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ACA multistate plans must not fly under regulatory radar, AMA says

The Association is concerned that insurers might be granted too much latitude in complying with state and federal consumer protection requirements.

By Jennifer Lubell — Posted Jan. 29, 2013

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To protect physicians and patients, multistate plans offered on upcoming health insurance exchanges should be held to the same regulatory standards as other private insurance offerings, the American Medical Association wrote in a Jan. 4 comment letter to the U.S. Office of Personnel Management.

The Multi-State Plan program was established by the Affordable Care Act to promote competition and encourage the availability of high-quality, affordable products in the insurance exchange marketplaces.

At least two multistate plans, one of which should be from a nonprofit insurer, must be offered on the exchanges starting in 2014. Such plans would be able to offer insurance to small businesses that operate in — or families that reside in — more than one state. In November 2012, the Office of Personnel Management issued a proposed rule establishing standards for these multistate plans and sought public comment from stakeholders.

In the AMA’s letter, Executive Vice President and CEO James L. Madara, MD, wrote that the Association had high hopes for the exchanges but that “all insurance participants need to be playing by the same rules to prevent adverse selection and competitive advantages.”

Need for healthy competition

The multistate plans will serve as an important tool to foster healthy competition in the health insurance marketplaces, Dr. Madara wrote. However, the AMA has concerns that the rule offers too much latitude to the multistate plans when it comes to complying with state and federal consumer protection requirements, he stated.

As an example, the Office of Personnel Management’s criteria for establishing adequate networks of contracted physicians and other health care professionals for these plans is too broad “and leaves too much discretion to OPM to determine the adequacy of a provider network,” Dr. Madara wrote. An inadequate network could force patients to reduce their use of preventive services and other necessary care, resulting in avoidable illnesses, increased use of emergency departments, work absences and lost productivity, he said.

The AMA recommends that all multistate plans comply with state network adequacy mandates as well as the consumer protection laws in the state where the enrollee lives. State insurance departments also should certify the networks of these plans, Dr. Madara wrote. In the meantime, the Association will share its own model legislation on network adequacy with states to help them strengthen their requirements.

The rule’s provisions on medical-loss ratios — which require insurers to spend a certain percentage of premium dollars on medical care — also may create an unlevel playing field between multistate and other plans, according to Dr. Madara’s comment letter. The Office of Personnel Management is reserving the authority to assign an entirely different minimum threshold to these plans if it deems that the change would benefit enrollees. But having multistate plans operate under their own requirements in this area would undermine the health system reform law’s transparency goals for insurers, Dr. Madara wrote.

The AMA urges that the Office of Personnel Management retain the final medical-loss ratio requirements that the Dept. of Health and Human Services adopted for the health insurance exchanges, which already have saved patients billions of dollars, “and not allow any flexibility or reduced patient protections for multistate plans,” the letter stated.

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