January 8, 2019
Administrator Seema Verma
Centers for Medicare & Medicaid Services
Department of Health and Human Services
Attention: CMS-9922-P P.O. Box 8016
Baltimore, MD 21244-8010
Submitted via www.regulations.gov
Re: [CMS-9922-P] RIN 0938-AT53 Comments in Response to Proposed Rulemaking:
Patient Protection and Affordable Care Act; Exchange Program Integrity
Dear Administrator Verma:
Blue Shield of California (“Blue Shield”) appreciates the opportunity to respond to your
Proposed Rule on Exchange Program Integrity. Blue Shield is a nonprofit health plan that offers
health benefits coverage to individuals and groups throughout the State of California. Our
mission is to ensure that all Californians have access to high quality care at an affordable price.
In 2011, Blue Shield was the first, and remains the only, health plan to voluntarily place a cap on
its earnings. Since then, we have limited our net income to 2 percent of our annual revenue.

Importantly, this policy change could force enrollees to face cancellation of their coverage—with
no opportunity to re-enroll during the calendar year—for failure to pay as little as $1 a
month. What is more, implementing this policy to bill separately for non-Hyde services will cost
insurers like Blue Shield far more to implement and operate than would be collected. This
would run directly counter to the Administration’s overall mandate to reduce the burden of
regulation. Because existing policies in place related to segregation of funds meet both the letter
as spirit of the law, this policy can only be understood as an attempt to impose an arbitrary
political penalty on states offering non-Hyde abortion services. For this reason, we strongly urge
that the Proposed Rule be withdrawn.

Blue Shield of California
50 Beale Street, San Francisco, CA 94105

blueshieldca.com

An independent member of the Blue Shield Association

Blue Shield is writing to express our strong opposition to a provision in the Proposed Rule which
would single out enrollees in states that require non-Hyde abortion coverage as part of the basic
health benefit. Blue Shield currently enrolls approximately 435,000 members in qualified health
plans (QHPs) who would be impacted by this rule. As opposed to current requirements that
permit enrollees to pay their entire premium—including the amount required for non-Hyde
services—in a single transaction, under the Proposed Rule enrollees would be forced to pay two
separate bills in two separate transactions for their Affordable Care Act (ACA) coverage.

 The Proposed Rule Does Not Consider the Real-World Impacts of the Policy:
In California—along with several other states—access to abortion coverage is a state mandated
benefit. This requirement took effect long before the ACA was enacted. Access to abortion
therefore must be included as part of the essential health benefit package included in all
individual market and QHP coverage.
The ACA requires that any funds for non-Hyde abortion coverage be paid from a segregated
account which is not funded by, or comingled with, federal tax dollars. Blue Shield and other
insurers comply with both the letter and spirit of the law by creating a process to separately track
and pay claims for non-Hyde abortion services. This process must be described to our state
regulator and filed along with required plan documentation for individual market coverage. Blue
Shield is not aware of any concerns regarding the process we have established related to
comingling of federal tax credits and reimbursement for non-Hyde services.
The proposal from HHS does not consider the real-world implications of the policy and what it
would mean for coverage. Under the rule as proposed, individuals who fail to pay as little as $1
per month would face mandatory cancellation of their policy—with no opportunity to re-enroll
until the next calendar year. HHS in its proposed rulemaking did not consider how many people
would fail to pay this amount considering the time required to write a check and pay for postage
for such a small bill. In addition, close to 100,000 of our Exchange members now automatically
re-enroll in coverage by continuing to make payments automatically through an approved credit
card transaction. Under the Proposed Rule if finalized, all these members would likely be
confronted with a separate authorization they would have to approve to add a new credit card
transaction for $1 per month. If they fail to authorize this transaction, coverage could be
required to be cancelled even though the enrollee would believe their premiums were being
automatically deducted.
Finally, given the administrative complexities of implementing this policy, plans could not be
ready by the 2020 plan year as suggested in the Proposed Rule. A 2020 effective date would
mean that all system changes would have to be in place by September of 2019 in order to test for
open enrollment. It would take at least 18 months to put these changes into place, requiring a
delayed implementation date.
The Cost of Implementing the Rule Would Dramatically Exceed HHS Estimates:
The Proposed Rule dramatically understates the financial impact of this rule to carriers. The
variance between the regulatory assessment and Blue Shield’s analysis suggests a striking gap in
the understanding of the implementation costs and challenges of the rule. HHS estimates the
total cost of implementing the rule to be $841.60 per issuer, or $63,120 for all insurers
nationwide. In addition, it estimated ongoing compliance costs would be $1,453.43 per year per
issuer.
In contrast, our internal estimates show it would cost $4-$6 million for Blue Shield alone to
implement this policy—separate from the monthly costs of operationalizing this requirement.
This is driven by the cost to reprogram systems to send multiple bills for a single policy—which
is not an existing option for Blue Shield or many other carriers. It also reflects the increased
complexity with duplication of bills/payments to single households and the establishment of

 parallel processes affecting claims, billing, enrollment, customer service, and financial
processing. In addition, we would expect current grace period and delinquency volume to grow
by 40%-60%, given the confusion of separate bills and the likelihood of not paying both bills
each month. As a reminder, when members are in their grace period, provider payments are
pended so there would be an increased number of provider complaints.
In addition, the requirement would add $900,000 per month in ongoing operational costs
including:
•
•
•

$600,000 to print and mail (approximately 300,000 bills at $2 a bill).
$125,000 for additional customer service related resources to support and address
member calls and increased delinquency volumes.
$125,000 for additional billing and reconciliation resources to support increased volume
of payment processing, delinquency volumes and reconciliation processes.

In summary, the requirements in the Proposed Rule would cost dramatically more for insurers to
implement and operationalize than considered in the rulemaking. This demonstrates that the
agency did not appropriately understand and weigh the impacts of this Proposed Rule. The rule
should therefore be withdrawn and reevaluated considering this evidence.
States Should Remain the Primary Enforcer of this Requirement:
HHS notes that states remain the primary enforcers of these requirements related to segregation
of funding for non-Hyde services. We believe that the requirement to mandate two separate
billing transactions for a single policy runs counter to this delegation of enforcement and should
not apply to any state which has procedures in place to oversee these requirements. Instead,
HHS should review enforcement procedures in each state and address any perceived
inadequacies through their existing oversight authority.

Conclusion:
The weight of evidence is clear that the Proposed Rule would impose costs far in excess of any
benefit and result in impacts to coverage that were not appropriately considered by the agency in
its rulemaking. Accordingly, we ask CMS to withdraw this policy.
Sincerely,

Andy Chasin
Policy Director
Blue Shield of California