States can choose whether to keep or kill the arrangements they have been using to prevent health insurance-related job lock.
Officials at the Center for Consumer Information & Insurance Oversight (CCIIO) have delivered that verdict in one of several answers given in a new batch of answers to questions about the new Patient Protection and Affordable Care Act (PPACA) health insurance exchange (HIX) program.
PPACA requires the U.S. Department of Health and Human Services (HHS) to work with state officials to make the exchanges, or Web-based insurance supermarkets, available in all 50 states and the District of Columbia by Oct. 1.
CCIIO — pronounced “Sih-Sigh-Oh” — is the agency helping HHS set up the exchange system.
CCIIO is an arm of the Centers for Medicare & Medicaid Services (CMS), which is, in turn, an arm of HHS.
One major CCIIO answer is a response to the following question: ”Given the guaranteed availability requirement in 2014, what does this mean for states with alternative mechanisms?”
The question has to do with the arrangements states have made to implement the major health system change law that came along before PPACA, the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
To keep lack of access to individual health coverage from locking sick people (or relatives of sick people) with group health coverage into jobs they want to leave, the drafters of HIPAA included a provision that requires states to make some kind of guaranteed-issue individual health coverage available to residents who leave group health plans and are unable to qualify to buy new individual coverage.
Some states have provided coverage access using “risk pools,” or subsidized programs designed to cover the medical bills of people with health problems.
Other states have required one, some or all of the insurers in their individual markets to provide all coverage or some kind of coverage on a guaranteed-issue basis.
PPACA itself calls for insurers to sell all individual coverage that takes effect on or after Jan. 1, 2014, without considering individual health information.
CCIIO officials said in their answer to the state HIPAA “alternative coverage mechanism” question that they believe that most state high-risk pool coverage is provided through some kind of arrange that, technically, is something other than insurance.
Because a high risk pool is not insurance, it is not subject to the PPACA rules that apply to group health plans or individual health insurance policies, officials said.
If a state has required individual insurers to act as “insurers of last resort,” then that individual health coverage is subject to the PPACA coverage requirements, to the extent that it is not “grandfathered,” officials said.
“States may not prevent individuals from moving to other products or to an exchange,” officials said.
A state can continue a risk pool program, or an insurer-of-last-resort program, but, because PPACA has rendered the HIPAA anti-job-lock provisions moot, “beginning in 2014, states will no longer be required to maintain their alternative mechanisms for the purpose of guaranteeing coverage to HIPAA-eligible individuals,” officials said.
“States will have the discretion to determine how long beyond January 2014 their state alternative mechanisms can continue to exist or, if it was a federal fallback’ state that did not have an alternative mechanism, whether health insurance issuers in the individual market must continue to offer certain products to HIPAA-eligible individuals,” officials said.
In the new batch of answers, CCIIO officials also give answers to matters relating to “geographic rating areas,” the definition of “association coverage,” and how regulators will view a health insurance product that provides coverage for grandfathered and non-grandfathered customers.
Officials said, for example, that an insurer should base ratings for a family with multiple residences on the location of the primary subscriber.
For a single-state small group that buys coverage either inside or outside the exchange system, the small-group market rating will be based on the employer’s primary business location, not on the employees’ addresses, officials said.
Officials also said that a state cannot treat coverage sold to individuals and small groups through a large association as large-group coverage.