The legislature has authorized the state’s health benefit exchange to establish an operational health benefit exchange in Washington. Below is a synopsis of the bill, supported by Group Health, which is expected to be signed by the governor any day.
Market Rules
- The legislation builds upon a bill enacted last year that created a nine member exchange board.
- Establishes modest market rules to govern how carriers participate in the individual and small group market; prohibits carriers from only offering plans that attract healthy enrollees or from designing benefits that do the same.
- Carriers offering bronze level coverage outside the exchange must also offer silver and gold coverage. Carriers offering bronze, silver, gold and platinum plans outside the exchange must abide by the actuarial requirements in federal law.
- Catastrophic coverage can only be sold inside the exchange.
- The OIC must evaluate prescription drug benefits to ensure variation in consumer costs shares are not structured to result in adverse selection.
- The exchange must evaluate the market rules by December 1, 2016, and recommend to the legislature whether they should be continued.
Qualified Health Plans
- The exchange is authorized to certify qualified health plans if they meet the state’s insurance laws, the Affordable Care Act requirements for qualified health plans, and have tribal clinics and urban Indian health clinics in their provider networks.
- Provider networks that meet a definition of integrated delivery systems are exempted if federal regulations allow ( final rule still under development).
- Retainer practices may be offered in the exchange if they meet federal requirements.
- The exchange must establish a rating system to help consumers choose among plan offerings.
Financing
- The exchange must be financially self-sufficient by January 2015 (or it will be suspended), but may seek federal grants and subsidies, assess health carriers and charge enrollees through premiums.
- The exchange shall seek input from carriers to develop a funding mechanism that fairly and equally apportions administrative costs of the exchange; changes will be proposed to the 2013 legislature.
- Third-party payers may pay for premiums of enrollees and employees in the SHOP exchange and may choose from any plan in the exchange offering the same plan metal level selected by the employer.
Essential Health Benefits
- The essential health benefit benchmark plan will be the largest small group plan currently offered by a carrier. All ten of the federally required categories of benefits must be include in that plan, or the OIC may add the missing categories.
- The OIC must find that a particular plan meets the essential benefit requirements before it may be offered and can take into consideration whether a plan’s benefit design would create a risk of biased selection based on health status.
- Beginning annually in December 2012, the OIC must submit to the legislature a list of the state’s mandated benefits (and the cost to the state) that, if enforced, will require the state to finance coverage for enrollees receiving a federal subsidy (as required by law). If the state does not allocate funding for these enrollees, the mandates cannot be enforced for other plans in the market.
Federal Basic Health Option
- A federal basic health option (FBHO) may be authorized under certain conditions and with legislative approval. The Health Care Authority (HCA) must certify that sufficient federal funding for the program will be available to cover premium and administrative costs, and that health plan rates will be sufficient to ensure enrollee access to a robust provider network by December 1, 2012.
- The HCA must consult with stakeholders and perform a Washington-specific feasibility analysis with economic modeling through an independent nationally recognized consultant.
- Principles for implementation of a FBHO: 12-month continuous eligibility with 12-month continuous enrollment (or a financing mechanism that enables enrollees to stick with one plan for a year); obtaining a balance between affordable premiums, cost shares, and provider payment rates that ensure robust provider networks are in place; and measures to assure program transparency.
Reinsurance, Risk Adjusters and the Future of the WSHIP
- OIC is directed to adopt regulations to establish reinsurance and risk adjustment programs and must consider the option of a reinsurance program that is an “invisible high-risk pool.” The latter option would cede the full premium and risk associated with certain high-risk or high-cost enrollees and how such a program could be designed to provide effective care management.
- Regulations for the reinsurance program must establish a mechanism to collect assessments, include a reinsurance payment formula, and have a mechanism to disburse reinsurance payments. Rules may be adjusted to preserve a healthy market inside and outside of the exchange.
- OIC must identify data submissions to support operation of the reinsurance and risk adjustment programs, and must contract with one or more nonprofit entities to administer the programs.
- Assessments from the reinsurance program may be increased to cover cost for preoperational and planning activities.
- The Washington State High Risk Pool (WSHIP) is authorized to contract with the OIC to administer the state’s risk management functions.
- The WSHIP is directed to review and perform an analysis of continued access to WSHIP pool coverage for certain populations that will not benefit from federal reform, to be reported to the legislature by December 1, 2012, with any recommendations for restructuring the program.
- WSHIP assessments (and categories of entities assessed) must be examined to make the assessments fair and equitable and the possibility of credits against the federal reinsurance assessments must be explored.
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