Overview of the Patient Protection and Affordable
Care Act (PPACA) Final Rule
Issued by the Centers for Medicare and Medicaid
Services (CMS) on May 21, 2014 entitled
Exchange and Insurance Market Standards for 2015
and Beyond
Navigators, Assisters and Application Counselors
The final rule includes many provisions relative to health insurance exchange navigators, assisters and certified
application counselors, which we generally refer to as all certified assisters or all consumer assistance personnel. In
addition to other requirements, the rule clearly asserts the preemption of state laws regulating consumer assistance
personnel in certain instances both for state-based exchanges and federally facilitated exchange states. The rule
provides examples of state laws that are to be preempted, but also makes it clear that other state requirements that
HHS feels overly restrict consumer assistance programs may be preempted even though they are not specifically
identified in the regulation.
The regulation establishes a number of specific preemptions of state laws directed at consumer assisters under PPACA.
First, states may not require navigators to refer consumers “to other entities not required to provide fair, accurate, and
impartial information.” The preface to the final rule clarifies that this rule is not intended to prohibit referrals to agents
and brokers in situations where the advice and assistance of an agent or broker would be helpful to the consumer.
Further, the preface implies that state laws that required a referral to agents and brokers who are required by state law
to provide information in “a fair, accurate, and impartial manner,” would not be preempted. However, the state
specifically may not require those who were previously insured, or had a previous relationship with an agent or broker,
be referred to agent or broker for service.
The final regulation further blurs the line between what has been traditionally a broker role under state law (which is
protected by the McCarran-Ferguson Act) and the role of the navigator, which was created by the ACA statute and
assisters and application counselors, which are invention of HHS regulation. The rule specifies that all consumer
assistance personnel must provide fair, accurate, and impartial advice and “facilitate” plan enrollment, but they may not
tell consumers which plan to choose or which plan is best for the consumer. However, the regulation specifies that they
may provide comprehensive information to consumers about the substantive benefits and features of plans, clarifying
similarities and differences among plans, and assist consumers in making informed decisions consistent with the
consumers’ expressed interests and needs. Furthermore, the final regulation specifically allows consumer assisters to
give “advice” to consumers, despite specific state insurance producer licensing laws that define “advising” as a condition
that requires producer licensure.
The rule directs assisters who are asked to recommend a specific plan to say they are prohibited by federal law from
doing so, and may then refer the consumer to an agent or broker who can make a recommendation. The assister must
not, however, refer to the consumer to a specific agent or broker, but rather to a random list of certified producers.
Consumer assisters may not satisfy their work requirements by just referring to agents, including with the SHOP
exchange for the federal exchange. However, states that operate SHOP-only exchanges can permit navigators to fulfill
their responsibilities through referrals to agents or brokers.
State laws that require navigators to be agents and brokers are preempted, but the final rule specifically drops a
proposed prohibition against requiring errors and omissions insurance or other financial protection requirements for
navigators, like a surety bond. The final regulation would also allow states to require non-navigator assisters and CACs to
be licensed as agents and brokers. The preface of the final rule does state that if financial responsibility requirements
would prevent consumer assistance personnel from fulfilling their federal duties, such requirements may be preempted.
The rule clarifies that a state may not require that consumer assistance groups maintain their principal place of business
in an exchange’s state. However, a state may require that navigators and non-navigator assisters (but not application
counselors) maintain a physical presence in the state. States may also not interpret conflict of interest restrictions to
prohibit providers from operating assistance programs simply because they receive consideration from health insurers
for health care services that they provide.
Finally, the final regulations generally preempt state laws or regulations that would, as applied, prevent the
implementation of a navigator program. The rule recognizes that state licensure conditions, such as fingerprinting,
background checks, or additional educational requirements, may be permitted. However, HHS reserves the right to
determine if such requirements are being imposed in such a way that consumer assisters cannot meet federal
requirements or exchanges cannot implement their consumer assistance programs. If they are determined to be too
restrictive, such state laws will be preempted.
Beyond the state law preemption requirements, the regulation does include some new prohibitions and requirements
on consumer assister behavior. The rule requires all assisters to obtain consumer authorization for accessing individual
consumer personally identifiable information (PII) and required that such authorizations be retained for six years.
Certified consumer assistance personnel cannot attempt to enroll people door-to-door, although door-to-door outreach
that does not include enrollment is permitted. If a certified assister can document that an individual has requested inhome assistance, then a home visit may be permissible for enrollment. Robocalls for enrollment are banned but may be
allowed for outreach.
The rule clarifies that no certified assisters are allowed to charge an applicant or enrollees for enrollment or ask them for
any money or other remuneration. However, there is a distinction made for assisters that provide consumers with
other services. For example, a community hospital with an application counselor on-site can charge for medical services.
Certified consumer assisters may not receive direct payment by insurers or stop loss carriers directly for enrollment.
They are also prohibited from giving consumers more than an di minims gift or cash (less than $15 value) or promotional
materials in exchange or for or as an enticement to enroll in coverage. Also banned is being paid or receiving
remuneration of any kind from a health insurer or stop-loss insurers related to enrollment. The rule establishes that the
federal exchange will not pay any certified assistance personnel for enrollments on a per-head basis. However, since
some states are doing do, it does not ban this practice in state-based exchanges. Finally, the rule clarifies at that all
certified consumer assistance personnel must complete training and certification requirements annually and that they
must be recertified on at least an annual basis.
In addition to the new requirements for certified consumer assisters, the regulation also authorizes civil money penalties
for consumer assistance personnel who violate their federal obligations, breach the confidentiality of patient
information, or assist in enrollment fraud. The penalty provisions regarding federal contract obligations apply to the
federal exchange only. The penalties for violating federal exchange requirements for certified consumer assisters can
amount to $100 per day for each affected individual and an assister under investigation has 30 days to refute and
charges and can be granted an extension by HHS. Depending on the action, HHS can impose corrective action instead
and there is a six year statute of limitations provision for such penalties.
The regulation also establishes penalties of up to $25,000 per application for negligent provision of false information or
for improper use and disclosure of personally identifiable information by certified assisters. If the provision of false or
improper information was knowing or willful, then penalties of up to $250,000 can be imposed. These penalties can be
imposed on agents and brokers as well as other certified assisters. HHS must notify the accused individual of the
charges and the potential amount of the penalty and then the assister has 60 days to appeal. Corrective action or a
settlement can occur in lieu of a penalty and HHS may reduce the penalty as part of a settlement.
Fixed Indemnity Plans
The final rule establishes new requirements for fixed indemnity plans, which previously as excepted benefits were
regulated primarily by the states. While the regulation preface specifically states that the intention of the final rule is
not to prohibit the sale of stand-alone fixed indemnity plans, it does require that they only be sold to individuals who
attest that they already have minimum essential coverage. Such coverage can also be sold to residents of U.S.
territories, a they are presumed to have minimum essential coverage. No documentation of a consumer’s holding of
minimum essential coverage is required other than the consumer’s personal attestation of coverage at the time of sale.
The attestation from the consumer is only required at the initial point of sale, not at renewal. Furthermore, for a fixed
indemnity policy to be sold, its benefits must be paid on a fixed dollar basis consumers and applications for such
coverage must include a notice printed in 14-point font stating:
THIS IS A SUPPLEMENT TO HEALTH INSURANCE AND IS NOT A SUBSTITUTE FOR MAJOR MEDICAL COVERAGE. LACK OF
MAJOR MEDICAL COVERAGE (OR OTHER MINIMUM ESSENTIAL COVERAGE) MAY RESULT IN AN ADDITIONAL
PAYMENT WITH YOUR TAXES.
Insurers may sell both traditional health insurance and fixed indemnity coverage, and such coverage can be paired with
a group health insurance offering that constitutes minimum essential coverage.
SHOP Exchange Provisions
The final rule contains two key new requirements for SHOP exchanges. The first is a relaxation of the proposed rule
standard regarding employee choice. The rule establishes that all exchanges should have full employee choice and
premium aggregation in place by next open enrollment. However, the rule notes that many states and stakeholders
were concerned about readiness and market destabilization. So, for 2015 only, the rule provides that the final rule
provides for 2015 only that “if the State Insurance Commissioner submits a written recommendation to the SHOP
adequately explaining that it is the State Insurance Commissioner’s expert judgment, based on a documented
assessment of the full landscape of the small group market in his or her State, that not implementing employee choice
would be in the best interests of small employers and their employees and dependents” then full employee choice can
be delayed for 2015. However, insurance commissioners have to make this decision very quickly. They must make their
recommendation to HHS by June 2, 2014, and HHS must make a final determination by June 10, to allow for insurers to
determine whether or not they will participate in the SHOP marketplace in a state in 2015.
The rule also establishes a new SHOP open enrollment period moving forward for 2015 and beyond. The SHOP open
enrollment period will mirror the individual market open enrollment period. Small employers can continue to enroll in
SHOP coverage initially throughout the year, but SHOP consumers will all be converted to a renewal date that falls
during the open enrollment period.
Plan Cancellations and Modifications and Consumer Notice Requirements
The rule makes changes to what is considered to be a coverage modification versus a coverage termination, which was
previously regulated solely by the states. The rules establish that Insurers in the large group market may modify
coverage at the time of renewal without restrictions. However, unless an individual or small group Otherwise, an
insurer in the small group or individual market may only modify coverage if; (1)The modified product is offered by the
same insurer; (2) The product is offered as the same product network type; (3) the product continues to cover at least a
majority of the same service area; (4) within the product, each plan has the same cost-sharing structure as before the
modification, except for any variation in cost sharing solely related to changes in cost and utilization of medical care or
to maintain the same metal tier level; and (5) the product provides the same covered benefits, except for any changes in
benefits not required by law that cumulatively impact the rate for any plan within the product within an allowable
variation of +/- 2 percentage points (not including changes to make the plan applicable with state or federal
requirements).
If a carrier terminates a specific plan offering, the insurer may reenroll the enrollee in a different plan in the same or a
similar metal level. If an insurer discontinues a product but re-files the same product within 12 months, the product will
be subject to rate review on a continuation basis, not as if an entirely new product was filed.
When insurers want to terminate coverage or offer to or renew coverage then they must notify consumers and HHS has
created new standard notices. For renewals, individual consumers need to get their own notices but for group plans,
the renewal notice may be sent just to the plan sponsor. For non-grandfathered individual plans, renewal notices will
need to be sent before the first day of open enrollment (November 15, 2014) and for grandfathered individual plans and
group coverage the notices must be sent 60 days prior to renewal. Terminations require 90 day notice but the notices
must be sent to all subscribers, not just the group plan sponsor.
Certificates of Credible Coverage
The final rule establishes that after December 31, 2014 certificates of creditable coverage are no longer required as they
have been deemed no longer necessary in the reformed marketplace.
Verification of Employer Coverage and Individual Mandate Compliance in State-Based Exchange States
The final rule rescinds earlier provisions that allowed state-based exchanges to defer verification of whether or not an
individual marketplace consumer has a valid offer of affordable and minimum value employer-sponsored coverage,
which would therefore disqualify the individual from eligibility for a premium tax credit. Full verification of employer
coverage will not be required until January 1, 2016—the state can verify a sample of applications between now and
then. Furthermore, state exchanges will have to verify individual mandate compliance and exemptions on their own
beginning by January 1, 2016.
Medical Loss Ratio
The final rule includes modifications to the medical loss ratio formula for insurers for two purposes. First, it extends MLR
relief for ICD-10 coding implementation costs, given that full implementation requirements for the ICD-10 switch have
been extended for another year. Also, the rule provides for some relief to insurers that elect to extend 2013 “grandmothered” policies in 2013 and slightly more relief for those carriers that offered coverage via the exchanges in 2014 to
account for the health reform law’s rollout costs.
Special Enrollment Periods
The regulation clarifies the effective dates of coverage and terms of special enrollment periods for a variety of
circumstances, including births or adoptions, marriage, insurer breach of contract, exceptional circumstances, or
misconduct by a non-exchange entity providing enrollment assistance, and general loss of minimum essential coverage.
The regulation also clarifies that if an individual is enrolled in a non-calendar year health plan that will expire in 2014,
then the individual qualifies for a special enrollment period even though the individual could renew the plan. The rule
also clarifies that loss of coverage does not mean voluntary termination of coverage.
Hardship Exemption
HHS has established that in 2014 if an individual’s coverage costs would exceed eight percent of his or her family
income, the individual may qualify for an individual mandate hardship exemption. The rule establishes a formula for
increasing that percentage amount annually. For 2015 it will be 8.05%.
Formulary Exceptions
The final rule establishes a new procedure for individual and small group market consumers and their physicians to
request coverage by an insurer of non-formulary drugs. The consumer or his or her physician can request an expedited
exceptions process if they can document a health condition that may seriously jeopardize the enrollee’s life, health, or
ability to regain maximum functioning, or when the enrollee is currently in a course of treatment using a non-formulary
drug. The insurer does not have to pay for the drug during the review process and the requirement does not impact the
cost-sharing requirements for non-formulary medications.
HIPAA Opt-Out for Self-Funded, Non-Federal Governmental Plans
Prior to enactment of PPACA, sponsors of self-funded, non-Federal governmental plans were permitted to elect to
exempt those plans from certain provisions of title XXVII of the Public Health Services Act (PHSA). The final rule
conforms this option with the PPACA’s amendments to the PHSA. The rule also clarifies that in the case of a plan
sponsor submitting opt-out elections for more than one collectively bargained health plan, each such plan must be listed
in the opt-out election, and in the case of a plan sponsor submitting opt-out elections for group health plans that are not
subject to a collective bargaining agreement, the sponsor must submit separate election documents for each such plan.