A final “blueprint” that states can use to apply to operate their own health insurance exchange markets, or to partner with the federal government, was issued Aug. 14 by the Department of Health and Human Services.
Speaking to about 450 participants at HHS's first regional health reform implementation forum Aug. 14, Michael Hash, director of HHS's Office of Health Reform and acting director of the Center for Consumer Information and Insurance Oversight (CCIIO) in the Centers for Medicare & Medicaid Services, announced that the final Blueprint for Approval of Affordable State-based and State Partnership Insurance Exchanges had been posted on CCIIO's website.
The blueprint outlines:
• functions that will be performed by exchanges run by the states, or “state-based exchanges”;
• functions performed by exchanges operated as partnerships between the federal government and states; and
• functions that states can perform in “federally facilitated” exchanges that HHS will set up in states that do not operate either of the other two types of exchanges.
States that want to operate their own online exchange markets for individuals and small businesses in 2014 under the Patient Protection and Affordable Care Act, or that want to enter partnerships with the federal government, must file applications by Nov. 16 with HHS.
HHS must approve the applications, or give conditional approval, by Jan. 1, 2013, for state-based exchanges or partnerships.
At the implementation forum, Hash outlined exchange functions that states can perform if they do not elect to either operate state-based exchanges or form partnerships with the federal government.
“If there is a federally facilitated exchange without a partnership, there are still roles that the state can play, and we certainly want to make those available in terms of running their own reinsurance program, [and] making their own determinations about Medicaid and [Children's Health Insurance Plan] eligibility,” Hash said. Reinsurance programs reduce risk for insurers in the exchanges.
“We're very interested in leveraging the expertise and the resources of state departments of insurance when it comes to the review of things like the credentials of qualified health plans, and certainly when it comes to the need for consumer education and outreach,” Hash said.
As of late July, HHS had received 13 letters from governors who made a commitment to submit applications to establish state-based exchanges, Hash said. The states are Colorado, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Washington, California, Connecticut, Hawaii, Kentucky, and Vermont.
“Obviously, we're looking for other ways for other states to participate in the task of reforming these marketplaces, and we are continuing to work with them as they begin to consider submitting a blueprint to be either a state-based exchange” or to enter into a partnership arrangement with the federal government, Hash said.
However, Hash stressed that a state-run exchange “provides for the state the maximum amount of flexibility.” State-run exchanges will have the option of allowing the federal government to conduct eligibility determinations for tax credits and cost-sharing reductions for low- and moderate-income consumers, he said.
States also could allow the federal government to make determinations about exemptions from the “individual mandate” insurance coverage requirements for hardship or other reasons, Hash said.
The federal government could operate risk adjustment programs for state-run exchanges at the option of the states, Hash said. It could also operate a reinsurance program for issuers of individual coverage through state-run exchanges, he said.
States that form partnerships with the federal government to operate exchanges have the option of conducting plan management functions--certifying qualified health plans that will be offered in the exchanges--or they could conduct consumer outreach functions, or they could do both, Hash said.
Those activities will keep states involved in operating “key core functions” of an exchange, Hash said. “It gives them the opportunity to design the processes for review of these important data from issuers. It also leverages their ability to [oversee] and review the activities of these plans in the marketplace,” he added.
Further, “It obviously gives states the first line of contact with the public with regard to consumer assistance and education,” Hash said.
Determining Medicaid eligibility and operating reinsurance programs could be undertaken by the federal government in partnership exchanges at the election of the state, Hash said.
It is important for the federally facilitated exchange to harmonize its activities with the states, Hash said. “There are many reforms that are coming online in 2014 that are marketwide, that involve both the individual and small group market in and outside of an exchange,” he said.
The federally facilitated exchange is designed to promote market competition and to minimize administrative requirements for issuers to make it easy for them to participate in insurance markets inside and outside of exchanges, he said.
HHS is working with the National Association of Insurance Commissioners (NAIC) to involve the public and other stakeholders to vet insurance regulation policies, Hash said.
HHS wants to ensure that the Small Business Health Options Program (SHOP) exchanges allow markets for small businesses to function more effectively than has been the case, Hash said. “Small employers have historically not enjoyed the kind of leverage that larger purchases of health insurance have always had,” he said.
SHOP exchanges can be created as separate exchanges by states for businesses with up to 100 employees, or they can be merged with exchanges for the individual insurance market. In 2014 and 2015, states could limit the SHOP exchanges to businesses with less than 50 employees. Small employers that participate in the SHOP exchanges are eligible for small business tax credits, which could cover up to 50 percent of the cost of covering employees in 2014 and 2015, Hash said.
In addition to outlining functions that states can perform in federally facilitated exchanges, the final blueprint creates new “assistors,” who will help promote the exchanges to the public in 2013, Timothy Jost, a professor at Washington and Lee University School of Law in Lexington, Va., and a consumer representative to the NAIC, told BNA.
States that have received grants to establish exchanges are prohibited by PPACA from using the money to create “navigators” before 2014, Jost said. Navigators are created by PPACA to help people use the exchange. Thirty-five states and the District of Columbia have received $850 million in exchange establishment grants.
A requirement in the proposed blueprint issued in May that states move people from high-risk pools into the exchanges in 2014 was deleted in the final blueprint, Jost said. PPACA did not include the requirement for high-risk pools, which were operating in many states before PPACA was enacted. PPACA created the Pre-Existing Condition Insurance Plan Program, and the approximately 80,000 people enrolled in that program must be transferred to the exchanges in 2014 under PPACA, he said.
HHS is holding regional implementation forums in Atlanta Aug. 15, Chicago Aug. 21, and Denver Aug. 22. At the meetings, HHS officials will meet with state officials and stakeholders “to really focus on the next steps we need to take together to achieve our goals” of providing access to quality, affordable health insurance, HHS Secretary Kathleen Sebelius said in kicking off the forum. “To go the distance, we need to work together,” she said.
By Sara Hansard
The Blueprint for Approval of Affordable State-based and State Partnership Insurance Exchanges is at http://cciio.cms.gov/resources/files/hie-blueprint-081312.pdf.