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HHS Guidance on Health Insurance Exchanges
Key Development: Federal exchanges will be open market models the first year and use health insurance brokers and agents to enroll consumers.
Next Step: States that want to operate their own exchanges in 2014 must file “blueprints” with HHS by Nov. 16.
By Sara Hansard
The Department of Health and Human Services will certify any health plan that meets required standards in the first year it operates exchange markets in states that do not set up their own, the agency said in guidance issued May 16.
“At least in the first year, we anticipate having an open market model,” Steve Larsen, director of the Center for Consumer Information and Insurance Oversight, said during a media call. “We think this will help ensure, at least initially, availability of health plans for consumers. And then we will look at the potential for other options after the first year.”
In addition, HHS indicated in the guidance that it will engage traditional health insurance brokers and agents, as well as web-based brokers “who can help drive business into the exchange,” Larsen said.
The agency also released a draft “blueprint” that states must submit to operate their own exchanges or to form partnerships with HHS to operate exchanges beginning in 2014 under the Patient Protection and Affordable Care Act. HHS will operate exchanges in states that do not operate their own. States that want to operate their own exchanges in 2014 must submit their blueprints by Nov. 16 for HHS approval.
The blueprint illustrates how state exchanges must meet legal and operational requirements, Larsen said. It lays out detailed information about the functions state exchanges must perform to get approval from HHS, he said.
States that are not ready to fully operate their own exchanges by 2014 may form partnerships with HHS. The two functions HHS listed in the draft blueprint that can be provided by states that enter into partnerships are plan management services, such as certifying qualified health plans (QHPs) for the exchanges, and in-person consumer assistance for the exchanges, Larsen said. States could do either of the functions or both in partnership with HHS, he said.
“We strongly encourage states to engage us in a partnership model if they are not ready to proceed with a full state-based exchange,” Larsen said.
Plan management and in-person consumer assistance “are traditionally areas that states are familiar with, and that states work with, either in their Medicaid agencies or in their state departments of insurance,” Larsen said.
Certifying health plans includes ensuring insurance companies are licensed, reviewing benefit packages of the qualified health plans to ensure they cover “essential health benefits” required under PPACA, reviewing rates that will be charged, and ensuring the plans have adequate provider networks, Larsen said.
In-person consumer assistance includes the “navigator” assistance program authorized under PPACA to help consumers apply for coverage and get information they need, Larsen said.
In the partnership model, HHS will operate exchange websites, Larsen said. HHS is developing a simple, streamlined application for people to apply for coverage through the exchanges, Larsen said.
HHS also announced more than $181 million in grants to Illinois, Nevada, Oregon, South Dakota, Tennessee, and Washington to help them build exchanges. Illinois, Nevada, Oregon, South Dakota, and Tennessee received one-year Level One grants to build their exchanges.
States are not required to have enacted legislation authorizing exchanges to receive Level One grants, Larsen said, but they must have plans to move toward establishing exchanges to receive them. “States are moving at different paces,” he said.
Washington became the second state, after Rhode Island, to receive a Level Two establishment grant, a multiyear award made to states that are advanced in building their exchanges. The Washington State Health Benefit Exchange received $127.9 million. Richard Onizuka, chief executive officer of the exchange, said the state expects to begin accepting applications for health insurance from consumers on Oct. 1, 2013, the beginning of the open enrollment period for plans that take effect in 2014.
Forty-nine states and the District of Columbia have accepted grants to help plan exchanges, and 34 states and the District have received Level One grants to build exchanges, HHS Secretary Kathleen Sebelius said.
HHS officials declined to predict how many states will operate their own exchanges in 2014. However, Sebelius said, “What this shows is that states are making real progress in delivering quality, affordable health coverage to their residents, and they want to be up and running by January 2014.”
The two guidance documents “provide every state a path forward to create an exchange that works for their residents,” Sebelius said. HHS on March 12 released a final rule and an interim final rule implementing requirements for the exchange markets, through which millions of individuals and small businesses will be able to buy coverage and receive premium assistance subsidies (see previous article; see related article).
Whether the exchanges will actively negotiate terms of insurance plans or whether they will be open markets for all plans that are qualified has been a topic of much discussion.
Timothy Jost, a law professor with Washington and Lee University in Lexington, Va., and a consumer representative with the National Association of Insurance Commissioners, told BNA that allowing an open market model in the federal exchanges the first year will “maximize participation, but hopefully the carriers will be on good behavior because there's the threat they might go to an active purchaser model in subsequent years.”
Jost noted that the guidance for federally facilitated exchanges stipulates that HHS will review plans for “meaningful differences across QHPs offered by the same issuer to ensure that a manageable number of distinct plan options are offered.”
That could effectively result in federal exchanges operating as selective purchasers, Jost said. For example, if an issuer offered many plans with only small differences in the deductible, the federally-facilitated exchanges would be unlikely to qualify all of them, he said.
Jost said he was “disappointed” that the guidance for federally facilitated exchanges delays implementation of QHP quality reporting requirements until 2016 for the 2017 coverage year. “That's a while to wait,” he said. But, he added, HHS has “an awful lot on their plate.”
PPACA requires QHPs to have strategies for incentives to improve health care quality, and HHS is to develop a quality rating system, Jost said.
By Sara Hansard
General Guidance on Federally-Facilitated Exchanges and the Draft Blueprint for Approval of Affordable State-based and State Partnership Insurance Exchanges are available in HealthDocs™. A state-by-state breakdown of exchange grant awards is at http://www.healthcare.gov/news/factsheets/2011/05/exchanges05232011a.html.
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