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HHS Secretary Extends Exchange Deadline Again

By Dena Bunis, CQ HealthBeat Managing Editor

November 16, 2012 -- State officials now will have until Dec. 14 to let the Obama administration know they want to operate their own health benefits exchange, Health and Human Services Secretary Kathleen Sebelius said late last week in a letter to the Republican governors. This second deadline extension in the past week comes on the heels of a request from the National Governors Association for more flexibility and information as states grapple with this key decision.

Without this last minute reprieve, states would have had to tell HHS by Nov.16 if they wanted to operate their own exchanges. Last week, federal officials told states they would still have to make a decision on a state-run exchange by the end of the week but had given them until Dec. 14 to file a detailed exchange plan. And last week states that wanted to do a hybrid state-federal exchange were given until Feb. 15, 2013 to file a letter of intent and a plan.

"We are committed to providing states with the flexibility, resources and time they need to deliver the benefits of the health care law to the American people," Sebelius wrote in her letter to the NGA. "We will continue to work directly with individual states to address their particular questions and concerns." Under the health law (PL 111-148, PL 111-152) enrollment in the exchanges is supposed to start in October, 2013 with the new marketplaces opening for business in January, 2014.

In their letter, the GOP governors had pointed out that state officials were being asked to decide what exchange route to follow before several important rules governing the operation of these new marketplaces have been released. Those includes regulations spelling out essential health benefits and market insurance rules.

In her letter, Sebelius said "additional guidance," presumably meaning those missing rules, will be "released in the coming days and weeks." The rules are now being reviewed by the White House Office of Management and Budget.

The secretary also pointed out to states that whatever their initial decision on whether to run their own exchange, partner with the federal government or defer to HHS to operate an exchange in their state, "a state may apply at any time to run an exchange in future years."

Even as the GOP governors as a group were balking at the deadline, the impending deadline was likely responsible for a flurry of exchange activity in recent days. Four more state leaders in North Carolina, South Carolina, Nebraska and Indiana announced their intentions in advance of the deadline.

Also late last week, New Jersey Democrat, Rep. Frank Pallone Jr. sent a letter to Gov. Chris Christie urging his governor to sign a law the state legislature passed creating a state exchange.

"If New Jersey cedes the opportunity to create its own exchange, our residents will miss out on a number of benefits,'' Pallone wrote to the Republican governor whose office told CQ HealthBeat that Christie had not yet decided whether to sign the measure. "First and foremost, a state-based exchange would allow the state to determine which insurers can participate in the exchange, ensuring that only those offering the highest quality for the best value are allowed to participate. Furthermore, a state-based exchange could set requirements for participating insurance companies above and beyond those set by the federal law, making sure that the unique health needs of New Jerseyans are fully met,'' Pallone wrote.

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