Federally Facilitated Exchanges – What’s the Broker’s Role?

A recent BenefitMall blog examined the challenges Republican governors face if they delay establishment of their respective state-based Exchange(s).  The Patient Protection and Affordable Care Act (PPACA) requires each state to establish a state health benefits Exchange for individuals and a SHOP Exchange for small group employers, or offer one merged public Exchange.  These Exchanges will help consumers access, compare and purchase coverage from a qualified health plan. 

Should a state fail to implement a state-based Exchange, even if by choice, the federal government will implement a federally-facilitated Exchange (FFE).  States maintain the ability to have some control for some functions within an FFE arrangement.  However, as discussed below, an FFE model of Exchange may pose additional complications for Brokers. 

A significant number of Republican governors are waiting for the U.S. Supreme Court decision on the constitutionality of the individual mandate provision embedded in the health care reform law.  They are philosophically opposed to many or all provisions of PPACA and, from their perspective, if the provisions of PPACA are declared unconstitutional, the time and expense in establishing a state-based Exchange may be futile.  As a result of this “waiting game,” some states may be forced to implement an FFE should PPACA be upheld by the Supreme Court. 

What Role Will the Federal Government Play in FFEs?

Many questions remain about the structure of the FFE. Because an FFE will be implemented “where a state-based Exchange is not operating,” several states will likely default by choice or otherwise find their local markets run through an FFE.  Although PPACA mandated every state have an Exchange, the funding mechanism for federally operated Exchanges is in question since this expense was not addressed in PPACA.  Under the current “pay as you go” federal legislative requirement, it is unclear what program funding would be cut or what taxes would be increased to pay for this potentially significant expense.  Given the partisan split in Congress, passage of a spending authorization to fund FFEs may have to wait until after the results of the November election. 

How Will the Role of Navigators Be Defined in an FFE?

As we discussed in a series of blogs on new final exchange rules issued by the U.S. Department of Health and Human Services (HHS), PPACA mandates that one of the primary responsibilities of the entity running the state-based Exchange  is to determine the nature and extent of the relationship the Exchange has with Brokers and Navigators. In other words, the federal government will identify the following:

·         Who is awarded the start-up grants for Navigators

·         Who will ultimately be approved as a Navigator

·         What specific functions the Navigator will fulfill

·         The extent of potential conflicts of interest

·         The extent that Navigators will have to provide “education activities”

·         The requirements for training Navigators, and

·         How Navigators will be compensated for their services. 

The federal government will also be responsible for approving the materials that Navigators may use in the pursuit of their duties. 

How Will the Role of Brokers Be Defined in FFEs?

Defining the role of Brokers in state-based Exchanges has generated some debate between policymakers.    In a set of recently issued Interim Rules, HHS reaffirmed its position that states that create and operate their own exchanges will retrain the authority to regulate the activities of both Brokers and Navigators, and those regulations have some positive things to say about Brokers. 

However, for an FFE implemented in one or more states, the role of the Brokers will be determined by the federal government. 

Under a hybrid approach, HHS asserts that in cases where a state Exchange is a joint venture with the federal government for back office operations, “A State Partner may assume primary responsibility for the plan management function, in-person consumer assistance functions (including oversight and management of Exchange Navigators), or both.”  Should a state decide to become involved in the consumer assistance function, the guidance specifically says the “State Partner will administer, oversee, and support in-person application assistance…including a Navigator Program.”

At first blush, this appears to create a program in which the state would likely revert back to maintaining total control to define the role of Brokers.  However, later in the guidance HHS declares that it would maintain control of the Exchange website and consumer hotline. Because the agency “is responsible for Exchange implementation, we will approve State Partners to perform plan management or consumer assistance functions, and retain authority over inherently governmental functions (certification of specific QHPs, selection of Navigators, etc.)”  The guidance continues, “HHS will enter into agreements with State Partners to establish and memorialize roles and responsibilities, and outline specific workflows, deliverables, review standards and timeframes.”  Thus, HHS might elect to define the role of Brokers in the emerging FFE system. 

In Exchanges completely run by the federal government, the role of the Broker will need to be defined in the not so distant future.  Today, the Broker’s role is not clear.  The guidance issued by HHS says, “HHS expects that licensed agents and brokers will continue to assist consumers in accessing health insurance, and will work with agents and brokers to promote enrollment through the Exchange.” The involvement of Brokers, however, is completely dependent on a myriad of further conditions including the Broker meeting registration and training requirements, defined by HHS, and signing an agreement.  Only then will the Broker be given access to the FFE portal or website and be permitted to assist consumers in selecting coverage.    

Are State-Based Exchanges Better for Brokers?

Deciding whether state-based Exchanges are better for Brokers than FFEs is another challenging task, and one largely dependent on the relationship Brokers have with individuals implementing the Exchange in their state.  In some states with administrations that understand the critical role Brokers play in assisting individuals and small group employers obtaining health insurance, it may be in the best interests of the Broker community to have an Exchange organized and run on a local basis. 

However, HHS has demonstrated some commitment to Brokers, as evidenced by the guidance: “HHS anticipates that agents, brokers, and other producers will be a primary channel small businesses use to access coverage…In addition to providing assistance with enrollment activities, HHS anticipates that agents and brokers will continue to be a primary point of contact for a variety of administrative, billings, and claims related issues, and will work with FF-SHOPs to assist their clients in resolving these issues.” This mindset may lead to an increased role for Brokers in states that do not have a clear understanding of how Brokers are an important asset to include in the daily operations of Exchanges.   

All quotations in this blog can be found in the guidance recently issued by HHS on FFEs.     

We will continue to keep you up-to-date on these and other developments in our ever-evolving marketplace. Please visit www.HealthcareExchange.com for blog posts, polls, surveys and numerous resources, or you may visit www.BenefitMall.com to view past Legislative Alerts.

The views expressed in this post do not necessarily reflect the official policy, position, or opinions of BenefitMall. This update is provided for informational purposes. Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.