More Detail on Multi-State Plans from Proposed Rules

Last Friday the Office of Personnel Management (OPM) released its proposed rule to establish a Multi-State Plan Program (MSPP). As I reported in my last blog about the Multi-States, this program was established as part of the ACA in an attempt to inject more competition into state insurance markets, many of which have only one or two major insurers. While encouraging insurer competition is an important goal, the OPM also recognizes that these new plans must compete on a level playing field. This means that MSP insurers will likely be subject to the same federal and state laws and requirements as traditional plans, including the qualified health plans (QHPs) competing on the new health insurance exchanges. OPM promises: “To the extent any of the rules governing MSPs…differ from those governing [qualified health plans on the exchanges], they will be designed to afford the MSPs…neither a competitive advantage nor a disadvantage with respect to other plans offered on the Exchange.”

At the same time, OPM seeks to encourage insurers to participate in the MSP program by offering them certain efficiencies and marketing opportunities. Below, I try to summarize areas in which OPM attempts to strike a balance between attracting insurers to apply to the program and appropriate federal and state oversight.

Potential Advantages and Flexibility for MSP Insurers

Under the ACA, once OPM has certified a MSP, it will be “deemed” certified on all the state exchanges. OPM has codified that provision in its proposed rule.

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OPM also offers MSP insurers the option of offering one, nationally uniform essential health benefits package, so long as it is substantially equal to either a state-chosen benchmark plan or to a plan chosen by OPM (one of the top three plans sold through the Federal Employees Health Benefits Program). However, OPM notes that, in states that prohibit benefit substitutions, MSP insurers would need to use the state-selected benchmark in order to avoid potential adverse selection.

OPM is also proposing that MSP insurers be allowed to offer coverage in only parts of a state instead of statewide. They are requesting comments on whether MSPs should be required to be statewide by the fourth year of the program. While insurers could choose which areas within a state they want to serve, OPM will monitor MSPs to ensure that they choose areas without regard to racial, ethnic, language, or health status-related factors. While allowing partial coverage of a state could make it easier for some insurers to enter into new markets, it would also allow them to avoid lightly populated and rural areas – the very same areas that already have the fewest choices among health insurers. And, potentially reducing the number of choices available to small business owners, OPM is proposing that MSPs can choose not to participate in the SHOP exchanges for three years, but must participate in SHOP by the fourth year of the program.

OPM is also offering MSP insurers a potential marketing advantage, allowed them to advertise themselves as “OPM certified,” signaling a government seal of approval to potential enrollees.

Less certain is the impact of the discretion OPM has reserved for itself to adopt standards or requirements that differ from those required of QHPs, if necessary to ensure that there are at least two MSPs in the program. This broad authority presents a concern that, if MSP insurers determine that some state exchange rules are too onerous, they could turn to OPM for relief.

Achieving a Level Playing Field

To promote a level playing field, OPM will require MSP plans to comply with State laws relating to the following 13 categories (listed in Section 1324 of the ACA): guaranteed renewal, rating, preexisting conditions, non-discrimination, quality improvement and reporting, fraud and abuse, solvency and financial requirements, market conduct, prompt payment, appeals and grievances, privacy and confidentiality, licensure, and benefit plan material or information. MSP insurers will be expected to comply with other relevant state laws and requirements, including exchange certification requirements, so long as they aren’t inconsistent with OPM’s requirements.

In addition, OPM intends to conduct its own, independent oversight of MSP insurers. For example, the agency will conduct its own rate review process in order to effectively negotiate premiums with MSP insurers. At the same time, MSP insurers will have to undergo State rate review. However, if a state rejects a rate, and OPM disagrees with the state’s assessment and determines that the state’s decision was “arbitrary, capricious, or an abuse of discretion,” then OPM makes the final decision regarding the MSP’s rates. While the “arbitrary, capricious” standard is a high bar, OPM is proposing that, for MSP insurers, it can effectively overturn a state’s decision, allowing the plan to be marketed and sold in a state using a rejected rate. OPM specifically requests comments on this approach.

OPM also has the authority review and approve MSP’s benefit plan material, such as benefit summaries and plan brochures, to determine that they are truthful and not misleading and written in “plain language.” OPM will also review the plan contract itself to determine whether it complies with federal requirements, including the non-discrimination requirements. At the same time, MSP insurers will also need to comply with any state requirements for policy form review.

The proposed rule recognizes that, on occasion, there may be disagreements between OPM and a State regarding a determination that is not related to the 13 issues in Section 1324. In such a case, States may submit their concerns to a dispute resolution process. However, in such a circumstance, the burden will be on the State to demonstrate that its law is not inconsistent with or does not prevent the application of federal law. OPM is asking for comment on whether the 13 issues listed in Section 1324 should also be subject to the dispute resolution process.

Other Key Provisions

Below are a few other issues of note in the proposed rule, but this is by no means an exhaustive list:

Coverage requirements. MSP insurers must offer plans at least at the Silver and Gold levels of coverage. In addition, in all the “precious metal” levels of coverage at which they are selling a plan, MSP insurers must also offer a child only plan.
Habilitative Benefits. For coverage of habilitative care, MSP insurers that use the OPM essential health benefits benchmark must follow the state definition of habilitative care if the state chooses to define it. If the state does not define it and the OPM benchmark doesn’t cover it, then OPM will determine which habilitative services and devices will be included.
User Fees. OPM will charge MSPs a user fee, which is yet to be determined.
Premium Negotiation. OPM will negotiate premiums with MSP insurers on a state-by-state basis.
Risk Mitigation. MSPs must also participate in and comply with the requirements of the ACA’s risk mitigation programs: risk adjustment, temporary reinsurance, and the temporary risk corridors.
Contractual Oversight. MSPs will be, essentially, federal contractors, and as such subject to certain requirements of contract oversight, such as keeping reasonable financial and statistical records, permitting OPM, Office of Inspector General, and U.S. Government Accountability Office officials to conduct audits, maintaining internal controls and quality assurance programs, and conducting a program to guard against fraud and abuse.
Appeals. MSP insurers must meet the same federal standards for internal claims and appeals that apply to QHPs. However, OPM will conduct the external review of adverse benefit decisions using a process similar to the one they use for FEHBP.
Abortion. Under the ACA, at least one MSP insurers cannot offer abortion coverage. OPM has codified this requirement.

OPM is encouraging people to comment, but you’ll need to act fast – comments are due within 30 days.

For a comprehensive summary of OPM’s Multi-State Plan rule, check out Professor Jost’s blog on Health Affairs. And for regular updates on this and other federal and state efforts to implement the Affordable Care Act, stay tuned to CHIRblog – we’ll keep you up to date.