CMS-10430 - Supporting Statement 072716

Supporting Statement for Information Collection Requirements for Compliance with
Individual and Group Market Reforms under Title XXVII of the Public Health Service Act
(OMB Control No. 0938-0702)

A. Background
Sections 2723 and 2761 of the Public Health Service Act (PHS Act) direct the Centers for
Medicare and Medicaid Services (CMS) to enforce a provision (or provisions) of title
XXVII of the PHS Act (including the implementing regulations in parts 144, 146, 147, and
148 of title 45 of the Code of Federal Regulations) with respect to health insurance issuers
when a state has notified CMS that it has not enacted legislation to enforce or that it is not
otherwise enforcing a provision (or provisions) of the group and individual market reforms
with respect to health insurance issuers, or when CMS has determined that a state is not
substantially enforcing one or more of those provisions.
1. Market Reform Provisions under Title XXVII of the PHS Act
Title XXVII of the PHS Act includes provisions regarding the individual and group health
insurance markets, and non-Federal governmental group health plans. These provisions are
designed to make it easier for people to access health coverage and to reduce the limitations
that can be placed on that coverage. The laws that amended title XXVII of the PHS Act are
as follows:
•

The Women’s Health and Cancer Rights Act of 1998 (WHCRA), Public Law 105277, title IX, was enacted on October 21, 1998. WHCRA requires group health plans
and health insurance issuers that offer mastectomy coverage to also provide coverage
for reconstructive surgery in a manner determined in consultation with the attending
physician and the patient.

•

The Newborns’ and Mothers’ Health Protection Act of 1996 (NMHPA), Public Law
104-204, title VI, was enacted on September 26, 1996. NMHPA requires plans that
offer maternity coverage to pay for at least a 48-hour hospital stay following
childbirth (96- hour stay in the case of a cesarean section).

•

The Health Insurance Portability and Accountability Act of 1996 (HIPAA), Public
Law 104-191, was enacted on August 21, 1996. Title I of HIPAA requires group
health plans and health insurance issuers to provide certain guarantees for availability
and renewability of health coverage in the group and individual health insurance
markets.

•

Michelle’s Law, Public Law 110-381, was enacted on October 9, 2008. Michelle’s

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Law addressed the situation in which loss of student status would cause a college
student to lose dependent health coverage. It prevents issuers from terminating
coverage if the loss of student status is a result of a medically necessary leave of
absence for a serious illness or injury. The protection applies to an absence of up to
twelve months.
•

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity
Act of 2008 (MHPAEA), Public Law 110-343, division C, title V, subtitle B, was
enacted on October 3, 2008. MHPAEA generally prohibits certain large group health
plans and health insurance issuers from imposing financial requirements and
treatment limitations on mental health or substance use disorder benefits that are more
restrictive than the predominant requirements or limitations applied to substantially
all medical/surgical benefits. MHPAEA was amended by the Affordable Care Act to
also apply to health insurance issuers in the individual market.

•

The Genetic Information Nondiscrimination Act of 2008 (GINA), Public Law 110233, was enacted on May 21, 2008. Title I of GINA prohibits discrimination in
health coverage based on genetic information by group health plans, health insurance
issuers in the group and individual markets, and issuers of Medicare supplemental
(Medigap) policies.

•

The Patient Protection and Affordable Care Act, Pub. L. 111-148, was enacted on
March 23, 2010; and the Health Care and Education Reconciliation Act of 2010, Pub.
L. 111-152, was enacted on March 30, 2010 (collectively known as the “Affordable
Care Act”). The Affordable Care Act reorganizes, amends, and adds to the provisions
of title XXVII of the PHS Act relating to group health plans and health insurance
issuers in the group and individual markets.

The Expatriate Health Coverage Clarification Act of 2014 (EHCCA) was enacted on
December 16, 2014 as part of the Consolidated and Further Continuing Appropriations Act,
2015, Division M, Public Law 113-235. The EHCCA provides that the market reform
requirements of the Affordable Care Act generally do not apply to expatriate health plans,
expatriate health insurance issuers with respect to expatriate health plans, and employers in
their capacity as plan sponsors of expatriate health plans. However, the plans, coverage,
sponsors and issuers must still satisfy the provisions of the PHS Act that would otherwise
apply if not for the enactment of the Affordable Care Act. The EHCCA exception from the
market reform requirements applies to expatriate health plans that are issued or renewed on
or after July 1, 2015.
In addition, due to CMS’s interpretation of the term “State” for purposes of the amendments
to the PHS Act made by the Affordable Care Act, issuers in the U.S. territories are not
subject to the group or individual market reforms under title XXVI of the PHS Act that were
enacted in the Affordable Care Act. They must continue to comply with title XXVII
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provisions that would otherwise apply if not for enactment the Affordable Care Act. They
will also need to ensure that coverage offered to both private sector and public sector
employer group health plans in the territories (which remain subject to the Affordable Care
Act) comply with the group market reforms in the PHS Act as amended by the Affordable
Care Act and incorporated into the Employee Retirement Income Security Act of 1974 and
the Internal Revenue Code. See e.g., Letter to Gary R. Francis, Commissioner, Office of
Lieutenant Governor, Virgin Islands, dated July 16, 2014, available at
https://www.cms.gov/CCIIO/Resources/Letters/Downloads/letter-to-Francis.pdf.
The statutory provisions and implementing regulations that are the subject of this
submission implement group and individual market reforms under title XXVII of the PHS
Act (“the group and individual market reforms”), as they apply to non-Federal governmental
group health plans and group and individual health insurance issuers. The group provisions
apply to employment- related group health plans and to the issuers who sell insurance in
connection with group health plans. For purposes of title XXVII of the PHS Act, all other
health insurance is sold in the individual market. 1
2. Enforcement Authority under Title XXVII of the PHS Act
Pursuant to sections 2723 and 2761 of the PHS Act (42 USC §§ 300gg–22 and 300gg–61),
states are empowered to enforce the group and individual market reforms applicable to
health insurance issuers under title XXVII of the PHS Act. Sections 2723(a)(2) and
2761(a)(2) of the PHS Act provide that, when a state has notified CMS that it has not
enacted legislation to enforce or that it is not otherwise enforcing a provision (or provisions)
of the group and individual market reforms with respect to health insurance issuers, or when
CMS has determined that a state is not substantially enforcing one or more of those
provisions, CMS shall enforce such provision (or provisions) in the state.
The Federal regulations implementing sections 2723 and 2761 of the PHS Act are codified
at 45 CFR 150.203. These regulations provide for two possibilities for direct enforcement by
CMS. The first is a situation in which the state notifies CMS that it does not have authority
to enforce or is otherwise not enforcing the group and individual market reforms. This may
include circumstances in which the state voluntarily invites CMS to enforce such Federal
provisions directly. The second situation involves CMS’ rendering of a formal
determination, in accordance with Federal regulations, that a state lacks authority to enforce
or has failed to substantially enforce one or more provisions of the group and individual
market reforms. In either situation, CMS may, and has a policy to seek to, accomplish its
direct enforcement of the group and individual market reforms through a collaborative
approach with the relevant state.
1

Under title XXVII of the PHS Act, “individual market coverage” is any health insurance coverage that is not
offered in connection with a group health plan. For the application of individual and group market requirements
under Title XXVII of the PHS Act when insurance coverage is sold to, or through, associations, see Insurance
Standards Bulletin Series—INFORMATION issued on September 1, 2011.

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The Federal regulations implementing section 2723 of the PHS Act are codified at 45 CFR
150.101 et.seq. Section 2723(b)(1)(B) of the PHS Act provides CMS primary enforcement
authority with respect group health plans that are non-Federal governmental plans.
3. Form Filing Collection
Federal enforcement of title XXVII of the PHS Act, if necessary, in a state may include the
collection and review of form filings from health insurance issuers. The collection of form
filings is similar to state law requirements, and most state insurance departments require
issuers to submit form filings. Generally, form filings are readily available and disclosed by
health insurance issuers as part of their current operations under state law. States generally
require health insurance issuers to submit form filings (for insurance products offered in the
state) to the state for review for compliance with state law. If CMS should need to assume
direct enforcement responsibility in a state, and the state already requires issuers in the state
to submit form filings, the collection of form filings by CMS is exempt from the PRA
because it does not meet the definition of a collection of information, as outlined in 5 CFR
1320.3(b)(3). In addition, Federal enforcement of provisions under title XXVII of the PHS
Act, in some instances, will be implemented on a complaint basis or through a focused
audit/investigation process, which is also exempt from the PRA as provided for in 5 CFR
1320.4(a)(2). This submission covers those limited instances where a state does not require
issuers to submit form filings in some or all markets and CMS must enforce in that state for
compliance with title XXVII of the PHS Act. As previously mentioned, in states where
issuers are required to submit form filings, this collection will be exempt from the PRA;
however, we are submitting this PRA to cover information collection requirements (ICRs)
that may fall outside of the narrow exemptions, as well as for transparency.
4. Self-funded Non-Federal Governmental Plans
Under section 2722(a)(2) of the PHS Act, a self-funded non-Federal governmental plan can
elect to opt out of a limited number of title XXVII requirements. This submission covers the
ICR related to notice to CMS of self-funded, non-Federal governmental plan opt-out and
notice to self-funded, non-Federal governmental plan enrollees of the plan’s election to optout of these requirements.
B. Justification
1 . Need and Legal Basis
A. ICRs relating to Group and Individual Market Reforms
Sections 2723 and 2761 of the PHS Act direct CMS to enforce a provision (or provisions) of
title XXVII of the PHS Act (including the implementing regulations in parts 144, 146, 147,

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and 148 of title 45 of the Code of Federal Regulations) with respect to health insurance
issuers, when a state has notified CMS that it has not enacted legislation to enforce or that it
is not otherwise enforcing a provision (or provisions) of the group and individual market
reforms with respect to health insurance issuers, or when CMS has determined that a state is
not substantially enforcing one or more of those provisions.
This ICR associated with the group and individual market reforms will permit collections
between the Federal government and states and health insurance issuers in varying
compliance and enforcement situations ranging from cooperative Federal/state compliance
and enforcement of group and individual market provisions to enforcement of selected
provisions. This ICR also relates to Federal collection and review of health insurance
issuers’ form filings of group and individual market products in cases in which CMS
assumes a direct enforcement role in a state that lacks authority to enforce or is not
enforcing a provision (or provisions) in title XXVII of the PHS Act.
Sections 2723 and 2761 of the PHS Act support this ICR because CMS may need to collect
and review state information to assess state authority, compliance and enforcement efforts
related to provisions under title XXVII of the PHS Act. If CMS determines that a state lacks
authority to enforce or is not substantially enforcing such provision (or provisions), CMS
will need to collect a health insurance issuer’s form filings for the group and individual
market in that state in order to determine compliance with any group and individual market
reform requirements under title XXVII of the PHS Act that the state is not substantially
enforcing. This collection will ensure compliance with provisions of title XXVII of the PHS
Act. More importantly, this collection will help to ensure that consumers who are shopping
for, or are enrolled in, private, individually purchased or employer-sponsored coverage or
non-Federal governmental plans receive all of the consumer protections provided by the
market reforms in the law.
Generally, form filings are readily available and disclosed by health insurance issuers as part
of their current operations under state law. States generally review form filings to ensure
compliance with state and Federal provisions. Form filing requirements vary from state to
state; however, most include policy and application forms, endorsements, certificates, riders,
amendments, and certifications. In states that are enforcing the requirements under title
XXVII of the PHS Act, CMS does not need to review form filings. In states that are in a
collaborative agreement with CMS to enforce the group and individual market reforms,
states may continue to review form filings for compliance with Federal provisions. In states
not assuming enforcement responsibilities in which CMS must enforce a provision (or
provisions) of title XXVII of the PHS Act, CMS may collect the required information
directly as part of its enforcement activities. This chart identifies the various documents that
CMS may need to review in order to determine compliance with the group and individual
market reforms in situations where CMS must enforce a provision (or provisions) of title
XXVII of the PHS Act. The documents identified in the chart may not be collected in all
cases. CMS will collect only the minimum information necessary to ensure compliance

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with the provision (or provisions) for which CMS must enforce.
Issuer Form Filings for Review for Compliance in the Group and Individual Market
Requested Documents
Issuer name and e-mail address

Does the State Already Collect This
Information on a Routine Basis?
Yes

Name, address, and telephone number where
complaints are to be sent

Yes

Clear indication of the market for which the
following materials are being submitted
Policy Forms and Contracts

Yes

Certificates/Outlines of Coverage
Amendment Forms
Policy Riders and Endorsements
Waivers or Opt Out Provisions
Advertising/Marketing Materials
Applications and enrollment forms, health
questionnaires used with application and
enrollment forms
Notices
Self-certification
Data and Supporting Documentation to Ensure
Compliance with the Essential Health Benefits
(EHB) Package
Data templates such as Plan Benefit template 2

Most States collect (Depends on State
Authority)
Depends on State Authority
Depends on State Authority
Most States collect (Depends on State
Authority)
Depends on State Authority
Depends on State Authority
Most States collect (Depends on State
Authority)
Depends on State Authority
Depends on State Authority
Depends on State Authority

Depends on State Authority

Issuer response notice

Depends on State Authority

Summary of Benefits and Coverage

Depends on State Authority

The previous PRA submission for this collection included two ICRs in the HIPAA group
market regulations that are regulatory requirements. The first is Notice of Preexisting
Condition Exclusion (see B1.b). This ICR is not specifically required by the statute, but
carries out the intent of the statute that individuals should know when they are being
affected by the policy. The second is Notice to Participants Regarding Special Enrollment
2

The template is approved under OMB Control number 0938-1187 and its collection is approved under OMB
Control Number 0938-1086.

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Periods (see B1.c). This ICR advises the individual of important rights they may be able to
exercise in the future. This ICR is not specifically required by the statute, but carries out the
intent of the statute that individuals should know of their special enrollment rights.
The ICR related to certificates and disclosure of prior coverage implemented requirements
necessary for an individual to establish prior creditable coverage so that any allowable
preexisting condition exclusion that a plan may wish to apply to the individual may be
reduced or totally eliminated. This ICR is being discontinued since these certificates and
disclosures are no longer necessary.
Statutory and Regulatory Basis for specific ICRs
The Federal collection of health insurance issuers’ form filings of group and individual
market products, where states are not enforcing and CMS needs to assume a direct
enforcement role in a state, will be used to assess compliance with the following collection
requirements under title XXVII of the PHS Act. The regulatory citations reflect provisions
covered under the previous PRA. The statutory citations reflect provisions covered under
the previous PRA, as well as provisions that were amended by the Affordable Care Act.
(1) Notice of Preexisting Condition Exclusion
Regulatory basis: 45 CFR 146.111(c) General Notice of Preexisting Condition Exclusion;
and 45 CFR 146.111(e) Individual Notice of Period of Preexisting Condition Exclusion
This regulatory authority is aimed at ensuring that plan participants have notice of the
imposition of preexisting condition exclusions on them (where still permitted). This ICR
only affects expatriate health insurance issuers in the group market. To ensure compliance
with this regulatory authority, states require issuers to submit sample notices and/or deal
with noncompliance on complaint-based audits.
This ICR concerns the disclosure requirements on those issuers that use preexisting
condition exclusion provisions. Model language that issuers may use to notify participants
about preexisting condition exclusions was included in the 2004 HIPAA final regulations.
(2) Notice to Participants Regarding Special Enrollment Periods
Regulatory basis: 45 CFR 146.117(c) Special Enrollment Periods
This section in the HIPAA regulation provides guidance regarding special enrollment rights
that employees and dependents have under HIPAA. A group health plan is required to
provide a description of the special enrollment rights to all employees (those who enroll as
well as anyone who declines coverage at the time of enrollment). A model notice with
language that explains special enrollment rights is contained at 45 CFR146.117(c).

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(3) Notice of Impaired Financial Capability
Regulatory basis: 45 CFR 146.150 Guaranteed Availability of Coverage for Employers in
the Small Group Market and 45 CFR 147.104 Guaranteed Availability of Coverage
Statutory basis: Section 2711(d) of the PHS Act (as numbered prior to the Affordable Care
Act); and Section 2702(d) of the PHS Act, as amended by the Affordable Care Act
This section allows a health insurance issuer to deny health insurance coverage in the small
group market if the issuer has demonstrated to the applicable state authority (if required by
the state authority) or to the Federal government (in cases in which CMS is enforcing this
standard in the absence of state authority) that it does not have the financial reserves
necessary to underwrite additional coverage. The issuer must also demonstrate that it is
applying this denial uniformly to all employers in the small group market in the state
consistent with applicable state law and without regard to the claims experience of those
employers and their employees (and their dependents) or any health status-related factor
relating to those employees and dependents. Thus, issuers are required to report to the
applicable state authority if they are denying coverage in the small group market.
In 2014, section 2702 of the PHS Act, as amended by the Affordable Care Act, applies to
both the individual and group markets.
(4) Federal Review of Policy Forms to Ensure Guaranteed Availability
Regulatory basis: 45 CFR 146.150 Guaranteed Availability of Coverage for Employers in
the Small Group Market; 148.120 Guaranteed availability of individual health insurance
coverage to certain individuals with prior group coverage; and 148.126 Determination of an
eligible individual
Statutory basis: Section 2711(a) and (b) of the PHS Act (as numbered prior to the
Affordable Care Act); Section 2702(a) and (b) of the PHS Act, as amended by the
Affordable Care Act; Section 2741 of the PHS Act; and Section 2744 of the PHS Act
Under HIPAA, states must ensure guaranteed availability of all products to all small group
market employers. Since 2014, section 2702 of the PHS Act, as amended by the Affordable
Care Act, applies to both the individual and group markets.
In order to ensure compliance with these provisions, states review policy and application
forms, risk rating factors, pooling practices, and agent commission structures during their
oversight process to make sure that all small employers have guaranteed availability of
coverage in the small group market.
In states in which CMS is enforcing the individual and group market guaranteed availability

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requirement, CMS will collect this information to assess compliance with this requirement.
As mentioned previously, in 2014, section 2702 of the PHS Act, as amended by the
Affordable Care Act, extends guarantee issue to the individual market. Therefore, the
provisions regarding HIPAA guaranteed issue in the individual market to certain HIPAA
eligible individuals only remain relevant for issuers in the U.S. territories.
Under HIPAA individual market provisions, states are given the flexibility either to enforce
the Federal requirements set forth in 148.120 (commonly referred to as the Federal
“fallback” rules) or to implement an alternative mechanism, under state law, that achieves
the statutory goal of providing individuals who meet certain criteria specified in HIPAA
(eligible individuals) with access to a choice of individual health insurance, or comparable
coverage, without preexisting condition exclusions. However, a state could choose to do
neither, resulting in Federal enforcement of the individual market regulations under HIPAA.
Following enactment of the Affordable Care Act guaranteed issue requirements, these
provisions only continue to apply to issuers in the U.S. territories. CMS is currently not
enforcing these individual market provisions in any state.
Every three years, the statute requires all states using alternative mechanisms to resubmit
their alternative mechanisms. In the absence of an alternative mechanism, issuers may limit
the products they make available to eligible individuals to two policies. The two policies
must be designed for, made generally available to, actively marketed to, and actually enroll
both eligible individuals and others. The two policies may be an issuer’s two most popular
policies, based on premium volume, or two representative policies. The latter must meet
several additional requirements.
(5) Notice of Intent to Discontinue a Product or Abandon the Market
Regulatory basis: 45 CFR 146.152 (c) and (d) Guaranteed Renewability of Coverage for
Employers in the Group Market; 45 CFR 147.106(c) and (d) Guaranteed Renewability of
Coverage; and 45 CFR 148.122(d) and (e) Guaranteed Renewability of Individual Health
Insurance Coverage
Statutory basis: Section 2712 (c) and (d) of the PHS Act (as numbered prior to the
Affordable Care Act); and Section 2703(c) and (d) of the PHS Act, as amended by the
Affordable Care Act; and Section 2742 of the PHS Act
Issuers are required to report to plan sponsors or individuals if the issuer is discontinuing a
particular type of group or individual health insurance coverage.
In addition, issuers are required to report to the state or Federal government, as appropriate,
and to plan sponsors or individuals if they are discontinuing all health insurance coverage in
the individual or group market, or all markets, in a state.

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(6) Federal Review of Policy Forms to Ensure Guaranteed Renewability
Regulatory basis: 45 CFR 146.152 Guaranteed Renewability of Coverage for Employers in
the Group Market; 45 CFR 147.106 Guaranteed Renewability of Coverage; and 148.122
Guaranteed renewability of individual health insurance coverage
Statutory basis: Section 2712(a) of the PHS Act (as numbered prior to the Affordable Care
Act); Section 2703(a) of the PHS Act, as amended by the Affordable Care Act; and Section
2742 of the PHS Act
Under HIPAA, states or the Federal government, as appropriate, will review policies during
their oversight process to make sure there is a guaranteed renewability clause in each policy.
HIPAA provisions require each issuer in the group or individual market to renew or
continue in force coverage at the option of the plan sponsor or individual. All states
(whether they are enforcing the Federal fallback requirements or implementing an
alternative mechanism with respect to guaranteed availability) review policies during their
oversight process to make sure there is a guaranteed renewability clause in each policy.
Currently, all states require guaranteed renewability as a normal business practice.
In 2014, section 2703 of the PHS Act, as amended by the Affordable Care Act, applies to
both the individual and group markets.
(7) Full Disclosure by Issuers to All Small Employers of Materials on All Products and other
Information
Regulatory basis: 45 CFR 146.160 Disclosure of Information by Issuers to Employers
Seeking Coverage in the Small Group Market in the PHS Act Provisions
Statutory basis: Section 2709 of the PHS Act, as amended by the Affordable Care Act
This section is aimed at informing small employers of their right to buy coverage and
requires issuers to disclose certain information to employers seeking coverage in the small
group market. Information to be provided upon request by a health insurance issuer offering
any health insurance coverage to a small employer includes the issuer’s right to change
premium rates and the factors that may affect changes in premium rates, renewability of
coverage, any preexisting condition exclusion, any affiliation periods applied by HMOs, and
the geographic areas served by HMOs. The issuer is exempted from disclosing information
that is proprietary or trade secret information under applicable law. The information
described in this section must be written in language that is understandable by the average
small employer and sufficient to reasonably inform small employers of their rights and
obligations under the health insurance coverage.
(8) Federal Review of Policy Forms to Ensure Coverage for the Essential Health Benefits

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Package
Regulatory basis: 45 CFR 147.150 Coverage of Essential Health Benefits.
Statutory Basis: Section 2707 of the PHS Act, as amended by the Affordable Care Act
This section requires health insurance issuers that offer coverage in the individual or small
group market to include the essential health benefits package required under section 1302(a)
of the Affordable Care Act, which includes coverage of EHB, actuarial value standards, and
cost- sharing limits. In order to ensure compliance with these provisions, states may review
policy and application forms, benefit structures and quantitative limits, cost-sharing
information, and plan data. CMS may collect this same information to assess compliance if
it is enforcing this policy in a state.
B. ICRs relating to Self-funded Non-Federal Governmental Plans Opt Out Provisions
Under section 2722(a)(2)(E) of the PHS Act, self-funded, state and local governmental plans
can opt out of some HIPAA requirements with respect to their employees.
(1) Notice to Federal Government of Self-Funded, Non-Federal Governmental Plan Opt-Out
Regulatory basis: 45 CFR 146.180 Treatment of Non-Federal Governmental Plans
Statutory basis: Section 2722(a)(2)(E) of the PHS Act
This section of the regulation includes rules pertaining to self-funded non-Federal
governmental plans, which are permitted under HIPAA to elect to be exempted on an
annual basis from certain HIPAA requirements in the PHS Act. The regulation establishes
the form and manner of the election. A September 21, 2010 memorandum issued by the
Office of Consumer Information and Insurance Oversight (OCIIO) 3 discusses the changes
the Affordable Care Act made to these opt-out provisions. 4 On May 27, 2014, CMS
published the final regulation addressing the Health Insurance Portability and
Accountability Act (HIPAA) opt-out election process (79 FR 30240). The final regulation
indicated that hard copy election documents via U.S. mail or facsimile will only be
accepted through December 31, 2014. The regulation was updated and bulletin issued on
July 21, 2014 5 that provides details of the procedures for the opt-out elections by
electronic means only.
(2) Notice to Non-Federal Governmental Plan Enrollees of Opt-Out

3

Currently CMS’s Center for Consumer Information and Insurance Oversight (CCIIO).
Available at http://cciio.cms.gov/resources/files/opt_out_memo.pdf.
5
Available at http://www.cms.gov/CCIIO/Resources/Forms-Reports-and-Other-Resources/Downloads/hipaaexemption-guidance-7212014.pdf .
4

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Regulatory basis: 45 CFR 146.180 Treatment of Non-Federal Governmental Plans
Statutory basis: Section 2722(a)(2)(E) of the PHS Act
A self-funded non-Federal governmental plan making an opt-out election is required to
notify plan enrollees, at the time of enrollment and on an annual basis, of the fact and
consequences of the election. (See Attachment)
2.

Information Users
Individuals and their dependents need this information to take advantage of the rights they
have under title XXVII of the PHS Act. States and the Federal government need the
information supplied by plans and issuers to properly perform their statutory and regulatory
functions under title XXVII of the PHS Act. In a state in which CMS must enforce a
provision (or provisions) of title XXVII of the PHS Act, CMS may collect and review health
insurance issuers’ form filings of group and individual market products for compliance with
such provision (or provisions).

3.

Use of Information Technology
All information collected from form filings must be submitted electronically. CMS or its
contractor will analyze the data electronically and communicate with health insurance
issuers using email and phone. Health insurance issuers in a state in which CMS must
enforce may be expected to submit form filings to CMS. Issuers will only be required to
submit in this circumstance if a state is not performing form filing functions to assess
compliance with title XXVII of the PHS Act. Issuers are expected to use their data
processing systems to generate the certificates and other notices. HIPAA opt-out elections
will be submitted electronically as well.

4.

Duplication of Efforts
The ICRs in this supporting statement are the least burdensome way of monitoring market
activity and ensuring compliance with these Federal statutory and regulatory requirements.
This information collection is similar to the collection that most states use to assess
compliance with state law requirements. Forms are readily available and disclosed by health
insurance issuers as part of their current operations under state law.

5.

Small Businesses
Small businesses are not significantly affected by this collection.

6.

Less Frequent Collection
This collection is required to fulfill the statutory and regulatory requirements under sections

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2723 and 2761 of the PHS Act. This collection ensures compliance with provisions under
title XXVII of the PHS Act. In addition, this collection will help to ensure that consumers
shopping for, or enrolled in, private, individually purchased or employer-sponsored
coverage or in non-Federal governmental plans receive the consumer protections of the
market reforms under title XXVII of the PHS Act. If this collection is not conducted in a
state that CMS determines lacks authority to enforce or is not substantially enforcing the
market reforms and the State does not collect these form filings, consumers in such state
may not receive the protections to which they are entitled under these Federal laws.
7.

Special Circumstances
There are no special circumstances.

8.

Federal Register/Outside Consultation
A Federal Register notice was published on December 2, 2015 (80 FR 75463), providing the
public with a 60-day period to submit written comments on the ICRs. We received two
comments in response to the Federal Register notice. One commenter addressed concerns
related to the Marketplace renewal and reenrollment process, premium tax credits and
affordability of coverage, while another commenter addressed Electronic Health Records
and Clinical Quality Measures (CQM). These comments are beyond the scope of the ICRs in
this supporting statement.

9.

Payments/Gifts to Respondents
No payments or gifts are associated with these ICRs.

10. Confidentiality
These ICRs do not pose any confidentiality or privacy concerns. The form filing data will
not include protected health information as defined under the HIPAA privacy rules. Any
request for data that may include protected health information under the HIPAA privacy
rules would be required to be de-identified or limited with certain identifiers removed. CMS
will work with the health insurance issuers to minimize the burden of de-identifying data.
The de-identification of data is standard practice for health insurance issuers when working
with other regulatory entities. The Department believes this collection does not require the
disclosure of trade secrets or other confidential information.
The Department may receive a Freedom of Information Act (FOIA) request for records
submitted to CMS under these ICRs. The Department shall respond to FOIA requests in
accordance with the FOIA law, including 45 CFR 5.1 et seq. Information sought in a FOIA
request may be exempt from disclosure under an enumerated FOIA exemption. In the event
of a FOIA request, the Department will review all requested records to determine if a FOIA

13

exemption applies, regardless of whether the records are marked as confidential. Consistent
with the Attorney General’s March 9, 2009 Memorandum on FOIA, information will be
withheld if CMS reasonably foresees that disclosure would harm an interest protected by
one of the FOIA exemptions, or the disclosure is prohibited by law.
Information considered a trade secret or confidential commercial or financial information
may be subject to FOIA Exemption Four. If the Department determines that it might have to
disclose such information, CMS shall provide the submitter with a predisclosure notification
required by 45 CFR 5.65(d), which affords the submitter an opportunity to object to the
disclosure. If the Department decides to disclose the records anyway, CMS will provide the
submitter with advance notice of the disclosure as further required by 45 CFR 5.65(d).
11. Sensitive Questions
These ICRs involve no sensitive questions.
12. Burden Estimates (Hours & Wages)
A. ICRs relating to Group and Individual Market Reforms
Federal Review of Information to Ensure Compliance with requirements under title XXVII
of the PHS Act
Federal Review of Form Filings
The Federal collection of health insurance issuers’ form filings of group and individual
market products will be used to assess compliance with title XXVII of the PHS Act
(including ICRs in B1.a. through B1.j. in this supporting statement). As mentioned
previously, this collection will only be required if CMS makes a determination that a state
lacks authority to enforce or is not substantially enforcing any requirement under title
XXVII of the PHS Act. As part of enforcement, CMS may require health insurance issuers
in a state to submit form filings to CMS. In most states, this collection is similar to
requirements under state law. Most states require issuers to submit form filings and as such,
form filings are readily available and disclosed by issuers as part of their current operations
under state law. In states where this collection is already required, this ICR is exempt
because it does not meet the definition of a collection of information, as outlined in 5 CFR
1320.3(c). Currently there are 5 states in which CMS directly enforces one or more
provisions.
Issuer burden--Federal Compliance Review
For purposes of determining a burden estimate for enforcing these requirements, we
reviewed the number of issuers that submitted forms for Plan Year 2016 and the total

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number of forms submitted for plan year 2016 in the existing five direct enforcement states.
CMS estimates that 109 issuers in these 5 states will each submit, on average, 50 forms to
CMS. Since issuers already prepare these forms, issuers will only incur the burden to
submit the forms per issuer, which is estimated to be 4 hours per issuer. Therefore, the total
annual burden for 109 issuers will be 436 hours.
Issuers/respondents will need to update or create new forms and respond to notices with
issues found during the form filing review after the initial form filing has been submitted to
CMS. If an issuer/respondent wants to create new offerings in the market, a more complete
submission, similar to the initial submission, is required. We anticipate that
issuers/respondents will each require on average 3 hours for this activity annually. The total
annual burden for all 109 issuers will be 327 hours.
Generally, form filings are readily available and disclosed by health insurance issuers as part
of their current operations under state law. Most states already require health insurance
issuers to submit form filings (for insurance products marketed and sold in the state) to the
state for review for compliance with state laws, in the absence of any Federal requirement.
Regardless of whether the state requires form filings to be submitted for review or use, all
states require the issuer to develop forms for issuance to plan participants. Therefore, in
states where this collection is already required, this ICR is exempt because it does not meet
the definition of a collection of information, as outlined in 5 CFR 1320.3(b)(3).
Federal Review of State Information Related to State Compliance and Enforcement of
Provisions relating to Title XXVII of the PHS Act
State Burden—Reporting
The burden associated with this ICR is the time involved for states to provide to CMS state
information relating to state compliance and enforcement of provisions relating to title
XXVII of the PHS Act. CMS may need this information in order to determine whether a
state has the authority and is substantially enforcing the new requirements under title XXVII
of the PHS Act. We estimate that most, if not all, state insurance departments will have this
information readily available as a normal business practice. Therefore, the burden
associated with this ICR is exempt from the PRA under 5 CFR 1320.3(b)(2).
Total burden hours are identified below for each of the specific ICRs covered by the group
and individual market regulations.
(1) Notice of Preexisting Condition Exclusion
Issuer Burden--Notice Issuance
This ICR has two components: (1) a general notice to all participants at the time of

15

enrollment stating the terms of the plan’s preexisting condition provisions, the participant’s
right to demonstrate creditable coverage, and that the plan or issuer will assist in securing a
certificate if necessary; and (2) notice (to the individual) by the issuer of its determination
that an exclusion period applies to an individual, and the length of that period. This ICR
only affects expatriate health insurance issuers. We anticipate that fewer than 10 issuers of
expatriate plans are affected by this requirement. Under 5 CFR 1320.3(c)(4), this ICR is not
subject to the PRA as it would affect fewer than 10 entities in a 12-month period.
Issuer Burden--Federal Compliance Review
If CMS is enforcing these notification requirements as part of Federal enforcement in a state,
we will enforce compliance through review of policy forms and supporting materials
(burden described above) or on a complaint basis or through a focused audit/investigation
process, which is exempt from the PRA as described above. (See background discussion of
varying Federal enforcement situations.)
(2) Notice to Participants Regarding Special Enrollment Periods
Issuer Burden--Notice Issuance
Under the HIPAA group market regulations, a plan must provide all employees with a notice
describing special enrollment rights at or before the time the employee is initially offered the
opportunity to enroll in the plan. The HIPAA final regulations provide model language that
can be used to satisfy the special enrollment notice requirements.
We believe that plans have already incorporated special enrollment language into their plan
enrollment materials. Thus, the cost of the special enrollment notice is assumed to be a
negligible compared to the overall cost of providing plan enrollment materials and is
therefore not estimated.
Issuer Burden--Federal Compliance Review
Federal enforcement of this notification requirement will be done through review of policy
forms and supporting materials (burden described above) or on a complaint basis or through
a focused audit/investigation process, which is exempt from the PRA as described above.
(See background discussion of varying Federal enforcement situations.)
(3) Notice of Impaired Financial Capability
Issuer Burden--Federal Compliance Review
If CMS is enforcing this requirement in a state in the absence of state authority, issuers will
report impaired financial capacity directly to CMS. We therefore estimate that issuers in

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one state will be required to report directly to CMS if they encounter financial difficulties
and since states closely monitor the financial health of companies operating in the state, we
estimate that fewer than 10 issuers will need to submit notice of impaired financial capacity
directly to CMS on an annual basis.
Our estimate is based on the following analysis. The NAIC maintains a database of
solvency reports for use by its members. Historically, such issuer reports have been under
the threshold of 10 companies. Under 5 CFR 1320.3(c)(4), this ICR is not subject to the
PRA as it would affect fewer than 10 entities in a 12-month period.
(4) Federal Review of Policy Forms to Ensure Guaranteed Availability
Under HIPAA, states must ensure guaranteed availability of all products to all small group
market employers. Since 2014, section 2702 of the PHS Act, as amended by the Affordable
Care Act, applies to both the individual and group markets.
In order to ensure compliance with these provisions, states review policy and application
forms, risk rating factors, pooling practices, and agent commission structures during their
oversight process to make sure that all small employers have guaranteed availability of
coverage in the small group market. In states in which CMS is enforcing the individual and
group market guaranteed availability requirement, CMS will collect this information to
assess compliance with this requirement.
Issuer Burden—Records
Section 148.126 (as codified prior to May 27, 2014 (79 FR 30341)) requires issuers to
determine whether individuals are HIPAA eligible individuals. Issuers are required to
maintain records for those individuals whom they determine are not HIPAA eligible
individuals. The burden for this requirement is limited to issuers in the individual markets
in the U.S. territories. We anticipate that fewer than 10 issuers are affected by this
requirement. Under 5 CFR 1320.3(c)(4), this ICR is not subject to the PRA as it would
affect fewer than 10 entities in a 12-month period.
Issuer Burden--Federal Compliance Review
The burden to issuers for providing the information to CMS for this review is included in the
burden for Federal review of form filings above.
Enforcement of this requirement will be done through review of policy forms and supporting
materials (burden described above) or on a complaint basis or through a focused
audit/investigation process, which is exempt from the PRA as described above. (See
background discussion of varying Federal enforcement situations.) The burden associated
with state enforcement of an alternative mechanism under state laws and regulations is

17

exempt from the PRA, as stated above.
(5) Notice of Intent to Discontinue a Product or Abandon the Market
Issuer Burden--Notice Issuance
Under the HIPAA final regulations, issuers are required to provide notice to plan sponsors or
individuals if the issuer is discontinuing a particular type of individual or group health
insurance coverage or all health insurance coverage in the individual or group market, or all
markets, in a state.
Issuer Burden--Federal Compliance Review
If CMS is enforcing this requirement in a state in the absence of state authority, issuers will
report market abandonment directly to CMS. We estimate that issuers in one state will be
required to report directly to CMS if they choose to withdraw entirely from the market
place. Based on our contacts with individual states and the NAIC, we believe that the one
state currently under Federal enforcement closely monitors product offerings by its issuers
operating in their state. Therefore, we estimate that fewer than 10 issuers will need to submit
notice of market abandonment directly to CMS on an annual basis. Under 5 CFR
1320.3(c)(4), this ICR is not subject to the PRA as it would affect fewer than 10 entities in a
12-month period.
(6) Federal Review of Policy Forms to Ensure Guaranteed Renewability
Issuer Burden--Federal Compliance Review
If CMS is enforcing the guaranteed renewability requirements in a state, we will enforce
compliance through policy review under Federal enforcement. The burden estimate
associated with the policy review is described above.
(7) Full Disclosure by Issuers to All Small Employers of Materials on All Products and
Other Information
Issuer Burden--Full Disclosure to Small Employers
We anticipate that 424 issuers in the small group market will be required to provide
disclosure to small employers on an annual basis. Based on experience to date, we estimate
this time to be approximately 2 hours for each issuer to develop and update the standard
information related to the general description of benefits and premiums on an annual basis
and include this information in their marketing materials and related policy information. We
have estimated the total annual burden associated with this activity to be 848 hours for all
issuers. This estimate is based on the belief that, beyond the initial modification to the

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marketing materials, the burden associated with this ICR will be low in subsequent years.
Issuer Burden--Federal Compliance Review
If CMS is enforcing this disclosure requirement in a state, we will enforce compliance
through policy review under Federal enforcement. The burden estimate associated with the
policy review function is described above.
(8) Federal Review of Policy Forms to Ensure Coverage for the Essential Health Benefits
Package
Issuer Burden--Federal Compliance Review
If CMS is enforcing this coverage requirement in a state, we will enforce compliance
through policy review, including review of policy and application forms, benefits structures
and quantitative limits, cost-sharing information, and plan data, under Federal enforcement.
The burden estimate associated with the policy review function is described above.
B. ICRs relating to Self-funded Non-Federal Governmental Plans Opt Out Provisions
(1) Notice to Federal Government of Self-Funded, Non-Federal Governmental Plan Opt Out
Plan Burden--Preparation of Opt-Out Election Notice to CMS
The burden associated with this ICR is the time involved for a plan electing to opt out of
certain HIPAA and other related requirements to complete the model notification in the
attachment and forward it to CMS through CMS’ Health Insurance Oversight System
(HIOS). An estimated 450 plans have actively opted out at any given time. Therefore, we
estimate an annual burden of 15 minutes for each plan to fill out the form for a total burden
of 112.5 hours for all 450 plans. This includes the time required by the individual signing
the certification to conduct a thorough review of the election contents.
Plan Burden--Federal Compliance Review
CMS will enforce compliance with the notice to CMS requirement relating to the opt-out
election on a complaint basis or through a focused audit/investigation process, which is
exempt from the PRA as described above.
(2) Notice to Non-Federal Governmental Plan Enrollees of Opt-Out
Plan Burden--Preparation and Dissemination of Opt-Out Notice to Plan Enrollees
(a) The approximately 450 self-funded non-Federal governmental plans that have made this

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election are required to provide notifications to their enrollees on an annual basis. Since
CMS developed a model with standard language that may be incorporated into plans’
existing policy documents, we estimate no burden to the public to develop and update the
CMS standardized disclosure statement annually.
(b) For 450 non-Federal governmental plans, an average of 99,667 notices need to be
produced annually. At 30 seconds per notice, we estimate the total annual burden hours to
be approximately 831 hours. CMS believes that any variation in the yearly estimate with be
negligible for the next three years, thus the estimates provided are considered a yearly
average.
Plan Burden--Federal Compliance Review
CMS will enforce compliance with the opt-out notification to enrollees’ requirement on a
complaint basis or through a focused audit/investigation process, which is exempt from the
PRA as described above.
Estimated Annual Average Burden:
Forms
(If necessary)

Form Filing
Submission

Type of
Respondent

Number of
Number of
Respondents Responses

Issuers

Average
Burden
hours per
Response

Total
Burden
Hours

109

4 hours

436

109

3 hours

327

109
Form Filing - New
Issuers
Submission
Small
Employers Guaranteed
Availability
Opt-Out Election
Notice to CMS

Issuers

Non-Federal
Governmental
Opt-Out Notice to plans
Members
Total

424

424

2 hours

848

450

0.25 hours

112.5

99,667

30 seconds

831

450

983

100,759

2,555

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13. Capital Costs
There are no capital costs.
14. Cost to Federal Government
These ICRs involve notification requirements and other information exchanges: i. between
plans/issuers and individuals covered under the plan/issuers’ policies; ii. between issuers and
states or the Federal government enforcing standards under title XXVII of the PHS Act; and
iii. between states and the Federal government. Generally, the Federal government becomes
involved only if a state notifies CMS that it lacks authority or is otherwise not enforcing one
or more of these provisions, or if CMS has determined that a state is not substantially
enforcing issuer compliance with these requirements. The collection and review of state
information to assess state compliance and enforcement relating to title XXVII of the PHS
Act, where necessary, will be conducted in-house and will be at no additional cost to the
Federal government.
The costs associated with this collection are dependent on whether and how CMS becomes
involved in enforcement in a state, under the following circumstances: (a) a state notifies
CMS that the state is not enforcing the group and individual market reforms or invites CMS
to enforce these provisions within its borders; or (2) CMS’ determination that a state lacks
authority to enforce or is not substantially enforcing one or more provisions of the group or
individual market reforms.
In the event that a state notifies CMS that it lacks authority to enforce or is not enforcing (or
invites CMS to enforce) the group and individual market reforms, CMS may enforce those
requirements in collaboration with the state. In the event that the state does not collaborate
with CMS in the enforcement of these requirements, there may additional cost to CMS.
In either situation, where necessary, CMS will use an external contractor to review form
filings to assess compliance with provisions under title XXVII of the PHS Act. We estimate
that the cost to review form filings is not anticipated to exceed $3.7 million per year. The
contract will be managed by staff in the Washington, D.C. area at the GS-13 level. Based on
the 2015 GS pay schedule, a GS-13, Step 1 earns $90,823 annually. We estimate that
managing this contract is not anticipated to exceed 1,040 hours per year.
15. Changes to Burden
There are program burden changes in this collection. As indicated in the Background
section, this revised burden is a result of new statutory requirements under title XXVII of
the PHS Act. With respect to health insurance issuer burden in a state in which CMS is
enforcing any of the requirements under title XXVII of the PHS Act, we revised the burden
estimate to reflect that CMS is currently enforcing these requirements in 5 states. We also

21

revised the burden estimates for other requirements since they are now applicable to issuers
in the U.S. territories or expatriate plans only. One requirement is being discontinued.
Therefore, the total burden is now revised from 3,760,421 hours to 2,555 hours, a total
reduction of 3,757,866 hours.
16. Publication/Tabulation Dates
There are no publication or tabulation dates associated with these ICRs.
17. Expiration Date
The expiration date will be displayed on the data collection instrument.

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ATTACHMENT: MODEL NOTICE TO ENROLLEES IN A SELF-FUNDED
NONFEDERAL GOVERNMENTAL GROUP HEALTH PLAN

23