General Design

•  State Exchanges with Federal Fallback. Each state must establish an Exchange that is a governmental agency or nonprofit entity by 1/1/14 to offer qualified health plans to individuals and small employers. Provides for the federal government (either directly or through an agreement with a non-profit entity) to implement an Exchange in states that either elect not to establish their own Exchange, or states for which HHS determines, by 1/1/13, that the state will not have an operational Exchange by 1/1/14.
• Voluntary Exchanges. Exchanges will be voluntary, with insurers allowed to sell coverage, and individuals and employers allowed to purchase coverage,in the outside market. There is no penalty for switching to minimum essential coverage outside of an Exchange.
• Small Business Health Options (SHOP) Exchange. Requires states to establish an Exchange for the individual market and a Small Business Health Options (SHOP) Exchange for the small group market, with flexibility to establish a single Exchange for both markets.
• Each state Exchange will certify health plans as qualified health plans (QHPs).
• HHS Responsibilities. Requires HHS to:
  • Establish criteria for the certification of QHPs. (PPACA § 1311(c))
  • Develop a rating system to rate QHPs offered through an Exchange. (See row below)
  • Develop an enrollee satisfaction survey system to evaluate enrollee satisfaction with participating plans.
  • Continue to operate, maintain and update the Internet Portal developed by HHS by 7/1/10 and make available a model template for Internet portals that state Exchanges can use.
  • Require Exchanges to provide for enrollment periods. (PPACA § 1311(c)(6))
  • Audit Exchanges annually; also allows HHS to investigate Exchanges and implement other financial integrity provisions. (PPACA §§ 1311(b),1312(d)(3), 1313)

 Tax Credits Tied to Exchange

Ties premium tax credits and cost-sharing subsidies to coverage purchased exclusively through the Exchange. (PPACA § 1401; IRC § 36B)

 Limit on Participating Plans

Allows states to exclude some plans that otherwise appear to meet the requirements of a qualified plan.

• In General. Exchanges must determine that allowing a plan to participate is “in the interests of” eligible participants. Provides for the Exchange to also take into account any “excess of premiums growth outside the Exchange as compared to the rate of such growth inside the Exchange,” including information reported by states. However, the Exchange cannot exclude a health plan on the basis that it is a FFS plan, through the implementation of premium price controls or on the basis that the plan provides treatments necessary to prevent patients’ deaths in circumstances that the Exchange determines are inappropriate or too costly.
• Premium Increase Justifications. Requires plans to submit justification for any premium increase prior to implementation, and to post such information on plan websites. Gives Exchange authority to use this information (and recommendations provided by states related to patterns of excessive or unjustified premium increases under the bill) in determining whether to make a plan available in the Exchange. Exchanges are also required to consider reasonableness of premium increase when deciding whether to allow plans to participate. (PPACA §§ 1311(e), 10104(f)(1))

 Rating System

• HHS will develop a system to rate Qualified Health Plans (QHPs) in each Exchange and each benefits level, based on price and quality.
• Quality ratings information will be presented in the new Internet portals.
• Requires enrollee satisfaction surveys for each plan with over 500 enrollees. (PPACA § 1311(c)(2))

 State/Regional Options

Provides flexibility for:

• Regional or other interstate Exchanges if the state(s) involved permit such operations and HHS approves such Exchanges.
• Subsidiary Exchanges, if each Exchange serves a geographically distinct area that is at least as large as a rating area (as established by a state and reviewed by HHS). (PPACA § 1311(f)(1)-(2))

 Exchange Functions

Requires Exchanges to:

• Offer qualified health benefits plans. Allows states to require additional benefits, but if they do so, they must assume the costs incurred by such additional benefits.
• Offer limited scope pediatric dental benefit plans.
• Implement certification procedures and policies.
• Provide a toll-free telephone hotline for Exchange assistance.
• Develop an Internet website for standardized comparative information on plans.
• Provide public ratings of the participating Exchange plans (see explanation above).
• Use a standard format for presenting health plan options in the Exchange, including the use of the uniform outline of coverage established under the new PHSA § 2715.
• Inform individuals of eligibility requirements for Medicaid and CHIP, and if, through screening of Exchange applications, the Exchange identifies individuals who are eligible for such programs, to enroll such individuals in Medicaid or CHIP.
• Make a calculator available to determine individuals’ cost of coverage, taking into account any tax credits they may qualify for.
• Grant certifications that individuals are exempt from the individual mandate requirement because there are no affordable plans available in the Exchange or the individual meets other mandate exemptions.
• Grant certifications of exemptions from the individual mandate for those who meet affordability or other exemptions.
• Notify employers and the Treasury of such exemptions and of information on employees who were determined eligible to enroll in the Exchange.
• Establish the Navigator program (described in the “Public Education/Outreach” row below).
• Be self-sustaining by 1/1/15.
• Consult with stakeholders, including consumers, representatives of small business and self-employed individuals, state Medicaid offices, those with experience in facilitating health plan enrollment and advocates for enrolling hard-to-reach populations.
• Publish on an Internet website the average costs of licensing, regulatory fees and other payments required by the Exchange, as well as the administrative costs of the Exchange.
• Account for expenditures. (PPACA §§ 1311(d), 1313)

 Standards for Participating Health Plans

• Meet Requirements Established by HHS for Participating Plans:
  • Meet marketing requirements and not employ marketing practices or benefit designs that have the effect of discouraging enrollment by those with significant health needs.
  • Ensure sufficient choice of providers and provide information on the availability of in- and out-of-network providers.
  • Include "essential community providers" who serve low-income and underserved communities in plan networks.
  • Be accredited for clinical quality measures such as HEDIS and patient experience ratings by CAHPS surveys as well as consumer access, UM, quality assurance, provider credentialing, complaints and appeals, network adequacy and access and patient information programs by an accreditation entity recognized by HHS.
  • Implement and report on a quality improvement strategy described as a payment structure that provides increased payment or other incentives for the following kinds of activities (to be described in further detail in HHS guidelines):
    • Improving health outcomes;
    • Preventing hospital readmissions;
    • Improving patient safety and reducing medical errors;
    • Implementing wellness and health promotion activities; and
    • Reducing health care disparities through language services, community outreach and cultural competency training.
  • Utilize uniform enrollment forms for qualified individuals and employers, that takes into account NAIC criteria for paper and electronic forms.
  • Utilize a standardized format for explanation to customers of health benefits and plan options.
  • Provide information to enrollees and Exchanges on any quality measures for health plan performance endorsed under PPACA § 3015. (PPACA § 1311(b), (g))
• Meet Mental Health Parity Requirements. (PPACA § 1311(j))
• Justify Rates. Any Exchange plan must, before raising premiums, submit justification to the Exchange and post such justification on their websites.
• Exchanges can consider such information in determining Exchange participation status for health plans. (PPACA § 1311(e))
• Meet Provider Contracting Requirements. Starting 1/1/15, also prohibits plans from contracting with:
  • Hospitals with >50 beds unless such hospitals use a patient safety evaluation system as described in the Medicare Advantage statute and implement a mechanism to ensure that each patient receives a comprehensive program for hospital discharge that includes patient-centered education and counseling, comprehensive discharge planning and post-discharge reinforcement by an appropriate health care professional.
  • Providers, unless they implement “such mechanisms to improve health care quality” as HHS requires by regulation. (PPACA § 1311(h))
• Meet Transparency/Disclosure Requirements. See above “Uniform Explanation of Coverage and Transparency Requirements” under the Near-Term Reforms section.

 Benefits Requirements

Participating plans must agree to offer at least one QHP in the Silver level and at least one plan in the Gold level in each Exchange in which it operates. (PPACA § 1301(a)(1)(C)(ii))

 Public Education/Outreach

• Open Enrollment. Requires Exchanges to provide for:
  • An initial open enrollment period (requires HHS to make a determination as to the date of the initial OEP by 7/1/12)
  • Annual open enrollment periods (for years following the initial OEP)
  • Special enrollment periods under HIPAA (IRC § 9801) and other SEPs “under circumstances similar to SEPs under Medicare Part D.” [Note: These SEPs are different from those required in the general guaranteed issue requirement, which provide for SEPs provided under ERISA § 603 (COBRA)].
  • Special monthly enrollment periods for Indians. (PPACA § 1311(c)(6))
• Role of Agents/Brokers. States can allow, under HHS procedures, insurance agents and brokers to help individuals and employers enroll and apply for tax credits. (PPACA § 1312(e))
• Navigators. Exchanges will award grants to entities to increase public awareness and education about QHP choices, with impartial information and services.
  • Such entities could include trade/industry/professional associations, fishing/ranching/farming organizations, community groups, chambers of
  • commerce, unions, resource partners of the Small Business Administration and other licensed insurance agents and brokers that demonstrate they have existing relationships (or could readily establish relationships) with employers, employees, consumers or self-employed individuals likely to be qualified for Exchange coverage. No health insurer or entity receiving direct consideration from a QHP-offering insurer is eligible to be a Navigator.
  • Duties for Navigators include: conducting public education activities; distributing fair and impartial information about QHPs and subsidy availability; facilitating Exchange enrollment; referring individuals to offices of health insurance consumer assistance or other appropriate state agencies regarding grievances, complaints or questions about their health plans, coverage, and providing culturally and linguistically appropriate information. (PPACA §§ 1311(i), 10104(h))
• Coordination with Medicaid and CHIP. By an unspecified date, requires HHS to develop a single form that will allow individuals to apply for enrollment in Medicaid, CHIP or Exchange subsidies and receive a determination of eligibility. Exchanges are required to inform individuals of eligibility requirements for Medicaid and CHIP. If an Exchange determines that such individuals are eligible for any such program, Exchanges are required to enroll such individuals in such program. (PPACA §§ 1311, 1413)

 Exchange Eligibility

- Individuals

• Any legal resident not incarcerated. (PPACA § 1312(f))

- Employers

• Available to small group market, which the bill defines as 1-100 workers, with the option for states to define the market as 1-50 until 1/1/16, at which time employers with up to 100 employees must be allowed to purchase coverage through the Exchange. (PPACA § 1304(b))
• Starting in 2017, states may allow employers with >100 employees to participate in the Exchange at the discretion of HHS. (PPACA § 1312(f))
• Employees will have a choice of carriers within a level of coverage (Bronze, Silver, Gold or Platinum) chosen by the employer. (PPACA § 1312(a)(2))
• Members of Congress and congressional staff may only be offered health plans created by the PPACA or offered through an Exchange. (PPACA § 1312(d))

- Medicaid/CHIP Enrollees

See Medicaid and CHIP sections below.

 Accreditation

Be accredited for clinical quality measures such as HEDIS and patient experience ratings by CAHPS surveys. (PPACA § 1311(c))

 Treatment of State Benefit Mandates

States may require additional benefits, but must assume the costs of providing those benefits. (PPACA §§ 1311(d)(3), 10104(e))

 Oversight and Enforcement

• HHS Role. If a state does not establish an Exchange by 2014 or, in 2013, it appears the state will not meet the 2014 deadline, HHS will (either directly or through a nonprofit entity) establish an Exchange in that state. (PPACA § 1312(c))
• Deeming of Existing Exchanges. Requires HHS to “presume” that Exchanges in existence before 1/1/10 that insure a percentage of the population that is at least as high as the percentage projected to be covered nationally after the implementation of this law, meet the standards for Exchanges, unless HHS determines that the Exchange does not comply with such standards. (PPACA § 1321(e))

 Grants

Not later than 1 year after date of enactment, HHS will give states grants to establish Exchanges. (PPACA § 1311(a))

 State Basic Plan Option

• State Option. States and/or “regional compacts” of states may seek HHS approval to establish a federally-funded, non-Medicaid program to cover persons between 133-200% FPL.
• In Lieu of Exchanges. The program would be in lieu of enrolling eligible individuals in Exchanges. Specifically precludes eligible individuals from enrolling in an Exchange plan (and therefore not able to receive Exchange subsidies).
• Funding. Federal funds to the state would be capped. Formula for state funding is equal to 95% of the subsidies and cost-sharing reduction that would have been provided over a fiscal year through an Exchange for enrollees in the state basic plan option
• Eligibility. Eligible individuals must be under 65 and not eligible for employer coverage, Medicaid or other minimum essential coverage.
• Coverage. Must be equal to at least the essential health benefits inside an Exchange.
• Contracting
  • Required to contract with “managed care systems, or with systems that offer as many of the attributes of managed care as are feasible in the local health care market.”
  • Participating plans would have to maintain an MLR of 85%. The state program is required to have a competitive process for entering into contracts with “standard health plans,” including negotiation of:
    • Premiums and cost-sharing.
    • Benefits in addition to the essential benefit requirements.
    • Inclusion of innovative features such as care coordination and care management for enrollees, especially for those with chronic health conditions.
    • Incentives for use of preventive services and the establishment of relationships between providers and patients that maximize patient involvement in health care decision-making, including providing incentives for appropriate utilization under the plan.
    • Suitable allowances for differences in health care needs of enrollees and differences in local availability of, and access to, health care providers.
• Regional Compact. A state may negotiate a regional compact with other states to include coverage of eligible individuals in all such states in agreements with contracted entities offering the coverage.
• Effective Date. Unspecified, but presumably 2014 when subsidies begin. (PPACA § 1331)

 Other

• Direct Payment of Premiums. Allows enrollees to pay premiums directly to their health plans. (PPACA § 1312(b))
• GAO Study. Requires GAO to conduct an ongoing study of Exchange activities and enrollees, including a review of Exchange operations and administration (including surveys and reports of QHPs, as well as their claims statistics and complaints data, and Exchange expenses). Also requires the study to include a survey of the cost of coverage provided to small employers inside and outside of Exchanges. (PPACA §§ 1313(b), 10104(k))
• Consultation with Consumers. Exchanges must consult with “educated health care consumers,” defined as “an individual who is knowledgeable about the health care system and has background or experience in making informed decisions regarding health, medical, and scientific matters,” as well as persons or entities with enrollment experience, representatives of small businesses and the self-employed, state Medicaid offices and advocates for enrolling hard-to-reach populations. (PPACA §§ 1304, 10104(d), 10104(e))