Federal Guidance and Regulation of State Health Benefit Exchanges

The Affordable Care Act (ACA) establishes a plan to facilitate the purchase and sale of qualified health coverage in the individual market, and to provide options for small business through American Health Benefit Exchanges. Exchanges will either be established and operated by the states or through a federally-facilitated process. The ACA directs that exchanges be fully operational in January of 2014. State-established government or nonprofit entities will certifying plans and identify individuals eligible for Medicaid, CHIP, and premium and cost-sharing credits. The ACA provides broad authority to the departments to establish standards and regulations to implement the statutory requirements related to the exchange. The Department of Health and Human Services (HHS), the Centers for Medicare and Medicaid Services (CMS), Department of Labor (DOL), Department of Treasury, and Internal Revenue Service (IRS) have initiated the process of promulgating rules that provide definition to the ACA statutory provisions to enabling those states who choose to operate an exchange to set up the necessary operational structure.

NCSL Submits Comments on Key Affordable Care Act (ACA) Regulations

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 Qualified Health Plans (QHPs), and exchange standards for employers.

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

The ACA contained several provisions affecting Medicaid eligibility, enrollment and coordination with the Affordable Insurance Exchanges (AIE), CHIP, and other insurance affordability programs. CMS published final rules and interim final rules implementing statutory provisions changing the minimum Medicaid income eligibility level to 133 percent of the Federal Poverty Level (FPL), eliminating some eligibility categories, modernizing eligibility verification rules, and ensuring coordination across Medicaid, CHIP, and the exchanges. Submission of comments were due May 7, and NCSL provided remarks focusing on timeliness and performance standards, Federally-facilitated Health Insurance Exchanges, and Medicaid coverage of incarcerated individuals.

NCSL Comments Submitted May 7, 2012

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 qualified health plans (QHPs); and
(3) Provides basic standards that employers must meet to participate in the Small Business Health Options Program (SHOP).

NCSL comments submitted May 11 continue 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 Exchange Regulations

NCSL State Federal Relations staff contacts: Joy Johnson Wilson, Federal Affairs Counsel, Health Policy Director at joy.wilson@ncsl.org  or Rachel B. Morgan RN, BSN, Health Committee Director, at rachel.morgan@ncsl.org  .