[Federal Register Volume 75, Number 250 (Thursday, December 30, 2010)]
[Rules and Regulations]
[Pages 82277-82279]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-32526]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Part 158
[Docket No. HHS-OS-2010-0026]
RIN 0950-AA06
Health Insurance Issuers Implementing Medical Loss Ratio (MLR)
Requirements Under the Patient Protection and Affordable Care Act;
Corrections to the Medical Loss Ratio Interim Final Rule With Request
for Comments
AGENCY: Office of Consumer Information and Insurance Oversight (OCIIO),
HHS.
ACTION: Correction of interim final rule with request for comments.
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SUMMARY: This document corrects technical errors that appeared in the
interim final rule with request for comments that appeared in the
December 1, 2010 Federal Register (FR Doc 2010-29596 (75 FR 74864))
entitled ``Health Insurance Issuers Implementing Medical Loss Ratio
(MLR) Requirements Under the Patient Protection and Affordable Care
Act.''
DATES: Effective Date: January 1, 2011.
FOR FURTHER INFORMATION CONTACT: Carol Jimenez, (301) 492-4457.
SUPPLEMENTARY INFORMATION:
I. Background
In the interim final rule with request for comments that appeared
in the December 1, 2010 Federal Register (FR Doc 2010-29596 (75 FR
74864)), there were technical and typographical errors that are
identified and corrected in the Correction of Errors section below. The
provisions in this correction notice are effective as if they had been
included in the December 1, 2010 interim final rule with request for
comments entitled ``Health Insurance Issuers Implementing Medical Loss
Ratio (MLR) Requirements under the Patient Protection and Affordable
Care Act.''
Accordingly, the corrections are effective January 1, 2011.
II. Summary of Errors
In the regulation text and preamble sections regarding the scope of
the regulation, on pages 74921 and 74867, respectively, we are
correcting a typographical error by replacing the Public Health Service
Act section reference from ``2718(b)(A)(ii)'' to ``2718(b)(1)(A)(ii)''.
In the regulation text section regarding exceptions to the general
aggregate reporting requirements (Sec. 158.120(d)) we are making two
changes. On page 74922 (Sec. 158.120(d)(1)), we are replacing the
words ``State that has jurisdiction over'' the certificate of coverage,
which was inadvertently used, with ``issue State of'' the certificate
of coverage. The correct phrase was inadvertently deleted and should be
corrected.
On page 74923 (Sec. 158.120(d)(4)), we are inserting the words
``non-U.S.'' before ``citizens working in their home country.'' The
words ``non-U.S.'' were inadvertently omitted and are necessary to make
clear that this exception does not apply to U.S. citizens working in
their home country. We have corrected the preamble section on page
74871 as well to reflect this revision to the text.
On page 74923 (Sec. 158.140(a)(1)), regarding group conversion
charges, we are adding a sentence that we inadvertently omitted. The
sentence clarifies paragraph(a)(1) with respect to an issuer that
transfers portions of earned premium associated with group conversion
privileges between group and individual lines of business in its Annual
Statement accounting.
Also on page 74923, we are deleting a phrase from Sec. Sec.
158.140(a)(2) and (3), regarding reimbursement for clinical services
provided to enrollees. The preamble makes clear we intended to adopt
the NAIC model regulation language, which does not include this phrase.
The phrase had appeared in an earlier draft of the NAIC model
regulation, and was correctly deleted from part of the interim final
rule, but was inadvertently retained in subparagraphs (a)(2) and (3).
Because the preamble makes clear that we intended to adopt the NAIC
model regulation language, and the inconsistency between Sec.
158.140(a)(1) and Sec. Sec. 158.140(a)(2)and(3) creates an ambiguity
that may cause confusion, we believe it should be corrected.
On page 74923, in two subsections regarding adjustments to incurred
claims (Sec. Sec. 158.140(b)(2) and (4))we are also replacing the
words ``may'' and ``can'' with the word ``must'' to indicate that such
adjustments are mandatory. This misuse of ``may'' and ``can'' was
inadvertent and should be corrected.
We correct an inadvertent omission in Sec. 158.140(b)(5)(i) on
page 74924, regarding the choice by affiliated issuers who offer
blended rates to choose whether to make an adjustment to each
affiliate's incurred claims and activities to improve health care
quality to reflect the experience of the issuer with respect to the
employer as a whole. We
[[Page 82278]]
inadvertently omitted the requirement that if an issuer makes this
choice, it must apply it for a minimum of 3 MLR reporting years. This
correction is necessary in order to implement this option accurately.
We are also correcting an inadvertent discrepancy between the NAIC
model regulation and the interim final rule regarding the treatment of
fraud recovery expenses. We are, first, deleting the phrase ``other
than fraud detection/recovery expenses up to the amount recovered that
reduces incurred claims'' from Sec. 158.150(c)(8) of the interim final
rule on page 74925, because in the NAIC model regulation this language
does not apply to expenses that improve health care quality. We are
then amending Sec. 158.140(b)(2) of the interim final rule, on page
74923, to add language from the NAIC model regulation regarding fraud
recovery expenses. This changes how the fraud recovery amounts in
question are labeled. The correction has no substantive effect on the
medical loss ratio calculation. We are also amending the preamble to
reflect this correction, by deleting two sentences from page 74874 and
by changing two phrases on page 74876, and by deleting a parenthetical
on page 74875.
On page 74925, we are also redesignating Sec. 158.161 as Sec.
158.162 and revising the section heading from ``Reporting of Federal
and State licensing and regulatory fees'' to ``Reporting of Federal and
State taxes.'' On page 74926, we are also revising subparagraph
(b)(1)(vii)(B) of this newly redesignated section, to add language that
we inadvertently omitted. In addition, we are adding a new Sec.
158.161 to replace text that had been unintentionally deleted, but
referenced in the preamble.
We are adding the words ``or non-credible'' after ``partially
credible'' in Sec. 158.231(c)(2) on page 74928, which were
inadvertently omitted. Adding these words is consistent with other
sections of the regulation and is consistent with the preamble section
on page 74882 regarding this subject.
Finally, we are correcting several typographical errors that appear
in Table 2 to Sec. 158.232 and in the preamble regarding Table 2, on
pages 74928 and 74882 respectively.
III. Waiver of Proposed Rulemaking and Waiver of the Delay in Effective
Date
We ordinarily publish a notice of proposed rulemaking in the
Federal Register to provide a period for public comment before the
provisions of a rule take effect in accordance with Sec. 553(b) of the
Administrative Procedure Act (APA) (5 U.S.C. 553(b)). However, we can
waive this notice and comment procedure if the Secretary finds, for
good cause, that the notice and comment process is impracticable,
unnecessary, or contrary to the public interest, and incorporates a
statement of the finding and the reasons therefore in the notice.
Section 553(d) of the APA (5 U.S.C. 553(d)) ordinarily requires a
30-day delay in effective date of final rules after the date of their
publication in the Federal Register. This 30-day delay in effective
date can be waived, however, if an agency finds for good cause that the
delay is impracticable, unnecessary, or contrary to the public
interest, and the agency incorporates a statement of the findings and
its reasons in the rule issued.
This document merely corrects typographical and technical errors
made in the MLR interim final rule with request for comments published
in the Federal Register on December 1, 2010 (FR Doc. 2010-29596) under
the Patient Protection and Affordable Care Act, which will be effective
on January 1, 2011. The corrections contained in this document are
consistent with and do not make substantive changes to the policies
adopted in the MLR interim final rule with request for comments. The
preamble to the MLR interim final rule with request for comments
correctly refers to and discusses the substance of the sections
affected by this technical correction and the table of contents
correctly refers to the section headings that are the subject of this
technical correction. Therefore, we find for good cause that it is
unnecessary and would be contrary to the public interest to undertake
further notice and comment procedures to incorporate these corrections.
For the same reasons, we are also waiving the 30-day delay in
effective date for these corrections. We believe that it is in the
public interest to ensure that the Interim Final Rule setting forth
Health Insurance Issuers Implementing Medical Loss Ratio (MLR)
Requirements accurately states our policies as of the date they take
effect. Therefore, we find that delaying the effective date of these
corrections beyond the effective date of the MLR interim final rule
with request for comments would be contrary to the public interest. In
doing so, we find good cause to waive the 30-day delay in the effective
date.
IV. Correction of Errors
In 75 FR 74864, FR Doc 2010-29596, published December 1, 2010, make
the following corrections:
A. Correction of Errors in the Preamble
1. On page 74867, second column, first full paragraph, line 3, the
citation 2718(b)(A)(ii) is corrected to read ``2718(b)(1)(A)(ii)''.
2. On page 74871, third column, first paragraph, line 20, the term
``citizens'' is corrected to read ``non-U.S. citizens''.
3. On page 74874, first column, second full paragraph, line 22
through the second column, line 2, after the phrase ``conversion
policies.'', the second full paragraph is corrected by deleting the two
sentences beginning with the phrase ``Incurred claims'' and ending with
the phrase ``quality improving activities'', without inserting any
additional language.
4. On page 74875, third column, last partial paragraph, lines 2 and
3, after the phrase ``(3) Fraud Prevention activities'' at line 1, the
last partial paragraph is corrected by deleting ``(beyond the scope of
those activities which recover incurred claims),'' without inserting
any additional language.
5. On page 74876--
a. In the third column--
(1) In the first partial paragraph, lines 9-15 are corrected by
deleting the phrase ``and fraud recovery activities up to the amount of
fraudulent claims recovered'', without inserting any additional
language.
(2) In the first full paragraph, line 11, the phrase ``a quality
improving activity'' is corrected to read ``an adjustment to claims''.
6. On page 74882, Table 2, the term ``$0'' in the first line of the
``Deductible'' column on the left side of Table 2 is corrected to read
``<$2,500''.
B. Correction of Errors to the Regulation Text
0
1. On page 74921, third column, second full paragraph (Sec.
158.101(b)), line 26, the citation 2718(b)(A)(ii) is corrected to read
``2718(b)(1)(A)(ii)''.
0
2. On page 74922, third column, first full paragraph from the bottom of
the page (Sec. 158.120(d)(1)), line 5, the phrase ``State that has
jurisdiction over'' is corrected to read ``issue State of''.
0
3. On page 74923--
0
a. In the first column, second full paragraph (Sec. 158.120(d)(4)),
line 8, the term ``citizens'' is corrected to read ``non-U.S.
citizens''.
0
b. In the second column--
0
(1) In the fourth full paragraph from the bottom of the page (Sec.
158.140(a)(1)), paragraph (a)(1) is corrected by adding the following
sentence at the end of it: ``If an issuer transfers portions of earned
premium associated with group conversion privileges between group and
individual lines of business in its
[[Page 82279]]
Annual Statement accounting, these amounts must be added to or
subtracted from incurred claims.''
0
(2) In the third full paragraph from the bottom of the page (Sec.
158.140(a)(2)), lines 2 and 3, paragraph (a)(2) is corrected by
deleting the phrase ``changes in unpaid claims between the prior year's
and''.
0
(3) In the second full paragraph from the bottom of the page (Sec.
158.140(a)(3)), lines 1 through 5 are corrected by deleting the phrase
``the change in'' following ``Incurred claims must include'' and by
deleting the phrase ``from the prior year to the current year. Except
where inapplicable, the reserve should be'' following the phrase
``claims incurred but not reported''.
0
c. In the third column--
0
(1) In the fifth full paragraph (Sec. 158.140(b)(2)), line 1, the term
``may'' is corrected to read ``must''.
0
(2) After Sec. 158.140(b)(2)(iii), line 20, paragraph (b)(2) is
corrected by adding the following paragraph: ``(iv) The amount of
claims payments recovered through fraud reduction efforts not to exceed
the amount of fraud reduction expenses.''
0
(3) In the fourth full paragraph from the bottom of the page (Sec.
158.140(b)(4)), line 1, the term ``can'' is corrected to read ``must''.
0
4. On page 74924, first column, first partial paragraph (Sec.
158.140(b)(5)(i)), line 14 (immediately following the term
``aggregate.''), paragraph (b)(5)(i) is corrected by adding the
following sentence: ``An issuer that chooses to use such an adjustment
must use it for a minimum of three MLR reporting years.''
0
5. On page 74925--
0
a. In the first column, third full paragraph (Sec. 158.150(c)(8)),
lines 1 through 4, (after the phrase ``Fraud prevention activities''),
paragraph (c)(8) is corrected by deleting the phrase ``, other than
fraud detection/recovery expenses up to the amount recovered that
reduces incurred claims''.
0
b. In the third column--
0
(1) After the eighth full paragraph (Sec. 158.160(b)(2)(vi)), lines 31
and 32, the sentence ``Sec. 158.161 Reporting of Federal and State
licensing and regulatory fees'' is corrected to read ``Sec. 158.162
Reporting of Federal and State taxes''.
0
(2) After the eighth full paragraph (Sec. 158.160(b)(2)(vi)) and
before the corrected sentence ``Sec. 158.162 Reporting of Federal and
State taxes'', on line 31, add the following paragraphs:
``Sec. 158.161 Reporting of Federal and State licensing and
regulatory fees.
0
(a) Licensing and regulatory fees included. The report required in
Sec. 158.110 must include statutory assessments to defray operating
expenses of any State or Federal department, and examination fees in
lieu of premium taxes as specified by State law.
0
(b) Licensing and regulatory fees excluded. The report required in
Sec. 158.110 must include fines and penalties of regulatory
authorities, and fees for examinations by any State or Federal
departments other than as specified in Sec. 158.161(a) as other non-
claims costs, but not as an adjustment to premium revenue.''
0
6. On page 74926, first column, fifth paragraph (Sec.
158.161(b)(1)(vii)(B)), line 10 is corrected by adding the phrase
``made due to a'' before the phrase ``State based requirement''.
0
7. On page 74928--
0
a. In the first column, third full paragraph (Sec. 158.231(c)(2)),
line 3, the sentence is corrected by adding the phrase ``or non-
credible'' after the phrase ``partially credible''.
0
b. In the second column, after the third full paragraph (Sec.
158.232(c)(2)), the term ``$2,500'' in the first line of the ``Health
plan deductible'' column on the left side of Table 2 is corrected to
read ``<$2,500''.
Dated: December 17, 2010.
Dawn L. Smalls,
Executive Secretary to the Department.
[FR Doc. 2010-32526 Filed 12-29-10; 8:45 am]
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