Virginia's Promotion of Competition and HHS' Notices of Proposed Rulemaking on Health Benefit Exchanges
Virginia Health Reform Initiative Advisory Council Meeting
The Virginia Health Reform Initiative Advisory Council (“Council”) is tasked with providing options and recommendations related to the establishment of a Health Benefit Exchange (“HBE”) to the Governor and General Assembly by October 1, 2011. The Council met on July 15, 2011, at the Virginia Department of Health Professions to discuss issues related to the establishment of a HBE in Virginia and make preliminary decisions related to the promotion of competition in the HBE. The Council had previously met and discussed issues regarding the governance of the HBE.
Prior to the meeting, the Council sought written comment on certain questions related to the promotion of competition in a HBE. These questions included:
- How should Virginia seek to build capacity within the Virginia HBE so that it can remain compliant with federal performance requirements while ensuring that over time Virginia maintains autonomy from the federal government?
- Should the Virginia HBE be statewide, multi-state, or a set of geographically contiguous sub-state exchanges?
- Should Virginia combine the non-group and small group risk pools or keep them separate as they are today?
- How small is a “small group”?
- Should Virginia require more benefits than the “essential benefits package”?
- Should Virginia make all market rules that will be adopted inside the HBE also applicable to the parallel markets (individual and small group) outside the HBE?
- Should Virginia encourage or require the HBE to be more of an active purchaser or an open market facilitator?
The Council made a number of preliminary decisions regarding these and other issues. The Council decided, subject to the receipt of additional information, that: (i) Virginia’s HBE should be statewide; (ii) the Virginia individual and small group risk pools should be kept separate but should be combined for administrative purposes; (iii) a small group should be defined as having between 2 and 50 employees; (iv) insurance agents should also be permitted to be navigators in the HBE but issues regarding compensation were deferred; and (v) Virginia should not make all market rules adopted inside the HBE applicable to parallel markets (individual and small group) outside the HBE, but the HBE will need to review the adverse selection impact. Many other questions were not answered or were left to be decided at future meetings.
The Council will make decisions regarding the other outstanding issues, as well as those pertaining to governance before October 1, 2011. The next meeting of the Council is September 9, 2011.
United States Department of Health and Human Services Notices of Proposed Rulemakings
On July 11, 2011, the United States Department of Health and Human Services (“HHS”) published two Notices of Proposed Rulemaking (“NPRM”). The first NPRM sets forth (i) the federal requirements that States must meet if they elect to establish and operate a HBE; (ii) the minimum requirements that health insurance issuers must meet to participate in a HBE and offer qualified health plans; and (iii) the basic standards that employers must meet to participate in the Small Business Health Options Program.
While the intent is to provide States with discretion in the design and operation of a HBE, it should be noted that the NPRM also states that “[g]reater standardization is proposed where required by the statute or where there are compelling practical, efficiency or consumer protection reasons.” The second NPRM addresses standards related to reinsurance, risk corridors, and risk adjustment to assure stability in these newly established markets. The two NPRMs are lengthy; one 244 pages and the other 103 pages. Interested parties have until September 24, 2011 to submit comments on the NPRMs.
Virginia’s Position on HBEs
Virginia is taking a middle ground approach on HBEs. While at least 9 states have established HBEs already, at least 20 states have taken no action on establishing a HBE or have chosen to reject the establishment of a HBE. Under the federal Patient Protection and Affordable Care Act (“PPACA”), a state HBE must meet the federal requirements. PPACA requires the Secretary of HHS to establish and operate a HBE within states that either: (i) do not elect to establish a HBE, or (ii) as determined by the Secretary on or before January 1, 2013, will not have a HBE operable by January 1, 2014. Virginia is pursuing the establishment of a HBE by setting the groundwork and making recommendations for the Governor and General Assembly to consider, but it has not yet established the legislative framework governing a HBE.
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