While the Affordable Care Act (ACA) significantly expanded the reach of the federal government in regulating private health insurance, state health insurance commissioners have had a major role in shaping implementation from the first moment the ACA was signed into law.
In fact, the ACA includes about a dozen directives to the National Association of Insurance Commissioners (NAIC), the umbrella organization representing state insurance regulators, to make recommendations to the Department of Health and Human Services (HHS) on key provisions of the statute, including, but not limited to, rate review, appeals, reinsurance and risk adjustment, age bands, and the Exchange enrollment form. Specifically, the ACA directed the NAIC to create a working group of “health insurance-related advocacy organizations, health insurance issuers, health care professionals, patient advocates, and other qualified individuals” to provide expertise in the implementation of ACA.
Since 2010, the NAIC has provided recommendations, model legislation, guidelines, and comments on Administration rules and actions on issues ranging from rate oversight to benefit definitions. A few prominent examples of what the NAIC’s early activities yielded include responses to the Administration’s request for information on rate review, standard definitions and standards for the summaries of benefits and coverage, and much of the methodology for the calculation of the medical loss ratio.
Similar to previous federal attempts to oversee health insurance markets, including the Health Insurance Portability and Accountability Act of 1996, the ACA delegated responsibility for assuring compliance with new federal insurance rules to the state insurance commissioners. However, if a state’s insurance commissioner does not exercise this authority, the federal government (acting through the Centers for Medicare and Medicaid Services, or CMS) steps in to directly regulate private insurers in those states. One key difference between the ACA and earlier, more limited, federal attempts at insurance regulation is that the federal rules are more prescriptive. States could and did provide input through the regulatory process, but once guidelines are established, enforcement is expected to be relatively uniform across the nation.
Whereas some Governors and state legislatures have decided not to implement the ACA by declining to expand Medicaid or to create Exchanges, state insurance commissioners have a separate decision about whether to participate in ACA implementation. State insurance commissioners have shared authority over the individual market coverage as well as insured small and large group market coverage. Whether or not they personally support the goals of ACA, many of them no doubt are motivated to participate in oversight by not wanting the federal government to assume responsibilities that are historically theirs. Thus, almost all states have retained responsibility for overseeing insurance reforms; CMS currently enforces insurance reforms in only five states: Alabama, Missouri, Oklahoma, Texas, and Wyoming. In contrast, the list of states that have chosen not to create exchanges or expand Medicaid is nearly six times as large.
So, while CMS sets the standards, in most states it is the insurance commissioner who oversees implementation of those standards. In areas were CMS has not established a specific guideline, how a reform is to be implemented is often left to the discretion of the insurance commissioner. For example, CMS’s essential health benefits (EHB) rule sets standards that health plans must meet including the requirement that they not discriminate “based on factors including but not limited to race, gender, disability, and age as well as marketing practices or benefit designs that will have the effect of discouraging the enrollment of individuals with significant health needs.” However, CMS specifically indicates that flexibility to interpret this standard is left to the states. State commissioners review plans to determine whether they satisfy the EHB standards and to assess whether any plan provisions violate the prohibition on discrimination.
As the examples above show, state commissioners are the first recourse when stakeholders believe that a plan is violating an ACA requirement. For these reasons, it can be challenging for stakeholders looking for policy relief to decide whether to look to the state to enforce CMS guidelines more strictly or to CMS to set a stronger federal standard. If stakeholders are concerned about how particular plans are implementing guidance from the Administration, they might request that CMS clarify its guidance to plans and to states. Alternatively, if plans are failing to comply with guidance, stakeholders might go directly to the state, arguing that the guidance was clear and that the state should increase plan oversight.
Sometimes, the ACA requires a very delicate (even an awkward) balance between the roles of states and federal regulators in overseeing local insurance markets. This is particularly true for most Federally-facilitated Marketplace (FFM) states, where CMS regulates coverage through the Exchanges, and each state insurance commissioner oversees the market outside of the Exchange. One example of this overlapping authority is network adequacy. In its 2014 letter outlining standards for issuers in FFM states (FFM Letter), CMS indicated that it would largely defer to FFM states’ analyses and recommendations regarding network adequacy, provided that the states had in place network adequacy standards equal to those in the CMS regulation. However, in light of concerns about the robustness of Exchange plan networks, CMS indicated in its 2015 FFM Letter that CMS would no longer rely on state reviews but instead “will assess provider networks using a “reasonable access” standard” and would collect data in 2014 in preparation for formulating time and distance standards for use in later years. The NAIC wrote twice to the Administration raising concerns about an increased federal role, arguing that states are best equipped to make these determinations and that NAIC model guidelines on network adequacy will be updated. As CMS reviews plans over the coming weeks in advance of 2015 open enrollment, it will be instructive to see if CMS does in fact require plans to make any changes to networks that may have already approved by the state.
As the ACA enters its fifth year of implementation, and Exchanges begin their second year of operation, the roles and the relationship between state and federal insurance regulators will continue to evolve. Consumer advocates and other stakeholders may pressure CMS to impose stricter, federal standards on plans. Nevertheless, as the primary enforcers of the private insurance provisions of the ACA, the role of insurance commissioners has been, and will likely continue to be, central to its implementation.