Last week, HHS released new guidance on how it will
operate federally-facilitated exchanges (FFE) in states that are not ready to
operate their own. It is a sparse
19-pages, but it will have a super-sized impact on how ACA is implemented in
the months and years ahead. We now
are looking at all but a dozen states or so states relying on a FFE to
implement the ACA, at least during the early months and years of full ACA
implementation.
The new guidance is chock full of concrete, valuable
information, but it also highlights the high-stakes nature of the game that
opponents of the ACA are playing by working to stop states from setting up
their own Exchanges. While their
efforts may have stalled action on health reform implementation, they also are
setting these states up for loss of control over how health insurance options
are structured in their states. It
may be with great reluctance and with constant encouragement that states reconsider,
but the new FFE guidance makes it clear that the federal government is willing and
increasingly prepared to operate Exchanges on behalf of states if it must do
so.
For states that want to avoid this outcome, they need to
demonstrate by January of 2013 that they are ready to operate their own
Exchanges or, at least, that they will be ready to do so in time for open
enrollment in October of 2013. On
a call releasing the FFE guidance, HHS officials indicated that to begin the
process of securing a green light, states must submit their applications by
November 16, 2012. (A draft application, known as the Exchange blueprint, is available here.)
If states elect not to establish their own Exchange, they
have two major options for the federal fallback:
- FULLY FEDERALLY-FACILITATED EXCHANGE. The federal
government can and will operate a state’s entire Exchange if necessary,
although HHS repeatedly emphasizes that the federal government would very much
like to avoid this outcome. Under
this model, the federal government will take on all Exchange responsibilities,
including offering qualified health plans, providing consumer assistance,
operating a SHOP for small businesses, and conducting eligibility
determinations for affordability programs. Under this model, the federal government will allow all
plans that meet basic standards to be offered as “qualified health plans”
(QHPs) through the Exchange (i.e. it will not be going into the business of
selecting which plans should be offered in an individual state).
- PARTNERSHIP MODEL. Under the partnership model, states can take on selected
functions of operating an Exchange.
Specifically, they can assume primary responsibility for 1) the plan
management function (i.e., selecting the qualified health plans that will be
offered to consumers), 2) in-person consumer assistance functions, including
the operation of a Navigator program, or 3) both. The guidance, however, makes it clear that even under a
partnership model, the federal government is ultimately responsible for the
operation of the Exchange.
The new FFE guidance and the activity surrounding its
release, including this week’s Exchange meeting with state officials, also
makes it clear that HHS is working diligently to ensure that it has the administrative
and operational capacity to operate Exchanges for states if necessary. The federal government is building an
electronic plan management system that can be used to gather the data needed to
identify qualified health plans for each state, as well as the infrastructure
needed to conduct eligibility determinations. It will operate the Exchange web site and call center in all
states with an FFE, even in those that elect to handle in-person consumer
assistance on their own.
Finally, a few words on Medicaid eligibility
determinations in FFEs and beyond.
For this topic, you need to check out the important information tucked
away in the footnotes to the new guidance. In footnote 2, HHS indicates that it will be re-opening –
yes, actually re-opening – the section of its final Medicaid rule on
eligibility determinations made by Exchanges. The purpose will be to gather comments on how to ensure that
government agencies – rather than non-profits and private contractors – make
eligibility determinations. In
footnote 6, HHS says that, if states elect to use the FFE for Medicaid
eligibility determinations, they can do so for free, making it more likely that
these states will look to the federal government to fully evaluate Medicaid
eligibility for them. We’ll have
more to say about these changes in the weeks and months ahead.
For now, though, the most notable feature of the new
guidance is that it makes it clear that states bypassing the chance to set up
their own Exchanges will not willy-nilly get to pick and choose which pieces of
the ACA they feel like implementing.
The tone of the guidance remains encouraging and accommodating of
states, but it also makes it clear that it will not allow residents of any state to be left behind in gaining access to more competitively priced health insurance through an Exchange. A state’s failure to act will necessarily result in the federal government stepping in to run things with some standardized federal models in order to ensure that residents of all states have the opportunity to obtain the benefits promised by the new health care law.