The Top Three Questions on Multi-State Plans

Earlier this month, my colleague Sabrina Corlette offered a great summary of the Office of Personnel Management’s (OPM) recent proposed rule implementing the Multi-State Plan Program. As stakeholders finalize their comments before (and over) the holiday, we are starting to see some common questions emerging:

  • Which insurers are going to offer multi-state plans? In order to participate in the program, a health insurer will need to be able to offer a multi-state plan in 31 states in year one – and more soon thereafter. To make this a little easier, OPM proposes that insurers need not immediately cover the full geographic area of each state. They can also decline to participate in the SHOP exchanges for small businesses. And, OPM will allow groups of health insurers to come together under a common trademark to qualify as a multi-state plan insurer. But so far insurers have been reticent to say whether or not they plan to apply and it remains to be seen just how appealing they will find the program to be.
  • How much leeway will multi-state plan issuers have to avoid state regulation? While OPM proposes that issuers will generally need to comply with applicable state laws and regulations, it also sets up an exceptions process if any state rules are considered to be inconsistent with OPM’s requirements. In such cases, the burden would be on the state to prove to OPM that their laws are not inconsistent. It is unclear just how often or broadly this exceptions process may be used, but one concern is that insurers will condition their participation in the MSP program on OPM’s preemption of state laws and requirements they find objectionable.
  • What happens to multi-state plans in active purchaser exchanges? According to the Affordable Care Act, multi-state plans are automatically deemed certified for exchange participation. While OPM indicates that, exceptions aside, multi-state plans will need to comply with any exchange certification rules, it’s hard to reconcile deemed certification with exchange efforts to use selective contracting or competitive bidding strategies. In states that want to limit the number of qualified health plans on the market, multi-state plans will have an inherent competitive advantage. Whether they will be able to use this to undermine exchange purchasing strategies is up to OPM to decide.

At the end of the day, OPM may need to balance its interest in having high quality insurers apply to the program with states’ ability to regulate their markets and ensure a level playing field among the plans. We at CHIRblog will keep you posted as the comments are submitted and OPM finalizes its proposed rule.