National Healthcare Update: Exchange Final Rule Issued

The Michigan Business and Professional Association (MBPA), along with its sister group, the Michigan Food and Beverage Association (MFBA), want to keep you up to date on the federal healthcare law and how it will affect you and your clients.

On March 12, 2012 the federal government released a final rule on Healthcare Exchanges. State Exchanges will allow individuals and small businesses to view all options, compare, and enroll in the plan that best meets their needs. As you are aware, in order for Michigan to operate its own Exchange beginning Jan. 1, 2014, our state must receive approval from the federal Department of Health and Human Services by Jan. 1, 2013. If a state is not running its own Exchange, HHS will step in and run the Exchange in that state, as federally mandated. States can receive funding from HHS to assist with Exchange development, but no federal funds will be provided after Jan 1, 2015.

Final Rule Updates

HHS is no longer requiring that states run their own reinsurance program in order to run a state-based Exchange. States also no longer need to announce user fees to issuers prior to the start of the plan year–HHS indicated that it wanted to give states more flexibility regarding fee assessment and notification. When a state seeks to make changes to its state-based Exchange, HHS has up to 90 days to approve or reject the changes to its Exchange Blueprint (the new name for the documentation states must file with HHS to receive state Exchange approval).

Individual market Exchange enrollment periods

The final rule changed initial open enrollment from Oct. 1, 2013, through Feb. 28, 2014, to Oct. 1, 2013, through March 31, 2014 and moved the initial coverage effective dates such that, now:

• If enrolled on or before Dec. 15, coverage effective Jan. 1
• If enrolled Dec. 16 to Jan. 15, coverage effective Feb. 1
• If enrolled Jan. 16 to Feb. 15, coverage effective March 1
• If enrolled Feb. 16 to March 15, coverage effective April 1
• If enrolled March 16 to March 31, coverage effective May 1

States may elect an earlier effective date than those listed above, but only if all qualified health plan issuers agree. Annual open enrollment period in subsequent years remains Oct. 15 to Dec. 7, with coverage effective Jan. 1.

Special enrollment periods

The final rule removes the requirement in the proposed rule that would have restricted recipients of a special enrollment period to selecting a QHP in the same metal level.

Roles for Navigators/Agents

1. Navigators

The final rule establishes that at least one Navigator entity must be a community-and-consumer-focused non-profit group. At least one navigator must also come from one of eight prescribed categories. Navigators are prohibited from receiving direct compensation from issuers for enrollment in plans inside or outside of the Exchange. In addition, a Navigator must not be a health insurance issuer, a subsidiary of a health insurance issuer, or an association that includes members of, or lobbies on behalf of the insurance industry.

The Exchange must develop a set of training standards to ensure expertise in the needs of underserved and vulnerable populations, eligibility and enrollment rules, the range of QHP options and insurance affordability plans, and privacy and security standards.

2. Agents

The final rule establishes participation standards for agents and brokers to facilitate QHP selection through the agent’s or broker’s website. In these cases, the agent’s or broker’s website must:

• Provide consumers the ability to view all QHPs offered through the Exchange
• Not provide financial incentives, such as rebates or giveaways
• Display all QHP data provided by the Exchange
• Provide consumers with the ability to withdraw from the process and use the Exchange website at any time

The final rule expands its regulations on agents and brokers with the inclusion of language outlining how an agent or broker may assist an individual in enrolling on the Exchange as well as requirements for an agreement between an agent/broker and the Exchange before the agent/broker may assist individuals in enrollment.

SHOP

HHS re-asserts that in order to be on the SHOP an employer must have at least one common law employee. This means that sole proprietors, 2 percent S-corporation shareholders and certain family members of sole proprietors or 2 percent S-corporation shareholders are not included in employee count. If a business does not have a common law employee it cannot constitute a group health plan and therefore cannot purchase coverage in the small group market. In these situations, Exchange coverage must be purchased on the individual market.

The proposed rule specifically excluded the SHOP from the requirement to provide a premium calculator that applies to the individual market Exchange. The final rule removes this exclusion and requires the SHOP to provide a premium calculator that compares the price of available QHPs after the application of any employer contribution.

QHP standards

New language requires QHP issuers to ensure that the provider network of each QHP maintains a network that is sufficient in number and types of providers, including providers that specialize in mental health and substance abuse services. The rule includes an alternate standard for a QHP issuer that provides a majority of covered professional services through physicians employed by the issuer through a single contracted medical group, such as through a staff-model HMO. To guarantee compliance, these QHP issuers must have an adequate number and geographic distribution of employed providers and hospital facilities to ensure reasonable and timely access to such providers.

Dental Plans

The final rule guarantees that the Exchange doesn’t overload a single dental insurance issuer by adding a “sufficient capacity” provision. The Exchange must consider the collective capacity of stand-alone dental plans during certification to ensure sufficient access to pediatric dental coverage.

The Exchange may allow standalone dental plans to be offered independently or in conjunction with a QHP. The rule clarifies that standalone dental plans offered through an Exchange must offer the pediatric dental essential benefits without annual or lifetime dollar limits. If standalone dental options that cover the pediatric dental essential benefits are available on the Exchange, then a health insurance product does not need to cover pediatric dental essential benefits in order to receive QHP certification.

Multi-state plans or CO-OPs

The Exchange must recognize the ACA established multi-state plans and plans offered by issuers through the Consumer Operated and Oriented Plan program. Multi-state plans are immune from many Exchange certification standards. HHS notes that OPM is required to ensure that multi-state plans adhere to QHP certification standards, so HHS finds it unnecessary to require each Exchange to certify the OPM-contracted plans. For many requirements, the final rule explicitly provides that, rather than the Exchange, OPM will assess whether the multi-state plans are achieving the appropriate standard.

Who is eligible?

The final rule no longer permits eligibility based on intent to reside in an Exchange service area. In addition, a new provision specifies that when multiple tax households are covered on a single policy, the Exchange will apply cost-sharing reductions such that the lowest level of cost-sharing reductions will be provided to the combined households (the household with the highest FPL determines cost sharing eligibility).

An interim final rule requires Exchanges to “determine eligibility promptly and without undue delay.” Notification of eligibility determinations must now be made in writing.

MBPA/MFBA will continue to keep you up to date. As always, please contact us with any questions or comments. We enjoy your feedback.

Please visit our website for more and detailed information. Contact our Government Relations Team with questions/comments at: bbochniak@michbusiness.org or by phone at: 517-374-9128.