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On Exchanges: This Summer the Policy Community Is Sweating Implementation Details

By John Reichard, CQ HealthBeat Editor

July 27, 2012 -- It was not everything they wanted to know about health insurance exchanges, but it was a lot. With deadlines looming, audience members at a standing-room-only Capitol Hill forum Friday peppered federal and state officials with dozens of questions about the nitty gritty of creating the new insurance marketplaces. And they got answers.

For example, it now appears that a proposed rule for the “essential health benefits” that must be offered by plans sold in exchanges will come out in August.

A supplemental guidance document on the operational details of the “federally facilitated exchange” is likely to come out next month too. The federal government will run exchanges in states that are not ready or that choose not to run their own exchanges. A previous guidance document on the federally facilitated exchange was released in May.

Michael Hash, acting head of the Center for Consumer Information and Insurance Oversight (CCIIO) at the Centers for Medicare and Medicaid Services (CMS) did not specifically mention August as a release month for either document. But he did say “shortly” with regard to the essential benefits proposal, and “summer” in the case of the guidance document.

Brian Webb, an exchange expert at the National Association of Insurance Commissioners (NAIC) who also spoke at the event, said afterwards he is assuming both will be out in August. Washington and Lee University law professor Timothy Jost, a third speaker at the forum sponsored by the Alliance for Health Reform, said the benefits proposal has to be released within a month.

Time is pressing on exchange developers. Insurers have to know what benefits they will be required to offer as they prepare to begin signing up people for coverage on the exchanges 14 months from now. The first open enrollment period starts Oct. 1, 2013.

Much has been written about how troubled the mammoth undertaking of creating exchanges is.

But Hash said the federally facilitated exchange is going to be up and running and ready to go in October, 2013. Webb said that every time he has heard from federal officials about the federal data hub that states will need to access to verify citizenship and income information, they say that the hub will be ready on time too.

Speakers were asked to say how many states will be ready to run their own exchanges by next fall with a questioner setting the “over-under” at 19 states. Webb said “over,” adding later that he expects the number of states to be 26.

Jost was more conservative. “If we’re looking at strict state-run exchanges with no federal involvement, then maybe under,” he said. “You’re not going to be able to vote in the spring of 2013 to establish and have one up and running.”

One questioner wanted Hash to address the widespread speculation by hospital officials that plans offered on exchanges would pay Medicaid level payment rates, which are relatively low.
“I’m not aware of anything in the Affordable Care Act that imposes requirements on issuers of health insurance or qualified health plans and the providers that will actually deliver the benefits,” Hash replied. “That’s a matter between the health plans and the providers and I don’t believe there are provisions in the Affordable Care Act that actually speak to that.”

Krista Drobac of the National Governors Association (NGA) said that the Congressional Budget Office (CBO) has assumed that health plans on exchanges will pay providers payment rates more typically found in the commercial health insurance market.

In remarks at the forum and in an interview afterward, Webb said states—with the exception of Massachusetts and possibly New Jersey or Vermont—will not try combining small businesses and individuals into a single exchange. But small businesses in all states will be able to go to exchanges in 2014, he said, either because the state has a “SHOP” exchange—the term for insurance marketplaces for small businesses—or there will be a federally run SHOP exchange.

Webb also said that essential health benefit minimums will vary from state to state, even where the federal government operates the exchange. HHS will use the small business plan with the largest enrollment in a state to set the minimum benefits for that state, he said.

In June, the Department of Health and Human Services posted the three biggest small business plans in each state and federal officials will choose from among the three, he said.

Webb also said NAIC is gearing up an effort to educate those who will assist consumers learn about exchanges and the plans they offer, including training “navigators” required in the health law to provide that help, as well as insurance agents and brokers.

NAIC has a meeting coming up in Atlanta that will address the issue, he said. It will start developing educational materials for those who will educate consumers and for consumers themselves, he said. “As we saw in Massachusetts it takes a lot of effort and frankly a lot of resources to get people the knowledge they need to make good choices,” Webb said. 

Small business plans (pdf)

John Reichard can be reached at [email protected].  

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