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No Sign of Exchange Rule as Some States Hit the Pause Button on Legislation

By Jane Norman, CQ HealthBeat Associate Editor

March 9, 2012 -- An anxiously awaited final rule on the structure of health benefits exchanges remained stuck in regulatory limbo last week, after an abrupt cancellation of a press call featuring top Health and Human Services (HHS) officials.

Meanwhile, an expert on state health policy says exchange action appears to be slowing in states where largely Republican lawmakers are reluctant to move before the Supreme Court decides later this year whether the health care law is constitutional. In Idaho, for example, legislative leaders say they now doubt an exchange bill will even be introduced this year, the Idaho Statesman reported this week.

HHS officials, however, insist they are happy with the progress that's being made, even in states controlled by the GOP. And they say legislators and governors share the Obama administration's goal to have states run their own exchanges rather than turn them over to the federal government. The exchanges will serve as marketplaces for individual and small group health insurance policies when the health care law (PL 111-148, PL 111-152) goes into effect in 2014.

But before the exchanges can be operational, there are many policy and technology details that must be hammered out. And many cannot be resolved until state officials know more about how the federal government wants them to construct the exchanges.

The mystery surrounding the exchange rule later deepened when HHS officials canned a call with reporters to "discuss an important announcement relating to a provision of the Affordable Care Act."

The call—scheduled after the close of the markets—was to feature key exchange players: Steven Larsen, deputy administrator and director of the Center for Consumer Information and Insurance Oversight (CCIIO) at the Centers for Medicare and Medicaid Services (CMS); and Chiquita Brooks-LaSure, director of coverage policy at HHS' Office of Health Reform at HHS.

Just the day before, Larsen had told those attending an American's Health Insurance Plans (AHIP) conference that the Obama administration was "very, very close" to issuing the exchange rules, which have been under review at the Office of Management and Budget (OMB). OMB review is typically the last step before a regulation is published.

Separately, Marilyn Tavenner, the acting director of CMS, told reporters after speaking at a Federation of American Hospitals meeting that the rules will be out "very shortly."

But less than an hour before the press call was scheduled, as health industry stakeholders nervously monitored their smart phones for rumors and developments, HHS officials said the announcement would be postponed until a date "TBD."

Republican members of Congress have been harshly critical of HHS for not moving faster on the exchange regulation and in a March 1 hearing of the Energy and Commerce Committee several House members battered HHS Secretary Kathleen Sebelius over the issue.
"Some states are concerned that without the final rules on the exchanges, they're bumping up against the deadline that it's going to be pretty tough for them to meet," Michael C. Burgess of Texas told the secretary at the hearing. "I mean they need these rules probably within the next couple of months, if they're able to be finalize their issues to meet the deadline."

Sebelius told Burgess that states would "definitely have them in the next couple of months."

But some states are just going to wait on exchange implementation, said Joy Johnson Wilson, federal affairs counsel and health policy director at the National Conference of State Legislatures.

Wilson said in an interview that "it's fair to say that legislation has kind of slowed." Many lawmakers are adopting a wait-and-see approach in anticipation of oral arguments over the law scheduled before the Supreme Court March 26-28, she said, with a ruling expected by the summer. Others are reluctant to take action until after the November elections.

The problem is that legislators don't want to make decisions that will have to be revisited and reworked, said Johnson. "These are not easy issues and they don't want to have to keep going back and making changes," she said.

However, in states that are going ahead with their exchanges, requests for proposals are going out especially in connection with information technology, she said.

Larsen, though, in his remarks to AHIP said HHS officials are spending a "an incredible amount of time" working through issues with interested states, and learning from them as well. Many Republican-governed states have applied for establishment grants for their exchanges and "we're very encouraged by that," he said.

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