Administration Releases Proposed Standards for Health Insurance Marketplaces

On June 14, 2013, HHS and CMS issued a Proposed rule establishing oversight and program integrity standards for state-based health insurance marketplaces as well as marketplaces facilitated in states by the federal government. The rule also modifies existing regulations regarding advance payments of the premium tax credit and cost-sharing reductions, premium stabilization programs, and the role of agents and brokers in selling insurance in the marketplaces.

Marketplaces

The Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) provided for the establishment of affordable insurance exchanges in each state. The exchanges will be used by individuals and small business owners starting October 1, 2013, to shop for qualified health insurance that would go into effect as soon as January 1, 2014. (In the three years since PPACA was enacted, the Obama administration has increasingly used the term “health insurance marketplace” instead of exchanges.) Some states are operating their own exchanges; some are working in partnership with the federal government to establish exchanges. Some states have refused to take any action in establishing an exchange; the federal government will establish and run the exchanges in these states.

Small Business Insurance

The Proposed rule offers more flexibility to states by allowing a state to operate a Small Business Health Options Program (SHOP) while HHS would operate the marketplace for selling individual health insurance policies. Previously, HHS had interpreted PPACA sec. 1311(b) to mean that a state had to choose to establish and operate an exchange that offered policies to both the small business and individual market; the Proposed rule states, “in light of HHS’s limited resources, and these States’ willingness to take on operation of the SHOP-specific functions required by the Affordable Care Act, we now interpret sections 1311(b) and 1321 of the Affordable Care Act to permit a State to elect to establish just a SHOP.”

Agents and Brokers

The Proposed rule modifies existing standards for agents and brokers who will be working under an arrangement with CMS to sell qualified health plans (QHPs) by clarifying the pathways through which they can help consumers and small businesses in federally-facilitated marketplaces. In particular, the rule modifies the rules regarding the information that agents and brokers must include in websites that individuals would access when looking for a QHP to purchase in a given state. It also modifies some of the rules regarding the circumstances under which agents and brokers who have an agreement with HHS can work with other agents and brokers who don’t have such an agreement, to facilitate helping individuals and small business purchase coverage through an exchange.

Program Integrity

The Proposed rule includes standards for the oversight of state marketplaces through monitoring, reporting, and oversight of financial activities and marketplace activities, to assure that consumers are properly given their choices of coverage available and correctly receive advance payments of the premium tax credit or cost-sharing reductions if they qualify.

Risk Adjustment and Reimbursement

HHS is proposing standards for the oversight of states that operate either risk adjustment or reinsurance programs, requiring that states keep an accurate accounting for the programs and submit to HHS and make public reports on operations.

CMS notes in the rule that “although many of the proposed provisions in this proposed rule would become effective by 2014, we do not believe that affected parties will have difficulty complying with the provisions by their effective dates, because most of the proposed standards are based on existing standards currently in effect in the private market” or were proposed or discussed in regulations finalized in previous years.

Comments will be accepted on the rule for 30 days after its publication in the Federal Register on June 19.