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On the States: HHS Accepts Utah Proposal for Hybrid Exchange

By Jane Norman, CQ HealthBeat Associate Editor

May 10, 2013 – The Department of Health and Human Services (HHS) recently gave its blessing to yet another form of health insurance exchange, this one a Utah creation that lets the state operate the small business market while the federal government oversees the sale of policies to individuals.

In other developments regarding the health care law, Kentucky's Republican governor announced that the state will expand its Medicaid program and GOP state legislators in Michigan moved that state a little closer to Medicaid expansion as well.

In Utah, the new hybrid option allowed federal officials to gain cooperation from a heavily Republican state in implementation of the health care law (PL 111-148, PL 111-152) while still allowing Utah's exchange a degree of political independence perceived as greater than that in a "partnership" exchange. State officials had been insistent they did not want to have any part of enforcing mandates that employers provide health insurance and that individuals obtain it.

Utah Republican Gov. Gary R. Herbert said in a conference call with reporters that the state wanted something different than a state exchange, federal exchange or state–federal partnership. "We didn't feel like any of those models fit with what we believed to be a better way," said Herbert.

Other states will be permitted to take the same route though there's no indication yet any plan to do so. The Center for Consumer Information and Insurance Oversight's Gary Cohen said in a letter to Herbert that "similarly situated states would have the same opportunities as Utah." The center is part of the Centers for Medicare and Medicaid Services (CMS).

Herbert said that after months of lobbying, HHS had accepted Utah's proposal to run what he called a "bifurcated" exchange model. "We feel good about this fourth option," said Herbert. "We think other states might want to consider it."

Utah already has had its "Avenue H" marketplace up and running for four years and wanted to continue its operation. In the version proposed by Herbert to Health and Human Services Secretary Kathleen Sebelius, Utah would run Avenue H as a certified Small Business Health Options Program (SHOP) exchange, "servicing small business without a competing federal SHOP solution or interjection from the federal government," Herbert said in a May 9 letter to Sebelius.

Utah will maintain oversight over qualified health plans in the SHOP, including certification, recertification, decertification, and compliance, the governor said. The state would expect HHS to be responsible for operating the individual exchange, including precertification for Medicaid and Children's Health Insurance Program eligibility, and managing tax credits, Herbert said.

Small businesses with one to 50 employees can apply and enroll online in qualified health plans through Avenue H, Utah state officials said.

Herbert said state officials also felt strongly they did not want to share any data about residents from Avenue H with the federal "hub" that will process health insurance information.

That seemed acceptable to HHS. Cohen, the CCIIO director, in his letter said that detailed enrollment information for SHOPs would be optional under proposed amendments to federal regulations. "SHOPs would be required to report only aggregated data that contains no information that identifies an individual or an employer," Cohen said.

The entire arrangement proposed by Utah would also be covered in the amendment to final rules already issued on exchanges, he said.
Also, Utah under the amendment would run a SHOP-specific navigator program, with the navigators conducting consumer outreach and education, Cohen said.

In the individual exchange, the federal government would rely on the state's recommendations for certifying qualified health plans for the marketplace, but the federal government "would ultimately maintain its legal responsibility for ensuring that the recommended" plans meet all standards, he added.

Medicaid expansion

Meanwhile, in Kentucky, GOP Gov. Steven L. Beshear announced last week that an additional 308,000 state residents would be covered by health insurance with the state's agreement to expand its Medicaid program. Beshear called it the "single-most important decision in our lifetime for improving the health of Kentuckians," and said it will create 17,000 new jobs.

Beshear said the expansion to extend Medicaid eligibility to adults earning up to 138 percent of the federal poverty level came after months of internal analysis and outside studies conducted by the University of Louisville and Price Waterhouse Coopers. And the governor said he was tired of seeing his state at the bottom of national health rankings, and expanding Medicaid would bring big improvements in health care for the poor.

Beshear said he was moving ahead with the expansion as the state's executive, although lawmakers could conceivably reject his action.
In Michigan, Republican lawmakers in the House proposed a plan in which Medicaid eligibility would be expanded but adults would be given only a temporary, four-year safety net for coverage. The Republicans said they would include health savings accounts, incentives for healthy behavior and no-cost or low-cost preventive coverage. But the plan would need the approval of Republican Gov. Rick Snyder, Democrats and the Obama administration.

The Republicans said their plan would be preferable to a straight Medicaid expansion. "Instead of expanding an open-ended federal entitlement, we found a way to reform the system and cover more people with better coverage, all at a cost savings to Michigan taxpayers," said state Rep. Al Pscholka, a Republican, in a statement.

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