Health exchange regulations unveiled today made clear that consumers in all states will have access to the new system effective Jan. 1, 2014, whether it be through a federal exchange or a state exchange.
The final rule says states will have flexibility in transitioning to the new system, but said that federal officials have interpreted the Patient Protection and Affordable Care Act to say that the system will be launched as of Jan. 1, 2014.
“These policies give states the flexibility they need to design an exchange that works for them,” said HHS Secretary Kathleen Sebelius.
She said that these new marketplaces would offer Americans "one-stop shopping for health insurance," where insurers would compete for their business.
“More competition will drive down costs and exchanges will give individuals and small businesses the same purchasing power big businesses have today,” she said.
The final rule also empowers states to determine a role for agents and brokers, including the use of on-line brokers. It also removes processing of appeals from minimum exchange functions.
In comments included in the final rule, HHS also clarified that in writing the regulation, HHS tried to ensure that agents and brokers will play a significant role in providing advice to consumers who participate in the exchanges.
Regarding the Navigator program, which insurance agents and brokers opposed during drafting of the bill out of concern that only volunteers and not professionals be used to provide aid, the final rule said that a “Navigator must meet any licensing, certification or other standards prescribed by the State or Exchange, as appropriate, and may not have a conflict of interest during the term as Navigator.”
The final rule says that health insurance issuers are prohibited from serving as Navigators and that Navigators must not receive any compensation from any health insurance issuer in connection with the enrollment of any qualified individuals or qualified employees in a QHP.
The final rule also gives states the flexibility to run an exchange through an existing state agency or through a nonprofit entity established by the state.
States under the regulation will also have the authority to open its exchange to all insurers and health plans, or it can limit the number of health plans available to consumers through the exchange.
The rule will also allow larger employers to participate.
Under the final rule, in 2014 and 2015, each exchange will be open to companies with either 1 to 50 or 1 to 100 employees. As of 2016, all exchanges will be open to businesses with 1 to 100 workers. Starting in 2017, states can let in companies with more than 100 employees.
The final rule also provides that states must levy user fees to insurance companies, not consumers.
The rule also allows states to join up to establish regional exchanges,
For example, each state can structure its Exchange in its own way: as a non-profit entity established by the state, as an independent public agency, or as part of an existing state agency. In addition, a state can choose to operate its Exchange in partnership with other states through a regional Exchange or it can operate multiple Exchanges that cover distinct areas within the state. Any combination of these options can be approved. Exchanges that are run by independent agencies or non-profits must have governance principles, include consumer representation, and that ensure freedom from conflicts of interest and promote ethical and financial disclosure standards.
Exchanges will perform a variety of functions, including:
- Certifying health plans as “qualified health plans” to be offered in the Exchange
- Operating a website to facilitate comparisons among qualified health plans for consumers
- Operating a toll-free hotline for consumer support, providing grant funding to entities called “Navigators” for consumer assistance, and conducting outreach and education to consumers regarding Exchanges
- Determining eligibility of consumers for enrollment in qualified health plans and for insurance affordability programs (premium tax credits, Medicaid, CHIP and the Basic Health Plan)
- Facilitating enrollment of consumers in qualified health plans.
The rule was issued as an interim final rule, meaning that further comment - and likely further clarifications or changes, can still be made.
In releasing the rule, HHS officials said that states will “have substantial flexibility in determining how to perform these functions.
It says the final rule tries to simplify the process for states’ Blueprints for Exchanges to be approved and updated; empowers states to determine a role for agents and brokers – including the use of on-line brokers; and removes processing of appeals from minimum Exchange functions.
The final rule allows exchanges to work with health insurers on structuring qualified health plan choices that are in the best interest of their customers, HHS said.
“This could mean that the Exchange allows any health plan meeting the standards to participate or that the Exchange creates a competitive process for health plans to gain access to customers on the Exchange.
Regarding standards for health plans, the final rule allows exchanges, working with state insurance departments, to set specific standards to ensure that each qualified health plan gives consumers access to a variety of providers within a reasonable amount of time.
HHS officials also said that exchanges will also establish marketing standards to make sure that qualified health plans do not market plans in a way that discriminates against people with illnesses.
“It also gives exchanges flexibility to set the timeframes in which health issuers need to become accredited for their quality performance (if they are not already), allowing consumers access to new and innovative health plans through the exchange as they gain accreditation,” HHS officials said.
“And it amends the grace period policy to ensure that qualified health plans can provide seamless coverage without being left paying all the bills.
The rule prompted swift reaction from both the National Association of Insurance and Financial Advisors.
“NAIFA is pleased that the final HHS rule acknowledges the significant role agents will play in the state health care exchanges and has incorporated our suggestion allowing exchanges to display information about the valuable role of agents and brokers on their Web sites and in other public materials," said NAIFA President Robert Miller in reaction to the final rule. "We remain concerned that the regulations fail to adequately protect consumers by allowing well-intentioned Navigators in the exchange systems to forego errors and omissions coverage.”
The final rule prompted similar reaction from America's Health Insurance Plans.
“This rule recognizes that states are in the best position to establish exchanges because they have the experience and local-market knowledge needed to best meet consumers’ needs," said AHIP President and CEO Karen Ignagni said in a statement. She added that states need to be given flexibility to ensure that individuals, families, and small businesses have access to options that work best for them. She also stressed the need that the exchanges do not duplicate existing state regulations that might add complexity or increase costs for consumers.