Ex­change regs leave ques­tions

But ex­change flex­i­bil­ity also en­cour­ag­ing: ex­perts

Modern Healthcare - - Front Page - Re­becca Vesely

The flex­i­bil­ity and fed­eral sup­port of­fered in a pro­posed rule on health in­surance ex­changes could en­cour­age par­tic­i­pa­tion, state of­fi­cials and ex­perts said. But the reg­u­la­tions re­leased last week leave many un­knowns re­gard­ing how the ex­changes will be struc­tured, pre­cisely be­cause of this state flex­i­bil­ity and be­cause some is­sues will be han­dled in re­lated rules yet to be is­sued.

Un­der the Pa­tient Pro­tec­tion and Affordable Care Act, in­di­vid­u­als and small busi­nesses will, start­ing in Jan­uary 2014, be able to buy health in­surance through the mar­ket­places of tightly reg­u­lated pri­vate in­surance plans and also re­ceive fed­eral sub­si­dies and tax cred­its.

The ex­changes are a cen­ter­piece of the health­care re­form law, which out­lined the dead­lines and rules for op­er­at­ing them. Un­like a widely crit­i­cized pro­posed rule on ac­count­able care or­ga­ni­za­tions HHS is­sued this spring, ex­perts said the guide­lines on the ex­changes ad­here closely to the in­tent of the law while of­fer­ing room for creativ­ity.

“They clearly are look­ing at states to de­velop some­thing that works with their spe­cific geo­graphic mar­kets, pop­u­la­tions and in­surance mar­kets,” said Dhan Sha­purji, di­rec­tor at Deloitte, a con­sult­ing firm ad­vis­ing states, pay­ers and providers on ex­change de­vel­op­ment.

To date, only a few states have passed leg­is­la­tion that al­lows them to start set­ting up ex­changes, and many fear that states won’t be ready in time (July 11, p. 6). While the pro­posed rule doesn’t move any dead­lines, it does al­low some breath­ing room.

Un­der the re­form law, HHS must ap­prove state ex­change plans by Jan. 1, 2013. But the pro­posed rule al­lows states that are show­ing a good faith ef­fort to de­velop their ex­changes to gain “con­di­tional ap­proval” by that time in­stead. The Jan. 1, 2014 dead­line re­mains firm, how­ever, and open en­roll­ment will be­gin Oct. 1, 2013, ac­cord­ing to the pro­posed rule.

“I think it’s nor­mal that you are go­ing to have states mov­ing at dif­fer­ent paces for a whole host of rea­sons,” Steve Larsen, di­rec­tor of the CMS Of­fice of Over­sight, said on a con- fer­ence call last week with re­porters.

In states that choose not to cre­ate ex­changes, HHS will run them. But HHS pro­posed in the reg­u­la­tions that states be al­lowed to jump in 2015 or fu­ture years pro­vided they come up with a plan and give HHS 12 months’ no­tice. States also would be able to band to­gether to op­er­ate re­gional ex­changes.

More im­por­tant, states can choose to part­ner with HHS, draw­ing on fed­eral re­sources and ex­per­tise in ar­eas such el­i­gi­bil­ity and en­roll­ment sys­tems or fi­nan­cial man­age­ment, ac­cord­ing to the pro­posed rule. States with­out the ca­pac­ity to do all the work may choose this state-fed­eral part­ner­ship route.

Lorez Mein­hold, deputy pol­icy di­rec­tor for Colorado Gov. John Hick­en­looper, said this new state-fed­eral op­tion is ap­peal­ing. Colorado has ap­proved its ex­change leg­is­la­tion, and its over­sight board started meet­ing in June. “The reg­u­la­tions of­fer more flex­i­bil­ity and more op­tions to de­velop the ex­changes and meet the dead­lines,” Mein­hold said.

States must still work within cer­tain pa­ram­e­ters too. For in­stance, gov­ern­ing boards of the ex­changes must show di­ver­sity—vot­ing ma­jori­ties can­not be com­posed of in­surance is­suers, agents or bro­kers. Ex­changes can be ei­ther a gov­ern­ment body or a not-for-profit en­tity es­tab­lished by the state.

In Colorado, some con­sumer groups have said the state’s nine-mem­ber ex­change board may run afoul of this pro­posed reg­u­la­tion be­cause state-elected of­fi­cials have ap­pointed four in­surance rep­re­sen­ta­tives and a ven­dor. Colorado Pub­lic In­ter­est Re­search Group is call­ing for the res­ig­na­tion from the board of Eric Gross­man, an ex­ec­u­tive with TriZetto. While TriZetto, which is based in Green­wood Vil­lage, Colo., doesn’t sell in­surance, it does pro­vide health in­for­ma­tion tech­nol­ogy and pro­fes­sional ser­vices to in­sur­ers. Colorado PIRG ob­jects to com­ments made by Gross­man in the past that the group said run counter to the ex­change’s mis­sion.

But Mein­hold said Colorado’s ex­change board was es­tab­lished in con­sul­ta­tion with HHS and com­plies with the pro­posed rule. “The ques­tion arises, what is the dif­fer­ence be­tween a di­rect and in­di­rect af­fil­i­a­tion with in­sur­ers?” Mein­hold said. “We didn’t see this (TriZetto) as a di­rect af­fil­i­a­tion.”

Mein­hold added that health IT is a large part of de­vel­op­ing an ex­change, so TriZetto’s ex­pe­ri­ence is rel­e­vant. “I think it will prove in­valu­able,” she said.

The Amer­i­can Hos­pi­tal As­so­ci­a­tion ap­plauded HHS for stat­ing in the rule that gov­ern­ing board mem­bers should have “rel­e­vant ex­pe­ri­ence” in health­care. “There’s state dis­cre­tion to have providers on the board, so that is pos­i­tive,” said Molly Collins Offner, di­rec­tor of pol­icy de­vel­op­ment for the AHA.

But the hos­pi­tal as­so­ci­a­tion is wait­ing to see forth­com­ing rules on provider net­works, ben­e­fit de­sign and qual­ity of care for the ex­changes—de­tails ex­pected this year.

Rep­re­sen­ta­tives for in­sur­ers, in­clud­ing ma­jor lob­by­ing groups Amer­ica’s Health In­surance Plans and the Blue Cross and Blue Shield As­so­ci­a­tion, said they still are re­view­ing the 200-page pro­posed rule and could not give their feed­back by dead­line.

HHS re­leased sep­a­rate pro­posed stan­dards on rein­sur­ance, risk cor­ri­dors and risk ad­just­ment, which aim to pro­tect in­sur­ers from risk se­lec­tion and mar­ket un­cer­tainty.

“They are try­ing to level the play­ing field of the ex­change busi­ness com­pared to the in­surance mar­ket out­side the ex­changes,” said Sha­purji of Deloitte.

HHS is ac­cept­ing pub­lic com­ment on the pro­posed rule through Sept. 28.

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