CMS Passes the Health Insurance Exchange Hot Potato; Time for the States to Get Cookin’

CMS has released rules to govern the new health insurance exchanges (HIE) as required under the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) and it is time for the states to get their act together and build a workable exchange. The HIEs have the potential to reach so many uninsured individuals, and under PPACA, these individuals who lack access to affordable minimum essential coverage will finally be able to purchase that coverage through these HIEs, which will serve as a kind of clearinghouse for information about the qualified health plans available. Small employers will have the opportunity to obtain group coverage for their employees via HIEs through the one-stop shopping of the small business health options program (SHOP). More than 21 million people will purchase coverage through the exchanges by 2016, according to Congressional Budget Office (CBO) projections.

With the release of the Final rule, states now have a framework in which they can design their Exchanges to best meet the needs of their consumers. States will have substantial flexibility as they design a marketplace that works for their residents. Policies have been set up to offer states guidance about the options on how to structure HIEs in two key areas:

  • 1) Setting standards for establishing HIEs, setting up a Small Business Health Options Program (SHOP), performing the basic functions of an Exchange, and certifying health plans for participation in the HIE; and
  • 2) Establishing a streamlined, web-based system for consumers to apply for and enroll in qualified health plans and insurance affordability programs.

“These policies give states the flexibility they need to design an Exchange that works for them,” said HHS Secretary Kathleen Sebelius. “These new marketplaces will offer Americans one-stop shopping for health insurance, where insurers will compete for your business. More competition will drive down costs and Exchanges will give individuals and small businesses the same purchasing power big businesses have today.”

The Final rule includes a set of standards for a state to establish an HIE while prioritizing state flexibility in numerous ways. States will have the ability to decide whether their HIE should be operated by a non-profit organization or a public agency, how to select plans to participate, and whether to partner with HHS for some key functions. Exchanges will perform a variety of functions, including:

  • Certifying health plans as “qualified health plans” to be offered in the HIE;
  • Operating a website to facilitate comparisons among qualified health plans for consumers;
  • Operating a toll-free hotline for consumer support, providing grant funding to entities called “Navigators;”
  • for consumer assistance, and conducting outreach and education to consumers regarding HIEs;
  • Determining eligibility of consumers for enrollment in qualified health plans and for insurance affordability programs (premium tax credits, Medicaid, CHIP and the Basic Health Plan);
  • Facilitating enrollment of consumers in qualified health plans.

A state’s plan to operate an HIE must be approved by HHS no later than January 1, 2013, however, state plans may be conditionally approved if the state is advanced in its preparation but cannot demonstrate complete readiness by January 1, 2013. States that are not ready for 2014 may apply to operate their HIE for 2015 or any subsequent year. HHS will continue working with states to support their progress, including through new funding opportunities. New funding will be available for all HIE models through a final award date no later than December 31, 2014.

So, it’s time for the states to get cooking and make the most of these Exchanges. The Final rule will be published on March 27, 2012.