Has the work of the exchange to date been for naught?

January 10, 2010
Area(s) of Interest: Health Care Reform 

With a second term now assured, President Obama’s administration released more than 800 pages of proposed regulations clarifying aspects of the Patient Protection and Affordable Care Act (ACA), which will allow states to move ahead with the vital planning that will need to be completed before the January 1, 2014, implementation date.

Implementers, in California and across the nation, must be celebrating this new-found clarity, right?

Unfortunately – especially for a state like California, which has been at the forefront of implementation – these new regulations present a whole new set of challenges.

Specifically, the federal direction largely applies to policy areas that California’s health benefit exchange board has spent months working to address, only to find now that their counterparts in Washington, D.C., had a different vision.

The inconsistencies between what the exchange has already adopted and what has been handed down by the feds may be many, with a few key areas identified by exchange staff during its December meeting.

For instance, federal rules proposed limiting geographic rating regions to seven, while California recently adopted nineteen regions after much debate. Luckily, it appears there will be a waiver process for states like California.

There are a number of other issues around the federal government's application of national standards to a state like California – with its unique population demographics and prevalence of the delegated group model. Critical reform components like risk adjustment do not account for physician groups operating under a delegated risk contract, and the federal actuarial value calculator adversely skews patient cost-sharing for Californians due to significant differences between the state and nationally representative populations.

And all of this is without taking into account the horde of challenges brought on by the federally-administered multistate plans, which, as mentioned previously, will be marching to a different tune than state-administered plans.

Of course, California officials will have the opportunity to submit comments on these regulations and it’s entirely possible that the final adopted rules will include accommodations for markets as unique as California’s.

In the meantime, however, exchange officials are left scrambling to sort through stacks of regulations that, given the timing, seem an awfully lot like an ill-timed holiday gift from their friends on the East Coast.


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