HHS Publishes Final Rule on PPACA's Health Insurance Exchanges

HHS has issued a final rule (pdf) on the health insurance exchanges established under President Barack Obama's Patient Protection and Affordable Care Act.

Starting Jan. 1, 2014, exchanges will be live, functioning, one-stop marketplaces for consumers and small businesses to compare and buy private health plans. Each state has the opportunity to establish an exchange, and the final rule sets the framework and standards for how states can establish the exchanges.

HHS Secretary Kathleen Sebelius said in a news release the flexibility for states and competition among health insurers will lead to the success of the exchanges. "More competition will drive down costs, and exchanges will give individuals and small businesses the same purchasing power big businesses have today," she said.

Today's final rule defined standards for five main categories: the establishment and operation of an exchange; health plans that can participate in an exchange, how to determine if an individual is eligible to enroll in an exchange; actual enrollment in health plans; and employer (small business) eligibility.

Establishment of exchanges
Each state is in charge of establishing its own health insurance exchange, and all plans must be approved by HHS by Jan. 1, 2013. However, a change in the final rule gives more flexibility to states that are not able to show "complete readiness." "HHS may conditionally approve a state-based exchange upon demonstration that it is likely to be fully operationally ready by Oct. 1, 2013, which provides states with flexibility in meeting exchange development timelines," according to the final rule. HHS said it will provide more details on the exchange development timelines in future guidance. There was no mention in the final rule regarding federal government intervention if a state does not show complete readiness by the 2014 deadline.

State agencies can also run their exchanges in a number of ways: as part of an existing state agency such as the state Medicaid organization or department of insurance, as an independent public or non-profit entity or as any other state agencies that would be considered an "eligible" contracting entity.

Qualified health plans
All health plans offered through exchanges must be "qualified health plans," which was also stated in the earlier proposed rules. A QHP, as defined by the PPACA, is an insurance plan that "provides essential health benefits, follows established limits on cost-sharing (like deductibles, co-payments and out-of-pocket maximum amounts) and meets other requirements." The actuarial value for QHPs and other non-grandfathered health coverage can be divided among four main metal tiers of PPACA health coverage: bronze, silver, gold and platinum.

The final rule allows exchanges to work with health insurers to structure QHPs and also allows exchanges, along with state insurance departments, to set specific standards to ensure each QHP gives consumers a wide range of healthcare providers.

A QHP issuer must also maintain a provider network that has enough hospitals, physicians, mental health providers and other healthcare providers, assuring that all services "will be accessible without reasonable delay," according to the final rule. Although the final rule does not provide a hard number for the provider network, it does ensure that consumers will have adequate access to hospitals and other community healthcare providers.

Under the final rule, consumers can find out if they are eligible for an exchange-based QHP through a "streamlined" web-based system. HHS said administrative burden would be reduced for states, individuals, health plans and providers by making sure one application is used as a consistent determinant of QHP eligibility.

Once consumers are determined eligible for insurance coverage in the exchanges — most of whom are uninsured or could qualify for Medicaid — they can actually enroll in a QHP by using websites and toll-free call centers. States can design their own options and systems, but certain privacy and security standards must be uniformly met (e.g., security of personal information).

Small employers
The final rule set the standards for the Small Business Health Options Program, or SHOP, which will allow small businesses to offer health coverage from multiple insurers, just like larger companies, but will only have to write a single check. States can determine the size of small businesses that can participate in SHOP. For example, until 2016, small businesses with 1 to 50 employees or 1 to 100 employees can participate in SHOP, depending on what the state decides. In 2016, all employers with 1 to 100 employees can participate in SHOP, and in 2017, states can then give that option to businesses with more than 100 employees.

HHS received nearly 25,000 public comments on its proposed rules and notices. Several provisions in this final rule — such as the aforementioned timeline requirements for exchange establishment — are being issued as an "interim final rule" to allow for more public comment, and the final rule will actually be published in the Federal Register on March 27.

More Articles on Health Insurance Exchanges:

Release of Health Insurance Exchange Rules Expected This Week

Oregon Lawmakers Approve Plans for Health Insurance Exchange

Healthcare Reform: Two Years Gone, Now What's on the Horizon?

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