Last Friday, the Obama Administration released two major rules providing additional guidance on the Patient Protection and Affordable Care Act (PPACA).
The first was written by the Department of Health and Human Services and details a variety of important exchange-related topics. In tandem, HHS also released a fact sheet with previously released regulations intended to provide information on the progress of setting up federal exchanges.
The second regulation addresses the Multi-State Plan Program (MSPP) and was released by the Office of Personnel Management.
The HHS rule, totaling 373 pages, is intended to give additional guidance on numerous topics and most notably contains some long-awaited information on federal health insurance exchanges. In addition, the new regulation provides specifics on the PPACA's risk adjustment, reinsurance and risk corridor programs, cost sharing reductions and advance payments of premium subsidies, as well as some conforming and largely technical changes to the medical loss ratio rules.
In a win for agents and brokers, the HHS regulations envision producers selling health insurance through the federal exchange(s). HHS had mentioned an agent role in previous guidance, but until now had not released any official documentation on the matter.
Although many details will still need to be released on exactly how producers will function within the exchanges, this is a positive step for Big “I” members. This is especially true since so many states will forgo setting up their own exchange, instead letting the federal government step in.
The HHS announcement also addresses producer compensation in vague language on page 240. The agency proposes that agent and broker compensation must be the same both inside and outside of exchanges for "similar health plans." The regulation states this is an effort to create a "level playing field," and that federal exchanges will only certify an insurer if its plans comply with the new compensation rules.
Also, the regulation states that only agents and brokers who complete registration and training stipulated by the federal exchange may have their information displayed on the exchange's website. Details on exactly how these registration and training programs will work have yet to be provided.
In other notable developments from the new HHS regulations, the department proposes insurers pay a user fee of 3.5% of premiums for each plan they sell through an exchange. This is intended to cover the administrative cost of running the exchange(s), and may be adjusted over time. The regulations also build off previously issued guidance on a trio of new programs—the risk adjustment, reinsurance and risk corridor programs—intended to reduce the impact of adverse selections created when exchanges are up and running.
In the MLR portion of the regulations, HHS intends to change the MLR formula to adjust for the monetary impact of the three risk adjustment programs. The rule also proposes a two-month delay in MLR rebate payments for consumers while the new MLR formula is administered.
The second set of regulations, written by the OPM, provides new details on MSPP. Multistate plans are health plans to be offered through exchanges on a national level. The terms for these plans will be negotiated and administered directly by the OPM.
By 2017, exchanges in every state must carry at least two multistate plans, one of which must be a nonprofit. The multistate plan concept was created by the drafters of the PPACA with the stated intention of increasing competition and giving consumers access to the same health care as federal government workers.
But many worry these plans could compete on an uneven playing field with private plans within the exchanges, since they are administered by the federal government and do not have to comply with many of the normal plan rules.
Many additional details have yet to be released by the Obama Administration on the PPACA, including topics such as the navigator programs and greater detail on the agent role in federal exchanges. The Big “I” government affairs team will continue to share information through IN&V as it is released.
Ryan Young is Big “I” senior director of federal government affairs.