Health Insurance Report™ helps you track and analyze legal, legislative, and regulatory developments affecting the health-insurance industry throughout implementation of the Affordable Care Act...
Six states have received “conditional” approval to operate their own health insurance exchanges under the health care reform law, and eight states and the District of Columbia have applied to do so, Department of Health and Human Services officials announced Dec. 10.
“Six states have made enough progress in setting up their own health insurance marketplaces, or exchanges, that we're ready to conditionally approve their plan,” Marilyn Tavenner, acting administrator of the Centers for Medicare & Medicaid Services, said in a telephone press conference.
“Colorado, Connecticut, Massachusetts, Maryland, Oregon, and Washington are all on track to meet all exchange deadlines,” Tavenner said. “This is a significant milestone in our collective progress to implement the Affordable Care Act,” she said. Under ACA, exchanges operating in all states and the District of Columbia will start taking applications for coverage when open enrollment begins Oct. 1, 2013, for coverage that will take effect Jan. 1, 2014.
HHS is reviewing the other applications, “and we expect many more announcements like this one in the weeks and months to come,” Tavenner said. “We also expect that many states will play an active role in operating their exchanges,” she said. If states decide to play a larger role in running the new marketplaces in 2015 and beyond, “we'll work with them to ensure that they can do so,” she said.
States have until Dec. 14 to file “blueprint” applications with HHS to either operate their own state-based exchanges, or to conduct plan management and consumer assistance functions in a partnership exchange with HHS. HHS will operate a federally facilitated exchange (FFE) in states that do not perform either of those functions.
California, Hawaii, Kentucky, Minnesota, Mississippi, New York, Rhode Island, Vermont, and the District of Columbia have sent letters to HHS signaling their intent to operate state-based exchanges, and Delaware and Illinois have sent letters to the agency announcing their intention to enter into partnerships.
In its announcement, HHS also said it will not provide full funding for expanding Medicaid to states as called for under ACA unless the states expand the program to cover everyone up to 133 percent of the federal poverty level (see related article).
In a letter to governors from HHS Secretary Kathleen Sebelius dated Dec. 10, CMS included 39 Frequently Asked Questions (FAQs) on Exchanges, Market Reforms and Medicaid.
The FAQs include information on:
• how state partnerships and the FFE will work, including how they will interact with state insurance departments and Medicaid programs;
• how exchanges and Medicaid administrative costs will be paid for;
• how states can provide premium assistance for exchange plans, as well as adopt “bridge” plans that would allow individuals and families to keep the same health plans and providers if their eligibility changes for Medicaid and exchange coverage;
• multistate insurance plans that will be managed by the Office of Personnel Management; and
• how HHS will supplement coverage to ensure all essential health benefits required by ACA are covered.
The six states given conditional approval were the first to get their blueprint applications in to HHS, Gary Cohen, director of CMS's Center for Consumer Information and Insurance Oversight, said during the press call. Conditional approval means “there's still work to be done,” he said. The six states “have demonstrated good progress, and they have a plan and a path that we believe will get them to full operation of the exchange” by Oct. 1, he said.
“This is not a reflection on whether any other state will be approved, or any other state's progress towards having an exchange,” Cohen said. Sebelius will make decisions on all the applications by Jan. 1, he said.
In addition, HHS is “actively building the capability to operate a federally facilitated exchange to ensure that residents of every state have access to affordable health insurance in 2014,” Cohen said.
HHS is developing an issuer application plan evaluation tool and information system to support the FFE and the state partnership exchanges, Cohen said. Health insurers will begin to submit their applications in April 2013 to be certified as qualified health plans in the FFE, he said.
HHS will provide consumer support through the FFE, Cohen said. HHS is building a website with “chat” capabilities and a 24-hour call center that consumers can use to compare plans, check their eligibility for “affordability programs,” such as premium tax credit subsidies, and enroll in qualified health plans (QHPs) that must be sold in the exchanges, he said.
“We are all keenly aware that open enrollment is coming quickly, and we will be ready to open our doors on Oct. 1, 2013,” Cohen said.
The cost to states where the FFE will operate will be “minimal,” Cohen said, and in states that want to set up their own exchanges, grant funds are available. As of 2015, state-based exchanges must be self-sufficient, he said.
Cohen also said health insurance costs should be lower in the exchanges because of increased competition among plans, a broader risk pool, the medical loss ratio provision of ACA that limits the share of premiums insurers can spend on administrative costs and keep as profits, and rate reviews required by the law.
However, insurance industry sources said at a background briefing Dec. 10 it is not clear that costs will be lower in the exchanges, because initial enrollees are likely to be sicker people who have been uninsured, and because of the cost of operating exchanges, such as a 3.5 percent fee that is likely to be imposed on plans sold through the FFE (see previous article).
The FAQs are intended to respond to governors' requests for more information about exchanges. Among the issues addressed in the FAQs, HHS said:
• It does not intend to further extend the deadline beyond Dec. 14 for blueprint applications for state-based exchanges, and beyond Feb. 15, 2013, for applications for partnership exchanges.
• The cost of establishing state-based exchanges may be funded by federal grants awarded through 2014. States may receive grants for activities performed “in support of a federally-facilitated exchange,” and states will not be required to repay funds.
• HHS will not charge fees for states that use federal data for state-based exchanges.
• HHS intends to work with states “to preserve the traditional responsibilities of state insurance departments” in the FFE, including requiring QHPs sold in the FFE to meet state licensure and solvency requirements, as well as market rules. HHS is “working to determine the extent to which activities conducted by state insurance departments such as the review of rates and policy forms could be recognized as part of the certification of qualified health plans” by the FFE.
• The FFE's authority is limited to certification and management of QHPs, and it will not affect what plans can be sold in the state's individual and small group markets.
• FFE personnel will be trained on state insurance laws, as well as Medicaid and Children's Health Insurance Program eligibility, and states entering into partnerships will be responsible for managing “navigators” authorized by ACA to help consumers in the exchanges.
By Sara Hansard
State letters on exchanges and state partnership exchange letters are at http://www.healthcare.gov/law/resources/letters. HHS's letter to governors and Frequently Asked Questions on Exchanges, Market Reforms and Medicaid is available in HealthDocs™.
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