The Department of Health and Human Services (HHS) released proposed regulations, along with fact sheets and summaries, that set basic standards and provide information to assist states in setting up health insurance exchanges under PPACA.
As background, PPACA requires states to set up exchanges, which are state-based competitive health insurance marketplaces through which individuals and small businesses can purchase private health insurance. The deadline for states to establish exchanges is 2014.
Among other things, the proposed regulations address the following:
- Standards for Establishment of Exchanges. The proposed regulations allow a state to structure the exchange as either a nonprofit, an independent public agency, or as part of an existing state agency. In addition, a state can choose to operate a regional exchange in collaboration with other states or establish subsidiary exchanges within a state.
- Functions of Exchanges. Exchanges will perform various functions, such as certifying health plans as Qualified Health Plans (QHPs) to be offered in the exchange, operating a website to facilitate comparisons among QHPs for consumers, and facilitating enrollent of consumers in QHPs.
- HHS Approval Process. Under the proposed regulations, exchanges must be approved by HHS no later than January 1, 2013. If a state does not obtain HHS approval, a federally facilitated exchange would be implemented in 2014.
- Initial Enrollment Period. The initial open enrollment period would extend from October 1, 2013 through February 28, 2014. Only those who enroll before December 22, 2013 would be ensured coverage effective January 1, 2014.
- QHP Certification. To be certified as a QHP, a health plan would be required to meet minimum standards under the proposed regulations. Exchanges would be required to establish procedures for certification, recertification and decertification of QHPs.
- Small Business Health Options Program (SHOP). Each exchange must operate a SHOP beginning in 2014. A SHOP is a program that is intended to give small employers and their employees the same purchasing power that larger employers typically have and allow them to offer employees a choice of plans. The proposed regulations would provide a small business tax credit for up to 50% of contributions a small business made toward employees' premiums if certain conditions are met.
- Guidelines on Reinsurance and Risk. Separate proposed regulations provide standards for certain programs required by PPACA that are intended to mitigate the impact of adverse selection and stabilize premiums in the individual and small group markets. The proposed regulations would establish three programs, effective in 2014: a temporary reinsurance program and risk corridor program, and an ongoing risk adjustment program.