Proposed Regs Describe State Innovation Waiver Process

The Treasury Department and Department of Health and Human Services (HHS) today released guidance, in the form of proposed regulations, on how states may obtain “Waivers for State Innovation” in lieu of complying with central features of PPACA, including the individual mandate. Originally such waivers were to become available in 2017 but the Obama Administration recently accelerated that deadline to 2014, which is when the key PPACA features first go into effect.

According to the regulations, waiver applications are to be submitted to the Secretary of HHS, which will complete a preliminary review within 45 days. The regulations do not set a minimum time between submission of an application and the effective date of the waiver, but request public comments on whether or not it should require submissions be filed no less than 12 months before the waiver is to take effect.

Completion of the preliminary review triggers the federal public notice and comment period, and the 180-day federal decision-making period. Additional public notice and comment periods occur at the state level, as well.

In order to receive a waiver, a state must demonstrate that its alternative system will provide coverage that is at least as comprehensive (in terms of benefits) as coverage would be under the PPACA, and as least as affordable, in terms of cost-sharing protections against excessive out-of-pocket spending. States must also demonstrate that a comparable number of citizens would be covered under the alternative plan, and that the plan is federal deficit neutral.

The regulations describe heavy documentation requirements on each of those points, including a detailed 10-year budget plan showing federal deficit neutrality.

The regulations also describe post-award monitoring and quarterly and annual reporting procedures states must follow in order to maintain their waiver. This includes a requirement to hold a public forum at the state level, six months after a waiver is implemented, at which members of the public may comment on the progress of the waiver. The state must provide a summary of this forum to the Secretary of HHS.

The preamble to the regulations also notes that the Treasury and HHS Departments are soliciting public comment on whether or not there should be annual limits on the number of waivers that may be submitted.