Implementing Health Reform: Small Business Health Insurance Marketplace

Health Affairs reports:

“On May 31, 2013, the Department of Health and Human Services released a final rule amending its earlier regulations governing the Small Business Health Options Program (SHOP).  The implementing agencies published a spate of proposed rules and amendments in late 2012 and early 2013, and are now beginning to finalize these, including the workplace wellness rule released on May 29 and the SHOP final rule released on May 31.  HHS also released simplified forms for employers  and employees to use to apply for SHOP coverage.

The final amended rule implements virtually unchanged a proposed version published on March 11, 2013   The rule amends the general final exchange (or “marketplace”) rules published in March of 2012.  The amendments make changes in the earlier SHOP rules as to two issues: the nature of plan choice that will be permitted in the SHOP exchanges for 2014, and the length of time allowed for employees to enroll in SHOP coverage if they become eligible for special enrollment periods.

The original vision of the SHOP exchange was that the SHOP would afford employees of small employers access to plan choice, much like that permitted in the individual exchange.  An employer might pick a metal level of coverage (bronze, silver, gold, or platinum), but the employee would be able to choose an insurer and qualified health plan offered within that level.  The SHOP would aggregate premiums for the various insurers and QHPs and present the employer with a single bill.  SHOP exchanges could also offer other approaches to plan choice, such as allowing the employer to select a single plan or set of plans to make available to employees.

The amendment recognizes that it is not going to be possible for the federally facilitated exchange and some state exchanges to permit plan choice in 2014.  The federally facilitated exchange will only allow employers to choose and to offer their employees one plan (although employers may offer a stand-alone dental plan in addition to a single medical plan).  Because employers will only be able to offer a single plan for 2014, the federal exchange will not be aggregating premiums for multiple insurers.  It will, however, offer an employer a single composite premium for all employees if required by state law or requested by the employer.

State exchanges are also not required to allow employee plan choice or to aggregate premiums, although they are permitted to do so.  Some reportedly plan to offer employee choice for 2014.  As of 2015, the federal SHOP will offer employee choice and aggregate premiums, and state SHOPs will be required to do so as well.

The reasons for the delay are quite obvious.  Insurers are going through massive changes required by individual and small-group market reform rules for 2014.  At the same time, the state and federal exchanges are racing, trying to get the exchanges up and running by October 1, 2013.  The federal exchanges are being starved for resources by a Congress which cannot repeal health reform but refuses to fund it.  It was simply not possible for insurers to also change their small-group enrollment, information technology, and accounting systems and for the exchanges to gear up for SHOP exchange plan choice and premium aggregation for 2014.  Concerns were also expressed by commenters that there would not be enough time to educate employers, employees, and agents and brokers for plan choice for 2014.

The value of SHOP without plan choice.  A big question raised by the proposed rule was what value the SHOP provides for 2014 if plan choice is lacking.  The preface to the final rule contends that the SHOP still offers real value. The SHOP exchange will provide access to the small-employer tax credit, which as of 2014 will cover half the employer-paid premium for eligible for-profit businesses, 35 percent for eligible nonprofits.  The tax credits will only be available through the exchange.  The SHOP will offer employers streamlined comparison among plans offered by multiple insurers, real-time premium quotes, and assistance in modeling employee contributions.

Under the 2014 benefit and payment parameters rule published in March, only insurers that currently have 20 percent or more of the small-group market are required to participate in the SHOP exchange to be allowed to offer plans in the individual exchange for 2014; however, it is expected that employers will have a choice of insurers in many SHOPs.  All SHOP plans must also be certified as qualified health plans, offering added oversight for plan quality and value.

The final rule also changes the provisions of the Exchange Establishment Rule pertaining to special enrollment periods. That rule allowed employees or dependents who qualified for a special enrollment period (for example because of loss of other coverage or qualification for coverage because of marriage, birth, or adoption) 60 days after the triggering event to enroll in coverage.  The amended rule limits the period to 30 days to make it consistent with the group coverage rules that apply to group plans outside the exchange under the Health Insurance Portability Act; the amended rule also clarifies that dependents are only entitled to enrollment if the employer covers dependents.  In addition, the amended rule provides that if a qualified employee or dependent of an employee loses eligibility for Medicaid or CHIP or becomes eligible for state premium assistance under the Medicaid or CHIP program, a 60-day special enrollment period would apply.

Simplified enrollment forms.  Finally, as noted earlier, HHS also released on May 31, 2013, simplified SHOP exchange enrollment forms.  The employer form is only three pages long, the employee form only two.  The forms, however, are obviously only intended to initiate contact with the employer or employee.  Vital questions like the number of employee dependents are not covered; even the list of employees is optional.  But the forms will make it easy for employers to seek and employees to indicate interest (or lack of interest) in SHOP coverage. They will presumably be followed up by a more complete online applications, often completed with the assistance of an agent or broker.

Upcoming milestones. On May 31, 2013, HHS also updated its marketplace progress fact sheet, exchange implementation timeline, and narrative timeline description. Milestones scheduled for June, 2013, include the re-launch of and the launch of the federally facilitated exchange call center, as well as the award of navigator grants.  July will bring CMS’s final evaluation of QHP proposals as well as final recommendations to HHS on QHPs  from partnership states.

Training for agents and brokers, navigators, in-person assisters, and enrollment counselors is scheduled for July and August, which will put their boots on the ground right before the exchanges open for early enrollment on October 1.  A number of states have adopted laws imposing additional regulatory requirements on navigators.  State certification requirements  could delay the availability of navigators in some states unless HHS determines that unduly burdensome or delayed state laws are preempted for preventing the application of the federal navigator program.”