By Joel Teitelbaum and Melissa Morrison-Reyes

Background

The Affordable Care Act (ACA) establishes Affordable Insurance Exchanges, which are entities that facilitate the purchase of Qualified Health Plans (QHP) and provide for the establishment of the Small Business Health Options Program (SHOP). Previous GPS Implementation Briefs have covered these topics here and here.

On May 16, 2012, the U.S. Department of Health and Human Services (HHS) issued a Draft Blueprint for Approval of Affordable State-based and State Partnership Insurance Exchanges, which provided additional implementation information related to the final Exchange regulations issued by HHS in March 2012. On August 14, 2012, the Office of Consumer Information and Insurance Oversight, a division within the HHS Centers for Medicare & Medicaid Services (CMS), released the final version of the Exchange approval Blueprint. The Blueprint process is designed to assure that Exchanges are approved for operation by January 1, 2013 so that they can begin offering coverage through QHPs on January 1, 2014.

Final Blueprint for Approval of Affordable State-based and State Partnership Insurance Exchanges

According to the final guidance, States must submit an Exchange Blueprint — consisting of a Declaration Letter and the Exchange Application — documenting how they will meet requirements. HHS must also be able to determine through the application whether a State will operate their own reinsurance and/or risk adjustment programs or rely on Federal services.

A Blueprint must be submitted for State-based and State Partnership Exchanges no later than November 16, 2012, or 30 business days prior to the January 1, 2013 approval date. If a Declaration Letter is submitted more than 20 business days prior to the submission of the Blueprint, a State may request an Exchange Application consultation with CMS regarding preparation of its application. HHS encourages States to submit the Declaration Letter as soon as possible.

HHS will approve a State-based Exchange when the State has demonstrated the ability to satisfactorily perform all required Exchange activities. The approval process will take into account guidance and infrastructure development provided to the States, as well as the various stages of development States will be in at the time of submitting Blueprints.

Conditional Approval will be used for those States that will not meet all requirements by the deadline but are making significant progress, and will be operationally ready for open enrollment on October 1, 2013. To be operationally ready, a State must be able to provide consumer support for coverage decisions, facilitate eligibility determinations for individuals, provide enrollment in QHPs, certify health plans as QHPs, and operate a SHOP.

Declaration Letter Requirements: A declaration letter must be signed by the Governor, include basic information associated with the Exchange Model, and designate individual(s) to serve as a point of contact. Point of contact individuals should have authority to bind the State regarding the Exchange, sign the Exchange Application, and attest to the facts of the Exchange Application for State-based and Partnership Exchanges. Also, based on the Exchange Model a State plans to pursue, there are other important requirements:

• State-based Exchange model
  • Confirmation of intention to operate a State-based Exchange;
  • Whether the State intends to administer a risk adjustment program in the first year, or use the Federal services. If the former, include State’s risk adjustment entity, whether planning to use the Federal risk adjustment methodology, and the proposed data model;
  • Whether the State is administering its own reinsurance program by establishing or contracting with nonprofit reinsurance entity — if so, provide name of entity;
  • Whether the State is performing its Advance Premium Tax Credit (APTC)/Cost-Sharing Reduction (CSR) eligibility determinations, or using Federal services;
  • Designation of individuals to be point of contact and sign Exchange Application.
• State Partnership Exchange model
  • Confirmation of intention to participate in a State Partnership Exchange, including which Partnership: Plan Management, Consumer Assistance, or Plan Management and Consumer Assistance;
  • Whether the State is administering its own reinsurance program by establishing or contracting with nonprofit reinsurance entity — if so, provide name of entity;
  • Designation of individuals to be point of contact and sign Exchange Application. Unless otherwise indicated, eligibility determinations will be assumed to be performed by the State Medicaid Director and, if applicable, the State CHIP director.
• Federally-facilitated Exchange model
  • Confirmation of intention to allow for the Secretary of HHS to establish and operate a Federally-facilitated Exchange;
  • Designation of individuals to be point of contact and sign Exchange Application. Unless otherwise indicated, eligibility determinations will be assumed to be performed by the State Medicaid Director and, if applicable, the State CHIP director;
  • Whether the State is administering its own reinsurance program by establishing or contracting with nonprofit reinsurance entity; include how it plans to meet the Section 5.2: Reinsurance program requirements.

If a Declaration Letter is not received by November 16, 2012, HHS will plan to implement a Federally-facilitated Exchange under the following assumptions: the State will not administer its reinsurance program, the State’s small group and individual markets will be merged only if already merged (if not merged SHOP will only permit qualified employees to enroll in QHPs in the small-group market), and the State’s definition of “small-group” employer will be followed.

Application for Approval: The Exchange Application is used to document the State’s completion of or progress on Exchange requirements, for either a State-based Exchange or a State Partnership Exchange.

Table 1 of the Blueprint outlines the Exchange activities that must be performed to comply with the ACA, and this table should be used to complete the Application. While states can use Designees for some activities, the State is ultimately responsible for successful performance of those activities. Approval requirements for the State Partnership Exchange mirror those of the State-based Exchange Approval requirements for activities to be performed within a Federally-facilitated Exchange. States that are applying with State-based Exchanges are also encouraged to complete the subset of activities associated with Partnership models; completion will assure that a State that receives Conditional Approval, but is subsequently unable to achieve operational milestones, will still be able to participate as a State Partnership Exchange in 2014.

In completing the Exchange Applications, States should submit: Attestations regarding completion of an Exchange activity including applicable timelines, Supporting Documentation if required, Testing Files (possibly including summary of results of State-developed testing, results of State execution of HHS-developed test scenarios, and/or summary of Independent Verification & Validation of applicable system components).

To determine an Exchange’s operational readiness, HHS may conduct on-site or virtual assessments, in addition to reviewing the Exchange Application.