On June 19, 2013, the Centers for Medicare and Medicaid Services and the Department of Health and Human Services released proposed rules setting forth financial integrity and oversight standards for qualified health plan issuers in federally-facilitated health insurance exchanges (“Exchanges”). They also proposed new standards with respect to states’ risk management services, as well as standards for brokers and agents. The purposes of these new proposed regulations are to create protections against health care fraud and protect consumers.


On January 1, 2014, qualified individuals and employers will be able to obtain private health insurance through Exchanges. There are two types of Exchanges: state-based Exchanges and federally-facilitated Exchanges, which are operated by the federal government in states that have chosen not to operate their own Exchange.

New State Regulations

The proposed regulations set forth reporting standards for state-based Exchanges that participate in either a reinsurance or risk adjustment program. These programs are intended to compensate Exchanges that have a higher share of higher risk participants. The new rules propose financial safeguards, such as yearly audits, to deter misuse of federal funds.

Also, under the proposed rule, when a state-based Exchange discovers that it did not offset an enrollee’s premium by the amount of the advance payment of the premium tax credit, the Exchange would have to refund the excess premium paid. The Exchange would also have thirty days to alert the enrollee of the excess charges after discovery.

New QHP Issuer Standards

The Centers for Medicare and Medicaid Services proposes circumstances under which the Department of Health and Human Services may impose fines on health plan issuers in federal Exchanges. The proposed rules sets out the circumstances under which a qualified health plan issuer should be decertified from an Exchange. The proposed rule also clarifies that an issuer is entitled to administrative review of a Department of Health and Human Services decision.

The proposed rule would also require issuers to accept most forms of payment including checks, money orders, pre-paid debit cards, and cashier’s checks. The purpose of this rule is to facilitate the payment of premiums by individuals without bank accounts.

Finally, the proposed rule includes addition standards for agents and brokers, geographic rating, and guaranteed availability and renewability of insurance plans within particular market segments.

Fraser Stryker is a leader in tax and employee benefits law. Attorneys in the Firm’s Taxation and Employee Benefits Practice Groups advise individuals, business entities, governments, and nonprofit/tax-exempt organizations on a wide variety of tax and employee benefits matters and transactions. Fraser Stryker works with employers to implement and maintain employee benefit plans that help attract and retain top talent.

Fraser Stryker is on the cutting edge of advising clients on all aspects of the Patient Protection and Affordable Care Act, as amended. Fraser Stryker’s Health Care Reform Response Team, composed of attorneys in the Employee Benefits and Health Care & Physicians Law Practice Groups, assist clients in complying with and implementing this major piece of legislation. Members of the Team work closely with employers, health care providers and facilities, insurance companies, human resources personnel, health plan administrators, and third party administrators to help them understand and implement health care reform. The Health Care Reform Response Team attorneys have experience working with state and federal health care and health insurance regulators, the Department of Labor, and the Internal Revenue Service in all aspects of health insurance and health care delivery. For more information on the proposed rules or health care reform, please contact or Nicole R. Konen.

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