Exchange regs leave questions
But exchange flexibility also encouraging: experts
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.