HHS Final Regulations on Insurance Exchanges Address Eligibility and Establishment Rules | Practical Law

HHS Final Regulations on Insurance Exchanges Address Eligibility and Establishment Rules | Practical Law

The Department of Health and Human Services (HHS) has issued implementing regulations that finalize proposed rules addressing the establishment of health insurance exchanges under the Affordable Care Act (ACA) and related rules governing eligibility determinations under the exchanges.

HHS Final Regulations on Insurance Exchanges Address Eligibility and Establishment Rules

by PLC Employee Benefits & Executive Compensation
Published on 14 Mar 2012 • USA (National/Federal)
The Department of Health and Human Services (HHS) has issued implementing regulations that finalize proposed rules addressing the establishment of health insurance exchanges under the Affordable Care Act (ACA) and related rules governing eligibility determinations under the exchanges.
HHS has issued final regulations regarding the health insurance exchanges (Exchanges) required to be established by each state under the Affordable Care Act (ACA). The Exchanges are marketplaces in which plans that satisfy certain minimum benefit and related standards, known as qualified health plans (QHPs), will be available to individuals and employers. The regulations finalize proposed regulations issued in:
  • July 2011 addressing establishment of the Exchanges.
  • August 2011 regarding eligibility determinations for individual participation in QHPs offered under the Exchanges.
Also, several sections of the regulations were issued in interim final form, and comments were requested on those sections (for example, eligibility standards for cost-sharing reductions). The final regulations make numerous changes and clarifications to the proposed rules, including:
  • Privacy and security of information. Exchanges must apply appropriate privacy and security protections when collecting, using, disclosing or disposing of personally identifiable information (PII). HHS stated that:
    • HIPAA is generally not broad enough to protect the various types of PII that will be created and used by Exchanges; and
    • the privacy and security standards adopted in the regulations do not eliminate the need for HIPAA covered entities to comply with the HIPAA privacy and security rules (see Practice Note, HIPAA Security Rule).
    Future HHS guidance should address how HIPAA and other federal laws apply to the Exchanges.
  • Electronic transactions. Under the final regulations, when an Exchange engages in electronic transactions with a HIPAA covered entity, it must follow standards, implementation specifications and code sets adopted by HHS. The regulations clarify that HHS operating rules for electronic transactions must also be followed when an Exchange performs electronic transactions of information with a covered entity.
  • HIPAA business associate status. The regulations address the relationship between Exchanges and QHP insurers, which are HIPAA covered entities, to help states determine how HIPAA applies to an Exchange (see Practice Note, HIPAA Privacy Rule). The regulations clarify that an Exchange is not acting on a QHP insurer's behalf when the Exchange carries out functions required under the regulations (for example, in determining an individual's eligibility to enroll in a QHP). According to HHS, an Exchange:
    • is not a business associate of a QHP insurer in performing certain general functions required under the final regulations;
    • could be a HIPAA covered entity or business associate if it chooses to perform functions other than the listed general functions; and
    • should evaluate its functions to assess its status as a covered entity or business associate.
  • Summaries of benefits and coverage (SBCs). Exchanges must maintain an up-to-date website that contains information about available QHPs (for example, premium and cost sharing information). This includes displaying an SBC for the QHP. HHS clarifies that the premium and cost-sharing information for QHPs:
    • is separate from the SBC requirement; and
    • exceeds the scope of information included in SBCs.
    HHS noted that Exchanges may collect SBCs from insurers in a manner that supports a searchable format. For more information on SBCs, see Practice Note, Summary of Benefits and Coverage Under the ACA.
  • Exchange notices. The regulations include specific content, form and timing requirements for notices sent by an Exchange to individuals and employers (for example, contact information for available customer service resources). HHS indicated that it is planning to develop model Exchange-issued notices, which should:
    • be in writing and provided electronically when possible; and
    • include the date the notice was sent and the reason for any intended action.
    HHS will address appeal rights and procedures, which is a content requirement for Exchange notices, in future guidance.
  • Eligibility determination process. Exchanges must determine an individual's eligibility for enrollment in a QHP offered through the Exchange. HHS declined to add a requirement that Exchange notices of eligibility determinations inform employers that retaliation based on the notices is prohibited. HHS deemed this requirement unnecessary given that a separate ACA requirement prohibits employers from discharging or discriminating against employees who receive an Exchange-related premium tax credit or cost-sharing reductions. For more information on this prohibition against retaliation, see Practice Note, Affordable Care Act (ACA) Overview.
  • Special enrollment. Exchanges must allow individuals to enroll in a QHP or change from one QHP to another outside of the annual open enrollment period on the occurrence of specified triggering events (for example, if an individual gains or becomes a dependent through marriage, birth or adoption). The regulations more closely align the Exchange-related special enrollment periods with the HIPAA special enrollment periods, including to ensure first-of-the-month effective dates for individuals who gain or become dependents through marriage.
  • Dental plans. Exchanges must allow limited scope dental benefit plans that satisfy certain coverage requirements to be offered through the Exchange. A dental plan can be offered:
    • as a stand-alone dental plan; or
    • in conjunction with a QHP.
    The regulations reflect that cost-sharing limits and restrictions on annual and lifetime limits added under the ACA should apply to stand-alone dental plans for coverage of pediatric dental essential health benefits. (For more information, see Practice Note, Lifetime Limits, Annual Limits, and Essential Health Benefits Under the ACA).

Practical Impact

The final regulations will be of interest to employers weighing whether to continue offering employer-sponsored coverage after the Exchanges are operational in 2014. Although the regulations contain an enormous amount of detail regarding how the Exchanges will be structured and function, they are only the beginning of Exchange-related guidance. In numerous places, the regulations anticipate that additional guidance will be issued regarding specific aspects of the Exchanges, including:
  • Guidance to assist states in developing privacy and security procedures.
  • Appeals of individual eligibility determinations.
  • Who can serve as an authorized representative for an Exchange applicant.
  • The collection and storage of PII.