States seek help making health exchange rules

• States face Nov. 16 deadline on exchanges
• Each state has different demographics to account for in exchanges
• Many states waited until the last minute because of the Supreme Court case

WASHINGTON – As the federal government tries to leave the states with the freedom to set up individualized local health exchanges, state officials say they've received so little guidance that they're afraid they'll have to make changes as more regulations come out after the presidential election.

"CMS is walking a very fine line with providing guidance while trying not to be too prescriptive," said Kevin Counihan, CEO of Connecticut's Insurance Exchange. "We can either say, 'I don't know enough to move,' or, 'We're going to do the best we can with what we have.' If we do something wrong, we can beg the government for forgiveness later."

The states are rushing to meet a Nov. 16 deadline to let Washington know if they will create their own health exchanges or participate in the federal program. But because only two states — Massachusetts and Utah — had the systems before the 2010 health care law was enacted, most of them are starting from scratch. And they're finding that limited guidance from the feds means that state officials need to answer some hard questions, such as whether acupuncture should be a covered benefit, or exactly what meets government regulations for mental health care, or whether they should pay for surgeries meant to help people who are obese.

"In my conversations with state officials, I'm hearing two concerns," said Ceci Connolly, managing director of the PwC Health Research Institute. "They're concerned about the very aggressive timetable …and the lack of guidance. There's not a lot of detail in essential health benefits."

In California, it means that stand-alone vision insurance has been left out of the new exchanges entirely, while stand-alone dental is included. That, vision insurers say, means that the big providers such as United Health Care or Kaiser could suddenly be in a position to provide vision care and run the stand-alone providers out of business.

"We are not happy with that," said Rob Lynch, CEO of California-based VSP, the largest vision care program in the nation. "We're headquartered here. If we get shut out of this market, we may move pieces of the company elsewhere."

Government officials say this is how the move toward the market-based exchanges should work, and that the states are supposed to have leeway in deciding what benefits fit their citizens' needs.

"Over the past two years, (Health and Human Services) has been in constant contact with the states, answering questions and providing guidance through bulletins, phone calls, webinars, in-person meetings and rulemaking," said HHS spokeswoman Erin Shields Britt. "Many states have taken advantage of this guidance and have already made extraordinary progress toward establishing an exchange."

Health exchanges are state- or federally run websites that allow people to choose an insurance policy — similarly to how employees choose plans through their employers now.

HHS issued 10 markers — essential health benefits — that are the minimum standards states must meet. Those include dental care for children, preventive care, emergency care and prescriptions. States have the option to use small group plans or large government plans as models.

Connolly said many states waited until the last minute because of the Supreme Court case deciding whether the health care law was constitutional, and that means they're fighting out the details now. Even so, she said the next couple of years will be a time of experimentation as the states figure out how the exchanges should work.

"That's what should be happening," she said. "Even when they're up and running, there's going to be a great deal of experimentation."

Each state has different demographics for potential insurance customers, and officials need to understand what people need. Consumers in California may expect different options than consumers in Minnesota.

"Massachusetts and Utah have very different approaches with very different ideas about government involvement," Connolly said. "We anticipate more that. If someone said to me, 'Everything's going perfectly,' I'd be a) surprised, and b) would not believe them."

But Cheryl Smith, a director at Leavitt Partners, which advises states about how to create exchanges, said she sees a problem that goes deeper than experimentation.

"In my opinion, the biggest (and most ubiquitous) problems for states are the simultaneous overabundance of information and the general lack of information from HHS," she said. "At the very moment they are drinking from HHS' fire hose of rules, regulations and deadlines, states still don't know what the federal exchange will look like, nor do they know if — or how much — a federally established exchange will cost them."

That prevents states from being able to make rational decisions, she said. States have the option to send consumers to a federal health exchange, rather than creating exchanges themselves. Many states, even those supportive of the exchanges, would like more time to put them together well.

"We're trying to work with the regulations we have," Counihan said, but he also said he speaks weekly with federal officials, and that the state expected bugs working with "a system this complex."

"But we'll absolutely meet deadline," he said.

Myung Oak Kim, spokeswoman for the Colorado Health Benefit Exchange, called the exchanges "complex" and said they're working under a tight deadline, as are officials she's talked to in other states. She said she's also speaking with federal officials regularly.

"We're trying to build flexibility into our system to accommodate upcoming guidance," she said. But in the meantime, they're reaching out to the local community to build a wish list of benefits that they believe should be included. "We may need to wait on some of them, but we'd like to include more in the next couple of go-rounds. For now, we basically have to move forward with what we have."

Connolly said the process is moving as it should.

"This is a massive piece of legislation to be implemented," she said. Each new regulation requires draft proposals and 90-day comment periods, and so far, that process has meant the regulations have been better than those originally proposed, she said.

In California, Lynch said state officials have promised to take another look by the end of the month at whether they should leave stand-alone vision plans out of the exchanges.

"I think there are going to be bugs," Lynch said. "There was no provision in the Affordable Care Act for stand-alone vision, so the state didn't think they needed to include it."