliance with the U.S. Constitution. In order to make the notification requirements balanced and meaningful, we propose the following: To immediately suspend or terminate an agent or broker pursuant to Section (g)(5), HHS must first provide written notice that is hand delivered, sent by certified mail (with return receipt requested), or sent by overnight delivery service (with signature upon delivery required). A suspension or revocation should not become effective until the notice is sent. The notice should disclose the effective date of any suspension or termination and the length of the suspension. The notice should disclose the specific allegations of misconduct and findings of fact that produced the suspension or revocation. Agents and brokers should also be informed why the normal for cause termination provisions are insufficient and why immediate suspension or termination is necessary. Specifically, the notice should outline the conditions and circumstances that warrant the 3

4 immediate suspension or revocation of the agent or broker and the specific danger and threat of harm that the agent or broker s activity in the exchange poses to the public. The notice should describe the agent or broker s right to appeal the suspension or revocation, the procedure for appealing the decision (including how to request an administrative hearing), the timeframe for filing an appeal, and the ramifications of not filing an appeal in a timely manner. Appeal Rights The proposal is largely silent concerning the appeal rights possessed by agents and brokers who immediately lose their exchange access. The draft indicates that those suspended pursuant to Section (g)(5)(i) may submit evidence in a form and manner to be specified by HHS, to rebut the allegation, but makes no reference to the appeal rights that are available to those who are immediately terminated under Section (g)(5)(ii). These scant references are entirely insufficient and must be strengthened in order to satisfy the due process requirements of the U.S. Constitution. Agents or brokers who are suspended or terminated pursuant to Section (g)(5) should have the opportunity to appeal the penalty and receive a fair and impartial hearing before an administrative law judge. The significant repercussions of an immediate suspension or revocation require that those affected have a meaningful opportunity to challenge the allegations and potentially restore their access to the exchange. Among other elements, these appeals procedures should authorize on-the-record hearings and allow an agent or broker to provide evidence that refutes the allegations or identifies mitigating circumstances. Specifically, we urge HHS to adopt appeal hearing procedures that mirror those set forth at 45 CFR part 150, subpart D. These existing procedures apply in a variety of contexts today, including instances in which navigators appeal sanctions pursuant to Section (m). In addition, an agent or broker suspended or terminated pursuant to Section (g)(5) should have the ability to receive a timely hearing. Specifically, the rule should require that appeals are heard as quickly as practicable. Misplaced Focus and Lack of Parity with Navigators and Other Assisters IIABA notes above that the addition of (g)(5) is completely unnecessary and that enforcement and regulatory matters of this nature should be handled by state insurance regulators. We certainly hope HHS will consider our substantive concerns and incorporate our recommended changes. If, however, HHS empowers itself to immediately suspend or terminate agents or brokers, we urge you to establish similar for cause termination authority over navigators and other assisters. IIABA finds it perplexing that the proposed rule would provide HHS with the authority to give immediate effect to the suspension or termination of an insurance producer, yet there are no analogous or parallel provisions for navigators and other assisters. The application of such provisions is justified and warranted in the navigator and assister context more so than in connection with agents and brokers. Insurance producers are professionals working in their chosen occupations, and they are closely regulated by state officials. They must be licensed in every jurisdiction in which they operate, satisfy various educational requirements (including ongoing continuing education requirements), remain accountable for their actions, and demonstrate financial responsibility. Navigators, on the other hand, are not subject to the same 4

5 degree of meaningful state-based oversight and scrutiny, and many jurisdictions have not yet established licensing or regulatory regimes for these actors and have questionable authority to take enforcement action against them when problems arise. Although there is no need for HHS to usurp state authority with regard to agents and brokers, there may be regulatory gaps and enforcement voids with regard to navigators that can be filled with the types of for cause termination provisions proposed in Section (g)(5). Agent and Broker-Initiated Terminations Section (f) Section (f) addresses instances when an agent or broker initiates the termination of the exchange agreement and registration, and HHS has proposed revisions to paragraph (f)(4) that are of concern. The proposed rewrite of this paragraph states that an agent or broker that initiates an end to the agreement will also be terminated through the termination for cause process set forth in the agreement, but the current rules indicate that the termination without cause process should apply. We suspect that this proposed revision was inadvertent, but we nevertheless urge HHS to make clear that the existing process is unchanged. These are terminations that occur without cause, and it would be inappropriate for an agent or brokerinitiated termination of an exchange agreement and registration to be classified as a for cause action. Agents and Brokers Requirements in State-Based Exchanges using a Federal Platform Section (l) Section (l) addresses the requirements and standards that would apply to agents or brokers who operate in a state-based exchange using a federal platform, and this new subsection would impose FFE rules in such cases and preempt state law in the process. This is an expansive and unjustified usurpation of state authority, and states that elect to use a federal platform should not be compelled to adhere to FFE agent and broker standards. HHS offers no rationale for its proposal, and IIABA recommends the deletion of this subsection. Duties of Navigators Section (e)(9) IIABA strongly objects to the promulgation of Section (e)(9) as proposed. Section 1311(i)(3) the Affordable Care Act unequivocally enumerates the duties that navigators must carry out, and this paragraph would dramatically expand the universe of navigator obligations in a manner that is inconsistent with the clear text of the statute. Navigators are directed by the Act to distribute fair and impartial information and facilitate enrollment in exchange-offered plans (among other related duties), and the law does not empower HHS to expand this list. Federal policymakers never contemplated that navigators would be providing assistance with eligibility appeals, advising consumers about tax issues, or counseling individuals about the detailed nuances of health coverage. Navigators lack the expertise and qualifications to take on these responsibilities, and it is inappropriate to empower these actors to perform an ever-growing series of activities on behalf of exchanges (especially when such attempts conflict with the underlying statute). HHS apparently recognizes that it cannot increase navigator duties without express statutory authorization, and the department s attempts to justify some of its actions are unconvincing and misplaced. For example, Section 1311(i)(3)(D) of the Affordable Care Act requires navigators to provide referrals to appropriate state-level agencies for consumers who have certain grievances, complaints, or questions, and HHS attempts to use this provision to suggest that Congress intended for navigators to personally address and respond to these same matters. 5

6 The statutory provision and the proposed regulation are simply incompatible and mutually exclusive. The law clearly requires navigators to direct consumers to outside state resources in these situations, and this same text cannot be used to justify a proposal that would require direct action on the part of navigators. With the proposed addition of Section (e)(9)(ii-iii), HHS would mandate that navigators engage in a range of confusing and poorly defined tax counseling activities. It is troubling that navigators might be required to provide assistance concerning subjects that are outside their area of supposed expertise. We fear that consumers will be adversely affected by the taxrelated assistance offered by well-intentioned but unqualified navigators, and disclaimers that point out that navigators are not providing actual tax assistance or advice offer no consolation. In addition, although HHS claims that navigators will not provid[e] actual tax assistance or tax advice, the proposal does not clearly define the types of activities that navigators must engage in, those they may engage in, and those that are prohibited. Further clarity is essential. We urge you to eliminate Section (e)(9)(ii-iii) and the mandates that navigators take on tax-related services. If this provision is retained in some form, we would propose the following revisions: First, this provision should be revised to permit navigators to engage in these tax-related activities but not require them to do so. Forcing organizations and individual navigators to tackle complicated subject matters outside of their areas of expertise and to provide guidance to consumers about these topics is in no one s best interest. Second, these requirements should be applicable only to federal exchanges. HHS should not unnecessarily infringe on the authority, discretion, and independence of statebased exchanges. Third, these requirements should not take effect for at least two years. States will need to establish and implement appropriate new navigator training requirements, and the navigators themselves will need to become familiar with these new expectations and obligations. Fourth, HHS should impose a meaningful consumer disclosure requirement on navigators that provide tax-related services. This disclosure should not only highlight that no advise is being provided, but it should note that navigators are not licensed or trained tax professionals and that a consumer who needs guidance in these areas should consult with a tax professional. Fifth, the preamble to the proposed regulation notes that navigators will not provid[e] actual tax assistance or tax advice. This prohibition should be clarified and promulgated as part of the actual rule, and we request that you add such a provision to Section (d). HHS also proposes the addition of Section (e)(9)(v), another tax-related provision that would require navigators to provide [r]eferrals to licensed tax advisors, tax preparers, or other resources for tax preparation and tax advice concerning exchange-affiliated tax matters. The preamble to the regulation states that this mandate is needed to help ensure consumers have seamless access to exchange-related tax information beyond the basic information that navigators can provide, but no real justification is provided and no statutory basis for this 6

7 expansion in navigator duties is offered. The duty to refer consumers to tax professionals raises questions about when navigators should provide tax assistance directly (which would be affirmatively required by Section (e)(9)(ii-iii)), and when a consumer should be handed off to someone more knowledgeable. It is also unclear whether navigators are permitted to provide referrals to specific tax professionals and services or whether (consistent with the duty to operate in a fair, accurate, and impartial) they may only inform consumers of the general availability of such entities. Navigators and Prohibited Conduct Section (d) IIABA also proposes several revisions to Section (d), the provision entitled Prohibition on Navigator Conduct First, despite its title and intended purpose, we observe that Section (d) does not directly ban navigators from engaging in the list of prohibited activities that follows. Instead, the subsection states that [t]he [e]xchange must ensure that a [n]avigator must not engage in the enumerated activities. This subsection should be revised so that it applies directly to those individuals and entities operating as navigators, and we encourage you to revise the rule to make clear that navigators themselves must not engage in the prohibited acts specified. Our recommendation would make this subsection consistent with the regulation s treatment of certified application counselors in Section (g) and would hold navigators directly accountable in a similar fashion. Second, in previous rulemakings, HHS has informally noted that it interprets federal law to prohibit navigators, certified application counselors, and other assisters from making specific plan recommendations. This prohibition should be formally promulgated as part of Section (d). Third, IIABA urges HHS to further expand the list of prohibited activities identified in Section (d) (and in the parallel certified application counselor provisions found in Section (g)). Specifically, we recommend that the rules prohibit navigators, assisters, and certified application counselors from engaging in any of the following activities while performing their Affordable Care Act-related functions: (1) attempting to influence legislation; (2) organizing or engaging in protests, petitions, boycotts, or strikes; (3) assisting, promoting, or deterring union organizing; (4) impairing existing contracts for collective bargaining agreements; (5) engaging in partisan political activities, or other activities designed to influence the outcome of an election to any public office; and (6) participating in, or endorsing, events or activities that are likely to include advocacy for or against political parties, political platforms, political candidates, proposed legislation, or elected officials. The regulation should also prohibit these actors from wearing exchange-related logos, clothing, or items while engaging in such activities. While individual navigators, assisters, and certified application counselors certainly possess the right to participate in the activities noted above on their own time, it is inappropriate for them to do so while performing their ACA-related responsibilities. Fourth, IIABA reiterates its recommendation that HHS require exchanges to perform criminal and regulatory background screening on prospective navigators, assisters, and certified application counselors. We first offered this suggestion to HHS in 2011 and the need for such scrutiny is greater than ever. Several states already require applicants to undergo background checks of this nature. These efforts routinely identify convicted felons who would have otherwise been approved and obtained access to the private personal and financial information of unknowing consumers. Individuals with such backgrounds should be barred and not have 7

8 access to sensitive information, and HHS should require that criminal background and regulatory checks be performed and that those with troubling histories be disqualified from serving in these roles. Conclusion IIABA agrees that bad actors should be removed from the insurance industry and punished. But, this must be done with the appropriate measure of due process protections required by the U.S. Constitution and deference to state insurance regulators. Additionally, navigators must not be held to a less onerous standard of conduct than other market actors and the duties of navigators must remain within the scope intended by Congress. IIABA urges HHS to consider our comments regarding 45 CFR and in drafting the final rule and again thanks HHS for the opportunity to comment on these important issues. Please contact Wes Bissett or Jennifer Webb via at wes.bissett@iiaba.net or Jennifer.webb@iiaba.net, respectively, or by phone at (202) with any questions. Sincerely, Charles E. Symington, Jr. Senior Vice President, External & Government Affairs 8