American Health Benefit Exchanges

Updated  March 22, 2013 

The principal intent of the Patient Protection and Affordable Care Act (PPACA) was to enable low and moderate income individuals, and small employers to obtain affordable health coverage through state based exchanges. In 2014, individuals and small business will be able to purchase private health insurance through state-based exchanges. This document reflects information and guidance issued through statute, rule or communications from the federal government concerning the activities and options as they related to the development of a health benefit exchange.

The Latest News

Selected Health Regulations and Other Guidances

March 22, 2013— Federal agencies released a number of rules and guidances over the last two weeks regarding the implementation of various aspects of the ACA. NCSL has compiled this information in a summary chart of the recent rules and guidances since Jan. 2013 which includes the following:

• Ninety-Day Waiting Period Limitation and Limitation and Technical Amendments Amendments to Certain Health Coverage Requirements under the Affordable Care Act 3/19/2013
• Requirements for Long-Term Care (LTC) Facilities: Notice of Facility Closure 3/18/2013
• Letter to Issuers on Federally-Facilitated and State Partnership Exchanges, Guidance–released 3/01/2013
• Notice of Benefit and Payment Parameters for 2014, Interim Final Rule with Comment–released 3/01/2013
• Notice of Benefit and Payment Parameters for 2014, Final Rule–released 3/01/2013,
• Establishment of Multi-State Plans Final Rule–released 3/01/2013
• Establishment of Exchanges and Qualified Health Plans; Small Business Health Options Program, Notice of Proposed Rule Making (NPRM)–released 3/01/2013
• Health Insurance Provider Fees, NPRM–released 3/01/2013
• Health Insurance Market Rules; Rate Review, NPRM–released 2/27/2013
• Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation, Final Rule–released 2/25/2013
• Transparency Reports and Reporting of Physician Ownership or Investment Interests (“Sunshine Rule”)
• Coverage of Certain Prevention Services under the Affordable Care Act
• Health Insurance Premium Tax Credit
• Exchange Functions; Eligibility for Exemptions; Miscellaneous Minimum Essential Coverage Provisions

CMS Letter to Issuers on Federally-facilitated and State Partnership Exchanges

March 1, 2013—The Centers for Medicare and Medicaid Services (CMS) issued guidance addressing market reforms that go into effect in 2014, and federally facilitated and state-partnership exchanges (SPE). CMS is considering this document as the first Annual Letter to states and issuers in which they plan to communicate pertinent developments related to market-wide standards and provide operational updates to Qualified Health Plan (QHP) issuers. The policies addressed in this Annual Letter apply to the 2014 coverage year.
The 2014 Annual Letter provides insight as to how CMS will impact various state operations, especially in those states that have chosen not to participate either by operating their own exchange or through a partnership with a federally facilitated exchange (FFE). The first chapter of the document describes how:

1. CMS will interpret and apply health insurance market reforms that apply to all issuers of non-grandfathered individual and small group market plans, and describes the interaction with state law and transition of enrollees in state high risk pools,
2. CMS will evaluated plans for compliance with essential health benefit standards (EHBs) regarding,
   • benefit design,
   • non-discrimination in the provision of EHBs,
3. the drug count service, which covers at least the greater of:
   • one drug in every United States Pharmacopeial Convention (USP) Model category and class, or the same number of prescription drugs in each category and class as the EHB-benchmark plan, and
   • the prescription drug exception process,
4. CMS will evaluate unique plan designs to verify that it is unique for the purposes of the AV calculation,
5. CMS will be reviewing plans that exceed the deductible to determine if the plan reasonably meets the desired metal tiers, and
6. CMS will evaluate plans for compliance with the annual limitation on enrollee cost sharing.

The second chapter of the guidance describes CMS’s approach to reviewing plans against standards that apply only to QHPs seeking certification from an SPE or an FFE. It describes CMS’s planned approach to evaluating QHPs against a certification standard in a non-Partnership FFE. Chapter three provides an overview of the QHP certification process in FFEs and SPSs, describing the timing and type of data submission required by issuers, and the communication required during the process. It includes a section that addresses the QHP certification process in a plan management state partnership exchange.
The guidance also addresses the certification of stand-alone dental plans in an FFE or SPE, and a Consumer Operated and Oriented Plan (CO-OP) Programs regardless of the type of the exchange they are functioning within. It also provides some additional information on the U.S. Office of Personnel Management (OPM) Multi-State Plans. The closing chapters of the document describes: (1) the enrollment process, the enrollment transactions and accompanying Companion Guide for issuers; (2) how CMS will provide support to consumers and employers in FFEs and federally facilitated-SHOPs, including an SPE, through the operation of a Call Center and website, and; (2) additional information on how issuers participating in FFEs, including an SPE, and state-based exchange can contract with Indian health care providers.
 

Declaration Letter & Blueprint Submission Date Changes !

Nov. 9, 2012—In response to a letter to Secretary Sebelius from the Republican Governors’ Association (RGA) requesting additional time for states to determine how they wish to go forward regarding the establishment of health insurance exchanges, she extended the deadline for submitting health insurance exchange “Declaration Letters” for State-Based Exchanges (SBEs) from Nov. 16, 2012 to Dec. 14, 2012.  The deadline for submitting the exchange application (Blueprint) was moved from Nov. 16, 2012 to Dec. 14, 2012 last week.  Last week, the Secretary also extended the deadline for State Partnership Exchange Declaration Letters and Blueprints to Feb. 15, 2013.  The Secretary is required to certify plans for State-Based Exchange by Jan. 1, 2013.  The Secretary will certify State Partnership plans on a rolling basis as the blueprints are submitted until March 1, 2013.

HHS still intends to award Level I and Level 2 Exchange establishment grants until the end of 2014. The next application deadline for Level I and Level II grants is Nov. 15, 2012. This information was provided to the governors today in a letter from the secretary.
 

On Nov. 13, HHS issued an updated Blueprint reflecting the new deadlines.

Blueprint Submission Frequently Asked Questions

Exchange Options for States

* Coordinate with Medicaid and CHIP Services (CMCS) on decisions and protocols 
 

SECTION 1—Affordable Care Act Exchange Basics

Contents

• Qualified Health Plans
• Levels of Coverage
• Essential Health Benefits
• Premium Subsidies

Each state electing to establish an Exchange must adopt the federal standards in law and rule, and have in effect a state law or regulation that implements these standards. If a state elects not to establish an Exchange, the ACA requires the Department of Health and Human Services (HHS) to establish and operate one in that state. This also applies in the event that HHS determines on review that state efforts to establish an Exchange have not made sufficient progress to be fully operational by January 1, 2014. The ACA provides broad authority to the secretary to establish standards and regulations to implement the statutory requirements related to the Exchange.

On August 15, 2012, the Congressional Research Service (CRS) published a new report that outlines the required minimum functions of Exchanges, and explains how exchanges are expectd to be established and administered under the ACA entitled Health Insurance Exchanges Under the Patient Protection and Affordable Care Act (ACA).

Qualified Health Plans (QHPs)

Exchanges should be designed to provide qualified individuals and small businesses with access to an insurers’ QHPs. QHPs are described in the ACA as a type of health plan that is subject to a specified list of requirements related to marketing, choice of providers, plan networks, essential benefits, and other features. QHP issuers will have to be licensed by each state in order to be eligible to provide coverage within their boundaries, and offer at least one QHP at the silver or gold level of coverage.

Levels of Coverage

The ACA generally requires QHPs to provide coverage at one of the following levels: bronze, silver, gold, or platinum. Actuarial value (AV) is a measure of the percentage of expected health care costs a health plan will cover. Plans inside and outside the exchange in the individual and small group markets who offer non-grandfathered healthplans must offer plans that meet distinct levels  of coverage specified in the ACA matching up to one of these "metal tiers" (and premiums must be the same for QHPs inside and outside of the Exchange). Excluding dental-only plans, health insurance issuers must offer a silver plan and a gold plan in the Exchange. Each coverage level will be based on a specified share of the full actuarial value of the essential health benefits. A health insurance issuer that offers coverage in any of these four levels will be required to offer the same level of coverage in a plan specifically designed for individuals under age 21. 
 

The Internal Revenue Service (IRS) maintains a list of qualified health plans by state that was last updates Aug. 29, 2012.

Essential Health Benefits

HHS will specify the “essential health benefits (EHBs)” included in the “essential health benefits package” that QHPs will be required to cover (effective beginning in 2014) through rule.
 

In December 2011, HHS proposes that essential health benefits are defined using a benchmark approach. Section four of this document provides details of this guidance.

Premium Subsidies

Subsidies or premium credits will be available for qualified individuals if they:

To prevent federal dollars going to state benefit mandates, the health reform law requires states to defray the cost of benefits required by state law in excess of essential health benefits. However, as a transition in 2014 and 2015, some of the benchmark options will include health plans in the state’s small group market and state employee health benefit plans.

These benchmarks are generally regulated by the state, and would be subject to state mandates applicable to the small group market. These mandates would be included in the state essential health benefits package if the state elected one of the three largest small group plans in that state as its benchmark.

Debate Over Premium Tax Credit Eligibility
It has been argued that premium tax credits would only be available in state-based exchanges. The Congressional Research Service (CRS) published a memorandum analyzing whether premium tax credits available to certain individuals under the Internal Revenue Code would be available for individuals who participate in federally facilitated health insurance exchanges. In May of 2012, the Treasury Department through the Internal Revenue Service (IRS) published final regulations related to premium tax credit, defining an exchange to include both state and federally created exchanges. The report states that if these regulations were to be challenged as being outside the scope of the IRS's authority under the Administrative Procedure Act, which provide standards of judicial review, a determination of whatever the IRS exceeded its delegated authority in issuing the regulations may hinge on the degree of deference that a reviewing court accords the IRS's understanding of the scope of its authority under the ACA. CRS contends that the IRS Rule appears to be an exercise of the authority to the agency to implement the ACA which includes the authority to provide refundable tax credits for taxpayers enrolled in a health insurance exchange.   

Administration Determines Individuals Given Deferred Action for Childhood Arrivals (DACA) Status are Ineligible for Key Health Care Programs—CMS is requesting comments on an amended version of the interim final rule governing the pre-existing condition insurance plan (PCIP) program. The amendment was posted for public display Aug. 28, 2012 () and will be published in the Federal Register Aug. 30. The amendment addresses program eligibility in light of the June 15, 2012 announcement by the Department of Homeland Security (DHS) on the administration’s policy of Deferred Action for Childhood Arrivals (DACA). This policy considers providing temporary relief from removal on a case-by-case basis to any individual who is under the age of 31 and meets DHS’s guidelines, including that he or she came into the United States as a child and does not present a risk to national security or public safety. The Department of Health and Human Services (HHS) is amending the definition of “lawfully present” in the PCIP program as written in the interim final rule published July 1, 2010, so that the program interim final rule does not inadvertently expand the scope of the DACA process. Individuals whose cases are deferred under the DACA process also will not be eligible to enroll in coverage through the Affordable Insurance Exchanges, and will not receive coverage that could make them eligible for premium tax credits.

Medicaid and the Children’s Health Insurance Program (CHIP)
CMS also issued a State Health Official letter  Aug. 28, 2012 clarifying that these individuals will not be eligible for Medicaid and CHIP under the state option to provide Medicaid and CHIP eligibility to children and or pregnant women who are “lawfully present.” CMS is asking for comments on the determination to exclude these individuals from eligibility for these benefits. Comments will be accepted until Oct. 30, 2012.

 SECTION 2—National Association of Insurance Commissioners (NAIC) Resources

NAIC White Papers—Adopted July 27, 2012.

• Exchanges Plan Management Function: Accreditation and Quality White Paper—This paper is intended to be a resource to help the states understand the obligations of the exchange with regard to accreditation and quality. The paper also addresses situations where the states have options, including situations where options may exist but federal guidance on specifics is not yet available.

• NAIC Form Review White Paper—This paper discusses those requirements, while focusing in large part on considerations for state departments of insurance (DOIs) that plan to handle or participate in QHP certification for either an SBE or an FFE.

• Marketing and Consumer Information White Paper: Navigators, Agents and Brokers, Marketing and Summary of Benefits and Coverage—This paper is intended to explore the issues and options for implementation of certain provisions of the law and regulations issued to date. These provisions include the management of marketing; the summary of benefits and coverage required to accompany each policy beginning in September 2012; and how agents, brokers and Navigators will be regulated and managed in regard to the ACA. This paper will not address issues concerning consumer outreach in general, nor will it address the many facets of issues surrounding agents, brokers and Navigators that do not directly involve how state DOIs will manage these individuals. Those issues may be addressed at a later date when more information has been released by HHS.

• Plan Management Function: Network Adequacy White Paper—The purpose of this white paper is to provide a framework for the states to consider for ensuring compliance with the network adequacy requirements (both statutory and regulatory) for both inside an exchange for QHPs—whether a state is implementing an SBE, FFE or partnership federally facilitated exchange (PFFE)—and outside an exchange for managed care plans.

• Rate Review White Paper—The purpose of this white paper is to assist state policymakers with the implementation of the ACA provisions related to health insurance rating, rate filing and rate review. The focus of the paper is the rate review requirements related to the certification of QHPs in the Exchanges, but many of the ACA provisions impacting rate review apply to all plans in the individual and small group markets.

NAIC Exchange Model Act

The ACA directed that HHS work in cooperation with the NAIC and other stakeholder organizations to develop standards for the Exchanges. On Nov. 22, 2010, NAIC adopted a final version of the American Health Benefit Exchange Model Act for this purpose. The model act contains definitions and guidance for general requirements, and duties of the Exchanges. It does not include specific options for governance however. States will be responsible for implementing what will ultimately become the final set of standards along with the insurance market reforms established in the ACA by 2014. If the HHS determines before 2013 that a state will not have an operational Exchange model by 2014, or will not be able to implement the required set of standards, HHS is required to establish and operate an Exchange within the state. States operating an Exchange before 2010 will be presumed to meet the standards, unless they are found to be out of compliance.

NAIC Resources

• NAIC American Health Benefit Exchange Model Act (11/22/10) 
• NAIC American Health Benefit Exchange State Implementation Tracking Chart (10/10/11)

SECTION 3—Building an Exchange: State Guidance from HHS
 

Contents

• Principles and Priorities
• Exchange Functions and Responsibilities
• Guidance for Statutory Requirements
• Clarification and Policy Guidance
• Federal Support
• Guidance for Exchange and Medicaid Information Technology (IT) Systems
• Expectation of States
  • Exchange Certification in 2013--Request for comments regarding CMS on the data collection for health insurance markets.Submit by August 31.
  • Final Exchange Blueprint--A blueprint must be submitted to HHS by Dec. 16, 2012.
  • The Declaration Letter--Must be submitted by Nov. 16, 2012
  • Application Instructions
• Office of the National Coordinator: System Interoperability

Principles and Priorities

The overriding principles and priorities that will guide federal funding and technical support include:

• Establishing an SBE. A planning process must drive state actions, by legislation or other means to establish an Exchange entity that meets the ACA requirements. In the states that choose, now or at a later point in the process, not to establish an Exchange, HHS will work with the state to establish the Exchange.
• Promoting Efficiency. Exchanges should be structured to have enough flexibility to respond to the local market conditions and take action to facilitate competition among plans on price and quality.
• Avoiding Adverse Selection. A successful Exchange will avoid adverse selection. States have been given the flexibility to provide consistent regulation and out of the Exchange to prevent adverse selection and HHS plans to work with states to maximize that flexibility.
• Streamlined Access and Continuity of Care. State will be required to evaluate and determine eligibility for applicants in Medicaid, the Children's Health Insurance Program (CHIP), and other programs. In order to be successful IT systems must be upgrades as well as other systems to support this process.
• Public Outreach and Stakeholder Involvement. Exchanges will be responsible for an aggressive and multi-faceted outreach to inform the public of their services and coverage options.
• Public Accountability and Transparency. Exchanges will be required to provide public reports on their activities and additional reports using standardized data reporting on price, quality, benefits, consumer choice and other factors that will help evaluate performance. They will also be responsible for providing the public with information on the performance of plans, and an automated comparison functions to inform consumer choice.
• Financial Accountability. The Exchanges will seek to prevent fraud and abuse and streamline enrollment and minimize acquisition expenses, implement policies to prevent waste, fraud and abuse, and to promote financial integrity.

Exchange Functions and Responsibilities

Guidance for Statutory Requirements

The ACA imposes two basic functional requirements upon Exchanges:

1. minimum functions Exchanges must undertake directly or, in some cases, by contract; and
2. oversight responsibilities the Exchanges must exercise in certifying and monitoring the performance of QHPs.

Plans participating in the Exchanges must comply with state insurance laws, and federal requirements in the Public Health Service Act.

Clarification and Policy Guidance

States should consider the following issues as they establish an Exchange.

1. Organizational Form. States have the option to establish their Exchange as a governmental agency or nonprofit entity. Within the governmental agency category, the Exchange could be housed within an existing state office, or it could be an independent public authority. Regardless of its organizational form, the Exchange must be publicly accountable, transparent, and have technically competent leadership, with the capacity and authority to meet federal standards, including the discretion to determine whether health plans offered through the exchange are “in the interests of qualified individuals and qualified employers”. Exchanges also must have security procedures and privacy standards necessary to receive tax data and other information needed for enrollment.
2. Operating Model. States have options to operate their Exchange from an “active purchaser” model, in which the Exchange operates as large employers often do in using market leverage and the tools of managed competition to negotiate product offerings with insurers, to an “open marketplace” model, in which the Exchange operates as a clearinghouse that is open to all qualified insurers and relies on market forces to generate product offerings. States should provide comparison shopping tools that promote choice based on price and quality and enable consumers to narrow plan options based on their preferences.
3. Small Business (SHOP) Exchanges. Federal rules will provide a framework for SHOP Exchanges, including options for how employers can provide contributions toward employee coverage that meet standards for small business tax credits.
4. Risk Adjustment. Federal rules in 2011 will outline risk adjustment methods and require all health plans to report demographic, diagnostic, and prescription drug data. Further guidance addressing risk adjustment rules and formulas will be provided in subsequent regulations. As specified by the law, federal rules will apply risk adjustment consistently to all plans in the individual and small group markets, both inside and outside of Exchanges. Federal rules on reinsurance payments will apply to all plans in the individual market, and rules on risk corridors will apply to all qualified health plans in the individual and small group market, as specified in the law.
5. Performance Measures. Standardized public data reporting will be used to evaluate Exchange performance and assure transparency.
6. State Choices. Federal rules will clarify that the following policy areas, among others, are State decisions, although HHS may offer recommendations and technical assistance to States as they make these decisions: 
   — Whether to form the Exchange as a governmental agency or a non-profit entity,
   — Whether to form regional Exchanges or establish interstate coordination for certain functions,
   — Whether to elect the option under the ACA to use 50 employees as the cutoff for small group market plans until 2016, which would limit access to Exchange coverage to employer groups of 50 or less,
   — Whether to require additional benefits in the Exchange beyond the essential health benefits,
   — Whether to establish a competitive bidding process for plans,
   — Whether to extend some or all Exchange-specific regulations to the outside insurance market (beyond what is required in the ACA).
7. State Authority. The federal government will work with the Governor of the State as the chief executive officer unless authority to operate the Exchange has been delegated to a specific authority through state law.  

Federal Support

Forty-eight States and the District of Columbia were awarded their first Exchange planning grants in September 2010. Expenditures necessary in the establishment of an Exchange will be fully funded by HHS until 2015. After January 1, 2015, Exchanges must be financially self sustaining.

The Centers for Medicare and Medicaid Services (CMS)Federal Funding for Medicaid Eligibility Determinations and Enrollment Activities Proposed Rules
CMS released proposed rules November 3, 2010 addressing federal funding for Medicaid eligibility determination and enrollment systems that will be necessary in Exchange screening operations. 42 CFR Part 433 specifically states that Medicaid eligibility determinations are considered to be part of the Medicaid management information system (MMIS) which is potentially eligible to receive enhanced administrative funding from the Federal government. Federal financial participation (FFP) is available at 90 percent of expenditures for the design, development, or installation of mechanized claims processing and information retrieval systems.

The proposed rule would provide an enhanced FFP available at 90 percent for state expenditures for design, development, installation or enhancement of systems through calendar year 2015. An enhanced FFP will also be available at 75 percent for maintenance and operation of systems after 2015, and if a system meets standards prior to 2015 in recognition of state efforts to invest in improvements.

CMS is proposing that states must meet a certain set of standards and conditions to qualify for the enhanced FFP. These standards will build upon the work of the Medicaid Information Technology Architecture (MITA). [MITA framework documents ]. Comments on the proposed rule will be accepted for 60 days.
 

Guidance for Exchange and Medicaid Information Technology (IT) Systems

The CCIIO and the CMS have released guidance concerning the design, development, implementation, and operation of technology and systems projects as they relate to the establishment of Health Insurance Exchanges. The guidance  is the first in a series that establishes a framework for developing IT systems that are the subject of the “Early Innovators” grants released October 29, 2010. This guidance was organized to provide information in the following categories:

— Governance (within the federal government)
—Business Architecture (defines goals for exchanges, Medicaid, CHIP, and state subsidy programs) 
—Cost Allocation (describes the mechanisms and considerations for funding and coordinating between sources of funding or responsibilities shared among exchanges and Medicaid)
—Technical Architecture (identifies initial standards and high-level architectural guidance for use in implementing provisions of the ACA relating to exchanges, Medicaid, and CHIP)

States receiving funding under a Cooperative Agreement for Exchange development or under an Advanced Planning Document (APD) under Medicaid for eligibility system development are advised to pay close attention to this guidance. The guidance document should be considered a critical source of information for states and will be used by OCIIO and CMS in reviewing state applications for funding under exchange grants and federal match under Medicaid.

Expectation of States

Provisions in the ACA place much of the burden of structuring and implementing Health Benefit Exchanges on states. The exchanges must be fully operational by January 1, 2014, and they are expected to be self-sustaining by January 2015. The Congressional Budget Office (CBO) has estimated that approximately 30 million people would purchase their own coverage through the new insurance exchanges by 2019, and there would be roughly 15 million more enrollees in Medicaid and CHIP than is projected under current law. State legislatures will participate in determining what form their exchange will take, or if their state will establish an exchange. Legislators must also determine how an exchange will be governed, under an existing government agency, create a new government entity, or through contract with a nongovernmental nonprofit entity created by the state. Another critical piece of implementation in 2014 is the expansion of Medicaid to include all individuals with an income at or below 133 percent of the federal poverty level (FPL). The two systems must be interoperable to allow for eligibility determinations for Medicaid, CHIP, or premium tax credits. The ACA specifies that an exchange must do the following:

1. implement procedures to certify, recertify and decertify QHPs;
2. provide for the operation of a toll-free hotline;
3. maintain a website through which individuals can view standardized comparative information on plans;
4. assign a rating to each exchange plan based on criteria developed by the Secretary;
5. use a standardized format for presenting exchange plan options;
6. inform individuals of eligibility requirements for Medicaid, CHIP or any other state or local program and, if through the screening process the exchange determines they are eligible for one of those programs, enroll them;
7. provide for a calculator to determine the actual cost of coverage to individuals after taking into account any premium credits and cost-sharing subsidies;
8. certify whether individuals are exempt from the individual mandate excise tax and transfer the list of such individuals to the Treasury Secretary;
9. provide to employers the name of the employees who dropped the employer’s coverage and received premium tax credits because the employer’s plan was unaffordable or did not provide the required minimum actuarial value; and
10. to establish a Navigator program.

CMS Request for Comments
CMS  issued a request for public comments regarding the data that will be collected for a number of functions for the health insurance exchange markets that begin operation in 2014. The request for comments specifically addresses data collection in four areas: (1) collection of data that will support QHP certification and other exchange operations; (2) data that will support eligibility determinations and enrollment for employees in the SHOP; (3) data collected to support eligibility determinations and enrollment for small businesses in the SHOP, and; (4) data collected to support eligibility determinations for Insurance Affordability Programs, and enrollment through Affordable Insurance Exchanges, Medicaid and Children’s Health Insurance Program agencies. The request was published in the Federal Register July 6. Comments should be submitted by August 31.

Exchange Certification in 2013

Regulations implementing the ACA require HHS to approve or conditionally approve state-based exchanges no later than Jan. 1, 2013, for operation in 2014. To receive HHS approval or conditional approval for a state-based exchange or a state partnership exchange, as well as reinsurance and sick adjustment programs, a state must complete and submit an exchange blueprint that documents how its exchange meets or will meet all legal and operational requirements associated with the model it chooses to pursue. As part of its exchange blueprint a state will also demonstrate operational readiness to execute exchange activities. A declaration letter, and a blueprint must be submitted to HHS by Nov. 16, 2012.

(Nov. 9, 2012)—HHS Secretary Kathleen Sebilius extended the deadline for submission of the State-based Exchange Blueprint application from its original date of Nov. 16 to Dec. 14, 2012. The deadline for submission of the Declaration Letter for a State-based Exchange will remain Friday, Nov. 16, 2012. HHS will approve or conditionally approve a State-based Exchange for 2014 according to the statutory deadline of Jan. 1, 2013.

Declaration Letters and Blueprint Applications for states pursuing a State Partnership Exchange have also been extended to Feb. 15, 2013, but will be accepted earlier if a state wishes to do so. HHS still intends to award Level I and Level 2 Exchange establishment grants until the end of 2014. The next application deadline for Level I and Level II grants is Nov. 15, 2012. This information was provided to the governors today in a letter from the secretary.

On Nov. 13th, HHS issued an updated Blueprint reflecting the new deadlines.

Blueprint Submission Frequently Asked Questions

1. Functions that will be performed by exchanges run by the states, or state-based exchanges;
2. Functions performed by exchanges operated as partnerships between the federal government and states; and
3. Functions that states can perform in “federally facilitated” exchanges that HHS will set up in states that do not operate either of the other two types of exchanges.

In a FFE, states may pursue a state-partnership exchange, where a state may administer and operate exchange activities associated with plan management and/or consumer assistance. The blueprint also sets forth the application process for states seeking to enter into a Partnership Exchange. In addition, they released guidance describing how they will consult with stakeholders to implement an FFE, where necessary, how states can partner with HHS to implement selected functions in an FFE, and key policies organized by exchange function. NCSL is developing a web page to provide FFE information as it becomes available.

HHS General Guidance on Federally-facilitated Exchanges.

Frequently Asked Questions

The Declaration Letter

A state seeking to operate a state-based exchange or participate in a state partnership exchange in plan year 2014 will declare the type of exchange model it intends to pursue through an exchange declaration letter as part of its exchange blueprint. The HHS guidance requires the state letter to be signed by the state's governor, and include a designation of the individual (s) who will serve as the primary point of contact. If a declaration letter is not received by November 16, 2012, HHS will plan to implement a federally-facilitated exchange for the state.

Application Instructions

In addition to a declaration letter, a complete exchange blueprint requires submission of an exchange application which HHS provided in their guidance. The application should be used to document a state's completion or progress towards completion of all exchange requirements, either as a state-based exchange or state partnership exchange.
 

Application Instructions
 

HHS List of Conditionally Approved State Exchanges

Office of the National Coordinator: System Interoperability

Section 1561 of the ACA directed that interoperable and secure standards and protocols be developed to facilitate enrollment of individuals in federal and state health and human services programs. Initial recommendations were approved August 30, 2010 and they were adopted by HHS on September 17, 2010. The core of these recommendations is the belief that consumers will be best served by a health and human services eligibility and enrollment process that is transparent, accommodates a wide range of user skills, integrates private and public insurance options, connects consumers with multiple health and human services, and provides strong privacy and security protections. State Exchanges will be responsible for screening enrollees for eligibility in health and human services programs requiring a transfer of a great deal of data for verification and screening. Definitions of data elements must be in agreement to make the transfer possible and enrollment data collected for the exchanges must provide the elements necessary to make screening for health and human services programs complete.

States will need to fully evaluate their systems capabilities to determine whether upgrades are required or if systems need to be replaced in order to handle this massive amount of information exchange. Legislators must consider the cost of these system changes not only for the purchase of new technology, but also the personnel required to carry out these changes.

The Office of the National Coordinator (ONC) has developed new web tools onthe following web pages:

• Standards and Interoperability (S&I) Framework to aide healthcare stakeholders in establishing standards, specifications and other implementation guidance that facilitate effective healthcare information exchange, and
• CONNECT is an open source software solution that supports health information exchange – both locally and at the national level.

Health IT Supporting Resource

National Information Exchange Model (NIEM)

SECTION 4—Federally Facilitated Exchanges: Progress Report

In states that elect not to establish an exchange, the ACA requires the HHS to establish and operate one for the citizens of that state. This would also apply in the event HHS determines that despite state efforts to establish an exchange, the exchange has not made sufficient progress to become fully operational by January 1, 2014. HHS has begun laying the groundwork to establish what will become a federally facilitated exchange in 2014. Contracts to build and support the IT systems, state exchange implementation support, eligibility and enrollment strategy and planning, and the eligibility appeals process are under way.

Quality Software Services Inc. (QSSI) has been awarded the contract to build and support the operations of a federal data service hub that will provide data verification to support eligibility processes for all exchanges, Medicaid and the Children’s Health Insurance Program.

CGI Group Inc. will work with CCIIO to build and support the IT systems for the federal exchange. CGI will also design, develop and implement the CCIIO Rate and Benefits Information System (RBIS) that will collect rate and benefit data from health insurance providers to be used by consumers to review in a comparison format.

Booz Allen Hamilton was awarded three separate contracts by CMS to provide state exchange implementation support, eligibility and enrollment strategy and planning, and for the development of the exchange eligibility appeals process.

Health and Human Services (HHS) Guidance on the State Partnership Exchanges

Jan. 3, 2013—HHS issued new guidance to states on marketplaces that will be operated in partnership with the federal government. This guidance outlines the various options that states have to provide input and guidance, and take ownership over significant components of the operation of a FFE. The State Partnership Exchange (SPE) options provide states with a high level of participation in plan management and consumer assistance/ outreach either on a permanent basis or as they work toward a goal of running a State-based Exchange. With an SPE, states can continue to serve as the primary point of contact for issuers and consumers, and will work with HHS to establish an exchange.

The guidance outlines state functions, activities, and responsibilities for a "State Plan Management Partnership Exchange," and the "State Consumer Partnership Exchange." To operate an SPE in 2014 a state must complete the relevant portions of the Exchange Blueprint and be approved or conditionally approved by HHS for the functions and activities the state will perform. States may receive funding for the start-up year expenses for activities related to establishing an SPE. After grant funding set aside in the Affordable Care Act (ACA) for this purpose has been depleted, HHS anticipates that continued funding under a different funding vehicle will be available to support these activities. The new guidance also describes how HHS plans to integrate traditional state regulatory functions and activities into FFE operations in the absence of a partnership.

States have until Feb. 15, 2013 to submit a declaration and Blueprint Application for approval as a SPE for 2014 coverage year. States planning to transition to a State-based Exchange for plan year 2015 must submit a Declaration Letter and a Blueprint Application to HHS by Nov. 18, 2013.

NCSL submitted comments to the Department of Health and Human Services expressing state concerns regarding two sets of final and interim final health care rules implementing key provisions in the ACA. The comment periods ended on May 7 for rules governing the Medicaid program and eligibility changes under the ACA, and May 11 for rules guiding the establishment of exchanges and QHPs, and exchange standards for employers.

HHS Frequently Asked Questions on Exchanges, Market Reforms, and Medicaid

Dec. 10, 2012—In response to the many questions she’s received from governors, state legislators, and other state officials over the last few months, HHS Secretary Sebelius developed a list of frequently-asked-questions (FAQs) for states. The document was sent to governors and contains answers to questions pertaining to exchanges and market reforms; FFEs; Multi-state Plans; Basic Health Plans; consumer eligibility and enrollment; Medicaid; flexibility for states; and various other questions asked about health reform implementation. Some of the key questions legislators have been asking over the last several months are addressed in the document and include:

• State-Based Exchanges and State Partnership Exchanges
• Federally-Facilitated Exchange
• Market Issues
• Mulit-State Plans
• Bridge Plan
• Pre-Existing Condition Insurance Plan and OtherHigh-Risk Pools
• Basic Health Plan
• Consumer Outreach
• Consumer Eligibility and Enrollment
• Consumer Experience

SECTION 5—Essential Health Benefits

Contents

• Defining Essential Health Benefits (EHBs)
• EHB Small Group Guidance and CMS Request for Comments on Data Collection Requirements
• State Small Group Products Report
• EHB Coverage
• EHB Resources
• Answer for State Questions From CMS
• Building an EHB Package

On December 16, 2011, HHS issued a bulletin outlining proposed policies that will give states more flexibility and freedom to implement the ACA. The bulletin describes a proposal that HHS intends to pursue in rulemaking to define essential health benefits and requested comments by January 31, 2012. NCSL submitted comments in a memorandum to CMS Acting Administrator Marilyn Tavenner.

HHS Releases Proposed Rules

Defining Essential Health Benefits (EHBs)

The ACA ensures access to quality, affordable health insurance. To achieve this goal, the law ensures health plans offered in the individual and small group markets, both inside and outside of the  Exchanges, offer a comprehensive package of items and services, known as “essential health benefits.” EHBs must include items and services within at least the following ten categories:

1. Ambulatory patient services
2. Emergency services
3. Hospitalization
4. Maternity and newborn care
5. Mental health and substance use disorder services, including behavioral health treatment
6. Prescription drugs
7. Rehabilitative and habilitative services and devices
8. Laboratory services
9. Preventive and wellness services and chronic disease management, and
10. Pediatric services, including oral and vision care

Intended Approach: Comprehensive and Flexible

HHS proposes that EHBs should be defined by using a benchmark approach. Under this proposal states would have the flexibility to select a benchmark plan that reflects the scope of services offered by a “typical employer plan.” This approach would give states the flexibility to select a plan that would best meet individual needs.
 

Feb. 1, 2013–HHS issued a notice of proposed rulemaking (NPRM) proposing two key changes to the preventive services coverage rules in order to accommodate the religious objections to contraceptive coverage of eligible organizations. The ACA imposes certain coverage requirements on non-grandfathered plans and health insurance issuers to offer preventive health services, which include women’s preventive health services and contraceptive coverage, without beneficiary cost-sharing. The NPRM would amend the criteria for the religious employer exemption to ensure that an employer whose services extend beyond religious purposes, or hires people of different religious faiths will not be disqualified from exempt status.  The NPRM would also establish accommodations for health coverage established or maintained by eligible organizations, or arranged by eligible organizations that are religious institutions of higher education, with religious objections to contraceptive coverage. The NPRM would simplify the existing definition of a “religious employer” as it relates to contraceptive coverage, and would follow a section of the Internal Revenue Service (IRS) primarily including churches, other houses of worship, and their affiliated organizations. Comments on the NPRM will be accepted until April 5, 2013.

Notification from the Centers for Consumer Information and Insurance Oversight (CCIIO), http://cciio.cms.gov/resources/factsheets/womens-preven-02012013.html.

HHS Press Release, http://www.hhs.gov/news/press/2013pres/02/20130201a.html
 

If a state chooses not to select a benchmark, HHS intends to propose that the default benchmark will be the small group plan with the largest enrollment in the state.

The benefits and services included in the benchmark health insurance plan selected by a state would be the EHB package. Plans could modify coverage within a benefit category so long as they do not reduce the value of coverage.

To prevent federal dollars going to state benefit mandates, the health reform law required states to defray the cost of the benefit or benefits required by state law outside of the EHBs for individuals enrolled in a plan offered through an Exchange. However, as a transition in 2014 and 2015, some of the benchmark options will include health plans in the state’s small group market and state employee health benefit plans.

These benchmarks are generally regulated by the state and would be subject to state mandates applicable to the small group market. These mandates would be included in the state EHB package if the state elected one of the three largest small group plans in that state as its benchmark.

EHB Small Group Guidance and CMS Request for Comments on Data Collection Requirements

On July 2, 2012, CMS published guidance to facilitate states’ selection of the benchmark plans that will serve as the reference plans for the EHBs. The Affordable Care Act’s (ACA) requires plans both inside and outside of the Exchanges to offer a comprehensive package of items and services, known as “essential health benefits.” The new document updates the publication released Jan. 25, 2012 on the three largest small group products offered in each state, and complements the bulletin on EHBs released on Dec. 16, 2011.

The HHS has proposed that EHBs be defined by a benchmark plan selected by each state. The selected benchmark plan would serve as a reference plan, reflecting both the scope of services and any limits offered by a “typical employer plan” in that state. States must select their benchmark plan on or before Sept. 30, 2012. If a state fails to make that selection, HHS will use the largest small group plan in the state as the default benchmark plan.

State Small Group Products Report

On January 25, 2012, the Center for Consumer Information and Insurance Oversight (CCIIO) published a report of the small group products with the three largest enrollments by state. States that are creating an exchange will be allowed to select an existing health plan licensed in their state to serve as a “benchmark” for the items and services that will form the essential health benefits package in their exchange. States may choose a benchmark from among the following types of health insurance plans:

1. The largest plan by enrollment in any of the three largest small group insurance products in the state’s small group market,
2. Any of the largest three state employee health benefit plans by enrollment,
3. Any of the largest three national FEHBP plan options by enrollment, or the largest insured commercial non-Medicaid Health Maintenance Organization (HMO) operating in the state.

HHS collected the data included in this report from issuers of individual and small group major medical insurance on their products based on March 31, 2012 enrollment data. The guidance also includes information on the largest three nationally available Federal Employee Health Benefit Program (FEHBP) plans, and the single largest Federal Employees Dental and Vision Insurance Program (FEDVIP) dental and vision plans respectively.

Essential Health Benefits: List of the Largest Three Small Group Products by State

The information on this report reflects data collected by HealthCare.gov based on June 30, 2011 enrollment. This report has been provided for informational purposes only and is not to be considered as an endorsement by HHS. For clarification purposes, HHS is using the term “product” when they’re referring to a specific “plan” such as Blue Cross Blue Shield (BCBS) Standard Option, and the term “issuer” when they refer to the “carrier” such as BCBS. The report also contains the links to the three largest national federal employee health benefit plan (FEHBP) by enrollment.

EHB Coverage

EHBs must include coverage of services and items in all 10 statutory categories. Based on HHS research, it is believed that these benchmarks will cover most of the EHBs outlined by the ACA.
These categories include preventive care, emergency services, maternity care, hospital and physician services, and prescription drugs. If a state selects a benchmark plan that does not cover all 10 categories of care, the state will have the option to examine other insurance plans, including the Federal Employee Health Benefits Plan, to determine the type of benefits that must be included in the EHB package.

Allowing Plans Flexibility to Innovate and Consumers Greater Choice

To meet the EHB coverage standard, HHS intends to require that a health plan offer benefits that are “substantially equal” to the benchmark plan selected by the state, and modified as necessary to reflect the 10 coverage categories. Health plans also would have flexibility to adjust benefits, including both the specific services covered and any quantitative limits, provided they continue to offer coverage for all 10 statutory EHB categories and the coverage has the same value. Permitting flexibility will provide greater choice to consumers, promoting plan innovation through coverage and design options, while ensuring that plans providing EHBs offer a certain level of benefits.

Updating the Approach

The department intends to propose that benchmarks will be updated in the future, and that state mandates outside the definition of EHBs may not be included in future years. The Bulletin also notes that updating the benchmark will allow benefits to reflect the most up-to-date medical and market practices.

How We Got Here: The Process?

While the law calls on the department to provide details regarding EHBs, this has been a team effort. As required by the ACA, in April, the Department of Labor (DOL) provided a report to HHS on employer-sponsored health insurance coverage. This report (PDF - 362 KB) detailed the benefits typically covered by employers’ detailed the benefits typically covered by employers. At the request of HHS, the Institute of Medicine (IOM) provided its recommendations on a process for defining and updating the benefits that should be included in the EHB package.

It is important to note that the ACA distinguishes between a health plan’s covered services, and the plan’s “cost-sharing features”, such as deductibles, copayments, and coinsurance. The cost-sharing features will be addressed in separate rules and will determine the actuarial value of the plan, expressed as a “metal level” as specified in statute: bronze at 60 percent actuarial value, silver at 70 percent actuarial value, gold at 80 percent actuarial value, and platinum at 90 percent actuarial value.

Although the HHS release only represents an intended regulatory approach, public input on this paper is encouraged—comments can be sent on essential health benefits, are due by January 31, 2012, and can be sent to: EssentialHealthBenefits@cms.hhs.gov . 
 

Answers for State Questions from CMS

On November 29, 2011 CMS published guidance in response to several of the reemerging state questions that focus on the establishment of a health benefit exchange under the ACA. Here are some of the highlights:
 

1. Costs to States
   —Grant funding will be awarded to States through the end of 2014 and are eligible for activities to establish an Exchange, to build State functions necessary to establish a Partnership Exchange with the Federal government, or to support State activities to build interfaces with a Federally-facilitated exchange.
   —State Exchanges that don’t become fully certified on January 1, 2013 can continue to qualify for and receive a grant award, subject to the Funding Opportunity Announcement (FOA) eligibility criteria.
   — State Medicaid and CHIP programs will not have to contribute to administrative expenses for eligibility determinations under a Federally-facilitated exchange, but will have to transfer information and cases to the exchange. Costs for maintaining interfaces will remain much as they are currently.
2. Basic Health Program Funding
   — Planning grants may be used to support research and explore coverage options including the option for a Basic Health Program. 
   — HHS will rely on the State for advice and recommendations regarding provider network adequacy standards under the Exchange.
   — HHS plans to make efforts to harmonize Exchange policy with the existing State programs and Laws wherever possible.
3. Federally-facilitated Exchange and State Department of Insurance Responsibilities
   — Qualified Health Plans (QHPs) offered through a Federally-facilitated exchange will have to meet State licensure and solvency requirements.
   — States will maintain responsibility for health plans licensed and offered in the State.
   — HHS will rely on the State for advice and recommendations regarding provider network adequacy standards under the Exchange.
   — HHS plans to make efforts to harmonize Exchange policy with the existing State programs and Laws wherever possible.
4. Eligibility under a Federally-facilitated Exchange or a State-based Exchange
   — Federally-facilitated Exchange
   — Under a Federally-facilitated exchange States may retain authority over final Medicaid eligibility determinations.
   — If a State does not choose to retain Medicaid and CHIP eligibility determinations in the Federally-facilitated exchange the exchange will make these determinations using State eligibility rules and standards.
   — State-based Exchanges
   — If a State-based exchange does not wish to operate all the eligibility functions the guidance offers some new options including allowing a State-based Exchange to use Federally-managed services to make determinations for advanced payments of premium tax credits, cost-sharing reductions and exemptions from the individual responsibility requirement.
5. Quality Certification Requirements
   — HHS recommends that States consider using quality information to certify QHPs, including when to require issuer accreditation and how to assess the quality of plans seeking to participate in Exchanges.
   — States will also need to determine what quality information will be made available to consumers.
6. Advance Payments of the Premium Tax Credit in the Federally-facilitated Exchange
   —States have been questioning whether individuals who are enrolled in coverage through a Federally-facilitated Exchange will have access to premium assistance programs. The administration makes clear through this guidance that individuals enrolled in coverage through a Federally-facilitated Exchange will be eligible for tax credits, including advance payments.

These and several other issues are discussed in more detail in the guidance document available at http://cciio.cms.gov/resources/files/Files2/11282011/exchange_q_and_a.pdf.pdf .

Building an Essential Benefits Package

July 2, 2012— the CMS published guidance to facilitate states’ selection of the benchmark plans that will serve as the reference plans for the EHBs. The ACA requires plans both inside and outside of the Exchanges to offer a comprehensive package of items and services, known as “essential health benefits.” The new document updates the publication released Jan. 25, 2012 on the three largest small group products offered in each state, and complements the bulletin on EHBs released on Dec. 16, 2011.

The HHS has proposed that EHBs be defined by a benchmark plan selected by each state. The selected benchmark plan would serve as a reference plan, reflecting both the scope of services and any limits offered by a “typical employer plan” in that state. States must select their benchmark plan on or before Sept. 30, 2012. If a state fails to make that selection, HHS will use the largest small group plan in the state as the default benchmark plan.

HHS collected the data included in this report from issuers of individual and small group major medical insurance on their products based on March 31, 2012 enrollment data. The guidance also includes information on the largest three nationally available Federal Employee Health Benefit Program (FEHBP) plans, and the single largest Federal Employees Dental and Vision Insurance Program (FEDVIP) dental and vision plans respectively.

Essential Health Benefits: List of the Largest Three Small Group Products by State

The ACA directed the HHS to work in cooperation with the Institutes of Medicine (IOM) and the Department of Labor to develop a core set of benefits, or Essential benefits package, that must be offered by the plans in order to be considered as a "qualified health plan" effective beginning in 2014. If a state exchange requires certain health benefits that exceed the essential benefits package established by HHS, they will be responsible for defraying the cost of additional benefits in relation to premium and cost-sharing assistance for enrollees with incomes up to 400 percent of the FPL.

IOM Recommendations in Determining the Essential Benefits Package

The IOM at the request of HHS Secretary Sebelius, conducting a study to make recommendations on the criteria and methods for determining and updating the “essential health benefits” packages offered through QHPs participating in state exchanges. On October 7, 2011, the IOM released their recommendations as criteria and methods to be used by HHS in determining and updating the essential health benefits packages offered through qualified health plans. The ACA outlines the general categories of coverage that QHPs are required to provide, but details of the essential health benefits will ultimately be provided through rule. These general categories include:

1. ambulatory patient services;
2. emergency services;
3. hospitalization;
4. maternity and newborn care;
5. mental health and substance use disorder services including behavioral health treatment;
6. prescription drugs;
7. rehabilitative and habilitative services and devices;
8. laboratory services;
9. preventive and wellness services and chronic disease management; and
10. Pediatric services including oral and vision care.

Highlights of the IOM Report

• Defining the Initial EHB Package
  In considering how to determine the initial EHB package, the committee was struck by two compelling facts: (1) if the purpose of the ACA was to provide access to health insurance coverage, that coverage had to be affordable; and (2) the more expansive the benefit package was, the more it was likely to cost and the less affordable it was would be. How to balance the competing goals of comprehensive coverage and affordability was key. They chose to first focus on defining the EHB package as reflecting the scope and design of the average small employer package today, modified to include the 10 required categories. Once developed the model would be assessed by criteria and a defined cost target recommended. Four policy domains—economics, ethics, population-based health, and evidence-based practice—will guide the secretary in determining the EHB package in general. From these four policy foundations IOM has recommended criteria to guide: (1) the aggregate EHB package; (2) specific EHB inclusions and exclusions; and (3) methods for defining and updating the EHB.
  
  Recognizing that cost is a predominate factor in the success of the exchanges, IOM determined that the cost of the initial EHB package should be compared to a premium target defined as what a small employer would have paid on average in 2014. Modification of the package should be made to meet the estimated premium in the future. IOM also recommended that states operating their own exchanges be able to design a variation of the EHB model if they meet certain standards. The report also recommends creating a framework and infrastructure to collect and analyze data concerning the implementation of the initial EHB; a National Benefits Advisory Council to act in an advisory capacity with the secretary concerning updates of the EHB package. Additional recommendations would encourage the use of evidence-based initiatives, and the development of a cost containment strategy to reduce the growth of health care spending.


• Who is Covered by the Essential Health Benefits?
  The EHB will determine the minimum benefit packages offered to individuals and small employers purchasing insurance through the exchange, certain Medicaid expansion plans or benchmark and benchmark equivalent plans, and state basic insurance plans. IOM estimates that 68 million people will obtain insurance that must meet the EHB requirement.


• How Did the Report Address State Mandates?
  The report emphasizes that a state mandated benefits must be considered when thinking about what is an essential benefit. The term “state-mandated health benefits” (also referred to simply as “mandates,” “state mandates,” or “mandated benefit laws”) refers to state laws that require health insurance contracts to cover specific treatments or services or medically necessary care provided by a specific type of provider. Prior to the passage of ACA, states were the primary regulators of the content of health insurance policies. The committee was asked to consider what role, if any, existing state mandates should play in defining essential health benefits. ACA obligates each state to subsidize the benefits it mandates above and beyond EHB requirements.


• Applicability of State Mandates
  Although all states have some mandates in place, they differ dramatically with respect to the total number in each state. Estimates of the number of existing mandates vary significantly, in part because they vary in terms of what they define as a “mandate” and also whether they count multiple laws requiring the same type of coverage in different market segments as distinct mandates. The Council for Affordable Health Insurance found an average of 42 mandates per state, with a high of 69 in Rhode Island and a low of 13 in Idaho (Bunce and Wieske, 2010).
  
  State mandates do not apply to every type of health insurance arrangement. Importantly, they do not apply to any employer-provided health plans that are self-insured by the employer. Given the high rates of self-insurance among larger employers, the result is that more than half (59 percent) of the individuals with employer-provided coverage are covered by plans that are not subject to state regulation, including state mandates (KFF and HRET, 2010) and the proportion is higher among very large firms (MacDonald, 2009). Whether mandates apply to state Medicaid programs, or other state programs designed to provide coverage to low-income individuals, depends on the particular statute enacting the mandate. Legislatures may include such programs within a mandate, but often they do not (Hyman, 2000). Typically the greatest impact of mandates is on privately financed health insurance sold through the individual and small group markets within a state. Additionally, the FEHBP national fee-for-service plans do not have to incorporate state mandates, but can pick up state mandates as a negotiated benefit.


• Options Considered by the Committee
  The committee considered several different options, discussed below.
  1. Incorporate all existing state mandates into the definition of “essential health benefits” that apply to a particular state.
  2. Incorporate mandates that exist in a majority or supermajority of states into the definition of essential health benefits that applies in all states.
  3. Do not explicitly incorporate existing state mandates into the essential health benefits framework, but rather subject coverage for all types of treatments and services to the same framework, principles, criteria, and methods used to determine essential health benefits generally.


• Conclusion
  Because state mandates are not typically subjected to a rigorous evidence-based review or cost analysis, cornerstones of the committee’s criteria, the committee does not believe that state-mandated benefits should receive any special treatment in the definition of the EHB and should be subject to the same evaluative method (see Recommendation 1 in Chapter 5). This interpretation is consistent with the language in ACA regarding state mandates; that is, Congress did not require their inclusion

SECTION 6—Regulation and Plan Management of Qualified Health Plans (QHPs)

Accreditation of QHPs

The ACA directs that a health plan to "be accredited with respect to local performance on clinical quality measures***by any entity recognized by the secretary for the accreditation of health insurance issuers or plans (so long as any such entity has transparent and rigorous methodological and scoring criteria)." In requiring that QHPs be accreditate, the ACA is ensuring that quality strategies are implemented in an effort to improve the quality of health care.  Accreditation is a tool for regulators and purchasers that does not serve as a replacement for regulatory oversight, but is a complement to state review. Accreditation is the responsibility of a QHP issuer. If the issuer does not become accredited within the specific time frame and remain accredited, the QHP will not be certified.

HHS proposed rules governing the process June 5, 2012. To implement the accreditation provisions from the ACA relating to QHPs, HHS is proposing the first of a two-phased approach for recognizing accrediting entities. In phase-two, HHS plans to recognition process including an application procedurem, standards for recognition , a criteria-based review of applications, public participation, and public notice of recognition. On an interim basis, HHS is recognizing those entities that best meet the requirements from the ACA. At this time only two entities that accredit health plans meet or plan to meet the statutory requirements in 2012. HHS has recognized NCSL Foundation members the National Committee for Quality Assurance (NCQA) and URAC  for the purpose of accrediting QHPs. Exchanges may include the accreditation process as early as 2013 certification, for the 2014 plan year.

NCQA and URAC have published white papers for policy makers addressing accreditation and the exchanges.

Additional Materials on Exchange Plan Management Functions

The National Association of Insurance Commissioners (NAIC) has drafted several white papers addressing key components in the plan management process. The NAIC Health Insurance and Managed Care (B) Committee adopted draft versions of the documents June 27, 2012 which include the:

1. Network Adequacy White Paper,
2. Form Review White Paper,
3. Rate Review White Paper,
4. Accreditation & Quality White Paper, and
5. the Marketing & Consumer Information White Paper.

 SECTION 7—Key Dates in the Implementation of the American Health Benefit Exchange

 Key Dates in the Implementation of the American Health Benefit Exchanges

Additional Information

Federal Rules and Guidance for the Establishment of and Exchange and Qualified Health Plans

 NCSL Comments on Key Affordable Care Act (ACA) Regulations

NCSL submitted comments Dec. 26 to the Department of Health and Human Services (HHS) on a proposed rule (NPRM) detailing the Affordable Care Act (ACA) standards for coverage of essential health benefits (EHBs), actuarial value, and accreditation of qualified health plans (QHPs). The NPRM also proposes a timeline within which QHPs must be accredited to participate in a Federally-facilitated Exchange (FFE). HHS published the  proposed rules Nov. 26.

Comments Regarding 45 CFR Parts 147, 155, and 156, Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation; Proposed Rule.

NCSL also submitted comments on Friday, Jan. 4 to the Office of Personnel Management (OPM) regarding a proposed rule to implement the Multi-state Plan Program (MSPP). The ACA created the MSPP to foster competition among plans competing in the individual and small group health insurance markets in the Affordable Insurance Exchanges (Exchanges) on the basis of price, quality, and benefit delivery. The ACA directs that OPM contract with private health insurance issuers to offer at least two multi-State plans (MSPs) in each of the Exchanges in the 50 States and the District of Columbia.

Comments Regarding 45 CFR Part 800, Establishment of the Multi-State Plan Program for the Affordable Insurance Exchanges

42 CFR Parts 431, 435, and 457—Medicaid Program; Eligibility Changes under the ACA

NCSL Comments

42 CFR Parts 155, 156, and 157—Patient Protection and Affordable Care Act; Establishment of Exchanges and Qualified Health Plans; Exchange Standards for Employers

The ACA provides states with an opportunity to establish an exchange through which individuals can purchase affordbale insurance coverage.The exchanges will provide competitive marketplaces for individuals and small employers to directly compare available private health insurance options on the basis of price, quality, and other factors. The exchanges will become operational by January 1, 2014, and will help enhance competition in the health insurance market, improve choice of affordable health insurance, and give small business the same purchasing clout as large business. The final rule incorporates two proposed rules, the July 15, 2011 rule titled “Establishment of Exchanges and Qualified Health Plans” (Exchange establishment proposed rule), and the August 17, 2011 rule titled “Exchange Functions in the Individual Market: Eligibility Determinations and Exchange Standards for Employers” (Exchange eligibility proposed rule). While originally published as separate rulemaking, the provisions contained in these proposed rules are integrally linked, and together encompass the key functions of Exchanges related to eligibility, enrollment, and plan participation and management. In addition, several sections in this final rule are being issued as interim final rules and HHS is are soliciting comment on those sections.

The final rule:

(1) Sets forth the minimum federal standards that states must meet if they elect to establish and operate an Exchange, including the standards related to individual and employer eligibility for and enrollment in the Exchange and insurance affordability programs;
(2) Outlines minimum standards that health insurance issuers must meet to participate in an Exchange and offer QHPs; and
(3) Provides basic standards that employers must meet to participate in the SHOP.

NCSL comments submitted May 11continue to advocate for state flexibility in structuring exchange governing boards and urges HHS to give that same flexibility to states in forming their navigator programs. It raises concern over the issue of deeming multi-state plans as certified by the states and exempts them from complyance with state laws. Interim final rule comments address agents and brokers, the eligibility process, and verification of eligibility process.

Federal Government Information and Resources

The Department of Health and Human Services

• CCIIO (Affordable Insurance Exchange site), http://cciio.cms.gov/programs/exchanges/index.html —CCIIO oversees the implementation of the ACA provisions related to private health insurance inclusive of the American Health Benefit Exchanges.
• HealthCare.gov, http://www.healthcare.gov / — Information for consumers.
• CMS.gov— Affordable Care Act in Action at CMS
• NCSL Web Page—Federal Guidance and Regulation of State Health Benefit Exchanges, http://www.ncsl.org/issues-research/health/federal-guidance-and-regulatory-actions.aspx
• Congressional Research Service (CRS) Reports
  • Health Insurance Exchanges Under the Patient Protection and Affordable Care Act (ACA), Aug. 15, 2012
  • CRS Distribution Memorandum—Legal Analysis of Availability of Premium Tax Credits in State and Federally Created Exchanges Pursuant to the ACA, July 23, 2012

• ACA Regulations and Guidance

• Internal Revenue Service (IRS)—ACA Tax Provisions
• IRS—List of QHPs by State