The surge of Affordable Care Act implementation momentum that ended 2012 seems to be continuing into 2013. The ACA required HHS to determine by January 1, 2013, whether states are on track to have a state-based exchange operational by January 1, 2014, and to establish federal exchanges in states that are not in a position to do so.
On January 3, the Department of Health and Human Services announced the conditional approval of seven state-based health insurance exchanges: California, Hawaii, Idaho, Nevada, New Mexico, Vermont, and Utah. These join the eleven state-based exchanges already approved for Colorado, Connecticut, the District of Columbia, Kentucky, Massachusetts, Maryland, Minnesota, New York, Oregon, Rhode Island and Washington. Applications for full state-based exchanges were due on December 14, 2012, and all but one (Mississippi) have now been approved.
The biggest surprise among this group was the Utah exchange, as Governor Herbert has made amply clear his intent to stick with Utah’s current exchange model rather than to comply with the ACA. The approval of the Utah exchange, however, was contingent upon Utah developing an ACA-compliant exchange that conforms to the exchange regulations and implementation progress milestones. Indeed, HHS has no legal authority to approve a state exchange that does not comply with the ACA.
In addition to approving state-based exchanges, HHS also approved Arkansas to operate a state partnership exchange, joining Delaware, which had earlier been approved for partnership status. States have until February 15, 2013 to declare if they intend to pursue a partnership exchange, and several more partnership exchange applications are currently pending.
A Partnership-Exchange Guidance
HHS also released on January 3, 2013, a Guidance further clarifying the respective roles of the federal and state governments in partnership exchanges. The partnership exchange is not recognized as such by the ACA, but was rather created by HHS as a way to take advantage of state expertise and to avoid duplication of effort once it became clear that many states were not interested in creating their own state exchanges. The partnership exchange is in fact a federal exchange, and the federal government is ultimately responsible for its operation. But partnership exchanges will rely on the states to perform important functions. They will also, it is hoped, serve as a way station for states that will move on to full state-based exchanges.
There is little new or surprising in this Guidance, although it goes into greater detail than have prior issuances in describing the federal and state roles in partnership exchanges. As has been earlier noted, states can partner with the federal government to perform plan management, or consumer assistance and outreach functions, or both. HHS commits itself to delegate responsibility to partnership states where it can and to establish processes that maximize the probability of accepting state recommendations without duplicative review where it must maintain final authority.
State plan-management partnership exchanges. The Guidance lays out in some detail the responsibilities of state plan-management partnership exchanges. These responsibilities include recommending plans for qualified health plan (QHP) certification, recertification, and decertification; QHP issuer account management; and day-to-day oversight and monitoring, including oversight of quality compliance. Plan-management partnership states will also carry on similar functions for stand-alone dental plans.
HHS retains ultimate responsibility for QHP certification, recertification, and decertification, but commits itself to work out a memorandum of understanding with partnership states to establish procedures to avoid duplicative review. An appendix to the Guidance further clarifies HHS QHP certification standards, which plan-management partnership states will apply. Once a partnership state makes recommendations, HHS will have 14 business days to notify the state of any concerns that it has. HHS will not re-review plan data or otherwise duplicate the state review. If HHS raises concerns, the state will have nine business days to respond, after which HHS will make a final decision within five business days. Partnership states may also make recommendations as to the certification of CO-OP QHPs, although the final decision on CO-OP plans will be made by HHS.
The Guidance describes plan-management partnership state responsibilities for account management, oversight, and quality monitoring. It also describes further both the issuer and plan-level data that must be collected for exchange functions and QHP oversight. Plan-management partnership states will have the option to use either the HHS Health Insurance Oversight System (HIOS) or the National Association of Insurance Commissioners’ System for Electronic Rate and Form Filing (SERFF) for data collection and submission.
The Guidance includes a timeline for implementing a plan-management partnership. Early in 2013, states will identify the entity performing plan-management functions and begin to submit evidence of legal authority to perform these functions; develop procedures for day-to-day oversight and monitoring; develop a plan for supporting QHP issuers and providing technical assistance; and develop an approach for issuer certification, recertification, and decertification. By February 15, 2013, as already noted, states must submit an application for a cooperative partnership agreement for a 2014 partnership exchange. During April of 2013, states will begin the QHP certification process. During May and June they will work with HHS on plan certification, with a goal of completing the QHP certification process and sending final recommendations to HHS by July 31, 2013.
The Guidance recognizes that many states do not intend to establish either a partnership or a state-based exchange. Nevertheless, many of these states will review QHPs for compliance with ACA exchange requirements, such as coverage of the essential health benefits or compliance with ACA actuarial value requirements, as a matter of state regulatory review. States will also continue to perform traditional state regulatory functions, such as reviewing network adequacy or compliance with marketing requirements. HHS intends to provide technical assistance and consultation to non-partnership states as to QHP certification standards, and, to the extent possible, to rely on state determinations that are conducted as a matter of state law but that also determine compliance with federal exchange certification standards.
State consumer partnership exchanges. The Guidance also describes further the state consumer partnership exchange. If a state assumes this function, it is responsible for the day-to-day management of the exchange navigators program and for the development and management of a separate and distinct in-person assistance program. It can also choose to be responsible for outreach and education activities.
HHS will also be responsible for establishing conflict-of-interest, cultural-and-linguistic-competency, and training standards for the navigators, and for selecting navigator grantees and awarding navigator grants. States cannot use exchange-establishment grants to fund the navigator program, but can use these funds to build the infrastructure for the navigator program. Once the program is up and running, federal exchange funds will be available to fund it.
States may use exchange establishment funding to establish in-person consumer assistance funding using state employees or grantees to complement the navigator program. These programs will, in particular, provide consumer assistance as the exchanges get underway. Consumer assistance programs must be in place by the summer of 2013.
States will continue to license and oversee agents and brokers, who can sign an agreement with the federally facilitated exchange to use its web portal or to work as navigators (as long as they are not compensated for enrolling individuals in either QHPs or non-QHP health insurance).
State consumer partnership exchanges are encouraged to brand and promote their consumer-assistance programs within their states. They may also promote the federally facilitated exchange. Although the federal exchange’s name and website will not change from state to state, the website will make provision for state-specific icons or sections. States are encouraged to develop their own outreach and education plan, which should be prepared by March 29, 2013.
HHS will carry out the functions of the federal exchange not performed by partnership states. These include determination of eligibility for premium tax credit and cost-sharing reduction payments, QHP enrollment, and establishment and maintenance of the exchange website and the call center. States can operate or allow the federal government to operate the reinsurance program, but the federal government must operate the risk-adjustment program in states that do not operate their own exchange, including partnership states.
States may use establishment grant funding to establish a partnership exchange. Once that funding ends, the federal government anticipates continuing to pay for activities performed by partnership states for the federal exchange. States that decide to transition to a full state exchange must give notice of their intent to HHS by November 18 of the year prior to the year before they establish the state exchange (i.e. November 18, 2013 for 2015).
Lenient QHP Certification Standards
The Guidance concludes with an appendix setting out QHP certification standards that will be applied by plan-management partnership states and HHS. These will not be reviewed in detail here. It must be noted, however, how strikingly little is expected of insurers for compliance with some of these standards. QHPs, for example, may be certified based on an attestation that they comply with state marketing standards or with ACA non-discrimination standards.
The statutory requirement that plans include essential community providers, where available, to serve low-income or underserved populations has almost completely vanished, with issuers being able to achieve compliance by including 20 percent ECP participation in network in their service area, or 10 percent ECP participation with a satisfactory narrative justification, or less than 10 percent participation with a narrative justification that will “undergo stricter review.” It is understood that HHS wants to ensure that insurers actually show up for the exchanges, but this does not justify it simply waiving requirements that Congress has established.