Maryland is well on its way to implementing a key feature of the Patient Protection and Affordable Care Act (PPACA), namely the reform of the private health insurance market via the creation of a Health Benefit Exchange.
PPACA authorized the federal government to grant funds to states to establish by January 1, 2014, entities, known as exchanges, that run virtual health insurance marketplaces. Maryland has won a number of these grants, and is in the vanguard of implementation, while many other states are either struggling to get their exchanges running or are refusing to create exchanges at all.
A. Exchange Functions
PPACA relies on these exchanges to accomplish a number of reform goals. First, exchanges are to connect individuals and small groups with a choice of health plans (qualified health plans) that comply with federal insurance reforms as a type of "one stop shop" for health insurance. Exchanges are also to police plan compliance by, for example, monitoring plan marketing for signs that a plan is trying to "cherry pick" healthy individuals to avoid the impact of the guaranteed issue and community rating mandates.
Second, the exchanges are to collect and to disseminate comparative data on plan coverage and performance, enabling consumers to select the most appropriate plan. Exchanges also slot qualified health plans into four "tiers" (bronze, silver, gold, and platinum) by the scope of benefits and coverage offered by the plans.
Finally, the exchanges are to share data with the Internal Revenue Service to determine whether purchasers qualify for tax credits (as in the case of certain businesses with small workforces), for means-tested subsidies for private insurance, or for Medicaid.
B. Maryland Act
The General Assembly passed the Maryland Health Benefit Exchange Act in 2011. The Act created the Maryland Health Benefit Exchange as an independent unit of State government governed by a Board of Trustees and managed by an executive director.
The Maryland Exchange is to be funded through user fees, grants, endowments, and donations, all kept separately from Maryland's general fund. Liabilities of the Maryland Exchange are not considered State obligations.
The Act also sets forth the goals of the Maryland Exchange. The Act tasked it with (1) meeting the exchange goals outlined in PPACA, (2) acting as an exchange for dental plans as well as health plans, and (3) running Maryland's Small Business Health Option Program (the SHOP Exchange - a mini-version of the exchange for businesses with under 50 employees).
C. Maryland Regulations
The Maryland Health Benefit Exchange has hired its executive director and other staff, and is now preparing to issue its first regulations, drafts of which it released for informal public comment in November. These first regulations concern, among other things, the operation of the call center and web portal required by the Act, and compliance with fraud and abuse audits required by the Act and by PPACA.
Future editions of TOPICS will include updates on the status of those regulations, and of the Maryland Exchange generally, as it prepares to open in 2014. Although Maryland is farther along than most states, most of the meat of the Maryland Exchange remains to be fleshed out. And it remains to be seen whether the Maryland Exchange and like exchanges will become the robust marketplaces envisioned by PPACA and the General Assembly.