§ 148.200 - Enforcement by State; determination regarding failure to enforce.

(a) General rule—enforcement by State. Except as provided in paragraph (b) of this section, each State enforces the requirements of this part with respect to health insurance issuers that issue, sell, renew, or offer health insurance coverage in the individual market in the State.

(b) Exception—enforcement by HCFA. HCFA enforces the provisions of this part with respect to health insurance issuers, using the procedures described in § 148.202, only in the following circumstances:

(1) State election. The State chooses not to enforce the Federal requirements.

(2) State failure to enforce. HCFA determines under paragraph (c) of this section that a State has failed to substantially enforce the requirements of this part.

(c) HCFA determination. If HCFA receives information, through a complaint or any other means, that raises a question about whether a State is substantially enforcing the requirements of this part, HCFA follows the following procedures:

(1) Verification of exhaustion. HCFA makes a threshold determination of whether the individuals affected by the alleged failure to enforce have made a reasonable effort to exhaust any State remedies. This may involve informal contact with State officials about the questions raised.

(2) Notice to the State. If HCFA is satisfied that there is a reasonable question about whether there has been a failure to substantially enforce the requirements of this part, HCFA sends, in writing, the notice described in paragraph (c)(3) of this section, to the following State officials:

(i) The Governor or chief executive officer of the State.

(ii) The insurance commissioner or chief insurance regulatory official.

(iii) If the alleged failure involves HMOs, the official responsible for regulating HMOs, if different than the official listed in paragraph (c)(2)(ii) of this section.

(3) Form and content of notice. HCFA's written notice to the State sets forth the following information:

(i) Describes the facts of the specific violations.

(ii) Explains that the consequence of a failure to substantially enforce the requirements of this part is that HCFA enforces the requirements in accordance with paragraph (d) of this section.

(iii) Advises the State that it has 45 days to respond to the notice, unless the time is extended as described in paragraph (c)(4) of this section, and that the response should include any information that the State wishes HCFA to consider in making the preliminary determination described in paragraph (c)(5) of this section.

(4) Extension. HCFA may, for good cause, grant the State an extension of the time period described in paragraph (c)(3)(iii) of this section. Examples of good cause include an agreement between HCFA and the State that there should be a public hearing on the State's enforcement, or evidence that the State is undertaking expedited enforcement activities.

(5) Preliminary determination. If, at the end of the 45-day period for a State to respond to HCFA's notice (and any extension), the State has not established to HCFA's satisfaction that it is substantially enforcing the requirements of this part, HCFA takes the following actions:

(i) Consults with the officials described in paragraph (c)(1) of this section.

(ii) Notifies the State of HCFA's preliminary determination that the State has failed to enforce the requirements, and that the failure is continuing.

(iii) Permits the State a reasonable opportunity to show evidence of substantial enforcement.

(6) Final determination. If, after providing notice and the opportunity to enforce the requirements of this part, HCFA finds that the failure to enforce has not been corrected, HCFA sends the State a written notice of that final determination. The notice sets forth the following:

(i) The effective date of HCFA enforcement.

(ii) The mechanism for establishing in the future that it has corrected the failure, and has begun enforcement. This mechanism includes transition procedures for ending HCFA's enforcement period.