Building the Health Insurance Marketplace

Updated  June 17, 2013 

A central focus of the Patient Protection and Affordable Care Act (ACA) was to enable low and moderate income individuals, and small employers to obtain affordable health coverage through newly designed state based health insurance marketplaces. Starting in 2014, individuals and small business will be able to purchase private health insurance through a variety of insurance Marketplace models throughout the United States. This document reflects information and guidance issued through statute, rule or communications from the federal government concerning the activities and options as they relate to the development of health insurance marketplaces.

The Latest News

Selected Health Regulations and Other Guidances

CMS Issues Final Rules Governing Establishment of Exchanges and Qualified Health Plans (QHPs); and
Small Business Health Options Program (SHOPS)

Navigator Funding Opportunity and Standards Released

On April 5, 2013, the Center for Consumer Information and Insurance Oversight (CCIIO) published a funding opportunity announcement for Navigators in an FFM and SPM, and a proposed rules on Navigator standards. Up to $54 million was made available for cooperative agreements to fund Navigator programs that will assist consumers in understanding their coverage options as open enrollment for the new Marketplaces begin in the fall of 2013. Information regarding the grant funding is available online. Applications were due June 7. CCIIO anticipates awarding funds by Aug. 15. A fact sheet on the funding opportunity is available online.

Proposed Navigator Standards
The proposed rule outlining Navigator program standards was published in April along with a fact sheet entitled "Helping Consumers Apply & Enroll Through the Marketplace" produced by CCIIO. The proposed ruled create conflict-of-interest, training and certification, and meaningful access standards applicable to Navigators and non-Navigator assistance personnel who are working within the framework of a Federally-facilitated Marketplace (FFMs), and a State-Partnership Marketplace (SPM), and to non-Navigator assistance personnel working in a State-based Marketplace that are funded through Federal Exchange Establishment grants. The rule would prohibit any licensing, certification, or other standards from preventing or restricting the application of the applicable ACA provisions. It also clearly defines the type of entity that is ineligible to become a Navigator and clarifies that the same ineligibility criteria that apply to Navigators will also apply to non-Navigator assistance personnel. 

Navigator duties as outline in the proposed rule would include:

1. Conducting public education activities to raise awareness of the availability of QHPs;
2. Distributing fair and impartial information concerning enrollment in qualified health plans, and the availability of premium tax credits and cost-sharing reductions;
3. Facilitating enrollment in QHPs;
4. Providing referrals to any applicable office of health insurance consumer assistance or health insurance ombudsman, or any other appropriate state agency or agencies, for any enrollee with a grievance, complaint, or question regarding their health plan, coverage, or a determination under such plan or coverage; and
5. Providing information in a manner that is culturally and linguistically appropriate to the needs of the population being served by the Marketplace.

Marketplace Consumer Applications

Guidance for Issuers in the Federally-Facilitated and State-Federal Marketplace

Every state will begin open enrollment for the new Health Insurance Marketplaces beginning in October of 2013.  Federally-Facilitated Marketplaces (FFMs) will operate in states that have chosen not to build their own Marketplace. In the absence of a State -Federal partnership arrangement, the FFM will support all operational functions of the new Marketplace. CCIIO issued operational guidance April 5, 2013 for issuers wishing to offer a Qualified Health Plan (QHP) in FFMs or a State-Partnership Marketplace (SPM). The policies in the guidance apply to the 2014 coverage year and beyond.

Marketplace Options for States

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

SECTION 1—Health Insurance Marketplace Basics

Contents

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

Each state electing to establish a new health insurance Marketplace 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 a Marketplace, 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 a Marketplace 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 Marketplace.

On August 15, 2012, the Congressional Research Service (CRS) published a new report that outlines the required minimum functions of the Marketplace, and explains how Marketplaces are expected 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)

Marketplaces 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 health plans 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 Marketplace). Excluding dental-only plans, health insurance issuers must offer a silver plan and a gold plan in the Marketplace. 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 May 1, 2013.

Essential Health Benefits

The ACA does not explicitly list the benefits that comprise “essential health benefits (EHBs),”  but identifies 10 broad benefit categories which must be included, at a minimum. 
 

HHS proposed that EHBs be defined using a benchmark approach for at least 2014 and 2015. States were asked to select a benchmark plan as a model for plans in the Marketplace.  These benchmarks

Premium Subsidies

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

Debate Over Premium Tax Credit Eligibility
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 Marketplaces. 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 Marketplaces. 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 Marketplace.   

 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 Marketplace 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 SBM or an FFM.

• 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 SBM, FFM or partnership Marketplace—and outside an Marketplace 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 Marketplace, 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 Marketplace. 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 Marketplace. 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 Marketplace model by 2014, or will not be able to implement the required set of standards, HHS is required to establish and operate a Marketplace within the state. States operating an Marketplace 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 a Marketplace: State Guidance from HHS
 

Contents

• Exchange Functions and Responsibilities
• 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

Exchange Functions and Responsibilities

Federal Support

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

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 Marketplaces. 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 Marketplaces, 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 Marketplaces and Medicaid)
—Technical Architecture (identifies initial standards and high-level architectural guidance for use in implementing provisions of the ACA relating to Marketplacesexchanges, Medicaid, and CHIP)

States receiving funding under a Cooperative Agreement for Marketplace 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 Insurance Marketplaces on states. The Marketplaces 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 Marketplaces 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 a Marketplace. 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 a Marketplace 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 Marketplace plan based on criteria developed by the Secretary;
5. use a standardized format for presenting Marketplace 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.

Systems Interoperability to Facilitate Program Enrollment

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 Marketplaces 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 on the 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 a Marketplace, 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 a Marketplace, the Marketplace has not made sufficient progress to become fully operational by January 1, 2014. HHS has begun laying the groundwork to establish what will become an FFM  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

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

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:
4. 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
5. the prescription drug exception process,
6. CMS will evaluate unique plan designs to verify that it is unique for the purposes of the AV calculation,
7. CMS will be reviewing plans that exceed the deductible to determine if the plan reasonably meets the desired metal tiers, and
8. 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 SPM or an FFM.  
The guidance also addresses the certification of stand-alone dental plans in an FFM or SPM, and a Consumer Operated and Oriented Plan (CO-OP) Programs regardless of the type of the affiliated Marketplace, and additional information on the U.S. Office of Personnel Management (OPM) Multi-State Plans.

HHS also released FAQs specific to the issues as they apply to the territories, .

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), l.

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 a Marketplace , to build State functions necessary to establish a Partnership Marketplace with the Federal government, or to support State activities to build interfaces with an FFM.
   —State Marketplace 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 FFM, 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 Marketplace.
   — HHS plans to make efforts to harmonize Marketplace 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 FFM 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 Marketplace.
   — HHS plans to make efforts to harmonize Marketplace policy with the existing State programs and Laws wherever possible.
4. Eligibility under a FFM or a SBE
   — Federally-facilitated Marketplace (FFM)
   — Under a FFM States may retain authority over final Medicaid eligibility determinations.
   — If a State does not choose to retain Medicaid and CHIP eligibility determinations in the FFM the Marketplace will make these determinations using State eligibility rules and standards.
   — State-based Marketplaces (SBM)
   — If a SBM does not wish to operate all the eligibility functions the guidance offers some new options including allowing an SBM 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 .
   — 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 FFM
   —States have been questioning whether individuals who are enrolled in coverage through a FFM will have access to premium assistance programs. The administration makes clear through this guidance that individuals enrolled in coverage through a FFM 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 Marketplace 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 Marketplace, 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. Marketplaces 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 Marketplaces.

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—Consumer Support

• Maintain expertise in eligibility, enrollment, and program specifications and conduct public education activities,
• Distribute fair, accurate, and impartial information about enrollment in Qualified Health Plans (QHP) and other, health programs such as Medicaid and CHIP,
• Facilitate selection of a QHP,
• Refer consumers to Consumer Assistance Programs (CAPs) or other ombudsmen programs,
• Provide information in a manner that is culturally and linguistically appropriate and accessible for people with disabilities,

The ACA prohibits Marketplaces from using Exchange Establishment grant funds to fund Navigator grants, although grant funds may be used to cover the Marketplace’s cost of administering the Navigator program.  States building their own Marketplace are required to have a Navigator program and a certified application counselor program, but may choose whether to build a non-Navigator (in-person) assistance program.

On April 3, 2013, CMS published a funding announcement on the availability of up to $54 million in cooperative agreements to fund Navigators in FFMs or SPMs.  Letters indicating an organizations’ intent to apply for the funding had to be filed with CCIIO by May 1, 2013.  Entities eligible to become a Navigator program include:

• Self-employed individuals
• Public and private entities including non-profit organizations, tribes and tribal organizations, unions, chambers of commerce, etc.

• Health insurance issuers and their subsidiaries
• Associations that include members of, or lobbies on behalf of, the insurance industry
• Recipients of any direct or indirect consideration from and health insurance issuer in connection with enrollment

• Marketing and Consumer Information White Paper : Navigators, Agents and Brokers, Marketing and Summary of Benefits and Coverage

• Countdown to 2014: Designing Navigator Programs to Meet the Needs of Consumers 
• Designing Navigator Programs to Meet the Needs of Consumers: Duties and Competencies

• Individual Short Form,
• Family,
• Individual without Financial Assistance,
• Small Business Health Options Program (SHOP) Employee Application,  
• Small Business Health Options Program (SHOP) Employer Application,

 SECTION 8—Key Dates in the Implementation of the Health Insurance Marketplaces

 Key Dates in the Implementation of the Health Insurance Marketplaces

Additional Information

Federal Rules and Guidance for the Establishment of Health Insurance Marketplaces 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 an FFM. 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 marketplaces 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 Marketplace 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 Marketplace through which individuals can purchase affordbale insurance coverage.The Marketplaces will provide a competitive forum where  individuals and small employers may directly compare available private health insurance options on the basis of price, quality, and other factors. The Marketplaces 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” (Marketplace establishment proposed rule), and the August 17, 2011 rule titled “Exchange Functions in the Individual Market: Eligibility Determinations and Exchange Standards for Employers” (Marketplace 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 Marketplace 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 a Marketplace , including the standards related to individual and employer eligibility for and enrollment in the Marketplace and insurance affordability programs;
(2) Outlines minimum standards that health insurance issuers must meet to participate in a Marketplace  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 Marketplace 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