Insurance exchanges must offer multi-state individual and small group health plans

Nov. 17, 2011

Consumers will have the ability to shop for individual and small group health plans that are offered in multiple states through state insurance exchanges, under a provision of the Affordable Care Act. The multi-state plans will be private sector plans overseen by the federal Office of Personnel Management.

The availability of OPM multi-state plans will provide consumers with options that are identical, or nearly identical, in multiple state exchanges. As a result, for example, the OPM coverage option purchased in another state could also be available for purchase in Michigan, which could be a desirable feature when individuals move to another state. At least two plans must be made available in each exchange. At least one plan will be issued by a non-profit entity, and at least one must not cover elective abortions.

Contracted plans must meet multiple requirements:

• Licensed in each state and subject to all requirements of state law
• Meets all insurance reform requirements under the ACA
• Meets all essential health benefit requirements
• Offers bronze, silver, gold, and catastrophic plans in each state
• Meets qualified health plan requirements

The Office of Personnel Management may contract with these plans without using a competitive bidding process. Contracts are issued for a one-year period but may be made automatically renewable, provided neither the plan or OPM terminates the contract. The Department of Health and Human Services has authority to appropriate funds for the program.

Multi-state plans contracted by OPM are automatically considered to be exchange-certified qualified health plans. The OPM director may prohibit a plan from being offered that is not in the best interest of consumers. 

To be contracted, health insurers will negotiate over issues including medical loss ratio, profit margin, premiums, and any criterion that the OPM director feels to be in the best interest of enrollees. 

For each contracted entity, their participation may be phased in so that they gradually offer coverage in all states. For the first contract year, coverage must be offered in 60 percent of states (30 states), for the second contract year, coverage must be offered in 70 percent of states (35 states), for the third contract year, coverage must be offered in 85 percent of states (43 states), and in the fourth contract year coverage must be offered in all states.

The multi-state plans will be governed by an advisory board created by OPM and consisting of plan enrollees or their representatives. Congress is authorized to appropriate funds necessary to carry out this section of the law.

The reform law states that health insurers are not required to comply with certain provisions of federal or state law if multi-state plans are not required to comply with those provisions. For example, the provisions include requirements regarding automatic renewal of health plan coverage, the ban on pre-existing condition exclusions, appeals rights, and health insurer solvency and licensure requirements. 

Statutory language expressly permits the Blue Cross Blue Shield Association to collectively compete for this contract. BCBSM is currently evaluating whether to pursue a contract, with many decisions contingent upon future rulemaking.

The information on this website is based on BCBSM's review of the national health care reform legislation and is not intended to impart legal advice. Interpretations of the reform legislation vary, and efforts will be made to present and update accurate information. This overview is intended as an educational tool only and does not replace a more rigorous review of the law's applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. Analysis is ongoing and additional guidance is also anticipated from the Department of Health and Human Services. Additionally, some reform regulations may differ for particular members enrolled in certain programs such as the Federal Employee Program, and those members are encouraged to consult with their benefit administrators for specific details.