The Affordable Care Act (ACA) requires the health insurance marketplaces (or exchanges) to conduct plan management, which includes certifying participating health plans, collecting and reviewing rate and benefit information, managing contracts, monitoring ongoing compliance issues, recertifying and decertifying plans, and managing open and special enrollment periods. While state insurance departments (DOIs) can make recommendations to certify or decertify a marketplace plan, it is the marketplace that must make the final determination. In the case of the federally run marketplaces, the “decider” is the U.S. Department of Health & Human Services (HHS).
Under the Obama administration, HHS generally deferred to state DOIs’ judgments about participating health plans. But the agency took seriously its ultimate accountability for plan management, and required insurers to submit rate and plan data in order to conduct HHS’ own analyses. For example, in the wake of reports of overly narrow provider networks among marketplace health plans, HHS began requiring insurers to submit lists of providers in their networks and conducting its own reviews.
A New Approach to Marketplace Plan Management
HHS under Secretary Price has announced that it will no longer review health plans’ provider networks in states that have the “means and authority” to assess network adequacy. The agency has also said it will “further streamline” the oversight of marketplace plans by deferring to the states’ reviews of plans and rates. For example, HHS will defer to states on:
- Whether insurers are licensed and in good standing;
- Network adequacy determinations;
- Assessing insurers’ service areas;
- Whether or not drug formularies or benefit designs discriminate against enrollees based on health status.
If a state does not perform the above activities, HHS has said it will continue to do its own reviews.
Issues for consumers and plan enrollees
Consumers enrolled in marketplace plans continue to depend on government oversight to ensure they receive the full range of protections promised under federal and state law. For example, many insurers are likely to push the envelope towards narrower provider networks in order to deliver more competitive premiums. While consumers have shown a willingness to trade a broad choice of providers for a lower price, overly narrow networks could impinge on their ability to obtain timely, accessible care.
At the same time, a perception among insurers that the ACA’s individual mandate will not be enforced, and the recent cuts in advertising and consumer assistance funding will likely lead to a sicker marketplace risk pool. This, in turn, could give insurers incentives to use service areas and drug formulary and benefit designs to deter enrollment among high risk populations. These incentives call for regulatory oversight to ensure that all insurers are playing by the same rules and that people with pre-existing conditions can obtain coverage that meets their needs.
Many states with a federally run marketplace conduct robust plan management and have expanded their DOI’s capacity to do so. However, as many as 18 states declined to provide marketplace plan oversight, lack the authority, and/or have extremely limited staff and expertise to do the job.
HHS under the Obama administration conducted plan management in order to fill gaps in state authority or oversight. The removal of a federal regulatory backstop could mean that key criteria for plan certification could receive little or no review before plans are marketed and sold to consumers.
In many ways, states are best equipped to conduct plan management. State DOIs communicate regularly with insurers operating in their state and are more knowledgeable about market conditions on the ground. However, to ensure consistent oversight of the individual market and the clear ability to enforce federal consumer protection standards, some DOIs may need explicit authorization from their legislatures. Others, while they may have the authority, lack the staff with the necessary expertise and need new resources, both financial and technological, to perform the needed plan analyses. States also may need stepped up data collection capacity and resources to conduct post-marketing oversight. These resources are unlikely to come from the federal government and would need to be provided by state legislatures.
Editor’s Note: This is the second in a blog series about state options in the wake of federal actions to roll back or relax ACA regulation and oversight. They are based on an issue brief and fact sheet series funded by the Robert Wood Johnson Foundation, available here.