On September 21, 2012, the Office of Personnel Management (OPM) issued a request for comments on a Multi-State Plan Program (MSPP) application.  The MSPP plays an important role under the Affordable Care Act (ACA).  The ACA requires the OPM, which administers the Federal Employees Health Benefits Program, to contract with at least two Multi-State Plans (MSPs); each of these MSPs must by 2014 offer plans through the individual and small group exchanges in at least 60 percent of the states, and by 2017 in all states.

At least one of the MSPs must be non-profit and at least one must not offer the option of abortion coverage.  The MSPP is intended to increase competition and ensure plan choice in state health insurance markets, which are now often highly concentrated.

The MSPP is a federal program run by a federal agency—the OPM—but will offer products through the state-level exchanges.  The ACA itself imposes a number of requirements on MSPs, although most are requirements that apply to all qualified health plans under the statute.  The ACA also requires MSPs to comply with applicable FEHBP requirements and minimum standards; it authorizes the OPM to negotiate terms and conditions of participation with MSPs as necessary to protect consumers, including medical loss ratios, profit margins, and premiums.  MSPs must also be licensed by states in which they do business, and must meet all requirements of state law not inconsistent with the MSP requirements.

“Level-playing field” requirement means that MSSP rules could have wider effect. A multi-state qualified health plan that meets these requirements and negotiates a contract with the OPM is “deemed to be certified” by the exchanges of all of the states in which it is offered;  it does not have to go through the qualified health plan certification process that state-based plans are subject to.  However, the ACA requires that MSPs compete with domestic plans on a “level playing field.”  Other private health plans are not subject to state or federal laws that do not apply to MSPs (or cooperative plans) if those laws relate to  guaranteed renewal, rating, preexisting conditions, non-discrimination, quality improvement and reporting, fraud and abuse, solvency and financial requirements, market conduct, prompt payment, appeals and grievances, privacy and confidentiality,  licensure, and benefit plan material or information.

MSPs are explicitly subject to all ACA requirements governing qualified health plans, but requirements imposed on MSPs that relate to issues not directly addressed by the ACA arguably constitute the maximum requirements that can be imposed on private health plans by states or exchanges.  (See Sabrina Corlette’s discussion of this issue.)  Insofar as the MSP application sets out the requirements for MSPP participation, therefore, it is of general interest.

The draft application packet consists of the application document itself plus a series of appendices. Some of the appendices are forms that will need to be filled out; others are textual, such as an appendix describing network adequacy and another describing application evaluation criteria. A cover letter clarifies that OPM is not yet accepting applications; the application is simply a draft.  Regulations and guidance to implement the program will follow.

The application recognizes that MSP organizational structures and affiliations will take different forms.  An MSP applicant could be a group of state-level insurers affiliated by common ownership and control or a nationally licensed service mark; an entity that owns a national service mark and affiliates with state insurers; a health insurer with wholly owned state subsidiaries; an insurer that subcontracts with state-level insurers to offer coverage in states in which the applicant is not licensed; or some other entity or group of entities.  Plans may offer NCQA or URAC accreditation as proof of compliance with certain requirements.  The document commits OPM to coordinate closely with state regulators, stating that “OPM aims to balance State and Federal regulatory interests in a manner that will enable MSPP issuers to offer viable plans on Exchanges and ensure a level playing field for MSPP and non-MSPP issuers.”

The application addresses an exhaustive range of issues including the national applicant’s organizational form; managerial capabilities; financial solvency; and oversight, control, and consolidation of functions.  The application requests information on state-level issuers regarding their for-profit or nonprofit status (remember, one MSP must be nonprofit); enrollment experience; financial condition; accreditation status; claims payment systems, processes, and experience; member services; marketing; utilization review and quality assurance programs; IT systems, security, and confidentiality; provider contracts; enrollment, disenrollment, and termination policies; and disaster recovery plan.  Information on offered products is also requested, including proposed benefit packages (in particular, whether the plan intends to cover abortion); base premium rate and rating methodologies; service areas; and provider networks.

OPM’s intentions on benefit package still unclear. The section of the application addressing IT systems is particularly detailed, evidencing the importance of IT to making the exchanges work.  The application and its Appendix C also go into much greater detail in describing network adequacy requirements than have previous regulatory issuances.  One important issue is not addressed by the draft application.  Under the heading “2014 Benefit Package” the draft simply says “Guidance forthcoming.”  The benefit package is one issue not included in the “level playing field” requirement, and thus could be defined nationally rather than at the state level, but OPM’s intentions here remain to be disclosed.

On services areas, a surprise that could undermine the goal of providing consumer choice. The biggest surprise in the draft package is its approach to geographic service areas within states.  The ACA requires that OPM determine that “the issuer offers the plan in all geographic regions.”  As the goal of the MSPP is to ensure that plan choice and competition is available throughout the country—even in rural or impoverished areas that commercial insurers might otherwise avoid—this is a very important requirement.

Nonetheless, the draft application asks MSPs to specify their service area, and states: “The service area must cover a minimum geographical area that is at least the entire geographic area of a county, or a group of counties defined by the Exchange, unless a smaller geographic area is necessary, nondiscriminatory, and in the best interest of the qualified individual and small employers.”