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States getting FFEs have a lot of state-federal role wrangling to do

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In its draft white paper on decisions suggested for states now subject to a Federally Facilitated Exchange (FFE), an NAIC Working Group suggests that these states may want to consider entering into an enforcement arrangement with the Department of Health and Human Services (HHS) to clarify the role of the state insurance department.

The Health Care Reform Regulatory Alternatives Working Group, now chaired by Wisconsin Insurance Commissioner Ted Nickel and composed of 26 jurisdictions, notes in the draft paper that many of the market reforms in the Affordable Care Act (ACA) will be primarily enforced through the form review process.

These requirements will apply to all plans in the state, whether sold through exchanges or outside of them.  

States will have primary enforcement authority regarding provisions of the law, but HHS will step in and directly enforce them—as it has with external appeals requirements in some states—a stricken sentence in the draft paper notes.  If HHS’ Centers for Medicare and Medicaid Services (CMS) determines that a state is not substantially enforcing aspects of the Public Health Service Act, as amended in 2010 under ACA, CMS then enforces them.

The white paper draft, entitled, State Decisions: Federally Facilitated Exchange (FFE) States, discusses the form review process and interaction between the states, HHS, and its agencies.

The paper noted the potential for federal involvement in form review and the possibility of an administrative burden on the affected state departments of insurance as well as on carriers submitting forms for review to both states and HHS.

For additional information on form review considerations, see the NAIC’s exchange plan management white paper intended as guidance on form review from last year.

The paper gives states with an FFE coming a lot to consider with respect to the state insurance department’s involvement in the federal program, and suggests there is still much uncertainty.  

In one example, the working paper notes that initial guidance on FFEs indicates that in states “meeting federal standards” the FFE will verify the states review.

In other states, the FFE will review network adequacy data submitted in the qualified health plan (QHP) issuer application.

The working group said that if a state did not review policy forms for compliance with federal law requirements, an FFE may do so as part of the QHP certification process.

It is still unclear what will be required under these federal standards, the working group’s paper stated.

FFE states may want to consider to attempt to meet federal standards and review the network adequacy of QHPs, and whether to apply these standards outside the exchange as well, according to the paper.

There is the potential for federal review of plan network adequacy and this can have ramifications of the decisions on the insurance marketplace, including the potential for adverse selection resulting from different standards inside and outside the exchange, the paper says.

Apparently, the March 1 HHS draft letter to issuers said that for the 2014 coverage year, when CMS is evaluating applications for QHP certification, CMS will rely on state analyses and recommendations when the state has the authority and means to assess issuer network adequacy, the draft paper noted. However, CMS will watch things closely, according to the letter.

The letter indicates, the working group interpreted, that CMS will monitor network adequacy in various ways, including via complaint tracking or gathering network data from any QHP issuer “at any time to determine whether the QHP’s network(s) continues to meet these certification standards.”

These and other topics, such as an ACA federal preemption analysis—rate and form review being one ripe area— done  by the working group, will likely  be discussed at the  working group’s meeting early Monday, April 8, in Houston at the NAIC Spring national Meeting. 

The working group also prepared a document intended to serve as a resource for states in reviewing their own state laws and regulations for flexibility when implementing the ACA for health plans inside and outside of health insurance exchanges. See: //  and // 

The Working Group was formed at the NAIC Summer Meeting and charged itself with providing a forum for discussion of and guidance on the alternatives to implementing a state-based exchange and the implications of such alternatives on regulatory authority. It is also analyzing the impact of the ACA on existing regulatory authority both inside and outside of a federal exchange, as well as the impact on NAIC Model Laws and identifying opportunities for NAIC members to continue to innovate and regulate outside federal exchanges.