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Most States Shun Fed HIX Partnerships, But Seek Accommodations

 |  By jfellows@healthleadersmedia.com  
   February 20, 2013

By most accounts seven is considered to be a lucky number. How that luck will play out among the seven states who have decided to partner with the federal government on running health insurance exchanges remains to be seen.

Friday was the deadline for states to decide whether or not to partner with the feds on exchanges; the seven who decided to do so include:



>>>Kaiser Family Foundation
HIX Decision Map

  1. West Virginia
  2. New Hampshire
  3. Delaware
  4. Michigan
  5. Iowa
  6. Illinois
  7. Arkansas

As unlikely as it may have seemed to the feds in the early planning stages of health insurance exchanges, a federally run exchange is what most states—27—will use.  Sixteen states plus the District of Columbia will take on the job of implementing and running exchanges themselves.

"We thought there would be nearly 50 state exchanges," says Caroline Pearson, vice president for Avalere Health, "At the time, the thought of a federal exchange was considered to be really an outlier and truly a fallback, not the majority as it looks like the case will be."

"It is definitely a lot lower than what policymakers envisioned when the law was passed." Pearson is tracking the implementation of the Patient Protection and Affordable Care Act at the state level.

There are no real surprises on the list of states pursuing a federal partnership model. Delaware was an early adopter to the idea, and the others all indicated earlier they would follow suit.

The bigger surprise comes from Virginia and Ohio. Both states are defaulting to a federally run exchange while at the same time indicating they will continue to oversee plan management activities, which is a key characteristic of a partnership arrangement. Confused? So is Pearson.

"The whole thing is a bit befuddling," she says. "Much of the responsibilities that they are citing they want to maintain control over are things that are components of that partnership option."

Virginia's legislature is on track to pass a bill giving its insurance department the authority to collect information on plan rates and benefits, ensure compliance, resolve customer complaints, provide technical assistance and decertify providers who participate in the federally run exchange.

Ohio sent similar overtures to HHS, and Pearson says it is uncertain how those states' actions will affect their exchanges.

"Until we get more guidance from HHS on whether this is permissible or what the legal authority is, I'm not sure we're going to have a clear understanding of it," says Pearson.

It's unlikely either state will forego grant money. HHS has made it clear that states who chose a federally run model will not be exempt from grants.

Another state is also attempting to set its own ground rules on a federally run exchange. South Dakota legislators are considering a bill that would require a person buying health insurance on the exchange to use an agent.

In general, states have broad authority over brokers and agents interacting with the exchanges, but South Dakota's actions, if passed, could potentially drive up the cost and complexity since the exchange is meant to be mostly an online experience for the user.

"The idea that South Dakota would mandate the use of a broker, would be quite novel, but that would be in their jurisdiction," says Pearson.

Friday's deadline is likely a soft one. The federal government, possibly anxious to get out from under the unexpected heavy lifting it's left with for crafting and running these exchanges, has said states can change their exchange model at any time. Depending on its response to Virginia, Ohio, and South Dakota, more states may seek accommodations rather than a change in status.

With states' insurance exchange models settled for now, Pearson says she expects a strong response from health plans despite the plans being a "little wary" of a federally run exchange.  

"I have definitely heard some plans express concern because the federal government has said things like 'We may apply a meaningful differences policy in future years,' where they would actually limit the number of products they offered," says Pearson.

"It's that kind of propensity to take a more active approach in the future or change the rules that makes them uncertain of the federal exchange. On the flip side, there is some efficiency for a plan to engage with the federal exchange because it's going to have a standard application template, a standard way of doing things."

Jacqueline Fellows is a contributing writer at HealthLeaders Media.

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