By Rebecca Adams, CQ HealthBeat Associate Editor
January 3, 2013 -- Federal officials gave conditional approval last week to Utah's health benefits exchange, even though state officials have sent mixed signals about whether they are willing to modify their current small business-only marketplace to meet all of the health law standards.
Centers for Medicare and Medicaid (CMS) officials also conditionally okayed six other state exchange plans and Arkansas' proposal to partner with the federal government on an exchange when the new marketplaces are set to begin operating in 2014.
CMS also released a 23-page guidance document for states that are considering a partnership exchange with the federal government. State officials have until Feb. 15 to declare whether they will partner with federal officials. In those states that do not operate their own exchange or team up with HHS, a federally run exchange will be established.
The states conditionally approved for a state exchange in addition to Utah were California, Hawaii, Idaho, Nevada, New Mexico and Vermont. The recent action brings the number of states that so far have been conditionally approved to operate their own exchange to 18. Federal officials have told two states—Arkansas and Delaware—that they are on track to partner with the federal government on an exchange. States had until Dec. 14 to tell federal officials they wanted to operate their own exchange.
The Mississippi insurance commissioner also had applied to run a state exchange but CMS officials said that they are deferring a decision so state officials can resolve disagreements about whether Mississippi has the legal authority to go forward. CMS Deputy Administrator and Director for the Center for Consumer Information and Insurance Oversight Gary Cohen said he did not know when that dispute would be resolved.
"In all of these states there's more work to be done," Cohen said on a call with reporters. But federal officials said they believe that the states have made significant progress and have produced plans that will allow them to begin enrolling consumers in October. The progress that each state has made is "more than a start," Cohen said.
Utah Talks Continue
Conservatives have held up Utah's exchange as a model, but as it operates now, it would not adhere to all of the requirements of the 2010 health care law (PL 111-148, PL 111-152). The exchange, which was created in 2008, currently offers health coverage for 309 Utah small businesses that provide health insurance for 7,337 people through defined contribution plans. State officials are continuing to negotiate the details of implementation with CMS.
Under the health care statute, Utah would have to expand to include coverage for individuals as well as small businesses and would have to create a program to help consumers navigate and understand the options available to them. The plans offered in the exchange also would have to adjust to meet the criteria spelled out in the law, such as minimum benefit requirements and standardized levels of coverage so that it is easy for consumers to compare plans. The law limits the factors that insurers can consider in setting rates for consumers.
U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius said on the call that the law ensures that there would be "no more squinting through dozens of pages of fine print, looking for loopholes in coverage."
Steve Gooch, the communications and marketing coordinator for the Utah exchange, said that state officials are just beginning to work through the specifics with federal officials.
"We expect to know more in the next couple of weeks, due to the nature of our unique situation," Gooch said last week. "We're in one place and HHS is in another place and we have to work together to figure out where the middle is and what we need to do to make it work. The announcement today is a solid step in saying now we're going to start working together" to determine the way that the exchange will have to be modified.
Utah Republican Gov. Gary Herbert had sent a somewhat confrontational letter to HHS officials in December, saying that the existing exchange should be accepted as complying with the law.
But since then, the state sent a 72-page submission that indicates that officials will conform to the federal law and revise the offerings allowed in its exchange. It says, for example, that the exchange website will provide information on premium subsidies and the tiered levels of coverage in the exchange. The federal law requires plans to offer standardized levels of coverage that are identified to consumers as bronze, silver, gold or platinum plans so that they can easily compare them.
"They said they're going to have a plan that's going to be compliant with the law and we're going to work with them to do that," said Cohen. "We're going to be flexible and work with every state including Utah."
Herbert's Deputy Chief of Staff Ally Isom has adopted a tone that suggests the state wants to stick as closely as possible to its existing structure.
"Utah's position on our state health exchange has not changed and it will not change," said Isom. "Because it's consumer-driven, market-based and flexible, Utah's model is the right solution for Utah. Of course we'll review the HHS announcement and determine if the conditions are acceptable or reasonable for our state exchange—and that includes sitting down with legislators—but there is nothing about Utah's path that changes as a result of today's announcement."
Former HHS Director of the Office of Consumer Information and Insurance Oversight Jay Angoff said that the conditional approval is a sign that federal officials are willing to be open-minded, but he believes they will expect that the state complies with the law.
"It's a conditional approval, with the accent on conditional," said Angoff, saying that federal officials created the idea of "conditional" approval in order to be as accommodating as possible to the states and encourage them to participate in implementation. "No one can know today whether the states that have received conditional approval will, in fact, do what they say they will do. So it may well be the case that HHS may end up running more exchanges in more states than today are envisioned."
More Information for States
Each state approved last week got a letter tailored to its plan. The letters spell out as many as five steps that state officials would have to take before getting federal approval to open their exchange. For instance, in the coming weeks federal officials will review and evaluation the timetables and work plans in some of the states. Other states still need to demonstrate that they have the legal authority to run and finance an exchange—which in some cases means that a state, such as Vermont, will have to pass a law in order to comply. Hawaii will have to develop a contingency plan by Jan. 15 that demonstrates its ability to perform eligibility and enrollment functions to provide coverage. Of the states approved, California seemed to be the furthest ahead in its work and will only have to show that it can do all it promised in its application, comply with the law and meet deadlines to demonstrate progress.
The guidance memo that CMS officials released spells out more specifically the roles that the federal government and states would assume under different types of partnership models. Under a partnership, a state could take the lead in overseeing plan management, consumer assistance and outreach, or both. The guidance also notes that even in states that rely on the federal government to run the exchange, state departments of insurance would still carry on such duties as reviewing health plan rates, benefits, and provider networks for all individual and small group plans in the state, both in and out of the exchange. "Even where a state partnership exchange is not operating, HHS will work with states to integrate state reviews into the" federal exchange's process for certifying qualified health plans, said the guidance.
The guidance includes charts specifying what types of duties would fall under the purview of state governments and which would be federal tasks. It also includes timetables for action to ensure that states are ready to start enrolling people in October.
Cohen repeated a promise that federal officials make at every announcement on the development of exchanges: If a state does not create an exchange, the federal government will be ready in October to enroll people.
- Utah exchange (pdf)