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Administration Plans Major Changes to Multistate Program

By Rebecca Adams, CQ HealthBeat Associate Editor

November 21, 2014 -- The Obama administration will propose on Monday significant changes to a program within the health care law that was intended to increase competition in the new insurance marketplaces by offering coverage sold in multiple states.

The law envisioned the coverage to be offered statewide, with options for both individuals and small businesses. However, the Office of Personnel Management (OPM) in a March 2013 final rule allowed those requirements to be phased in for multistate plans. Now the administration is poised to get rid of the statewide requirement and ask for public comment on when insurance companies should have to offer coverage in the small business market.

The proposed rule also will suggest giving insurers more flexibility in offering benefits by allowing companies to choose the standard that they will follow as a benchmark on a state-by-state basis or letting insurers offer two types of plans, using different benchmarks as a guide for setting benefits, within the same state.

OPM officials said they want to "attract additional issuers" and spur more competition.

So far, about 371,000 individuals have signed up for a multistate plan, according to the proposed rule. Department of Health and Human Services  (HHS) officials have said that almost 7 million people are enrolled in marketplace plans under the health law (PL 111-148, PL 111-152).

This year, the first year that the marketplaces under the health law were open, OPM contracted with insurers to offer more than 150 plan options in 31 states, including the District of Columbia. For the 2015 plan year, the multistate program will expand into five additional states, for a total of 36 states. The program will offer more than 200 different plan choices for individuals to consider.

But supporters of the law had hoped for more robust participation nationwide.

The final rule that was published last year said that OPM would delay the requirement for insurers to offer coverage statewide. Most, but not all, of the multi-state plan options available to consumers this year and next year provide coverage statewide.

Insurers "in particular states have not consistently been able to offer statewide multistate plan coverage," said the rule. "We believe some of the challenges to providing statewide coverage in all states will continue to impede expansion or participation in the program."

Administration officials said they will consider consumers' needs for statewide coverage and insurers' ability to provide it.

The requirement for insurers to offer coverage to both individuals and small businesses has also been delayed. OPM officials suggested that requirement is not practical, noting that "very few" insurers have actually offered small business coverage yet.

The rule also said that OPM may begin collecting the fee from insurers as early as plan year 2015. The fee will fund OPM work on the multistate program. The fee would be "no more than 0.2 percent of premiums," said the proposed rule.

A new multistate program advisory board also is in the works. Some of the members would be representatives of consumers who are enrolled in the plans.

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