[Federal Register Volume 70, Number 226 (Friday, November 25, 2005)]
[Rules and Regulations]
[Pages 71020-71023]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-23076]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS)
Centers for Medicare & Medicaid Services
45 CFR Parts 144, 146, 148, and 150
[CMS-4091-F]
RIN 0938-AN35
Federal Enforcement in Group and Individual Health Insurance
Markets
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This rule makes final an interim final rule that details
procedures we use for enforcing title XXVII of the Public Health
Service Act as added by the Health Insurance Portability and
Accountability Act of 1996, and as amended by the Mental Health Parity
Act of 1996, the Newborns' and Mothers' Health Protection Act of 1996,
and the Women's Health and Cancer Rights Act of 1998. Specifically, we
are responsible for enforcing title XXVII requirements in States that
do not enact the legislation necessary to enforce those requirements,
or otherwise fail to substantially enforce the requirements. We are
also responsible for taking enforcement actions against non-Federal
governmental plans. The regulation describes the process we use in both
enforcement contexts. This final rule deletes an appendix to the
interim rule that listed examples of violations of title XXVII and
corrects the description of a cross-reference, but makes no substantive
changes to the interim final rule.
DATES: These regulations are effective on December 27, 2005.
FOR FURTHER INFORMATION CONTACT: David Mlawsky (877) 267-2323, ext.
61565.
SUPPLEMENTARY INFORMATION
I. Background
Title I of the Health Insurance Portability and Accountability Act
of 1996 (HIPAA) created a new title XXVII of the Public Health Service
(PHS) Act (42 U.S.C. 300gg, et seq.) that 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.
HIPAA created a series of parallel provisions that were placed in
the Employee Retirement Income Security Act (ERISA), which is within
the jurisdiction of the Department of Labor; the Public Health Service
(PHS) Act, which is within the jurisdiction of the Department of Health
and Human Services; and the Internal Revenue Code, which is within the
jurisdiction of the Department of the Treasury. These ``shared
provisions'' set forth Federal requirements relating to portability of
and access to group health plan coverage, as well as group health
insurance coverage provided by issuers. The shared provisions contain
rules limiting the use of preexisting condition exclusion periods, and
prohibiting discrimination against participants and beneficiaries based
on health status.
Section 104 of Title I of HIPAA requires that the Secretaries of
the three Departments ensure through an interagency Memorandum of
Understanding (MOU) that regulations, rulings, and interpretations
issued by each of the Departments relating to the same matter over
which two or more departments have jurisdiction, are administered so as
to have the same effect at all times. Under section 104, the
Departments, through the MOU, are to provide for coordination of
policies relating to enforcement of the same requirements in order to
have a coordinated enforcement strategy that avoids duplication of
enforcement efforts and assigns priorities in enforcement. The
Secretaries of the three departments signed and published the MOU in
1999 (64 FR 70164).
HIPAA also added certain provisions governing insurance in the
group and individual markets, and with respect to non-Federal
governmental plans, which are contained only in the Public Health
Service Act and are not within the regulatory jurisdiction of the
Department of Labor or the Department of the Treasury.
Under section 101(b) of HIPAA the Department of Labor is not
authorized to enforce any of the portability requirements of part 7 of
ERISA (the ``shared'' provisions) against a health insurance issuer
offering health
[[Page 71021]]
insurance coverage in connection with a group health plan, although
individuals covered under ERISA can bring suit against the issuer.
Also, governmental plans, while they are defined in section 3(32) of
ERISA, are exempt from ERISA requirements. (See section 4(b)(1) of
ERISA.) Thus, the scope of the MOU is limited, with respect to
coordination of enforcement activities, to enforcement of shared
provisions. Enforcement of these provisions constitutes only a
relatively small portion of our responsibilities.
The Newborns' and Mothers' Health Protection Act of 1996 (NMHPA)
amended the PHS Act and ERISA (with corresponding provisions in the Tax
Code) to provide protections for mothers and their newborn children
with regard to the length of hospital stay following childbirth. The
Mental Health Parity Act of 1996 (MHPA) further amended the PHS Act and
ERISA (with corresponding provisions in the Tax Code) to provide for
parity in the application of certain annual and lifetime dollar limits
on mental health benefits with annual and lifetime dollar limits on
medical/surgical benefits. The Women's Health and Cancer Rights Act of
1998 (WHCRA) amended the PHS Act (and ERISA) to provide certain
protections for patients who elect breast reconstruction in connection
with a mastectomy. (As used hereafter in this preamble, ``HIPAA''
refers to title XXVII of the PHS Act, as added by the Health Insurance
Portability and Accountability Act of 1996, and later amended by MHPA,
NMHPA, and WHCRA).
HIPAA added two preemption provisions to the PHS Act. With respect
to HIPAA's preexisting condition exclusion rules, and the special
enrollment rights contained in section 2701 of the PHS Act, State law
cannot differ in any way from the Federal requirements, except to
expand the protections in one of several ways specifically permitted by
the statute. (See section 2723(b) of the PHS Act.) With respect to
HIPAA's other requirements (except for NMHPA and WHCRA), including the
non-discrimination provisions in section 2702 of the PHS Act, State
laws are preempted only to the extent they prevent the application of
any requirement of HIPAA. (See section 2723(a) of the PHS Act.) In
addition, the NMHPA does not apply to health insurance issuers in
States that have certain types of laws regulating coverage for the
length of post-childbirth hospitalization. WHCRA does not preempt State
laws in effect on the date of WHCRA's enactment with respect to health
insurance coverage that requires coverage of at least the coverage of
reconstructive breast surgery otherwise required under WHCRA.
HIPAA affirms that the States are the primary regulators of health
insurance coverage in each State. However, in the event that a State
either does not enact legislation that meets or exceeds the Federal
requirements, or if it otherwise fails to substantially enforce the
HIPAA standards, we enforce the HIPAA requirements that apply to health
insurance issuers offering coverage within that State.
We are also responsible for enforcing the HIPAA requirements with
respect to non-Federal governmental plans. Non-Federal governmental
plans that self-insure, rather than purchasing health insurance
coverage may elect exemption from one or more requirements of HIPAA,
but must comply with requirements regarding certification and
disclosure of creditable coverage.
II. Provisions of the Interim Final Regulations
Subpart A--General Provisions
Section 150.101 Basis and Scope
On April 8, 1997, we published regulations to implement HIPAA by
adding 45 CFR parts 144, 146, and 148. Included in those regulations
were enforcement provisions. After gaining some experience with direct
Federal enforcement in some States, we determined that it was necessary
to provide more detail on the procedures that will be used to enforce
HIPAA when a State does not do so. Therefore, on August 20, 1999, we
published interim final regulations (HCFA-2019-IFC) (64 FR 45786) that
added a new part that revised and expanded the provisions contained in
Sec. 146.184, Sec. 148.200, and Sec. 148.202. Those sections were
deleted.
That new part, 45 CFR part 150, consists of four subparts. Subpart
A explains the basis and scope of the regulation and presents
definitions that supplement definitions located in 45 CFR 144.103 and
148.103. Subpart B describes how we determine whether to assume
enforcement authority in a State and explains the process for
transferring authority back to the State. Subpart C describes
procedures for assessing civil money penalties. Examples of specific
situations that may trigger the assessment are listed in Appendix A to
subpart C. Subpart D describes the administrative appeals process.
We refer the reader to the August 20, 1999, interim final rule with
comment period for greater detail.
III. Analysis of and Responses to Public Comments
We received no public comments on the August 20, 1999 interim final
rule.
IV. Provisions of the Final Regulations
The provisions of this final rule are identical to the provisions
of the August 20, 1999, interim final rule with comment period, except
that we have deleted the appendix to subpart C that listed examples of
specific situations that may trigger the assessment of civil money
penalties. We believe the inclusion of that document is unnecessary, in
light of the fact that assessments are triggered by breaches of the
provisions within the regulation itself.
Additionally, in Sec. 150.311(e), the cross-reference made to the
document described in Sec. 150.307 incorrectly identified that
document as the notice of intent to assess a penalty. We are correcting
that cross-reference in 150.311(e) so it references the notice to the
responsible entity or entities described in Sec. 150.307.
V. Collection of Information Requirements
This document does not impose information collection and
recordkeeping requirements. Consequently, it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1995.
VI. Regulatory Impact Statement
In drafting the interim regulation that this regulation finalizes,
we had examined the impacts of the interim final regulation as required
by Executive Order 12866 (September 1993, Regulatory Planning and
Review), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub.
L. 96-354), the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4),
and Executive Order 13132. We published a Regulatory Impact Statement
addressing all those impacts in the preamble to the interim regulation
(64 FR 45786, 45792). This regulation merely finalizes that interim
final regulation, and makes no substantive changes to it. Therefore,
that Regulatory Impact Statement applies to this final regulation as
well, and we refer the reader to it. However, we note that under
Executive Order 12866 (58 FR 551735, October 4, 1993), the Department
must determine whether a regulatory action is ``significant'' and
therefore subject to the requirements of the Executive Order and
subject to review by the Office of Management and Budget (OMB). Under
section 3(f), the order defines a ``significant regulatory
[[Page 71022]]
action'' as an action that is likely to result in a rule (1) having an
annual effect on the economy of $100 million or more, or adversely and
materially affecting a sector of the economy, productivity,
competition, jobs, the environment, public health or safety, or State,
local, or tribal governments or communities (also referred to as
``economically significant''); (2) creating serious inconsistency or
otherwise interfering with an action taken or planned by another
agency; (3) materially altering the budgetary impacts of entitlement
grants, user fees, or loan programs or the rights and obligations of
recipients thereof; or (4) raising novel legal or policy issues arising
out of legal mandates, the President's priorities, or the principles
set forth in the Executive Order. We have determined that this action
is not economically significant for the reasons stated in the preamble
to the interim final regulation. The action also does not create any
serious inconsistency or interfere with another agency's action or
planned action, nor does it materially alter any budgetary impacts of
entitlement grants, user fees, or loan programs or the rights and
obligations of recipients thereof. Additionally, because this final
regulation merely keeps in force an interim regulation already in
effect before the publication of this final regulation, and makes no
substantive changes to it, this final regulation does not raise any
novel legal or policy issues.
We also note that Executive Order 12612 (``Federalism'') has been
revoked subsequent to the issuance of the interim final regulation, and
has been replaced by Executive Order 13132 (``Federalism''). Executive
Order 13132 outlines fundamental principles of Federalism. It requires
adherence to specific criteria by federal agencies in formulating and
implementing policies that have ``substantial direct effects'' on the
States, the relationship between the national government and States, or
on the distribution of power and responsibilities among the various
levels of government. Federal agencies promulgating regulations that
have these federalism implications must consult with State and local
officials, and describe the extent of their consultation and the nature
of the concerns of State and local officials in the preamble to the
regulation.
In the Department's view, these final regulations have Federalism
implications because they may have substantial direct effects on the
States, the relationship between the national government and States, or
on the distribution of power and responsibilities among the various
levels of government. This is because the process set forth in these
regulations impacts the relationship between national government and
the States. However, in the Department's view, the Federalism
implications of these final regulations are minimal. This is evidenced
by the fact that no State submitted any comments on the interim final
regulations suggesting that the regulations would in fact materially
impact States' relationship with the national government, or would
unduly infringe on States' historical function of regulating health
insurance issuers. Additionally, the Department notes that the PHS Act
provides that the States may enforce the provisions of title XXVII as
they pertain to issuers, but that the Secretary of Health and Human
Services must enforce any provisions that a State fails to
substantially enforce. Currently, HHS enforces the title XXVII group
market portability and nondiscrimination provisions in only one State
\1\ in accordance with that State's specific request to do so.
Additionally, HHS enforces the NMHPA provisions in title XXVII in one
State \2\ that has not enacted conforming legislation, and has varying
levels of direct enforcement responsibility in four States \3\ with
respect to the WHCRA provisions in title XXVII. In these instances, the
Department complied with the procedures set forth in the interim final
regulation (and this regulation) before assuming such enforcement
responsibilities.\4\ When exercising its responsibilities in this
regard, HHS works cooperatively with the State for the purpose of
addressing the State's concerns and avoiding conflicts with the
exercise of State authority.
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\1\ Missouri.
\2\ Wisconsin.
\3\ Colorado, Massachusetts, Rhode Island, and Wisconsin.
\4\ Additionally, HHS applied the process set forth in the
interim final regulation (and in this final regulation) with regard
to several other States that had not enacted legislation conforming
to NMHPA, WHCRA and MHPA. Largely as a result of initiating that
process and working cooperatively with those States, every one of
them enacted conforming legislation.
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In compliance with Executive Order 13132's requirements that
agencies examine closely any policies that may have Federalism
implications or limit the policymaking discretion of the States, HHS
has engaged in numerous efforts to consult and work cooperatively with
affected State and local officials. For example, the Department has
worked closely with State insurance regulators and the National
Association of Insurance Commissioners (NAIC). The NAIC is a non-profit
corporation established by the insurance commissioners of the 50
States, the District of Columbia, and four U.S. territories. In most
States the insurance commissioner is appointed by the Governor, in
approximately 14 States, the insurance commissioner is an elected
official. Among other activities, it provides a forum for the
development of uniform policy when uniformity is appropriate. Its
members meet, discuss and offer solutions to mutual problems. The NAIC
sponsors quarterly meetings to provide a forum for the exchange of
ideas and in-depth consideration of insurance issues by regulators,
industry representatives and consumers. CMS staff have been
consistently attending these quarterly meetings to listen to the
concerns of the State Insurance Departments regarding HIPAA enforcement
and other issues. In addition to the general discussions, committee
meetings, and task groups, the NAIC sponsors the standing CMS/
Department of Labor meeting on HIPAA issues for members during the
quarterly conferences. This meeting provides CMS (and the Department of
Labor) with the opportunity to provide updates on enforcement actions,
regulations, bulletins, and outreach efforts regarding, among other
things, title XXVII of the PHS Act.
The Department has also cooperated with the States in several
ongoing outreach initiatives, through which information on, among other
things, title XXVII of the PHS Act, is shared among Federal regulators,
State regulators, and the regulated community. In particular, CMS has
sponsored conferences with the States--the consumer Outreach and
Advocacy conferences in March 1999 and June 2000, and the
Implementation and Enforcement of HIPAA National State-Federal
Conferences in August 1999, 2000, 2001, 2002, and 2003. Furthermore,
CMS websites offer links to important State websites and other
resources, facilitating coordination between State and federal
regulators and the regulated community. Throughout the process of
developing these regulations, to the extent feasible, the Department
has attempted to balance the States' interests in regulating health
insurance issuers, and Congress' intent to ensure federal enforcement
of the provisions of title XXVII in instances where a State fails to
substantially enforce those provisions.
Pursuant to the requirements set forth in section 8(a) of Executive
Order 13132, and by the signatures affixed to these final regulations,
the Department certifies that the CMS has complied with the
requirements of Executive
[[Page 71023]]
Order 13132 for the attached final regulation, Federal Enforcement in
Group and Individual Health Insurance Markets (RIN 09-38-AN35), in a
meaningful and timely manner.
In accordance with Executive Order 12866, this regulation was
reviewed by the Office of Management and Budget.
List of Subjects
45 CFR Parts 144 and 146
Health care, Health insurance, Reporting and recordkeeping
requirements.
45 CFR Part 148
Administrative practice and procedure, Health care, Health
insurance, Penalties, Reporting and recordkeeping requirements.
45 CFR Part 150
Administrative practice and procedure, Health care, Health
insurance, Penalties, Reporting and recordkeeping requirements.
0
Accordingly, for the reasons set forth in the preamble, the interim
final rule with comment period adding 45 CFR Part 150, Subparts A
through D, which was published on August 20, 1999, in the Federal
Register at 64 FR 45786 through 45807, is adopted as a final rule, with
the following amendments:
PART 150--CMS ENFORCEMENT IN GROUP AND INDIVIDUAL INSURANCE MARKETS
0
1. The authority citation for part 150 continues to read as follows:
Authority: Secs. 2701 through 2763, 2791, and 2792 of the PHS
Act (42 U.S.C. 300gg through 300gg-63, 300gg-91, and 300gg-92).
Sec. 150.307 [Amended]
0
2. In Sec. 150.307, paragraph (a) is amended by removing the
parenthetical ``(See Appendix A to this subpart for examples of
violations.)''
Sec. 150.311 [Amended]
0
3. In Sec. 150.311, paragraph (e) is amended by removing the phrase
``of intent to assess a penalty'' and adding in its place the phrase
``to the responsible entity or entities''.
Appendix A To Subpart C [Removed]
0
4. In Part 150, ``Appendix A To Subpart C Of Part 150--Examples Of
Violations'' is removed.
Dated: January 19, 2005.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicare Services.
Dated: August 15, 2005.
Michael O. Leavitt,
Secretary, Department of Health & Human Services.
Editorial Note: This document was received at the Federal
Register on November 17, 2005.
[FR Doc. 05-23076 Filed 11-23-05; 8:45 am]
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