More flexibility in exchange regs
Providers hoped for CMS standards on exchanges
Federal officials widely hailed flexibility extended to the states in the final regulations guiding the establishment of insurance exchanges under the healthcare reform law, but that has some providers fearing what states will do with that leeway and girding for 50 new battles.
The final rule, issued last week, outlines details of the exchanges, or insurance marketplaces, scheduled to launch Jan. 1, 2014. The exchanges will offer insurance-plan options for individuals and small businesses, along with substantial subsidies to lower-income enrollees.
The final federal standards outlined a series of minimum requirements that the various state exchanges must include. However, they also left many provisions up to states; federal officials repeatedly touted such flexibility.
“These policies give states the flexibility they need to design an exchange that works for them,” HHS Secretary Kathleen Sebelius said in a written statement.
But not all providers were comfortable with that approach.
For instance, the National Association of Public Hospitals and Health Systems had been pushing for federal requirements on a collection of exchange policies that will affect public hospitals and their patients. The regulations allow states to decide some of those matters for themselves.
“We were hoping that CMS could take care of some of that at the federal level, but with the direction it has taken we’re just going to have to track the states and exchange implementation a lot closer,” said Xiaoyi Huang, assistant vice president for policy at the NAPH.
Among the areas of concern for the NAPH was the CMS’ refusal to further define the term “generally applicable payment rates,” which insurance plans in the exchanges must pay to safety net providers. The public hospital group had wanted federal rules to set them as the higher of Medicare reimbursement rates or the highest negotiated rates for similarly situated providers. Without federal requirements, the
association worried that some of their member hospitals would end up with lower reimbursement rates because they lack the negotiating leverage of large private systems, which also don’t provide the same degree of community support services.
Public hospitals also were concerned that the CMS declined to require insurance plans in the exchanges to contract with all both essential community providers and high-volume Medicaid providers, and to conduct access reviews if they don’t contract with all essential community providers.
Blair Childs, senior vice president of public affairs for Premier healthcare alliance, said in a written statement that his organization opposed HHS leaving states the option of imposing a provider tax to pay for evaluations of insurance plans for the exchanges. The plans “are expected to benefit from exchanges, including access to markets and reduced sales and marketing costs, and they should bear the cost of these assessments,” he wrote.
Premier, an alliance of about 200 hospitals and health systems, also was disappointed the final rule allows states to constitute up to half the membership of their exchange governing boards with insurers’ representatives, Childs wrote. “While exchanges clearly need the expertise of health insurance issuers and agents, active and engaged advisory committees should suffice.”
Kenneth Raske, president of the Greater New York Hospital Association, hailed the state flexibility included in the final rule and said his group plans to address any details of the exchange that emerge as its authorizing legislation continues to move through the state’s Legislature. Such a need to engage state legislators is preferable, he said, to trying to fit into a federal exchange imposed if the state does not act.
“No matter whether you live in Oklahoma or New York or California, insurance markets generally, and health insurance specifically, are very, very much local products with specific rules and regulations,” Raske said. “Going with the state approach is probably the best bet as it relates to exchanges.”
The final rules will inform state legislatures’ design of their own insurance marketplaces, but few in Washington expect it will influence whether states undertake such action. Only 13 states have passed authorizing legislation or executive authorization for exchanges, and HHS will decide within 10 months whether each state will require a federal exchange based on its progress by then (March 5, p. 12).
David Merritt, a senior adviser at Leavitt Partners, said that following release of the rules states that were implementing exchanges will continue, while those that were waiting or refusing to act will continue to do that. “Many are waiting for a (Supreme Court) decision, and others are waiting to see what the federal exchange looks like,” he said.
The New Jersey Legislature passed a bill last week that would create an exchange. While Republican Gov. Chris Christie has not said whether he will sign or veto the legislation, he has previously said he would not move forward with an exchange until the Supreme Court rules on the constitutionality of the law (See story, p. 10).
In Congress this week, some Democrats from states that are advancing exchanges, such as Sen. Joe Manchin (D-W.VA.), have said they urged such action, while others were more pessimistic.
“They made a political decision in Ohio that they don’t like this healthcare law,” Sen. Sherrod Brown (D-ohio) said when asked about an exchange in his state. “I hope they will start moving forward on it, but it’s unclear to me.”