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Hey, everybody.
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Welcome to Regulatory Joe.
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I'm Joe Boyle, president of ClearFile,
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and on today's episode, we'll be
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discussing the shift to state-based
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exchanges and why that's picking up speed.
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So before we get into the shift, we'll
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just do a quick recap on some terminology.
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What is a federally facilitated exchange?
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An FFE is where an issuer
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traditionally files through CMS,
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utilizes and relies on them for
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enrollment and marketplace functions.
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When we talk about a full state-based
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marketplace, that's where a state
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exchange manages all operations within
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the marketplace, including enrollment
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and billing on behalf of that issuer.
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A state-based exchange operating
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on a federal platform, otherwise
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known as an SBE-FP, is a traditional
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one-year transitionary period that
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allows state-based exchanges to become
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prepared with readiness, staffing,
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operations to then be able to handle
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the volumes of enrollment, the volumes
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of billing, the volumes of functions
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that members will create during the
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influx of enrollment after an issuer
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has completed the filing process.
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So if you put the ACA on a timeline from
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the inception of QHPs, there was really
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14 states that embraced the ability to
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either transition by way of a state-based
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marketplace or state-based exchange
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or become a full state-based exchange.
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When we fast-forward the clock
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to today in current time, those
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statistics have grown immensely.
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And when we fast-forward the clock to
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today for the most recent states looking
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to convert to become a state-based
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exchange for plan year 2027, Oregon
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is bringing the total industry pool
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up to about forty-three percent of all
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jurisdictions implementing this as a
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core principle for future plan years.
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If we walk back recent pace of transition
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history, we can look at a few states
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that have also followed this trajectory
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over the past couple plan years.
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Virginia moved to become a
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state-based exchange during
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plan year twenty twenty-four
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Georgia for plan year twenty twenty-five,
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Illinois for plan year twenty twenty-six.
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Like we mentioned Oregon for Plan
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Year 2027, that really sets the tone
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for an even faster pace as we enter
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and start planning strategically
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into Plan Year '29, '30, and so on.
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And when we even walk back a timeline
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for states such as Oklahoma entering
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this SBE-FP process in plan year 2026,
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now looking for a full conversion to a
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State-based Exchange in plan year 2028.
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And when we look at some of the pros
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and positives for becoming a state-based
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exchange, there's really quite a few.
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Not just boosting the economy for that
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given geography, within that zip code or
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county by creating jobs for folks that
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will be managing enrollment, billing,
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operations, working with issuers.
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But inherently against the headwinds
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of the ACA, and we saw this clear as
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day with the NBPP, that becoming a
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state-based exchange allows much more
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control over standardized day-to-day
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operations within the QHP ecosystem
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for the members within that state.
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So each state has a voice.
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They have a different member pool,
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with different demographics and all
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sorts of different health conditions.
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Of course, we all have to follow
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CMS' federal baseline policies like
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we talked about, those EHBs, those
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essential health benefits that everybody
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must adhere to across the country.
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But states can then look to enhance those
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benefits for members, for example, against
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the elimination of subsidy eligibility.
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States as a state-based exchange could
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utilize the additional control they have
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to create other financial opportunities
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for their members, whether it's by way
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of cost share reconciliation, whether
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it's by way of alternate funding
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methods or even alternate product type
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mandates with issuers in that state.
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So really understanding the
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capabilities that a state-based
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exchange will allow you, we recognize
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and fully understand it's a process.
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It takes a long time.
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Early adopters have definitely
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utilized and carried value from this
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process, states such as Massachusetts,
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who were pioneers even as early as
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Romneycare, leading the state-based
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exchange industry and setting those
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parameters through their RFI process.
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We do see states taking different shapes
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and forms of how they manage their
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business, not always straightforward
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for all issuers of different sizes.
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We understand larger issuers are
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more easily accommodating to those
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business processes because they
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have the resources available.
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We encourage regional issuers, provider
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issuers, or even startup issuers to
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proactively reach out, work with your
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SBEs, and understand their needs so
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you can meet them where they're at.
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So when we talk about what this
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means for issuers, we have four
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things that you need to know.
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Working with an SBE really means that your
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filing pathway will ultimately change.
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So we do know that the FFE has been
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operating on a singular submission
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timeline since the inception of the ACA.
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Converting to an SBE no longer cedes
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to the timeline that CMS has provided.
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State-based exchanges will develop
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and will implement their own deadlines
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that wrap around FFE deadlines.
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So if you operate in multiple states
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and if you're following this process for
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states during the conversion process,
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you need to have multiple implementation
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plans, multiple project plans.
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When we talk about the pathway that leads
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right into systems and requirements, what
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we see here at ClearFile from a SBE lens
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is SBEs take a byproduct of those codified
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technical materials and create their own
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state-based materials and requirements.
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And as states create these state-specific
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requirements, justification
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forms, they attempt to simplify
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these complex federal templates.
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We know the plan of benefit
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template is one of the most complex,
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labor-intensive templates, but we
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know why it drives and why it's so
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important for CMS's codification.
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So when you take a template that has
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thousands of data points, we see some
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states create their own version of a
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light plan of benefit template that
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may have a third of the components, a
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fourth of the components, or a fifth
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of the components issuers must complete
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to create more streamlined review.
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So we're also seeing states take CMS's
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lengthy review process and simplifying it.
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That's created their own efficiencies
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during the approval process.
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When we talk about the third item, when
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we talk about handoffs, and communication
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and working with states, we do find
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that SBEs are much more fluid with
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communication as we can have an open line
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and retain that open line throughout the
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filing process, pre-submission, review
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period, and ultimate certification.
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When we work with CMS, we're really
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beholden to the ticketing process.
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So we work with the CMS FEPS help desk,
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which again, that process has improved
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over time, but still yields long delay
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times, unresolved questions, unresolved
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issues for undetermined periods of time.
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The benefit for working with state-based
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exchanges is generally you have more line
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of sight to direct individuals where you
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can pick up the phone or arrange calls
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with your reviewers and with the exchange
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to answer questions quickly and timely.
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And one net new improvement that this
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would actually be favorable, and this
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is a call out for any net new issuers
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looking to enter new marketplaces.
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If you'd like an easier time
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starting off your first year,
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I'd recommend entering an SBE.
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You'll have, generally speaking,
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a more easier time during
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the network development,
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contracting, and review process.
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We know it's really hard to
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contract networks, especially
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in states with rural counties.
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So as states convert to state-based
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exchanges, encourage issuers, especially
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new market entrants to have a more
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hyper-focused view of where you'd want
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to participate in these markets and work
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with your exchange to understand how a
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compliant network will be contracted.
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We know some state-based exchanges
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have their own adequacy review
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process that could supersede CMS's
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network adequacy requirements.
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So as we're developing these validation
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tools and functions on a traditional
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FFE, we're seeing new market entrants
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fail network validations where that
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same network could be approved in
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the SBE market, allowing healthy
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competition and economies of scale
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for those members with those issuers.
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So regardless if you're a new issuer
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just starting out or a veteran issuer
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to the industry, some closing remarks
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is just we really want issuers to start
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mapping and tracking and really building
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that relationship with your states
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that you either know are converting to
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SBEs right now or that you think are
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anticipating converting to become an SBE.
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Won't be even too far-fetched to say
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as an issuer in the marketplace, even
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advocating for your states to start
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thinking about the conversion process
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could be a worthwhile conversation.
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So thank you everybody for listening in.
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Give us a like, give us a share,
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and we'll see you all next time.