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Federal Register / Vol. 86, No. 127 / Wednesday, July 7, 2021 / Rules and Regulations
FOR FURTHER INFORMATION CONTACT:

Christopher Truffer, 410 7861264; or Cassandra Lagorio, 410 7864554.
SUPPLEMENTARY INFORMATION:

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I. Background A. Overview of the Basic Health Program Section 1331 of the Patient Protection and Affordable Care Act Pub. L. 111
148, enacted on March 23, 2010, as amended by the Health Care and Education Reconciliation Act of 2010
Pub. L. 111152, enacted on March 30, 2010 collectively referred to as the Patient Protection and Affordable Care Act provides states with an option to establish a Basic Health Program BHP.
In the states that elect to operate a BHP, the BHP will make affordable health benefits coverage available for individuals under age 65 with household incomes between 133
percent and 200 percent of the federal poverty level FPL who are not otherwise eligible for Medicaid, the Childrens Health Insurance Program CHIP, or affordable employersponsored coverage, or for individuals whose income is below these levels but are lawfully present non-citizens ineligible for Medicaid. For those states that have expanded Medicaid coverage under section 1902a10AiVIII of the Social Security Act the Act, the lower income threshold for BHP
eligibility is effectively 138 percent due to the application of a required 5
percent income disregard in determining the upper limits of Medicaid income eligibility section 1902e14I of the Act.
A BHP is another option for states to provide affordable health benefits to individuals with incomes in the ranges described above. States may find a BHP
a useful option for several reasons, including the ability to potentially coordinate standard health plans in the BHP with their Medicaid managed care plans, or to potentially reduce the costs to individuals by lowering premiums or cost-sharing requirements.
Federal funding for a BHP under section 1331d3A of the Patient Protection and Affordable Care Act is based on the amount of premium tax credit PTC and cost-sharing reductions CSRs that would have been provided for the fiscal year to eligible individuals enrolled in BHP standard health plans in the state if such eligible individuals were allowed to enroll in a qualified health plan QHP through Health Insurance Exchanges Exchanges.
These funds are paid to trusts established by the states and dedicated to the BHP, and the states then
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administer the payments to standard health plans within the BHP.
In the March 12, 2014 Federal Register 79 FR 14112, we published a final rule entitled the Basic Health Program: State Administration of Basic Health Programs; Eligibility and Enrollment in Standard Health Plans;
Essential Health Benefits in Standard Health Plans; Performance Standards for Basic Health Programs; Premium and Cost Sharing for Basic Health Programs;
Federal Funding Process; Trust Fund and Financial Integrity hereinafter referred to as the BHP final rule implementing section 1331 of the Patient Protection and Affordable Care Act, which governs the establishment of BHPs. The BHP final rule established the standards for state and federal administration of BHPs, including provisions regarding eligibility and enrollment, benefits, cost-sharing requirements and oversight activities.
While the BHP final rule codified the overall statutory requirements and basic procedural framework for the funding methodology, it does not contain the specific information necessary to determine federal payments. We anticipated that the methodology would be based on data and assumptions that would reflect ongoing operations and experience of BHPs, as well as the operation of the Exchanges. For this reason, the BHP final rule indicated that the development and publication of the funding methodology, including any data sources, would be addressed in a separate annual BHP Payment Notice.
In the BHP final rule, we specified that the BHP Payment Notice process would include the annual publication of both a proposed and final BHP payment methodology. The proposed BHP
Payment Notice would be published in the Federal Register each October, 2
years prior to the applicable program year, and would describe the proposed funding methodology for the relevant BHP year,1 including how the Secretary of the Department of Health and Human Services the Secretary considered the factors specified in section 1331d3 of the Patient Protection and Affordable Care Act, along with the proposed data sources used to determine the federal BHP payment rates for the applicable program year. The final BHP Payment Notice would be published in the Federal Register in February, and would include the final BHP payment methodology, as well as the federal BHP
payment rates for the applicable BHP
program year. For example, payment rates in the final BHP Payment Notice 1 BHP program years span from January 1 through December 31.

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published in February 2015 applied to BHP program year 2016, beginning in January 2016. As discussed in section II.D. of this final methodology, and as referenced in 42 CFR 600.610b2, state data needed to calculate the federal BHP
payment rates for the final BHP
Payment Notice must be submitted to CMS.
As described in the BHP final rule, once the final methodology for the applicable program year has been published, we will generally make modifications to the BHP funding methodology on a prospective basis, with limited exceptions. The BHP final rule provided that retrospective adjustments to the states BHP payment amount may occur to the extent that the prevailing BHP funding methodology for a given program year permits adjustments to a states federal BHP
payment amount due to insufficient data for prospective determination of the relevant factors specified in the applicable final BHP Payment Notice.
For example, the population health factor adjustment described in section III.D.3. of this final methodology allows for a retrospective adjustment at the states option to account for the impact that BHP may have had on the risk pool and QHP premiums in the Exchange.
Additional adjustments could be made to the payment rates to correct errors in applying the methodology such as mathematical errors.
Under section 1331d3ii of the Patient Protection and Affordable Care Act, the funding methodology and payment rates are expressed as an amount per eligible individual enrolled in a BHP standard health plan BHP
enrollee for each month of enrollment.
These payment rates may vary based on categories or classes of enrollees. Actual payment to a state would depend on the actual enrollment of individuals found eligible in accordance with a states certified BHP Blueprint eligibility and verification methodologies in coverage through the state BHP. A state that is approved to implement a BHP must provide data showing quarterly enrollment of eligible individuals in the various federal BHP payment rate cells.
Such data must include the following:
Personal identifier;
Date of birth;
County of residence;
Indian status;
Family size;
Household income;
Number of persons in household enrolled in BHP;
Family identifier;
Months of coverage;
Plan information; and
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