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NAIC, BCBSA to OPM: Don't override state authority

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Insurers and state regulators are concerned that the Office of Personnel Management’s (OPM) draft of its Multi-State Plan (MSP) program application has the potential to conflict with state regulation in addition to other policy issues that could create an unlevel playing field in the health insurance market. 

In recent letters, they told OPM they hope the federal agency avoids establishing new federal network adequacy standards for MSPs that would undermine state standards and impact consumers and the health insurance market for the worse.

Under the health reform law, OPM is to contract with two or more multi-state, qualified health plans through each state exchange. One of these contracts is to be with a nonprofit entity. The multi-state plans would provide individual and/or small group coverage. Currently, states are responsible for regulating the individual and small group markets.

OPM has not released the proposed regulation yet, so health plans and regulators are trying to influence the administration on what OPM does include.

“We understand the difficulty of implementing this provision of the [Patient Protection and Affordable Care Act] and your intention to work cooperatively with states to ensure a level playing field and avoid disruption of state health insurance markets. It is, however, critically important that the MSP Program is operated in a way that preserves a level playing field and respects the regulatory responsibilities of the states,” wrote NAIC President Kevin McCarty, of Florida, President-Elect Jim Donelon of Louisiana and other NAIC executives in an Oct. 24 letter to John J. O’Brien, director of healthcare and insurance at OPM.

Although the PPACA law empowers OPM to negotiate and enter into contracts with MSPs, the NAIC leadership wrote that it does not provide any exemption from state regulations and laws for which the MPSs, as licensed entities, must comply.

Such requirements include health insurance rate filings for review by state regulators by the individual and small group markets.

“Exempting MSPs from these requirements will undermine state delivery system transformation efforts, upon which the long-term success or failure of the [PPACA] ultimately rests, wrote the NAIC leadership.

The Washington-based Blue Cross Blue Shield Association (BCBSA), in a letter sent Oct. 22 by William Breskin, vice president, government programs, to O’Brien, also expressed concern about overlays of federal regulation.

“The [PPACA’s] framework provides state regulatory authority over the outside market and dual regulation would lead to confusion for issuers and consumers over who maintains regulatory oversight inside and outside an exchange,” Breskin wrote. 

BCBSA is a national federation of 38 independent, community-based and locally operated Blues plans that provide health care coverage for one in three Americans, it says.

The NAIC and insurers are also concerned with the application of the medical loss ratio (MLR) provisions to MSPs. 

If OPM allowed the multi-state plans to aggregate their MLR nationally, then some national insurers would be able to have lower MLRs in some states and higher MLRs in other states, insurers and regulators worry.

Thus, not all consumers would benefit from the MLR provision as intended, the NAIC leadership told OPM.

Both the NAIC and the Department of Health and Human Services (HHS) determined that state-by-state aggregation of insurer experience best served consumers, the state regulators leadership noted.

For its part, BCBSA told OPM that it should clarify that MSPs must have MLRs that are equal to the MLR requirements that apply to other products. 

The program application draft allows OPM to consider MLRs but is silent on the issue of MLR thresholds for MSPS and how they should be calculated, the association said. OPM can negotiate an MLR, and health insurers remain concerned that OPM could set a lower MLR than exists for other products offered by health insurance issuers.

If OPM allowed MSPs to aggregates MLRs nationally it would make it easier for some national insurers to meet the MLR requirements and avoid paying rebates,” BCBSA warned. The result would cause market disruption and favor some health plans over others, it said.

State regulators and insurers are also annoyed with what they say is a lack of concrete guidance from OPM.

Without it, concerns remain, insurers and state regulators told OPM separately.

BCBSA said many critical details, such as insurance reforms, requirements for interconnectivity between health plans, Treasury, HHS, exchanges and the financial administration of the plans remain unknown. 

The NAIC said it was impossible to provide meaningful feedback on the draft application without any details about how the program will operate, the standards that MSPs will be expected to meet and how OPM proposes to fulfill its obligation to contract with MSPs within the framework of state-based regulation.

With the beginning of the Oct. 1, 2013, initial open enrollment period now less than one year away, state regulators and the NAIC need detailed guidance about regulatory responsibilities with regard to the states and other critical questions as soon as possible, the NAIC letter told OPM.

BCBSA told OPM to publish all requirements “as soon as possible following a proposed rule-making process to comment on all the interwoven regulations.

The NAIC leadership urged OPM to publish guidance in the form of a Notice of Proposed Rulemaking to allow it to fully receive and consider comments on the standards that will apply to MSPs. 

The NAIC leadership said it was impossible to provide meaningful feedback on the draft application without any details about how the program will operate, the standards that MSPs will be expected to meet and how OPM proposes to fulfill its obligation to contract with MSPs within the framework of state-based regulation.


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