States Expect Most Carriers to Participate In Exchanges, But Some Will Limit Them

Featured Health Business Daily Story, Nov. 28, 2012

States Expect Most Carriers to Participate In Exchanges, But Some Will Limit Them


By Steve Davis, Managing Editor – November 2012 – Volume 2 Issue 11

In response to a request for letters of intent, more than 30 health insurers indicated they want to offer coverage through California’s state insurance exchange — recently dubbed Covered California. Unlike some states, California intends to limit the number of carriers that it allows to offer coverage through its exchange.

The state’s largest carriers, Kaiser Permanente, Anthem Blue Cross, Blue Shield of California and Health Net, Inc., have all expressed an interest in participating in the exchange, while smaller carriers and large hospital systems might opt to offer products in certain geographic areas, the Los Angeles Times reported Oct. 31.

State exchanges can operate as a “clearinghouse,” contracting with all qualified health plans (QHPs), or they can be an “active purchaser” and contract with selected health plans and/or negotiate premium prices with health plans, according to the Kaiser Family Foundation. Over time, however, some state insurance exchanges acting as clearinghouses might switch to an active purchaser model.

Last spring, HHS indicated that any willing health insurer that has URAC or NCQA accreditation will be allowed to participate in a federal facilitated exchange. While most states have yet to define how their exchange will operate, several states, such as California, intend to operate under the active purchaser model. While Massachusetts’ Commonwealth Connector exchange often is held up as an active purchaser model, it really was more of a clearinghouse when it began operations — the state accepted every eligible plan, and eventually brought in an out-of-state carrier.

HEX contacted several state exchange directors to find out how many carriers they expect will participate. Here’s a look:

Maryland: The five health plan operators that now sell coverage in the small-group market and the seven that sell individual coverage are all expected to participate in the Maryland Health Benefit Exchange, says Executive Director Rebecca Pearce. In addition, a Consumer Operated and Oriented Plan (CO-OP), which received a $65 million federal loan in September, will offer coverage statewide. Insurers that reach a specified level of premium revenue from sales outside the exchange will be required to sell coverage inside the exchange.

That provision is intended to limit adverse selection in the exchange. Similarly, carriers in Massachusetts that had “a minimum threshold of enrollees” in the small-group and individual markets were required to participate in that state’s exchange, which preceded the federal reform law. While Maryland’s exchange will allow all qualified health plans to participate, legislation allows the exchange to switch to an active purchasing model after two years and restrict carrier participation.

On Oct. 24, the Maryland Health Benefit Exchange and Maryland Insurance Administration conducted training for carriers to provide an overview of plan management policies and procedures. The information, for example, explains timelines and outlines the paperwork carriers will have to submit. Carriers can participate in the Small Business Health Options Program (SHOP) exchange or the individual exchange, but will not be required to participate in both. On the Medicaid side, Maryland has seven carriers in the market. Pearce says her office has had conversations with a couple of them about the possibility of offering commercial coverage on the individual exchange. “Nothing concrete, but there have been discussions,” she tells HEX.

Nevada: It’s still too early to tell which insurers will participate in the Silver State Health Insurance Exchange, Executive Director Jon Hager tells HEX. So far, he says he hasn’t had any firm commitments from insurers saying they will or won’t participate. Nevada’s exchange will be an open-market facilitator that will allow participation by any carrier that meets the licensing and certification criteria to be a Qualified Health Plan (QHP).

Carriers will be allowed to participate in either the individual or SHOP exchange or both. “We hope that our policy decisions will provide the incentives necessary to allow for robust participation,” he says. Medicaid managed care companies that participate in Nevada’s programs will likely offer commercial coverage through the exchange. In its request for proposals (RFP), the Division of Health Care Financing and Policy included a requirement that Medicaid managed care vendors offer at least one silver and one gold QHP in the exchange. Bids were due Nov. 1.

Washington, D.C.: About 25 carriers now participate in the District’s individual and small-group markets. The largest carriers are Aetna, Inc., Maryland-based CareFirst BlueCross and BlueShield, Kaiser and UnitedHealth Group, says spokesperson Dorina White. Most carriers are expected to participate in the exchange, which could wind up being the only place health insurers will be able to sell small-group and individual products. The exchange also hopes to include coverage from a CO-OP.

Washington state: Exchange officials have not yet issued a letter of intent for health plans, but is participating in a work group with about 10 commercial carriers and Medicaid plans to discuss technical issues related to the exchange. “We believe at this stage most of the major players in our market, including the Medicaid plans, are interested in the individual exchange,” says Richard Onizuka, Ph.D., CEO of the Washington Health Benefit Exchange. It’s unclear how many carriers will participate in the SHOP exchange, he adds. “We’re hearing issues about affordability from [carriers], particularly those in the individual market, where some tell us their current products are well below the floor of 60% actuarial value for bronze level plans.”

Editor’s note: To see the materials that were distributed to insurers that sell coverage in Maryland, visit

© 2012 by Atlantic Information Services, Inc. All Rights Reserved.

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Roy Ramthun
Council for Affordable Health Insurance
(202) 747-4467

Disclaimer: The information contained on this email is for informational purposes only and does not constitute legal advice. Transmission, downloading, accessing and/or receipt of these materials does not establish or constitute an attorney-client relationship between CAHI and the recipient. Readers of this information should not act upon any information contained in this email without seeking professional legal counsel.


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