Avalere Health LLC | The intersection of business strategy and public policy

Insurance Exchanges / Federal Regulations & State Flexibility

August 3, 2011

Bonnie WashingtonAvalere Health LLC

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State Activities

Federal Activities

States Have Substantial Implementation Responsibilities in the Next 3 Years

Affordable Care Act Passed

March 23, 2010

2010 2011 2012 2013 2014

Proposed Exchange Rule

ReleasedJuly 2011

Final Exchange Rule Expected

Late 2011

Deadline for Approval or Conditional

Approval of State Exchange PlanJanuary 1, 2013

Exchanges Begin2014

Pursue Legislation or Executive Order to Implement an Exchange

Establish Governing Boards

Operational Planning & Implementation

File Exchange Plan

Open Enrollment

Plan Bids Submitted

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States Are Busy Implementing Exchanges As the Federal Government Issues Regulations

AK

HI

CA

AZ

NV

OR

MT

MN

NE

SD

ND

ID

WY

OK

KSCO

UT

TX

NMSC

FL

GAALMS

LA

AR

MO

IA

VA

NCTN

IN

KY

IL

MIWI

PA

NY

WV

VT

ME

RICT

DEMD

NJ

MANH

WA

OH

D.C.

Exchange in Operation (2)

Adopted Establishing Legislation (11)

Adopted Legislation Requiring New Study (3)

Issued Executive Order Requiring New Study (6)

In Progress (28)

Source: Avalere Health Reform State Insights, July 15, 2011.

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Proposed Exchange Regulation Grants States Significant Flexibility to Establish Exchanges

Exchange Functions State Flexibility State Flexibility with Federal Floor

Nationwide Standard

Health Plan Selection Process  X    

Network Adequacy Standards  X    

Marketing Requirements  X    

Agent and Broker Roles  X    

Streamlined Applications & Eligibility Decisions    X  

Governance Structure    X  

Subsidiary and Regional Exchanges    X  

SHOP Employer/Employee Choice Model    X  

Exchange Consumer Tools: Website, Call Center    X  

Navigator Program    X  

Requirements for Qualified Health Plan Offerings    X  

Network Requirements    X  

Enrollment Periods      X

Approval of State Exchanges      X

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Governance Structure and Composition

Federal Requirements Exchange governing bodies may be housed within government agencies or as

freestanding non-profit entities (or a combination of both) At least half of all voting board members must represent consumer interests

5-person independent, quasi-governmental board

Includes appointed members that may not represent health plans or providers

Government-Run Independent

WV

10-person board in the Department of the Insurance Commissioner

Includes consumer and employer representation, plus one plan rep

WV

CA

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Presence of Benefit Mandates Varies Significantly By State

Number of Mandates

AK

HI

CA

AZ

NV

OR

MT

MN

NE

SD

ND

ID

WY

OK

KSCO

UT

TX

NMSC

FL

GAALMS

LA

AR

MO

IA

VA

NCTN

IN

KY

IL

MIWI

PA

NY

WV

VT

ME

RICT

DEMD

NJ

MA

NH

WA

OH

D.C.

46 – 60

31 - 45

> 60

16 - 30

< 15

1. Source: Council for Affordable Health insurance, http://www.cahi.org/cahi_contents/resources/pdf/MandatesintheStates2010.pdf

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Federal Requirements Give exchanges discretion on plan contracting, including accepting any qualified plan,

conducting competitive bidding, or conducting case-by-case negotiations States may set additional requirements for participating plans

Health Plan Bidding Process

Requires plans to adhere to specific benefit designs, excluding those that

do not compare favorably

Passive Facilitator Active Purchaser

WV

The state’s exchange accepts all health plans licensed to offer coverage in the state

UT

MA

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Small Business Health Options Program (SHOP)

Integrated exchanges; SHOP eligibility expanded to large groups

Broad employee choice options for employers

Limited Market, Less Flexibility Large Market, Broad Flexibility

WV

Separate exchanges; SHOP limited to groups <50

Minimum requirements for employee choice

Federal Requirements States integrate SHOP with individual exchange or administer them separately Includes groups up to 100 employees—states may include larger employers or limit to <50 Exchanges must offer employee choice—states and employers may limit plan options or

offer extra flexibility to choose between tiers

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Other State Flexibility in Exchange Implementation

Network Adequacy

States have broad flexibility to define network requirements to ensure sufficient choice of providers for enrollees

Navigator Program

States are responsible for designing navigator programs to promote outreach and enrollment activities

Consumer Interface

Exchange websites must include comparative plan information, but states have discretion about the degree of benefit information available

Agents and Brokers

States may contract with agents and brokers to enroll individuals and/or small businesses

Financing Exchanges must be self-funded by 2015; States may use premium assessments or other taxes

*Employee choice means that employers select a benefit tier (e.g., silver) and employees can enroll in any plan in the tier (e.g., Aetna or Blue Cross Blue Shield)

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Separate Rulemaking Will Address Additional Exchange Related Topics

Detailed requirements on the federal fall-back exchange that will operate in states that fail to establish an exchange will likely be covered in subregulatory guidance

Premium credits and cost-sharing reductions

Essential health benefits

Grievances and appeals

Quality requirements

Exemptions from the individual mandate