Lisa Feldner, chief information officer of the North Dakota Information Technology Department, speaks on Thursday, Nov. 10, 2011, to a joint North Dakota House and Senate appropriations committee hearing about a proposed state-run health care insurance exchange. (AP Photo/Dale Wetzel)

The Department of Health and Human Services (HHS) today awarded nearly $220 million in Affordable Insurance Exchange grants to 13 more states to help them create exchanges, bringing the total number of states  moving toward creating exchanges to 29. Little Rhode Island is the first state receiving a Level Two grant, which provides multi-year funding to states further along. The other 12 are receiving level one grants.

HHS also announced a six-month extension for level one establishment grant applications, to June 29, 2012, from Dec. 30 of this year, a month away, and outlined in guidance further modifications, future guidance and new tweaks on various  other exchange deadlines and parameters.

This extension was made to accommodate the accommodate state legislative sessions and to give states more time to apply.  

Level one grants, which provide one year of funding to states that have already made progress using their exchange planning process.

Under the Affordable Care Act, states must ensure that their Exchanges are self-sustaining by Jan. 1, 2015.

Forty-nine states and the District of Columbia have already received planning grants, and 45 states have consulted with consumer advocates and insurance companies.  Only 13 states have passed legislation to create a health care exchange, but 49 states and D.C. have already received planning grants and 45 have consulted with necessary interested parties–industry and consumer advocates–in their state. 

The state exchanges–one-stop marketplaces where consumers can choose a private health insurance plan that fits their health needs–are a big part of the Patient Protection and Affordable Care Act (PPACA). The health care reform law gives states the freedom to design their affordable insurance exchanges.

To help with policy-making at the state level, HHS’s key agency for implementation of the exchanges released today a set of Frequently Asked Questions (FAQs) in anticipation of state legislative sessions beginning in January.  

The guidance provided by the Centers for Medicare & Medicaid (CMS) clarified that exchange grants canindeed be used to build a state Exchange that is operational after 2014; that state-based exchanges will not be charged for accessing Federal data needed to run exchanges in 2014; and that state insurance rules and operations will continue even if the federal government is facilitating a state’s exchange.  

CMS also said network adequacy standards must ensure enrollees a sufficient choice of providers, consistent with HHS regulations.

If it has not, then HHS would step in and develop it for the purposes of the federally facilitated exchange, but it would use a standard such as the NAIC’s Network Adequacy Model Act to do so, CMS said.

HHS is also currently working to determine the extent to which activities like the review of rates and benefit packages are already conducted by State insurance departments and how these responsibilities could be recognized as part of the certification of qualified health plans (QHPs) by a federally facilitated exchange. HHS may use states’ rate review program in place to the extent practicable and where legally permissible, CMS suggested.

Some other interesting points spelled out in the guidance include the fact that HHS will allow  a state-based exchange to permit the federal government to determine eligibility for premium tax credits. 

A state that does not have a fully certified state-based exchange on Jan. 1, 2013 can continue to qualify for and receive a grant award, subject to the Funding Opportunity Announcement (FOA) eligibility criteria, the guidance stated. The process of “establishing” an exchange may extend beyond the first date of operation and may include improvements and enhancements to key functions over a limited period of time. Grants may be awarded through the end of 2014, and grant funds are available for approved and permissible establishment activities.

States may receive a grant for activities to establish and test functions that it performs in support of its exchange.

Also, although the exchanges must develop and report a quality rating system for QHPs, further guidance will likely be released before exchanges are required to implement that system, according to CMS.

HHS intends to propose a phased-in approach to the quality rating provisions in which quality ratings in 2014 would be predicated on generally available and collected metrics and measures, transitioning to a QHP-specific rating in 2016, CMS stated.

Some things states should be considering include the following:

  • “States should focus on developing and establishing other exchange operational capacities. When focusing on quality, states should consider their strategy for using quality information to certify QHPs, including when to require issuer accreditation and how to assess the quality of plans seeking to participate in Exchanges.”
  • “States should also consider how the Exchange will monitor QHP quality during the plan year, including performance monitoring of complaints, appeals and network adequacy. “
  • “…States should consider to when to require issuer accreditation of QHPs  and how to assess the quality of plans seeking to participate in exchanges…”

In answer to the query on whether the federal government can perform the eligibility process for exemptions from the individual responsibility requirement for state exchanges, CMS said it intends to modify its original proposal in the final rule to permit additional options for determining eligibility under a state-based and federally facilitated Exchange.

In response to comments to its Exchange Eligibility NPRM, CMS said it was planning to revise the options currently available for determining eligibility determination.

Under the new plan, the federally facilitated exchange  would conduct initial assessments of applicants for Medicaid and Children’s Health Insurance Program (CHIP) eligibility based on modified adjusted gross income (MAGI,) as part of the determination of eligibility for advance payments of the premium tax credit and cost-sharing reductions. 

However, the state Medicaid and CHIP agencies would be able to make final determinations under this option consistent with general guidelines and the terms of an agreement  already established between the state and the federal exchange.

If a state does not choose to retain Medicaid and CHIP eligibility determinations, the federally facilitated exchange would determine eligibility.

CMS also strived to address state regulators’ concerns about the need to apply state insurance requirements and state-specific certification standards to multi-state plans and said it was working to make sure it “does not disrupt existing markets both inside and outside the exchanges in the states, “and will work with the NAIC to address these concerns by identifying existing state standards. Specific issues of greatest concern for multi-state plans and states include reduction of adverse risk selection, the risks to multi-state plans and states, and potential alternatives.

The guidance also addresses IRS information states may access, and data collection. For instance, CMS stressed HHS will not implement any proposal that calls for states or the federal government to collect personal data such as name, social security number or address for the risk adjustment program, nor will HHS require states to collect medical record or information that identifies an individual’s doctor, nor would it collect this information.