Healthcare Business News

HHS gives initial OK to eight more insurance exchange plans

By Rich Daly
Posted: January 3, 2013 - 2:45 pm ET

With eight new plans approved, 17 states in all have received a tentative nod from the CMS to operate their own health insurance exchanges while two more will offer the insurance marketplaces with federal help, according to the latest round of approvals.

HHS provided conditional approval Thursday for seven more states—California, Hawaii, Idaho, Nevada, New Mexico, Vermont and Utah—to operate state-based exchanges, and Arkansas was approved to operate a state partnership exchange with the federal government. Ten other states and the District of Columbia had previously received conditional approvals to launch their own exchanges, while Delaware was approved for a partnership exchange.

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“States across the country are working to implement the healthcare law and build a marketplace that works for their residents,” HHS Secretary Kathleen Sebelius, said in a news release. “In 10 months, consumers in all 50 states will have access to a new marketplace where they will be able to easily purchase affordable, high quality health insurance plans.”

Federal officials are planning to launch federally operated exchanges in states that are not approved either to operate their own exchange or to do so in partnership with the federal government.

The deadline for states to submit applications to operate their own exchanges passed on Dec. 14, 2012, but states still have until Feb. 15 to apply for a state partnership exchange.

The exchanges, a central pillar of the Patient Protection and Affordable Care Act, are intended to spur insurer competition and expand coverage through private health insurance plans not tied to individuals' employment. Exchange-based insurance plans are expected to provide coverage to 9 million people when they launch in 2014 and expand to 26 million people by 2022, according to July estimates by the Congressional Budget Office (PDF).

At least seven states have opted to have the federal government operate their exchanges, according to recent testimony by Gary Cohen, director of the Center for Consumer Information and Insurance Oversight at the CMS. Many Republican governors have indicated they will decline to participate in the exchanges because states will have little control over them.

HHS also issued more guidance detailing which aspects of an exchange the state would operate under the partnership model (PDF).

The only state to apply to operate an exchange in partnership or independently and not yet receive tentative approval was Mississippi. CMS officials said they suspended their consideration of that state's exchange application when legal questions were raised about whether the state insurance commissioner had the legal authority to submit the application.

“We've come to understand that there is some disagreement within the state as to authority to perform the functions of operating an exchange, and we're working with the state officials to get clarification on that,” Cohen said in a call with reporters.

All of the exchange approvals provided have been conditional, but CMS officials were optimistic they would eventually provide them this year with permanent approval.

“In all of these states there is more work to be done to be ready for open enrollment in October of 2013, but we believe that they have made significant progress and have presented a plan to get them there and that is the basis for the approval that we made,” Cohen said.

State leaders across the nation are likely to pay especially close attention to Utah's exchange. The state's exchange that existed before the federal law's enactment was a much more basic model than the federal version, and the state proposed relatively few changes to it. Some supporters of the federal law had urged CMS officials to reject the state's application because it contained few of the standard provisions required in other exchanges.

Cohen said Utah will be required to expand its exchange to include the individual insurance market and to add a so-called navigator program, which assists with individuals' enrollment. But he declined to specific any further changes the CMS is requiring the state to implement before it provides final approval.

“They said that they are going to have a plan that will comply with the law, so we have said we will work with them,” Cohen said.

There is no deadline for the CMS to issue a decision on final approvals for any state, he said.

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