State Regulators Concerned About Federal Provider Network Regulations

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By Sara Hansard  

May 6 -- State insurance commissioners expressed concern about the federal government setting national standards for health insurance provider networks, in a letter to President Barack Obama following a meeting with him in April.

Commissioners have raised questions about some features of limited networks in 2014, such as lack of coverage for services outside the state; exclusions of teaching hospitals or specialty hospitals from networks; and the creation of narrower networks for qualified health plans, said the April 30 letter from leaders of the National Association of Insurance Commissioners (NAIC). However, it said, “We believe that states are best equipped to balance the access, cost, and geographic variables that exist in their distinct markets.”

Forty-four state insurance commissioners met with Obama April 17 to discuss Affordable Care Act implementation. The NAIC letter said the commissioners noted “with concern” that the Centers for Medicare & Medicaid Services' 2015 Letter to Issuers in Federally Facilitated Marketplaces proposes to apply a “reasonable access review standard” and collect data to formulate standards for how far patients should have to travel to providers. The letter to issuers was released March 14 .

To reduce costs and premiums in ACA marketplace plans, many insurers offered narrow provider networks for 2014. That has caused controversy among consumers, as well as state and federal officials.

The NAIC letter was signed by North Dakota Insurance Commissioner Adam Hamm, NAIC president; Montana Commissioner of Securities & Insurance Monica Lindeen, NAIC president-elect; Pennsylvania Insurance Commissioner Michael Consedine, NAIC vice president; Kentucky Insurance Commissioner Sharon Clark, NAIC secretary-treasurer; and former Sen. Benjamin Nelson, NAIC's chief executive officer.

Allow Extended Open Enrollment Periods

In their letter, the NAIC officials also requested that the administration allow states to extend open enrollment periods in their marketplaces. For 2014, open enrollment was extended by the Department of Health and Human Services for the federally facilitated marketplace as well as by some state-based marketplaces due to technical difficulties with the marketplace websites.

The NAIC letter said, “While the text of the ACA allows sufficient flexibility for states to extend the open enrollment periods in their Exchanges, and the preamble to the Exchange regulation mentions such flexibility, a ruling by the HHS General Counsel's Office has prohibited this option. Extending the open enrollment period in states that wish to do so would be an added consumer protection and would not prevent the application of the federal law.” Marketplaces are also known as exchanges.

Retain State Partnership Option

The letter urged the Obama administration to retain the option for states to elect to enter into agreements with the federal government to operate state partnership marketplaces. For 2014, the HHS allowed such partnerships in seven states in which states conducted consumer assistance or plan management functions, or both.

“This has been an important option for several states that lack the size to realize the economies of scale necessary to establish a self-sufficient State-Based Exchange and provides an intermediate step for states interested in transitioning from a Federally Facilitated Exchange to a State-Based Exchange,” the NAIC said.

“Maintaining a funding stream to offset any additional costs incurred by the state for those Exchange functions it assumes as part of this agreement, but cannot recoup through user fees, will help ensure that states are able to take on as much oversight responsibility as possible and provide a more stable glide path for states that choose to pursue the transition to a State-Based Exchange,” the NAIC said.

The letter also said that states need sufficient time to consider options for essential health benefit packages to give insurers time to develop and price plans before 2016. Under current HHS regulations, each state has the opportunity to designate a plan offered in the state as a benchmark for the ACA's requirement that 10 categories of essential health benefits be covered in individual and small group health plans. That framework is only applicable through the 2015 plan year, the letter said.

In addition to those issues, the letter suggested that administrative costs could be reduced without harming consumers by eliminating duplicative submission of identical data to state and federal systems. “Requiring insurers to enter plan and rate review data into the new federal Health Insurance Oversight System (HIOS) as well as the existing System for Electronic Rate and Form Filing (SERFF), adds expense to the federal government, insurers, and ultimately consumers and taxpayers, without additional benefit to any,” it said.


To contact the reporter on this story: Sara Hansard in Washington at

To contact the editor responsible for this story: Janey Cohen at