HHS has determined that health insurers in U.S. territories don't have to comply with certain Patient Protection and Affordable Care Act health insurance exchange requirements.
In a letter to U.S. Virgin Islands Lt. Gov. Gregory R. Francis sent this week, CMS Administrator Marilyn Tavenner wrote HHS has been using the existing Public Health Services Act definition of "state" for new PHS Act requirements and funding opportunities addressed in the PPACA. "Under this definition, the new market reforms in the PHS Act apply to the territories," Ms. Tavenner wrote. "We have been informed by representatives of the territories that this interpretation is undermining the stability of the territories' health insurance markets."
Upon review of the situation and statutory language, HHS has determined the new PHS Act provisions enacted in title I of the PPACA are "appropriately governed by the definition of 'state' set forth in that title." The determination means the definition of "state" in the PHS Act will only apply to PHS Act requirements enacted before the PPACA became law or subsequently enacted in measures that don't include a differing definition of "state" (which the PPACA does), according to Ms. Tavenner.
Therefore, the following PPACA requirements don't apply to individual or group health insurance issuers in the territories: guaranteed availability, community rating, single risk pool, rate review, medical loss ratio and essential health benefits. CMS plans to issue regulations reflecting this new interpretation.
Additionally, Ms. Tavenner writes that "because this interpretation applies prospectively, territories will not have to pay back to the federal government any grants that have been spent by the territories as of the date of this letter, such as those provided for rate review (section 2794 of the PHS Act) and for consumer assistance (section 2793 of the PHS Act). However, all unspent grant funding must be returned to CMS, because the interpretation of the law making the territories eligible to expend such funds is no longer in place."
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