Filed Under:Risk, Corporate Risk

New HHS Rules Define Producer Role in Health Exchange

NU Online News Service, March 13, 12:57 p.m. EDT

WASHINGTON—Health exchange regulations finalized by the Obama administration Monday envision allowing agents, brokers and private companies, to sell coverage on the exchange to individuals and employers through privately-run websites.

In a report issued by Beth Mantz-Steindecker, John J. Leppard and Ira S. Loss of Washington Analysis, a Washington think tank for buy-side security analysts and brokers, they say the rules provide great flexibility to the states to carve out a key role for agents and brokers.

The provisions related to the private market were stipulated on an interim final basis, the analysts say, meaning that the federal Department of Health and Human Services (HHS) will review public comments and then determine whether to finalize them, alter them, or remove them.

However, they add it is unlikely that private companies will be permitted to assess consumer eligibility for premium subsidies, cost-sharing arrangements, or other affordability programs.

“Compensation mechanisms for these entities will be determined by the state,” the analysts say.

The analysts went on to say that with Republicans currently in control of the majority of state governments, and with most Democratically-controlled states placing an emphasis on initial insurer participation rather than restrictive control, “we think that this rule sets the framework for more market-driven exchanges than some have feared.”

The analysts’ comments were supported by officials of the National Association of Insurance and Investment Advisors.

Robert Miller, NAIFA president, says that while NAIFA staff is still analyzing the 644-page document, “we are encouraged by the consistent recognition for the role of the agent and broker.”

He says, “We believe the interim final rule which permits agents, brokers and private companies, to sell coverage on the exchange to individuals and employers should be finalized.

“State flexibility may result in more market-driven exchanges,” he notes.

Officials of the National Association of Health Underwriters, whose members will be most directly affected by the exchanges, say they are still evaluating the rules for their impact on its members.

They did caution that the regulation merely provides a regulatory floor, and that states are free to enact conditions of participation above and beyond those outlined by HHS.

“This could include limitations on the number of insurers permitted to offer plans via the exchange or even an active exchange model whereby exchanges “negotiate” premiums,” say the WashingtonAnalysis authors in their report. “Still, the emphasis at this point remains on participation.”

Other sources say some of the functions that will be the responsibilities of the states include certifying qualified health plans; operating a website for comparing plans; running a toll-free hotline for consumer support; providing grants to "navigators" to assist consumers; determining eligibility of consumers; and helping consumers enroll.  

Other sources note that certain elements of the plan will disappoint insurers and consumers.

PoliticoPro, for example, says, “Insurers, wanted less discretion for states—they wanted HHS to prevent exchanges from imposing requirements on plans in the exchanges beyond what is included in the health care reform law.”

Another concern cited by PoliticoPro was that consumer groups wanted fewer insurers on the exchange board, but up to half of a board can represent insurers, the rules say.

However, the final rule, which goes into effect in 60 days, mandates that representatives of insurance issuers, agents, brokers, or others licensed to sell insurance may not constitute the majority of an exchange board.

Furthermore, at least one voting member of the board must be a designated consumer advocate.

The analysts say that states will be given broad discretion in devising methods to ensure that their exchange is financially able to perform all of its required functions. 

“This will likely include some manner of user fees or assessments on participating issuers,” say the analysts.

“While HHS encourages states to study the impact of various funding arrangements on risk selection, insurer participation, and provider contracting, the ultimate determination will be left up to the state,” they say.

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