CMS Finalizes Rule On Exchange Standards, SHOP Operation

The Centers for Medicare and Medicaid Services (CMS) has issued a final rule that outlines health insurance exchange standards with respect to eligibility appeals, agents and brokers, privacy and security, issuer direct enrollment, and the handling of consumer cases. It also sets forth standards with respect to a state’s operation of the exchange and the Small Business Health Options Program (SHOP). The final rule was published in the August 30 Federal Register.

The Patient Protection and Affordable Care Act (ACA) created health insurance exchanges, which are online marketplaces for individuals to purchase health coverage. The ACA also created the SHOP program, which is an exchange for small businesses. Exchanges and SHOP exchanges are scheduled to begin enrollment on October 1. In June, the CMS issued proposed regulations. The final rule adopts the proposed regulations with little change, the CMS noted.

Key policies in the final rule include:

Oversight of QHP issuers in the federally-facilitated marketplace. To protect consumers and the financial integrity of the federally-facilitated marketplace (FFM), the final rule provides for standards that would establish oversight of health insurance issuers. This includes the Department of Health and Human Services (HHS) focusing on ensuring compliance with marketplace-related standards while preserving states’ traditional role in overseeing the individual and small group insurance market.

Oversight and monitoring of privacy and security requirements. The rule finalizes that HHS will oversee and monitor all the FFM and non-marketplace entities operating in the FFMs for compliance with the privacy and security standards established and implemented by the FFM. Additionally, the HHS will monitor each state-based marketplace (SBM) for compliance with the privacy and security standards established and implemented by the SBMs. SBMs also must oversee and monitor non-marketplace entities operating in the SBM.

Individual eligibility appeals. The final rule provides standards for the eligibility appeals process, including coordination between agencies and appeals entities; the standards for appeal notices, appeal requests, pended benefits, informal resolution, hearings, and appeal decisions; and the due process and procedural rights of the appellant.

Employer appeals in the individual market. The ACA directs the HHS to establish a separate appeals process for employers that wish to contest a marketplace determination that the employer does not provide minimum essential coverage (MEC) that meets both minimum value and affordability standards. Under the final rule, SBMs will have the flexibility to establish a state-based appeals process for employer appeals, and the HHS will provide this process if the state does not opt to do so or does not operate a SBM.

SHOP eligibility appeals. Employer and employee applicants to the SHOP may appeal denials of eligibility to purchase coverage through the SHOP, and the final rule provides standards for this appeals process. Because the SHOP has the flexibility to establish state-specific eligibility criteria, the final rule specifies that any state that operates a SHOP also will operate the SHOP appeals process. The HHS will provide the appeals process for states that do not operate a SHOP.

Flexibility for states. The final rule allows a state to operate a state-based SHOP while the HHS would operate an individual market FFM in that state. States that can provide reasonable assurances through the Exchange Blueprint submission and/or amendment process that they will be able to establish and operate a SHOP can do so in 2014. These provisions have been developed based on state feedback and would allow a state to focus on the effective implementation of the SHOP.

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