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Exchange Builders: Where Are the Federal Regulations?

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Atlanta – Obama administration officials have not yet issued final health insurance exchange regulations, and the deadline for states that want to get the certification necessary to run their own exchanges is fast approaching.

Regulators talked about the delays here at the summer meeting of the National Association of Insurance Commissioners (NAIC), Washington.

The U.S. Department of Health and Human Services (HHS) is in charge of implementing the provisions of the Patient Protection and Affordable Care Act of 2010 (PPACA) that deal with the exchanges, or Web-based health insurance supermarkets.

PPACA lets states choose between running the exchanges themselves, sharing responsibility with HHS, or turning full responsibility for exchange services over to HHS.

Regulators from three states — West Virginia, Wisconsin and Rhode Island — talked about the effects of the HHS exchange rulemaking delays at an Exchanges Subgroup session.

West Virginia and Wisconsin have not decided what they want to do about the exchanges; Rhode Island is going ahead with building a state-run exchange program.

Jeremiah Samples, insurance program manager for West Virginia, said a state needs to understand the costs involved before making any decisions. A cost analysis will not be possible until HHS issues final rules, he said.

A state could have a huge problem if it goes ahead with implementing exchanges one way, then has to “unplug” the program if it finds another approach is more cost effective, Samples said.

“It is critical to get this right from the beginning,” Samples said.

Martin Swanson, assistant project director for the Nebraska Insurance Department, said his state believes it needs to see about 200 instances of rulemaking before it can make an educated decision about what to implement.

The only decision that has been made is that whatever form the exchange takes, it will be housed in the state’s insurance department, Swanson said.

Medicaid would have to be part of an exchange, and federal officials still have not explained how Medicaid will fit in an exchange system, Swanson said.

“We encourage our federal friends to get us an answer as soon as possible,” Swanson said.

Herb Olson, legal counsel for the state of Rhode Island Office of Heath Insurance Commission, said Rhode Island is moving ahead full tilt with implementing its exchange program and has appointed a new Health Benefits Exchange director, Christine Ferguson.

But states could end up with a fragmented system of regulations if federal agencies do not develop rules properly, and some states that act early could lose good health programs if the programs fail to fit with the rules that are adopted, Olson said.

Olson stressed the need to build on the current regulatory structure and avoid duplication or the need for creating new systems.

“There is no right or wrong way to do it, as long as the aim is to do it right,” Olson said.

Tim Hill, deputy director for the Center for Consumer Information and Insurance Oversight (CCIIO), the part of the Centers for Medicare and Medicaid Services (CMS) that is responsible for implementing much of PPACA, said HHS wants states to be in the exchange building process.

HHS — the parent of CMS — is diligently working to provide the resources states need to implement exchanges by 2014, Hill said.

“We want to meet the states where it is comfortable for them,” Hill said.

The federal government does not want to be the referee over the state health exchange markets, Hill added.

Julienne Fritz, an NAIC staff member, talked about efforts to help states and the federal government transmit exchange-related data through the System for Electronic Rate and Form Filing (SERFF).

SERFF cannot work on creating a federal-state database until HHS publishes final rules, Fritz said.

Fritz said SERFF will only help facilitate sharing of information and will not dictate what kinds of information states and the federal government transmit.

The NAIC held a separate full-day session at the summer meeting on SERFF.

One participant said regulatory agencies and insurance providers have only one point of consensus about SERFF and the exchanges: “We are all scared spit-less.”