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States will have a range of options for operating health insurance exchanges in 2014 under proposed rules issued by the Department of Health and Human Services, an agency official said July 14.
Speaking to about 300 attendees at the 2011 National Forum on Health Information Exchange sponsored by eHealth Initiative, Chiquita Brooks-LaSure, director of coverage policy in HHS's Office of Health Reform, said HHS “wanted to give states significant flexibility to build an exchange that works for them.”
Comments are due Sept. 28 on the two proposed health insurance exchange rules announced July 11 by HHS implementing the health insurance exchange provisions of the Patient Protection and Affordable Care Act (see previous article).
Health insurance exchanges, which are to be in operation by 2014 in all states under PPACA, will be online markets in which individuals and small businesses can shop for health insurance plans. HHS will establish exchanges in states that do not set up their own.
Forty-eight states and the District of Columbia have accepted grants from HHS to plan for and operate the exchanges, and about half of the states have taken action through a variety of measures to establish them, Brooks-LaSure said.
The proposed regulation on exchange and plan certification would allow states to decide whether their exchanges should be local or regional, what type of entity would operate the exchanges, how to select plans to participate in the exchanges, and whether to partner with HHS to perform different functions of the exchanges, Brooks-LaSure said. States also have a great deal of flexibility to determine the roles of agents and brokers, she said.
Minimum functions that must be performed by the exchanges involve providing consumer support for coverage decisions, including toll-free call centers and websites with personalized coverage cost comparison tools as well as plan cost comparison tools, Brooks-LaSure said.
The exchanges also must ensure that the health insurance policies they offer are “qualified” plans that cover benefits required by PPACA, and they must operate a Small Business Health Options Program, she said. In addition, plans must perform outreach and education for consumers, she said.
“There's an incredible emphasis on using technology,” she said. “The goal is to make sure that somebody could enroll in health insurance relatively easily.” Enrollment standards for exchanges are aimed at ensuring that information technology systems support “a seamless process for consumers and small businesses,” she said.
The exchanges will create new opportunities for small businesses, Brooks-LaSure said. For the first several years, states will have flexibility to decide whether to make SHOP exchanges available for employers with up to 50 employees or up to 100 employees, she said.
“Small businesses will be part of a bigger risk pool,” and they will have greater purchasing power in the exchanges, Brooks-LaSure said. “But it's also about being able to offer different models,” she said.
The proposed rule would provide options for employers to offer employees a choice of coverage within a “tier,” she said. PPACA requires the exchanges to include four tiers of benefits based on their actuarial value: the “platinum” tier must cover 90 percent of required benefits, the “gold” level must cover 80 percent, the “silver” level must cover 70 percent, and the “bronze” level must cover 60 percent. The exchanges also may offer catastrophic coverage with limited primary care.
The exchanges could offer the traditional model under which a small employer contracts with one insurance company, or they could allow employees to choose from among the tiers, Brooks-LaSure said.
An important feature of the SHOP exchange will be to allow employers to choose whether the exchange should aggregate premiums, which would make it easier for small businesses to enroll, she said.
A separate proposed regulation issued July 11 by HHS is intended to prevent “adverse selection,” Brooks-LaSure said. It will be important to ensure that “there isn't cherry-picking among plans and that the risk pool is balanced,” she said. Adverse selection can occur if health insurance plans have a disproportionately high share of sicker policyholders, or if consumers wait until they need health care to purchase insurance, both of which drive up plan costs.
PPACA includes strategies to try to guard against adverse selection, she said. Under the proposed rule, risk corridors will be administered by HHS, she said. States are given options for risk adjustment and they can come up with proposals of their own, she said. Reinsurance will also be a function of the exchanges, but states that do not operate exchanges will be able to able to administer reinsurance for plans if they choose, she said.
HHS also will issue additional proposed exchange rules concerning eligibility for tax credits and providing more details about quality, Brooks-LaSure said. She did not give a timetable for the future rules.
A study by eHealth Initiative released at the conference, 2011 Report on Health Information Exchange: The Changing Landscape, found that the number of health information exchanges, systems allowing patient information exchanges between doctors and hospitals, increased 9 percent to 255 in 2011 from 234 in 2010.
The increase was “pretty significant considering there was also some consolidation,” Jennifer Covich Bordenick, chief executive officer of eHealth Initiative, said at a press briefing on the report. eHealth Initiative is a nonprofit, independent organization that advocates for improvements in health information technology.
About 10 health information exchanges were closed or consolidated during the period studied, she said.
The study showed that HIEs are putting in complex privacy controls “so patients can decide what information they want people to see or not see, or protect that sensitive information that people don't want to necessarily share,” she said.
There currently are no federal requirements regarding privacy in health information exchanges, Bordenick said. “There was a sense that everybody was waiting for the federal requirements to come out, when in fact we're seeing that the private market is moving forward fairly quickly in this area,” she said.
That may have led to an increase in the number of behavioral and mental health providers participating in health information exchanges, she said.
Some of the health information exchange organizations that are successful are selling their services, she said. “There was quite a jump in the services that HIEs provide, and the ones that are successful—no surprise—have business models that work, because they're selling services that are of interest to doctors and hospitals,” she said.
But “the pressures right now are extremely intense,” she said. “There really isn't a lot of time for these HIEs to catch up. So they really need to hit the ground running, [and] start selling these services if they're not, because there's a lot of competition out there right now.”
The private market enterprise HIEs “are really starting to grow, and these state and community-based organizations have some serious competition right now. So they really need to get going, or face irrelevancy,” she said.
Some 113 organizations said they plan to incorporate the Direct Project, an initiative begun in 2010 by HHS's Office of the National Coordinator to support use of internet protocols in health information exchanges, in their service offerings, the study found.
There have been questions about how Direct works and whether it is competitive with what HIEs are already offering, “so it was very interesting to see that over half of them are actually planning on doing it,” Bordenick said.
With federal “meaningful use” requirements that will have to be met to receive incentive payments for adopting information technology, “We see that the advanced initiatives, the ones that are more sophisticated, are ready to support the doctors and hospitals” to meet the requirements, she said.
“There were a lot of questions about are the exchanges even able to do this, and we're finding that yes, they are,” Bordenick said. “The exchanges are available to help the providers and hospitals meet the requirements,” she said.
Health information exchanges will be necessary to create accountable care organizations that will be created under PPACA, Bordenick said. “You need an exchange to figure out who your population is and manage your population,” she said. Over a quarter of the respondents in the study said they support or plan to support an ACO, she said.
With the requirements of health care reform, “These groups really need to get moving quickly [and] work with the infrastructure that currently exists,” Bordenick said. “There isn't time to take four years to build a whole new infrastructure to do an exchange. They've got to work with what they've got right now and make it work, and make it work quickly,” she said.
By Sara Hansard
Information on the 2011 Report on Health Information Exchange: The Changing Landscape is at http://www.ehealthinitiative.org/store.html?orderby=product_cdate&DescOrderBy=DESC&page=shop.browse&category_id=8&manufacturer_id=0&keyword=&keyword1=&keyword2 =.
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