45 C.F.R. Subpart E—Grants to States for Operation of Qualified High Risk Pools
Title 45 - Public Welfare
Source: 68 FR 23414, May 2, 2003, unless otherwise noted.
This subpart implements section 2745 of the Public Health Service Act (the PHS Act). It provides for grants to States that have qualified high risk pools that meet the specific requirements described in §148.310. It also provides specific instructions on how to apply for the grants and outlines the grant review and grant award processes. For the purposes of this subpart, the following definitions apply: CMS stands for Centers for Medicare & Medicaid Services. Loss means the difference between expenses incurred by a qualified high risk pool, including payment of claims and administrative expenses, and the premiums collected by the pool. Qualified high risk pool means a high risk pool that meets the conditions described in §148.128(a)(2)(ii): (1) It provides to all eligible individuals, as defined in §148.103, health insurance coverage (or comparable coverage) that does not impose any preexisting condition exclusion or affiliation periods for coverage of an eligible individual; and (2) Provides for premium rates and covered benefits for the coverage consistent with the standards included in the National Association of Insurance Commissioners (NAIC) Model Health Plan for Uninsurable Individuals Act (as in effect as of August 21, 1996) but only if the model has been revised in State regulations to meet all of the requirements of this part and title 27 of the PHS Act. Standard risk rate means a rate developed by a State using reasonable actuarial techniques and taking into account the premium rates charged by other insurers offering health insurance coverage to individuals in the same geographical service area to which the rate applies. The standard rate may be adjusted based upon age, sex, and geographical location. State, for purposes of this subpart, means any of the 50 States and the District of Columbia or any entity to which a State has delegated the authority to conduct risk pool operations. State fiscal year, for purposes of this subpart, means the fiscal year used for accounting purposes by either a State or a risk pool entity to which a State has delegated the authority to conduct risk pool operations. [68 FR 23414, May 2, 2003, as amended at 69 FR 15700, Mar. 26, 2004] A State must meet all of the following requirements to be eligible for a grant: (a) The State has a qualified high risk pool as defined in §148.308. (b) The pool restricts premiums charged under the pool to no more than 150 percent of the premium for applicable standard risk rates for the State. (c) The pool offers a choice of two or more coverage options through the pool. (d) The pool has in effect a mechanism reasonably designed to ensure continued funding of losses incurred by the State after the end of fiscal year 2004 in connection with the operation of the pool. (e) The pool has incurred a loss in a period described in §148.314. (a) An eligible State may receive a grant to fund up to 50 percent of the losses incurred in the operation of its qualified high risk pool during the period for which it is applying. (b) Funds will be allocated to each eligible State in accordance with the following formula: (1) The number of uninsured individuals is calculated for each eligible State by taking a 3-year average of the number of uninsured individuals in that State in the Current Population Survey (CPS) of the Census Bureau. For grants based upon State fiscal years 2002 and 2003, a 3-year average was calculated using numbers available as of September 30, 2003. For grants based upon State fiscal year 2004, a 3-year average will be calculated using numbers available as of September 30, 2004. (2) Based upon the CPS numbers, the State's percentage of the total uninsured population of eligible States is calculated and then multiplied by $40 million to determine the State's maximum allotment for the fiscal year in question. The following example illustrates the formula in paragraph (b): (i) The most current 3-year average of uninsured individuals in State A is one million, and the 3-year average of uninsured individuals for all eligible States is 10 million. State A has 10 percent of the uninsured population of the eligible States. (ii) Under this example, State A's allotment would be 10 percent of $40 million, or $4 million, for the fiscal year in question. (c) The amount awarded to each eligible State will be the lesser of the 50 percent of losses incurred by its qualified risk pool for the fiscal year in question or its allotment under the formula. [68 FR 23414, May 2, 2003, as amended at 69 FR 15700, Mar. 26, 2004] (a) General rule. A State that meets the eligibility requirements in §148.310 may apply for a grant to fund losses that were incurred during the State's fiscal year 2002, 2003, or 2004 in connection with the operation of its qualified high risk pool. If a State becomes eligible for a grant in the middle of its fiscal year, a State may apply for losses incurred in a partial fiscal year if a partial year audit is done. Only losses that are incurred after eligibility is established will qualify for a grant. (b) Maximum number of grants. An eligible State may only be awarded a maximum of two grants, with one grant per fiscal year. A grant for a partial fiscal year counts as a full grant. (c) Deadline for submitting grant applications. The deadlines for submitting grant applications are stated in §148.316(d). (d) Initial distribution of grant funds. States that meet all of the eligibility requirements in §148.310 and submit timely requests in accordance with paragraph (c) of this section will receive an initial distribution of grant funds using the following methodology: (1) Initial grant applications submitted for losses incurred in State fiscal year 2002 (hereafter referred to as 02 States). Initial grants to States that submitted an application for losses incurred in State fiscal year 2002 were funded out of the $40 million appropriation for Federal fiscal year (FFY) 2003, which is available for obligation until the end of FFY 2004. (This is referred to as the “initial $40 million appropriation.”) (2) Initial grant applications submitted for losses incurred in State fiscal year 2003 (hereafter referred to as 03 States). Initial grants to States that did not submit an application for losses in State fiscal year 2002 (or submitted an application but did not qualify) and first qualified for a grant for losses incurred in State fiscal year 2003 will be funded out of the initial $40 million appropriation. (3) Initial grant allocations. Initial grant allocations will be determined by taking all grant applications described in paragraphs (d)(1) and (2) of this section, and allocating in accordance with §148.312. (4) Other applications. All other grants, including the initial grants for the 04 States (States that initially qualify based upon losses incurred in their fiscal year 2004), will be funded out of the $40 million appropriation for FFY 2004, which is available for obligation until the end of FFY 2005. (This is referred to as the “second $40 million appropriation.”) (e) Allocation of funds. Grants to States described in paragraphs (d)(1) and (d)(2) of this section will be allocated in accordance with paragraphs (e)(1) and (e)(2) of this section. (1) Initial allocation. (i) Reserves. We will first determine the projected number of 03 States (those that are expected to submit their initial grant requests after the deadline for grants relating to a State's 2002 losses). We will reserve the portion of the initial $40 million appropriation that we estimate will be needed to fund grants for 03 States. (ii) Initial allocation to 02 States. The remainder of the initial $40 million appropriation will be allotted to the 02 States. (iii) Excess reserves. If the initial allotments for any of the 02 or 03 States are less than 50 percent of the losses incurred by those States, any reserved funds that remain after allotments have been made to all 02 and 03 States will be proportionally redistributed to the 02 and 03 States, but not to exceed 50 percent of losses incurred by the States. The size of the initial grants will be increased retroactively for those States. (2) Second allocation. The procedure described in paragraph (e)(1) of this section will also be applied to allocate the second $40 million appropriation. A reserve will be established based on the amounts expected to be needed to fund grants to 04 States before funds are allocated for second year grants for 02 and 03 States. If any excess funds remain after States receive their full allotments, the funds will be proportionally distributed to States whose allotments were less than 50 percent of their losses. [68 FR 23414, May 2, 2003, as amended at 69 FR 15701, Mar. 26, 2004] (a) Application package. Each State must compile an application package that documents that it has met the requirements for a grant. If a risk pool entity applies on behalf of a State, it must provide documentation that it has been delegated appropriate authority by the State. At a minimum, the application package must include a completed standard form application kit (see paragraph (b) of this section) along with the following information: (1) History and description of the qualified high risk pool. Provide a detailed description of the qualified high risk pool that includes the following: (i) Brief history, including date of inception. (ii) Enrollment criteria (including provisions for the admission of eligible individuals as defined in §148.103) and number of enrollees. (iii) Description of how coverage is provided administratively in the qualified high risk pool (that is, self-insured, through a private carrier, etc.). (iv) Benefits options and packages offered in the qualified high risk pool to both eligible individual (as defined in §148.103) and other applicants. (v) Outline of plan benefits and coverage offered in the pool. Provide evidence that the level of plan benefits is consistent with either Alternative One or Alternative Two in Section 8 of the NAIC Model Health Plan for Uninsurable Individuals Act. See Appendix for the text of Section 8 of the NAIC Model. (vi) Premiums charged (in terms of dollars and in percentage of standard risk rate) and other cost-sharing mechanisms, such as co-pays and deductibles, imposed on enrollees (both eligible individuals (as defined in §148.103) and non-eligible individuals if a distinction is made). (vii) How the standard risk rate for the State is calculated and when it was last calculated. (viii) Revenue sources for the qualified high risk pool, including current funding mechanisms and, if different, future funding mechanisms. Provide current projections of future income. (ix) Copies of all governing authorities of the pool, including statutes, regulations and plan of operation. (2) Accounting of risk pool losses. Provide a detailed accounting of claims paid, administrative expenses, and premiums collected for the fiscal year for which the grant is being requested. Indicate the timing of the fiscal year upon which the accounting is based. Provide the methodology of projecting losses and expenses, and include current projections of future operating losses (this information is needed to judge compliance with the requirements in §148.310(d)). (3) Contact person. Identify the name, position title, address, e-mail address, and telephone number of the person to contact for further information and questions. (b) Standard form application kit—(1) Forms. (i) The following standard forms must be completed with an original signature and enclosed as part of the application package:
SF-424 Application for Federal Assistance SF-424A Budget Information SF-424B Assurances Non-Construction Program SF-LLL Disclosure of Lobbying Activities Biographical Sketch Additional Assurances (ii) These forms can be downloaded from the following Web site: http://www.cms.hhs.gov/researchers/priorities/grants.asp. (2) Other narrative. All other narrative in the application must be submitted on 8 (c) Submission of application package. (1) Applicants are required to submit an original and two copies of the application. Submissions by facsimile (fax) transmissions will not be accepted. (2) Applications mailed through the U.S. Postal Service or a commercial delivery service will be considered “on time” if received by the close of business on the closing date, or postmarked (first class mail) by the date specified in the paragraph (d) of this section. If express, certified, or registered mail is used, the applicant should obtain a legible dated mailing receipt from the U.S. Postal Service. Private metered postmarks are not acceptable as proof of timely mailings. (d) Application deadlines—(1) Deadline for States to submit an application for losses incurred in their fiscal year 2002. States must submit an application to us by no later than September 30, 2003. (2) Deadline for States to submit an application for losses incurred in their fiscal year 2003. States must submit an application to us by no later than June 30, 2004. (3) Deadline for States to submit an application for losses incurred in their fiscal year 2004. States must submit an application to us by no later than June 30, 2005. (e) Where to submit an application. All initial applications and supplemental applications must be submitted to:
Centers for Medicare & Medicaid Services, Acquisition and Grants Group, Mail Stop C2–21–15, 7500 Security Boulevard, Baltimore, MD 21244–1850, Attn: Nicole Nicholson. [68 FR 23414, May 2, 2003, as amended at 69 FR 15701, Mar. 26, 2004] (a) Executive Order 12372. This grant program is not listed by the Secretary under §100.3 of this title, and therefore the grant program is not subject to review by States under part 100 of this title, which implements Executive Order 12372, “Intergovernmental Review of Federal Programs” (see part 100 of this title). (b) Review team. A team consisting of staff from CMS and the Department of Health and Human Services will review all applications. The team will meet as necessary on an ongoing basis as applications are received. (c) Eligibility criteria. To be eligible for a grant, a State must submit sufficient documentation that its high risk pool meets the eligibility requirements described in §148.310. A State must include sufficient documentation of the losses incurred in the operation of the qualified high risk pool in the period for when it is applying. (d) Review criteria. If the review team determines that a State meets the eligibility requirements described in §148.310, the review team will use the following additional criteria in reviewing the applications: (1) Documentation of expenses incurred during operation of the qualified high risk pool. The losses and expenses incurred in the operation of a State's pool are sufficiently documented. (2) Funding mechanism. The State has outlined funding sources, such as assessments and State general revenues, which can cover the projected costs and are reasonably designed to ensure continued funding of losses a State incurs in connection with the operation of the qualified high risk pool after fiscal year 2004. (a) Notification and award letter. (1) Each State applicant will be notified in writing of CMS's decision on its application. (2) If the State applicant is awarded a grant, the award letter will contain the following terms and conditions: (i) All funds awarded to the grantee under this program must be used exclusively for the operation of a qualified high risk pool that meets the eligibility requirements for this program. (ii) The grantee must keep sufficient records of the grant expenditures for audit purposes (see part 92 of this title). (iii) The grantee may be required to submit quarterly progress and financial reports under part 92 of this title. (b) Grantees letter of acceptance. Grantees must submit a letter of acceptance to CMS' Acquisition and Grants Group within 30 days of the date of the award agreeing to the terms and conditions of the award letter.
Title 45: Public Welfare
PART 148—REQUIREMENTS FOR THE INDIVIDUAL HEALTH INSURANCE MARKET
Subpart E—Grants to States for Operation of Qualified High Risk Pools
§ 148.306 Basis and scope.
§ 148.308 Definitions.
§ 148.310 Eligibility requirements for a grant.
§ 148.312 Amount of grant payment.
§ 148.314 Periods during which eligible States may apply for a grant.
§ 148.316 Grant application instructions.
§ 148.318 Grant application review.
§ 148.320 Grant awards.
