On March 23, 2010 the Patient Protection and Affordable Care Act (PPACA) or “Health Care Reform” became law. Part of the law called for the establishment of Health Insurance Benefit Exchanges (HBE). These are mechanisms created by the Act to help individuals, families and small businesses shop for health insurance coverage.
The main premise for the Exchanges is that they would provide insurance coverage in a way that provides an easy comparison of available plans based on price, benefits, services and quality. They are supposed to make it both easier and more affordable to purchase coverage.
The initial enrollment period for Exchanges will run from October of this year to March of 2014 with the first policies being effective January 1, 2014. The Exchange will allow individuals and small businesses to compare plans, get answers to questions, find out if they are eligible for tax credits for private insurance or if they will qualify for programs such as the Children’s Health Insurance Program (CHIP) and enroll in a plan that meets their needs. By providing one-stop shopping, Exchanges will make purchasing health insurance easier and more understandable.
Many consumer advocates have argued the individual and small group health insurance markets which for Arkansas are defined as 2-25, have suffered from adverse selection and high administrative costs, resulting in a low value for consumers. In theory, Exchanges will allow individuals and small businesses to take advantage of the benefit of pooling risk, leveraging the market, and economies of scale that large businesses are able to enjoy. It is expected that by pooling people together, reducing transaction costs, and increasing transparency, the Exchange will create a more competitive and efficient marketplace.
On December 12, 2012, Governor Beebe sent a letter to federal officials informing them that Arkansas would pursue a state-federal partnership health insurance exchange; in other words, Arkansas would not develop and operate an Exchange on their own. All of the surrounding states with the exception of Mississippi have decided to let the federal government develop the Exchanges for their states. Mississippi opted to build their own.
On January 3, 2013, Arkansas received conditional approval from Health and Human Services (HHS) to establish a state-federal partnership exchange making it one of seven states choosing to partner with the federal government. The final approval is contingent upon the state demonstrating its ability to perform all of the required activities on time, complying with future guidance and regulations, and maintaining a federal funding source through plan year 2014. The state has until February 15, 2013 to sign a memorandum of understanding with CMS that defines the roles and responsibilities for Exchange plan management and consumer assistance, outreach and education operations.
The funding for the Exchange is through grants from the federal government. In 2010 the Arkansas Insurance Department received a federal Exchange Planning grant of almost $1 million. In September 2011, the Governor declined to apply for a Level One Establishment grant after hearing objections from lawmakers. A few months later, the state applied for $7.6 million in funding to implement the partnership exchange. They received the grant in February 2012 and plan to use the funds to update IT systems to connect to Medicaid and the Exchange to the federally operated eligibility and enrollment portal, support state operated consumer assistance functions and develop plan management functions. Arkansas received a second Level One Establishment grant of $18.6 million to work in partnership with the federal government and other state stakeholders to implement the plan management and consumer assistance components of the Exchange.
States opting for a partnership Exchange can choose to operate plan management functions, consumer assistant functions or both. States can also elect whether or not they want to perform Medicaid and Children’s Health Insurance Program (CHIP) eligibility determinations or use services from the federal government.
The Governor acknowledged in November 2012 that Arkansas could still pursue a state run exchange if the Arkansas Legislature enacted exchange authorizing legislation. To date, the Legislature has not done so rather they have been consumed with negotiations over the expansion of the Medicaid program to cover individuals up to 138% of the Federal Poverty Level.
Arkansas has moved to quickly define its role in the partnership exchange with the main focus 1)Plan selection and rating and 2)Consumer assistance and monitoring functions such as outreach, education and the Assister program. A comprehensive framework for the Exchange has been released that establishes the Insurance Commissioner as the primary decision maker for the Exchange. A Steering Committee was also created to authorize resources and provide oversight. The Committee meets monthly and members include senior management from the Insurance Department, the Department of Human Services, the Department of Finance and Administration, the Legislature and the Governor’s office. The Steering Committee makes recommendations to the Insurance Commissioner.
There are 2 other committees that assist the Steering Committee: 1) Plan Management Advisory Committee and 2) Consumer Assistance Advisory Committee. The Plan Management Advisory Committee is comprised of dozens of stakeholders (nearly 40 people) representing hospitals, insurers, businesses and consumers. The Committee meets bi-monthly and its focus is on the definition and delivery of Qualified Health Plan guidelines such as Essential Health Benefits, recommendations for health plan qualifications and network access standards. The Consumer Assistance Advisory Committee, which has about 30 members representing consumers, hospitals and community organizations meets bi-monthly and focuses on developing In-Person Assister (IPA) guidelines, outreach efforts and consumer compliant resolution.
In early 2012, the Insurance Department began making plans and sending out RFPs for Navigators. However, not long after they released the RFPs, the Center for Consumer Information and Insurance Oversight clarified that in a partnership exchange, the Navigator program will be run by the federal government. States have the option to develop an In-Person Assister Program. The program is similar to the Navigator program, but can use Federal Exchange Establishment grants for development and operation. Arkansas is now fully focused on developing on developing the Assister program.
The Arkansas Legislature is now charged with making the decision during this General Assembly of whether they will expand the Medicaid program. This program is jointly funded with both state and federal dollars. The expansion would make people who earn up to 138% of the federal poverty level eligible for Medicaid. This would bring about 250,000 new Arkansans into the program. The expansion would initially be paid for fully by the federal government; however their portion would decrease to 90% in a few years.
Cynthia Crone, who is over the Insurance Department’s Health Benefits Exchange Partnership Division, says that if Arkansas expands Medicaid, the Exchange will serve about 211,000 people. If Medicaid is not expanded, it is uncertain as to the number served, but it should increase.
Once the Exchange is operational, consumers may access it via a website, phone, in person and by mail. Consumer assistance will be given through the federal call center, In Person Assistors, federally funded navigators and licensed insurance agents and brokers.
The Exchange will employ between 15 and 20 people and will also use third party contracts for exchange-related functions such as In Person Assistors. This would result in about 500 people around the state to help guide consumer enrollment.
A key provision of the Law said that employers were to notify employees of the existence of the Exchange by March 1, 2013. This has been delayed as a model notice has not yet been provided. It is important to note that once the notice has been developed, employers are to provide this notice regardless of whether they offer coverage or they do not offer coverage.
The Exchanges and their guidelines are a key piece of legislation to watch. This will change the way insurance is marketed and Arkansans are covered. It will also affect group health plans and employee participation. Stay tuned for more late breaking updates on this coverage altering topic.