The U.S. Department of Health and Human Services (HHS) has issued a set of frequently asked questions (FAQs) that discuss key questions for the states to
ponder as they consider how best to structure their insurance exchanges. According to HHS, the FAQs are intended to provide states with a framework for policy issues related to the exchanges as they head into 2012 legislative sessions.
Why the guidance? The Feds are getting concerned that all 50 states’ exchanges might not be operational by the October 2013 deadline. Although HHS has grant money available to the states to help plan and establish the exchanges, many states have yet to apply for funding. The link below illustrates the steps the states have taken to date:
http://www.statehealthfacts.org/comparetable.jsp?ind=962&cat=17&sub=205&yr=1&typ=5
Under the law, each state must demonstrate progress towards operational readiness by no later than January 1, 2013, although HHS will grant conditional approvals for states that are moving forward. If a state fails to meet HHS’s deadline, then the federal government is tasked with operating the exchange within the state. Each state exchange must be ready to accept enrollees on October 1, 2013.
HHS is touting three different exchange models:
- State-based Exchange: the state operates its own exchange with minimal federal involvement.
- Partnership Exchange: the state performs some exchange functions, but leaves other functions to the federal government.
- Federally-facilitated Exchange: the state “punts” (either intentionally or by inaction) and allows the federal government to operate the exchange within the state.
As an incentive for a states to operate their own exchanges (option #1), HHS will create and manage a “data services hub” to facilitate information-sharing between state and federal agencies. HHS won’t charge fully state-based exchanges for use of the hub. This FAQ begs the question of whether the Feds would charge a state under the other exchange models.
In instances when the Federal government operates a state exchange (#3), the FAQs indicate that HHS will try and preserve traditional responsibilities of state insurance departments for handling licensing, insurer solvency and network adequacy.
The HHS guidance confirms our view, expressed to clients who have asked, that federal subsidies toward the purchase of insurance will be available in federally-facilitated exchanges, even though a glitch in the law’s language made that a bit questionable.