How does a state get the green light to open a Health Insurance Exchange in 2014? The requirements and timelines are spelled out in the final Blueprint for Approval of Affordable State-based and State Partnership Insurance Exchanges released on August 14, 2012.

The Blueprint includes the declaration letter and application form that states must use to operate an Exchange — or to partner with the federal government to do so. The final Blueprint is very similar to the Draft Blueprint introduced by the Center for Consumer Information and Insurance Oversight (CCIIO) in May, with a few exceptions. Most notable among the changes:

• The inclusion of a new category of “in-person assistance programs,” which are separate and different from the previously established “Navigator” programs, although there has been limited guidance on the in-person assistance program’s role and responsibility.

• New provisions in the Blueprint recognizing the regulatory role of the states regarding  Navigators in the federally facilitated Exchanges and closer oversight of web-based brokers who bring consumers to the Exchanges.

• The elimination of the requirement that states have a plan for transitioning enrollees out of state high risk pools (Under the law, the state high risk pools are not required to shut down when the Exchanges begin. That only applies to the temporary national high-risk pool.)

The role of the Blueprint
States planning to operate a state-based Exchange or a state-federal partnership Exchange have until November 16, 2012 to submit an Exchange Blueprint, which must include a declaration letter signed by the Governor and a completed application.

The Blueprint describes the respective functions of the state and federal government in a full state-based, state partnership, and federally facilitated Exchange. There is some flexibility, as states can:

• Cede certain functions of a state-based Exchange to the federal government
• Continue to operate the reinsurance program and make Medicaid determinations, even in a federally-facilitated Exchange
• Start with a federally-facilitated Exchange but later transition to a state-based Exchange (an option new to this final Blueprint)

The application section of the Blueprint lists the activities a state must complete and the characteristics it must define before the state can operate an Exchange or partner with the government on Exchange functions like plan management and consumer assistance.

Will there be an Exchange in the states where you do business? According to the Kaiser Family Foundation, here are the Exchange actions that states have taken as of August 1, 2012:*

* Kaiser Family Foundation, StatehealthFacts.org,” State Action Toward Creating Health Insurance Exchanges, as of August 1, 2012,” cited August 20, 2012. Available at: http://statehealthfacts.kff.org/comparemaptable.jsp?ind=962&cat=17

The law calls for the federal government to set up an Exchange for any state that does not

• Operate one of its own
• Enter in a federal partnership for an Exchange

“In-person assistance programs” and Navigators
This new development in the Blueprint creates federal funding for “in-person assistance programs,” to help consumers looking to purchase health insurance prior to 2014. These programs can be funded from establishment grants and will fill a need for consumer help during the initial open enrollment period in 2013.

The Blueprint does not provide details on this new role, except to note that “in-person assistors” would have to at least meet conflict of interest requirements and receive training to ensure they can effectively advise consumers on public and private coverage options.

This role is separate from the Navigator role, which will not be funded until 2014 and cannot be funded with state establishment grant funds. However, the Blueprint includes new provisions regarding the regulatory role of the states with respect to Navigators in the federally facilitated Exchanges.

Navigators will assist consumers, somewhat like agents and brokers do, but the difference will be that they do not actually sell insurance. The Blueprint calls for oversight to make sure that Navigators are properly trained to:

• Provide sound consumer guidance
• Avoid any conflict of interest
• Protect the privacy and security of consumers

The Blueprint also calls for Exchanges that contract with brokers (including web-based brokers) to spell out their broker compensation policies and show the strategies they will use to make sure brokers are appropriately trained and meet the privacy and security standards for this role. States must also describe how the Exchange website will interface with brokers’ websites.

For more information on the Navigator program, see page 10 of the Unum report, “Health Insurance Exchanges: A marketplace for the future.”

The Blueprint timeline
The deadline for states is November 16, and the government has until January 1, 2013 to certify the state’s Exchange decision. The new Blueprint document notes that states that submit a declaration letter more than 20 days before the November 16, 2012 deadline can request a consultation with the Department of Human Services to obtain further federal guidance on their Exchange blueprint application.

The Blueprint confirms that states can receive conditional approval for their Exchanges, even if they do not meet all federal requirements at the outset. However, they are required to demonstrate significant progress toward having an operational Exchange ready for October 1, 2013, when the Exchanges are expected to start enrolling individuals.

There is also a plan in place for states to modify an Exchange model after the initial year of operation. States that want to change their Exchange model for 2015 would have to submit an Exchange Blueprint by November 18, 2013. To do so for 2016, applications would be required by November 18, 2014.

For more information, see the full Blueprint document.

Impact to employers:

Employers will need to follow the progress of the Exchanges in their state and understand the options available to their company and workers.

Impact to brokers:

Brokers will need to comply with the regulations outlined in these new guidelines and continue to stay informed about the evolving roles of the Navigator and “in-person assistors.”