St@teside

Governor O’Malley just introduced SB238  - the Maryland Health Benefit Exchange Act of 2012 - in the Maryland Senate. The legislation is a product of a deliberative step-by-step approach led by the Maryland Health Exchange Board and its Executive Director, Rebecca Pearce.

The legislation reflects the policy recommendations developed by the Exchange Board to implement a successful Exchange. As we recently noted in the December St@teside, six studies examining critical policy issues were produced by contracted consultants to assist advisory committees and the Board in assessing the policy questions and, ultimately, developing the final recommendations for the legislature.

Of particular significance is the process by which the Board pursued the decision-making process.  First, a set of principles guided the decision-making for each of the policy topics.  Secondly, decision pathways were constructed to “frame the issues for decision making, to provide a structure for a data-driven analysis of key policy issues, and to provide consistency in [their] approach across multiple areas.”¹

The main components of the Exchange bill include:

1. Scope of Exchange’s authority: clarifies that Exchange can only sell qualified health, dental and vision plans – not ancillary products like life insurance.

2. Interstate contracting: gives Exchange ability to enter into agreements with other states to facilitate consistency in plans across borders, etc., as long as agreements are in state’s interest.

3. Operating model (active purchaser v. clearinghouse):

• Directs Exchange to allow any plan meeting standards to participate in Exchange during first year of operation (2014), but authorizes Exchange to impose requirements above ACA minimum standards (e.g., promoting wellness, ensuring continuity of care for individuals changing plans.
• After 2014, authorizes Exchange to use contracting strategies (e.g., competitive bidding, negotiation with carriers) to meet key objectives like promoting quality and reducing costs.

4. SHOP Exchange:

• Creates a small employer Exchange separate from an individual Exchange for now, directing a study in 2016 as to whether the individual and small group markets should be merged.
• Does not expand definition of a small employer from 50 to 100 employees.
• Directs SHOP Exchange to allow employers to offer their employees insurance in two ways: 1) The employer picks a carrier and menu of plans offered by that carrier from which employees can choose; or 2) The employer picks a metal level (bronze, silver, gold, platinum) and employees choose plan from any carrier at that level (ACA-mandated option).

5. Navigator programs: Creates separate navigator programs for SHOP and Individual Exchanges

• SHOP Exchange: Producers can obtain authorization and training to sell plans in Exchange and be paid commissions by carriers as they do now; navigators must obtain special SHOP navigator license issued by the Insurance Commissioner (not a full-blown producer’s license, but subject to training and regulatory authority of Commissioner), as well as training and authorization from Exchange.
• Individual Exchange: Producers can obtain authorization and training to sell plans in Exchange and be paid commissions by carriers as they do now; navigators obtain training and certification from the Exchange but are subject to regulatory authority/sanctions by Commissioner.

6. Dental plans: Exchange shall allow carriers to offer dental benefits as stand-alone or plans bundled with qualified health plans.

7. Essential Health Benefits: The state’s essential health benefits shall be those benefits in the State’s benchmark plan selected by the Health Care Reform Coordinating Council with the input of stakeholders. The benchmark plan must be chosen by September 30, 2012.

8. Risk adjustment and reinsurance programs: The Exchange shall implement these programs in accordance with federal regulations to protect against adverse selection which could destabilize the Exchange. It shall strongly consider using the federal risk adjustment model for at least the first two years, and then shall conduct a study to determine whether a Maryland-specific model would be more effective.

9. Fraud, waste, and abuse detection and prevention program: Exchange shall establish a comprehensive program and submit it to legislative committees for review and comment.

10. Market rules: Any carrier above a certain market share threshold which sells health insurance in  the state must also sell qualified health plans in the Exchange. The threshold is $20 million in premiums for the small group market, and $10 million for the individual market. Any carrier selling a catastrophic health plan in the state, however, must also sell one in the Exchange regardless of market share.

11. Exchange Financing: A joint executive-legislative committee shall conduct further study of the specific financing mechanisms which would be most appropriate and effective in ensuring that the Exchange be self-sustaining by 2015.  It should consider a range of mechanisms, from broad-based assessments to narrower transactional fees.

Several legislative hearings will be held to review the bill over the next month.

¹Maryland Health Benefit Exchange, Recommendations for a Successful Maryland Health Benefit Exchange: A Report to the Governor and Maryland General Assembly. December 23, 2011.