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HHS Releases Proposed Rules for HIX

 |  By Margaret@example.com  
   July 12, 2011

The creation of health insurance exchanges took another step forward with the release Monday of the long awaited proposed rules that outline the requirements a state must meet to launch an exchange.

The exchanges, which were created by the Affordable Care Act, are expected to provide coverage to an estimated 11.5 million people, including members of Congress, in 2014. According to a March 2011 report from the Congressional Budget Office, health insurance exchange enrollment by individuals and small businesses will grow to 27.6 million by 2021.

Kathleen Sebelius, secretary of the U.S. Department of Health and Human Services, announced the proposed rules at a Washington, D.C press conference saying the exchanges will provide individual consumers and small businesses with a “one-stop shop to purchase healthcare coverage” and force health insurers to compete by making healthcare premium charges more transparent.

The ACA requires that states create HIX or what the HHS refers to as “affordable insurance exchanges” by January 2013 and that the HIX be up and running by January 2014.

To jumpstart the process, 49 states, the District of Columbia and four territories accepted HHS grants to plan and operate exchanges. Only Oklahoma declined the funds. More than 50% of the states have taken the additional step of passing legislation or taking administrative action to begin building exchanges.

The proposed rules provide details on the purpose, scope and operation of the exchanges. The rules cover these key areas:

  • Basic functions of a HIX. The exchanges are state-based competitive marketplaces where individuals and small businesses will be able to apply for, comparison shop and purchase private or public health insurance. HIX will be responsible for business functions such as eligibility and enrollment systems, as well as financial and health plan management. Each exchange will be required to have a navigator or outreach and education program for individuals and small businesses.
  • Standards for establishing a HIX. Each exchange will need HHS approval. States will submit their proposals for meeting HIX requirements, including a readiness assessment that demonstrates that the proposed exchange meets operational standards for exchanges such as setting up a call center and a website. HHS plans to develop a template for the exchange proposal.
  • Offering insurance through a Small Business Health Options Program or SHOP. The proposed rule permits businesses with as many as 100 employees to be eligible to offer coverage through a SHOP, which will be operated by an exchange. Similar to individual coverage, the SHOP program will have a website where employees can shop for the best prices and benefits. Employers can select a level of coverage they will offer (bronze, silver, gold or platinum plans) and define their contribution toward their employees’ coverage.
  • Certifying health plans for HIX participation. The proposed rules suggest the minimum standards to qualify a health plan, including the size of its network and service area. However a state may decide to set additional standards such as affordability and quality to meet the special needs of its population.
  • Premium stability. To help protect HIX insurers and enrollees from market uncertainties as healthcare reform is implemented, HHS proposes to offset the claims for high-risk enrollees.

To reduce duplication and the administrative burden on the states, HHS also announced that it will be available to partner with states to make exchange development and operations more efficient. States will have the flexibility to design “the exchanges that work for them,” explained Steve Larsen, director of the center for consumer information and insurance oversight at HHS.

Under the proposed rules, states can elect to develop statewide or regional exchanges or partner with HHS in the development of an exchange. States can operate an exchange as an independent public agency, as part of an existing agency or they can create a non-profit organization to run the exchange.

HHS also announced that it may provide conditional approval to states that don’t meet the January 2013 deadline for HIX certification but which have made sufficient progress to the point that HHS believes the state will have the exchange ready for the required January 2014 launch.

Public comment on the proposed rules, which run more than 200 pages, will be accepted over the next 75 days. To facilitate the public comment process, HHS will convene a series of regional listening sessions and meetings. The location of those sessions will be announced at a later date. The final rules are expected later this year.

Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
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