If you are a regular reader of this blog, you know that implementing health reform presents an even greater challenge than passing federal health reform legislation (despite Congress taking not just months, but decades to make it happen). In particular, you have probably noticed that states have had a lot of work to do – not to mention the Department of Health and Human Services. They aren’t the only ones, though. The Office of Personnel Management (OPM) was given a fairly specific but nonetheless challenging assignment under the ACA – establishing the multi-state plan program.
The goal of the multi-state plan program is to increase competition in state health insurance markets by introducing at least two new high quality plans that have been approved by OPM. To make the program attractive to issuers and achieve that increase in competition, OPM is given authority to standardize the contracting process and certain rules. And once OPM certifies a multi-state plan, it is “deemed” certified for participation in all the health insurance exchanges. The idea is to make it easier for insurers to enter markets they aren’t currently operating in. (Of course, as CHIR research has demonstrated, this policy doesn’t address one of the primary impediments to new competition: building a provider network.) At the same time, Congress also limited the extent to which multi-state plan issuers could bypass state consumer protections to preserve a level playing field between multi-state plans and other plans in the state.
OPM has the difficult job of balancing these competing pressures. In the final rule implementing processes and standards for the multi-state plan program, OPM attempts to do this by both 1) emphasizing that it plans to make sure that multi-state plans have neither a competitive advantage or disadvantage compared to other qualified health plans sold on exchanges and intends to require multi-state plans to follow state laws and other standards set by state exchanges and 2) reserving authority to exempt multi-state plans from state requirements on an as needed basis. How this will play out in practice is an open question, but the final rule provides some insight into where multi-state plans may or may not have flexibility. For instance:
- While the ACA requires multi-state plan issuers to offer plans in 60% of states in their first year in the program, OPM will not require multi-state plans to offer coverage throughout a state – at least not in the beginning. Recognizing that some states or exchanges may require insurers to provide statewide coverage, OPM notes that multi-state plan issuers should follow such laws, but only “to the extent it is within their capability to do so.” This means that multi-state insurers can pick and choose the markets in which they operate, making it less likely that areas within a state that lack competition will see any new market entrants early on.
- Similarly, even though the small group market is highly concentrated in many states – often with only one or two insurance companies to choose from, OPM is generally providing leeway to issuers in terms of participating in the small business exchanges (SHOP exchanges). If state-based SHOP exchanges have stricter standards governing participation, “OPM retains discretion to allow an MSPP issuer to phase-in SHOP participation.” OPM does, however, note in the preamble that multi-state plan issuers must offer coverage for both individual and small groups in states like Massachusetts and Vermont, as well as DC, which merge their individual and small group markets.
- Multi-state plans need only to follow a state-selected EHB benchmark plan if the state prohibits substitution. Otherwise, a multi-state plan issuer may opt to use one of three EHB benchmark plans selected by OPM instead. At this time, CHIR researchers have found very few states acting to prohibit substitution. Likewise, if a state defines habilitative services and devices, the issuer will need to follow the state definition, while, if they do not, OPM may determine what is to be included during contract negotiations.
- It appears that OPM intends to require multi-state plan issuers to comply with any state rules standardizing benefit designs or cost-sharing limits, as well as state requirements related to offering certain levels of coverage.
- On the other hand, multi-state plan issuers will not be required to meet state network adequacy requirements in the first year – rather, they will follow standards adopted by OPM that are intended to match the minimum federal exchange standards for network adequacy. However, OPM believes this provision, as well as the general requirement that multi-state plan issuers comply with state laws, would mean that multi-state issuers must comply with state “any willing provider” laws.
- OPM notes that it multi-state plan issuers will need to comply with state form and rate review laws. Nonetheless, if OPM does not agree with a state’s determination, OPM acknowledges that “state approval of a policy form is not a precondition of OPM approval” and that it “retains authority to make the final decision to approve rates for participation” in the multi-state plan program. OPM does note, though, that it intends to allow state rate review processes (including administrative and judicial remedies) to proceed so long as prospective multi-state plan issuers have adequate time to prepare for open enrollment periods. This policy presents the possibility that OPM will certify a multi-state plan whose rates and/or policy contract has been rejected by a state department of insurance. OPM proposes a dispute resolution process (described below) for this – perhaps unlikely – scenario.
- OPM will administer the external review process for multi-state plans (unless an adverse benefit determination is related to medical judgment, in which case an independent review organization will be used), but will follow the ACA’s standards for external review that apply to state processes to maintain a level playing field.
- Multi-state plan issuers will be expected to comply with state rating rules, to the extent they go beyond the federal requirements (for instance, if a state prohibits tobacco rating or adopts its own age curve).
- While OPM intends for multi-state plans issuers to generally be subject to the same standards as qualified health plan issuers, they do not need to participate in any selective contracting processes (dubbed “operational processes”) established by exchanges. Rather, issuers will contract directly with OPM, which will deem plans as certified to be sold on exchanges.
If a state disagrees with a decision by OPM to waive the applicability of a state law to a multi-state plan or issuer, it can request a redetermination. This request must be made in writing. OPM will be required to respond with a written decision within 60 calendar days. A different official from the one who made the initial determination will be called in to conduct the review of a state’s request.
Given the constraints placed on the program under the ACA, OPM officials may feel that it is necessary to retain as much discretion as it has in order to implement the program effectively – including contracting with at least two health insurers in the first year. OPM is currently signaling its intention to defer to state laws and standards. But, by giving itself considerable flexibility to determine which state rules are or are not preempted, OPM opens the door for variation in the standards that are applied to issuers by future Administrations
CHIR researchers intend to keep an eye on how implementation of the program proceeds this spring and we will keep you up to date on any major developments.