Officials Say The Exchange Rule Includes Flexibility For States

Health and Human Services Secretary Kathleen Sebelius today announced the release of proposed regulations that will govern how states are to set up and run new marketplaces where individuals and small businesses can shop for health insurance.

Kaiser Health News: "The proposal from the Department of Health and Human Services runs to hundreds of pages. Industry groups, consumer advocates and others will have 75 days to comment. Final rules are expected later this year. Insurers want states to be granted great flexibility in how they design their exchanges – and don't want to be barred from seats on oversight boards. Consumer groups, however, would prefer that insurers not be allowed on the boards or, if they are, to meet strict conflict-of-interest rules. The groups also are watching closely to see whether the federal government will require states to choose which insurers can participate – and negotiate with them over prices and other issues – or allow a looser structure in which all insurers that meet the minimum standards under the law can participate" (Appleby, 7/11). KHN also provides an updated FAQ: A Guide To Health Insurance Exchanges (Appleby, 7/10) and at-the-scene observations in a "reporter's notebook" blog post. 

The Hill Healthwatch Blog: "The proposed rule, according to HHS, offers states guidance and options on how to structure their Exchanges in two key areas: Setting standards for establishing Exchanges, setting up a Small Business Health Options Program (SHOP), performing the basic functions of an Exchange, and certifying health plans for participation in the Exchange; and [e]nsuring premium stability for plans and enrollees in the Exchange" (Pecquet, 7/11). Here's a second Healthwatch post on state flexibility issues.

Bloomberg: "Regulated markets where uncovered individuals buy plans from private insurers are central to the law's aim to expand coverage to as much as 95 percent of Americans from about 83 percent now. The exchanges are set to open in 2014 under rules the U.S. Department of Health and Human Services released today. ... The U.S. will help pay for the most costly patients under a reinsurance program outlined in the draft rule, providing health plans with an extra subsidy to care for people with chronic conditions, according to a program description. ... Eight states enacted laws creating exchanges this year, according to a database maintained by the National Conference of State Legislatures, the group representing state lawmakers" (Wayne and Armstrong, 7/11).

Reuters: "The U.S. Health and Human Services Department revealed on Monday a sliding deadline for states to set up the exchanges, allowing them to receive conditional approval if they are in advanced preparation by 2013. Also, states that are not ready by the final 2014 deadline can delay operation of exchanges until 2015 or later" (Selyukh and Yukhananov, 7/11).

Politico Pro: This "new regulatory provision could extend the timeline for states that want to establish health exchanges, but can't meet the statutory Jan. 1, 2013 deadline for states to have their exchanges certified. 'A state can be approved as fully operational as of January 2013,' CCIIO's Joel Ario said Monday. 'If they're close but not quite ready, they have the ability to get a 'conditional approval,' subject to a further readiness assessment. That's the second option'" (Kliff, 7/11).

CQ HealthBeat: HHS officials "unveiled two proposed health care law exchange regulations. ... One 249-page proposal governs the establishment of exchanges and qualified health plans. The second 103-page rule is designed to minimize the impact on insurance companies of covering high-cost patients. That proposed reg includes three components that would encourage insurers to cover high-risk patients just as they would healthy patients. Those elements are: a risk adjustment formula that would pay insurers higher rates for sicker patients; a three-year reinsurance program that would set up a nonprofit that would pass through temporary payments for insurers that cover patients with high medical claims, and a risk corridor program that would operate through 2016. That would give insurers whose claims are at least three percent higher than projected more federal funding, while giving insurers whose costs are at least three percent less than projected fewer federal dollars" (Reichard, Norman and Adams, 7/11). 

Governing: "The HHS rules outline minimum standards for the exchanges, though the agency insists allow enough flexibility so that each state can tailor its plan to its unique market. The rules allow states to determine whether the exchanges should have a regional or local scope; whether they should be operated by a non-profit; and whether they'll work independently to create the exchanges or in concert with HHS. ... Forty-nine states, D.C., and four territories have accepted federal grants that will allow them to establish exchanges. ... Exchange plans must be approved by HHS no later than Jan. 1, 2013 so they can be be launched a year later. Some delays may be granted if a state isn't making enough progress" (Holeywell, 7/11).

National Journal: "Health and Human Services Secretary Kathleen Sebelius released rules for the new health exchanges on Monday but says to expect many modifications before they become final. The draft proposals ... offer states guidance on what the basic functions of an exchange should be, how to certify health plans for participation, and how to control premiums.  Along with Affordable Care Organizations -- the conglomerations of doctors, hospitals, and other providers designed to coordinate care -- exchanges are one of the basic structures of health care reform as envisioned by the 2010 law" (Fox, 7/11).

Read the regulation and other information from HHS.