Health Insurance Exchange implementation: A primer

Health insurance policies issued as part of the state and federal health insurance exchanges under the Affordable Care Act (ACA) will take effect Jan. 1, 2014. That means that, starting on that date, patients may present to your office for insurance coverage under the plans. Here are the things you need to know to be prepared for handling these policies.

First, certain elements of implementation have been delayed for a year, notably the employer mandate. That shouldn’t have a huge impact on your operations, as most employers affected by the mandate already offer coverage. The individual mandate requiring people to obtain insurance through the exchange or pay a tax penalty will take effect as scheduled.

Second, most of the coverage offered by the exchanges will be offered by the same insurance companies that you’re used to dealing with now.

Exchange set-ups

The ACA allowed for three different types of exchanges.

In a state-based exchange, the state sets up, operates and regulates its own health insurance exchange.

In a partnership exchange, the federal government facilitates the exchange, but the state operates certain functions, such as public outreach, consumer assistance and plan management. These functions may vary based on the state.

A federal exchange will operate in all states that opt not to set up their own exchange or participate in a partnership.

According to a Kaiser Family Foundation report in June, these states or territories have opted to set up their own exchanges: California, Colorado, Connecticut, the District of Columbia, Hawaii, Idaho, Kentucky, Maryland, Massachusetts, Minnesota, Nevada, New Mexico, New York, Oregon, Rhode Island, Washington and Vermont.

These states have opted for a partnership exchange: Arkansas, Delaware, Illinois, Iowa, Michigan, New Hampshire and West Virginia.

All other states will use the federal exchange. Seven states – Kansas, Maine, Montana, Nebraska, Ohio, South Dakota and Virginia – will conduct some plan management within the federal exchange.

Timeline and plan types

Individuals may begin to select coverage under the ACA beginning on Oct. 1, 2013. They’ll choose from either the state or federal exchange depending on the state. The coverage takes effect on Jan. 1, 2014.

Individual applicants may not be rejected for coverage based on pre-existing conditions or other factors, nor will rates be determined by illness history. Plans are allowed to charge older applicants no more than three times the rates of younger applicants and to assess a surcharge of up to 50 percent for smokers.

Plans come in four types – bronze, silver, gold and platinum. This is a key distinction for you to understand, as it directly affects how you will get and seek payment from the plan and patient.

Here are some key details about the plan types:

Bronze plans: Bronze plans are intended to cover 60 percent of the incurred costs of the insured. These plans will likely be popular for relatively healthy, younger applicants. For medical practices and facilities, however, these plan holders will likely have larger deductibles and coinsurance costs, creating a collections risk for the practice.

Silver plans: These plans will cover 70 percent of the incurred costs. As a result, these plans may have slightly lower coinsurance costs and deductibles and may offer an improved drug benefit from the bronze plan. Exchange participants are required to offer silver plans.

Gold plans: The gold plan covers an estimated 80 percent of the incurred costs. These plans are a little closer to replicating typical, decent employer coverage and may exempt office visits from the deductible and offer lower coinsurance. Exchange participants are required to offer gold plans.

Platinum plans: The platinum plan covers an estimated 90 percent of the incurred costs, meaning lower coinsurance and deductible costs. Because exchanges are not required to offer platinum plans, they may not be widely available. For example, Oregon’s exchange, offered through Cover Oregon, does not show any platinum plans available from any participating insurers.