By Louise Norris
In mid-April, the Department of Health and Human Services published its market stabilization final rule. The regulations gave states new flexibility to determine whether health plans sold in the exchange (qualified health plans, or QHPs) have adequate provider networks and prescription drug formularies that aren’t discriminatory in their design.
HHS notes that shifting responsibility to states is a direct result of President Trump’s executive order that directed federal agencies “to provide greater flexibility to States and cooperate with them in implementing healthcare programs.” In promulgating the new rules, HHS explains that they are “committed to returning to states their traditional authority to regulate health plans.”
There are 39 states using HealthCare.gov, including six with state-federal partnership exchanges and five that are state-based exchanges using the federal enrollment platform. Eleven states and the District of Columbia run their own exchanges.
States that run their own exchanges have control over network adequacy and enforcement of formulary non-discrimination rules. In the other states, HHS has been involved to some degree over the last few years. Now, some of that control is being handed over to the states.
Provider network adequacy: Most states will regulate: For 2014 coverage, HHS deferred to the states when determining whether health plans sold in the exchange had adequate provider networks. Since then, HHS has been conducting network adequacy reviews for non-plan management states that use HealthCare.gov.
There are 13 states that use the federally-run exchange but conduct their own plan management:
- State-federal partnership exchanges: Delaware, Illinois, Iowa, Michigan, New Hampshire, West Virginia.
- States with a federally-run exchange that conduct their own plan management: Kansas, Maine, Montana, Nebraska, Ohio, South Dakota, Virginia.
Also, five states have state-run exchanges but use the HealthCare.gov platform for enrollment: Arkansas, Kentucky, Oregon, Nevada, New Mexico. These states handle their plan management, as they are technically state-run exchanges. In the other 21 states that use HealthCare.gov (i.e., non-plan management states), HHS has been reviewing plans to ensure that they have adequate networks. Starting with the 2018 plan year, however, they are going to revert to the way they handled it in 2014, deferring to states to make the determination that a health plan’s network is adequate for QHP certification.
In 2014, the majority of the states had network adequacy reviews that were deemed sufficient. But in 10 states, insurers that wished to offer QHPs in the exchange had to provide HHS with either accreditation from an entity recognized by HHS or, if unaccredited, had the option to submit an access plan to HHS.
All of that is coming back for 2018. States will determine whether health plans have adequate provider networks to ensure that all members have access to necessary health care without unreasonable delays.
As was the case in 2014, HHS will rely on state certifications in states that have sufficient network adequacy review processes in place.
In states that don’t, insurers will provide HHS with proof of accreditation from one of three HHS-approved accreditors (National Committee for Quality Assurance, URAC, and Accreditation Association for Ambulatory Health Care). An insurer without such accreditation will have to submit an access plan demonstrating that the insurer “has standards and procedures in place to maintain an adequate network consistent with the National Association of Insurance Commissioners’ (NAIC’s) Health Benefit Plan Network Access and Adequacy Model Act.”
HHS has not yet released a list of states with an acceptable network adequacy review processes, and some states changed their guidelines since 2014. But by and large, it is expected that in the majority of states, the state will determine whether a QHP issuer’s network is adequate, and HHS will defer to that determination.
Formulary non-discrimination: Plan-management states will regulate: QHPs are not allowed to use marketing practices or plan benefit designs that discriminate against people with significant health needs. Review processes are in place to ensure that QHP formularies (covered drug lists) are not discriminatory. The review process looks for plans with formularies with an unusually low number of drugs not subject to prior authorization or step therapy, or formularies with cost-sharing that’s unusually different from that of other plans.
For 2018 QHP certification in the federally-facilitated exchange, HHS will leave this process up to the states, but only in states that conduct plan management (the 13 federally-facilitated exchange states identified above).
In those states, HHS no longer will perform the certification reviews for formulary non-discrimination compliance, and instead will fefer to each state’s certification. In a recent Health Affairs article, Tim Jost explains two new formulary review tools that HHS is providing to those 13 states to use in determining whether formularies are adequate regarding non-discrimination.
In the 11 states and the District of Columbia where the exchange is fully state-run, the states will continue to ensure that formularies comply with non-discrimination requirements. This will also continue to be the case in the five state-run exchanges that use HealthCare.gov for enrollment.
In the other 21 states, HHS will continue to conduct the QHP certification reviews about drug formularies. Presumably, they will use their new formulary review tools for health plans in these states.
Louise Norris is a longtime writer on insurance topics and a contributor to healthinsurance.org. She and her husband started a health insurance agency, Insurance Shoppers Inc., in 2003.
