Federally Facilitated Exchanges: The draft application for qualified health plans
In at least 23 states, governors are allowing a “Federal takeover” in the form of a federally facilitated exchange (FFE). Now, CMS has published the first draft of the application that health plans need to complete to become a qualified health plan (QHP) in the CMS FFE. To be sure, the exchange regulation allows individual exchanges flexibility in defining rules and operations, provided they meet the basic requirements. This flexibility applies equally to how CMS interprets its role in operating exchanges in the FFE states.
Notwithstanding the publication of proposed rules around benefit packages, actuarial equivalents, risk adjustment and accreditation two weeks ago, the draft QHP application gives us only a glimpse at the sub-regulatory requirements an insurance provider must meet to qualify for a FFE contract. It is normal that laws beget regulation that change into sub-regulatory requirements in the form of manuals, applications and memos. The process is painstaking, long and aggravating as the government attempts to re-explain or respond to every question — especially for new programs. So early adaptors, beware. There were approximately 100 promises of additional guidance in the final exchange regulation published in March. This draft application puts only a small dent in that promised guidance.
More importantly, for health plans who were expecting to be approved by sending CMS a copy of their state license and a benefit package, the draft application provides real meaning to “Federal takeover”. The FFE application is effectively a new licensure process since each health plan is an unknown to CMS. Familiarity with a state regulator has almost no meaning, and a new set of judgments and evaluations are applied. CMS wants to see your state license first, but you will also need to explain that you are solvent and are in good standing with the state. For basics, CMS asks for extensive administrative data on the organization and its staffing. If there are corrective actions in place, CMS will determine if they are sufficient.
The draft application notes that multiple areas will have additional information added over time. One undefined, major area is a new section that will address parameters for network adequacy that may or may not agree with state licensure requirements. Also, a separate listing is required for a new, undefined provider category for essential community providers. No doubt, this section will undergo its own evolution. Additionally, for the FFE, CMS adds new requirements. For example, there is no exchange regulation for a compliance plan. However, for operating in the FFE, it’s required.
Similar to applications for Medicare Advantage and Part D, FFE health plan applications will be submitted electronically. This includes the usual complexities given the nature of the systems used by CMS for validation and document uploads. A series of attestations is used to ensure that plans have reviewed requirements.
In the Medicare Advantage and Part D world, manuals and memos provide sub-regulatory guidance that defines these requirements. However, there is little or no sub-regulatory guidance for the FFE attestations. So far, only regulations are cited and, as noted above, there are over 100 places in the exchange regulation where future guidance is promised.
Finally, requirements for benefit plans and risk adjustment are in their comment period and are destined to become a part of the application. At the same time, the application promises that it will change over the next few months before it is final in early Spring 2013. However, the draft application clearly indicates to us that CMS will engage in a serious regulatory process. Clues to their methods have been firmly established in processes used in Medicare Advantage and Part D. Given the expected timeframes, health plans need to identify resources that can efficiently provide the right kind of responses during what promises to be a tumultuous startup to 2014.