The qualified health plan contracting process in Health Insurance Exchanges present many opportunities and challenges for states and the Centers for Medicare and Medicaid Services (CMS). Success in implementing the Exchanges – one of the Affordable Care Act’s most complex and ambitious features – will require comprehensive, well-structured strategies, particularly for the selection and management of qualified health plans (QHPs), the name given health plan coverage offerings inside a federally-run or state-run Health Insurance Exchange (HIX).
Strategy to Align Health Insurance Exchange with State Needs
Most Health Insurance Exchanges will be designed, implemented, and operated run by CMS. However, in half or more of the states, it now appears that the state itself will take charge of plan management functions, notably the process of soliciting, reviewing, and approving health insurers’ QHPs applications; contracting with QHPs; and oversight of QHP compliance with requirements. In addition, even where CMS takes charge of all aspects of the HIX and even where a state doesn’t expand Medicaid eligibility, the Exchange will still have considerable interaction with the state’s Medicaid program. This underscores the need for a strategy.
States have some flexibility in selecting and contracting with qualified health plans, allowing them some room to align QHPs with the state’s policy objectives for the health insurance market and Medicaid, particularly Medicaid managed care.
A Strategic Approach for Insurance Exchanges to Select and Manage Qualified Health Plans, a helpful policy brief from the State Health Reform Assistance Network explains several strategic issues for states and tactics in QHP contracting states should consider. The policy brief:
- Describes many of the types of decisions that Exchanges should consider in preparing to launch a clean, effective QHP solicitation process.
- Describes the standards that Exchanges will use to certify QHPs, including the major federal requirements all QHPs must meet and examples of additional requirements that some states are considering.
- Options for negotiating key elements of health issuers’ proposals.
Unlike many start-up tasks, certifying, re-certifying, de-certifying, and managing the relationship over time with health plans is an ongoing and evolving set of tasks. Therefore, Exchanges should take a strategic approach to these functions, each state can craft plan selection and ongoing partnerships to support the achievement of its goals for health care reform.
Setting Goals before Selection of Qualified Health Plans
Exchanges will be shaped by the QHPs they house. Before states begin to design QHP requests for applications (RFAs), they should set goals that best fit their individual situation. These might include:
- Maximize health insurer participation in 2014. Exchanges may want to take steps that will help them cultivate a reasonably sized pool of insurance carriers and plan offerings.
- Maximize total volume of enrollment through the Exchange. This may attract more health insurers, give the Exchange leverage, and reduce administrative costs.
- Maximize enrollment of lower-income, uninsured households. This will require extensive marketing and outreach efforts.
- Achieve exceptional customer service.
- Minimize premiums, especially in the Exchange. If accomplished, this will achieve favorable reviews from politicians, consumers, and the general public.
- Become financially self-sustainable by 2015. Federal funding for state-run Exchanges stops at the end of 2015.
- Promote payment and delivery system reform.
QHP Strategy to Achieve Exchange Goals
As states begin to contemplate the specifics regarding QHPs in their Exchange, they should do so within a strategic framework. States have flexibility in requiring QHP selection material in addition to federal guidelines. States may use this to their advantage to align the selection process with the overall goals of the Exchange. For example, states may want to consider:
- Types of plans to be solicited. States should decide which types of plans are most cost effective and desirable given their own goals and needs.
- Standardization of cost-sharing features across QHPs.
- Number of QHPs from each issuer per actuarial value level. States must decide if they want issuers to offer plans beyond the required silver and gold level plans.
- In-network coverage of out-of-state services.
States must also consider QHP design regarding small group market (SHOP) products. For example, states should consider:
- The value proposition of SHOP for small employers.
- Specifications of QHPs offered in SHOP. States should consider how these will compare to plans in the Exchange.
- Employee Choice Model. States must decide if they want the full menu of QHPs extended to the small group (SHOP) part of the Exchange.
- Rating structure. Will states prefer composite or individual rating?
Developing a Strategic Application Process for Qualified Health Plans
States can use the QHP application process to keep the Health Insurance Exchange in line with state specific goals. In addition to federal requirements, states can determine additional criteria it will expect of QHPs. States should make these additional expectations clear throughout the RFA process. Additional requirements may be:
- Integration of Medicaid managed care organizations (MCOs) and/or smoothing transitions between QHPs and Medicaid health plans. States may wish to make the transition or “churning” between Medicaid and the Exchange easier for beneficiaries by offering continuity of care options.
- Network adequacy standards. States may require higher standards for provider networks than those required by CMS rules.
- Cooperative efforts to transition individual (non-group), subsidy-eligible enrollees in the Exchange.
- Link issuers’ participation in individual (non-group) and SHOP Exchanges. States may consider strategies to require issuers with QHPs to also participate in SHOP.
Negotiating with Health Insurers Offering Qualified Health Plans
After developing strategic goals and utilizing the QHP application process to meet state goals, states should negotiate with health insurers in order to maximize results. In some states, negotiations may not take place after the release of an RFA or RFP, so states should take this timing into consideration. States have several areas in which negotiations might be particularly effective.
- Premium rates: States can accept proposed premium rates or attempt to influence them by several means.
- Defer to state review process.
- Establish actuarially sound and competitive trend factors.
- Select lower-priced proposals.
- Joint marketing initiatives: Exchange success may very well depend on the ability to reach key populations, specifically low income uninsured individuals. States might consider engaging insurers to conduct joint marketing efforts aimed towards:
- Existing enrollees who may be subsidy-eligible.
- Twenty five year olds leaving parent’s insurance.
- COBRA-eligible enrollees, especially those that are subsidy-eligible.
- The uninsured.
- Service level agreements: Contracts between the Exchange and insurers will need to include obligations, performance expectations, and service level agreements. These will need to be negotiated and may vary from one insurer to another. States have flexibility in setting these obligations, but may consider the following:
- Requiring issuers to appoint a point of contact to collaborate with the Exchange.
- Requiring issuers to work with the Exchange to identify opportunities to reduce health care disparities.
- Requiring issuers to have in place administrative and management protections against fraud, waste, and abuse.
- Requiring issuers to have continuity of operations plans in place in case of disaster.
- Requiring issuers to maintain adequate levels of communication with beneficiaries.