Three years after President Obama signed the Patient Protection and Affordable Care Act into law, most of the federal rulemaking has been completed, if not all yet cemented as policy.

In the past several months, the Department of Health and Human Services has issued final insurance market rules and proposed regulations for the federal insurance exchange, while other federal departments are finalizing regulations for the annual fee on insurers and the multi-state plan program.

HHS first proposed insurance market regulations in November and after it received about 500 comments from industry and stakeholders, it adjusted several of the final rules, while still keeping some of the more controversial ones, such as the 3:1 age ratio that limits the difference health plans can charge for age.

Many states that have age rating rules set it at 5:1, but a lot of insurers contend that the 3:1 ratio could lead to high premiums for young people and perhaps discourage them from enrolling. The National Association of Insurance Commissioners and others asked HHS if states could phase in the 3:1 age band, but the agency responded that it has no legal authority to do so. (Also, a recent Urban Institute study suggested the 3:1 age ratio may not be that hard on the finances of young people, as most young consumers buying in the individual market are likely to do so through public HIXs and will receive tax credits limiting premiums to 9.5 percent of their household income.)

[The ACA at 3: Neither success nor survial a forgone conclusion]

In other areas HHS has been trying to accommodate local concerns by granting states autonomy, where the agency has greater legal flexibility and the states would be meeting or exceeding the ACA’s baseline.

Most of the public comments on the proposed market rules urged HHS to establish per-member rating methodologies in the small group market and Small Business Health Options Program (SHOP) on the exchanges. Although some commenters said the per-member ratings could raise premiums for older workers, as opposed to composite ratings that average the pricing across the employer health plan, HHS ended up keeping per-member rating.

HHS officials said that composite ratings would make the individualized plan selections envisioned by SHOP difficult, and that “per-member rating assures compliance with the requirement that age and tobacco rating only be apportioned to an individual family member’s premium” and also “promotes the accuracy of the risk adjustment methodology.”

But HHS added that nothing in the rules prohibits states from requiring insurers or small employers to offer “premiums based on average employee amounts where every employee in the group is charged the same premium.”

While some rules are still developing, all of them will have to be enforced by either state insurance and financial regulators or the federal government, and that’s going to be a gradual process, as Kaiser Health News reported earlier this week.

Florida regulators aren’t going to penalize insurance companies that violate new consumer protection rules, but have worked out an agreement with HHS to report them, while three conservative states that will have federal insurance exchanges and are not expanding Medicaid — Mississippi, South Dakota and Alaska — are going to be actively ensuring compliance. Aaron Sisk, a senior attorney at the Mississippi Insurance Department, told Kaiser Health News: “We don’t pick and choose which laws to enforce or not enforce.”

Although the agency says it’s trying to collaborate with states as much as possible, HHS can take direct enforcement action if states choose not to enforce ACA market rules, if state regulators lack statutory authority to do so or if HHS finds a state not enforcing certain rules. Under the Public Health Services Act, HHS can fine insurers up to $100 per day for each individual affected by a violation, as Timothy Jost, Washington and Lee University law professor, blogged on Health Affairs. So far, Missouri, Oklahoma and Wyoming have told HHS they will not be enforcing the ACA.

[From Healthcare Payer News: eHealth survey finds ACA confusion among small businesses]

HHS may also end up doing substantial health plan review in the 26 states likely to default to federal HIXs. In guidance issued recently on the federal exchange, HHS said its hopes to rely on the states for qualified health plan (QHP) certification or to create an integrated review, to avoid duplicative work for insurers, although HHS can only do that to extent state insurance reviews meet federal baselines.

HHS officials previously estimated that 42 states have sufficient insurance rate review processes, but the HIX qualification process also accounts for other federal requirements, including network adequacy and availability of essential community providers, which the agency is still finalizing.

In states that do not meet the federal baseline for network adequacy — meant to ensure health plan members have provider choices — HHS has proposed accepting an insurer’s accreditation, either commercial or Medicaid, and currently unaccredited issuers would be required to submit an access plan as part of applying to be a QHP.

For the essential community providers, such as FQHCs, HHS is proposing a fairly flexible compliance formula accounting for the providers’ geographic variation.

To meet “safe harbor” standards, a QHP would have to demonstrate that at least 20 percent of essential community providers in the health plan’s service area are included in the network, and they’ll have to offer contracts to all available Indian providers and at least one essential community provider in the service area from six categories, including family planning clinics and HIV/AIDs centers.

 The ACA at 3 Podcast: The road to reform and a short window of implementation

Associate Editor Anthony Brino on President Obama's historic signing of the law, and an interview with healthcare historian Beatrix Hoffman on the reform movements that brought about Medicare, Medicaid and ultimately the ACA.

Play in a new window.

To meet minimum essential community provider requirements, QHP would have to include at least 10 percent of area community providers in their networks, and submit a “narrative justification” demonstrating adequate services for low-income and previously underserved enrollees.

The federal exchange, set to go live for enrollment in October, is required to consider all rate increases in QHP certification — one of the biggest tasks the federal government could face. HHS has proposed basing its rate increase acceptability determination process on insurers’ data and actuarial justifications, as well as “any recommendations provided to CMS by the applicable state regulator about patterns or practices of excessive or unjustified rate increases and whether or not particular issuers should be excluded from participation in the exchange.”

In the coming years, HHS says it may also consider factors such as rate growth, both inside and outside the exchange — a sign of just how much the ACA is and will be evolving.

HHS and other agencies are extending deadlines — such as the compliance date for states to meet external review procedures for self-insured health plan enrollees — and are very much trying to accommodate industry concerns while ensuring strong consumer protections.

For the federal exchange, and with health plan certification more broadly, HHS says it’s trying to coax into the exchange rates neither too high nor too low — because in addition to avoiding market disruptions, the agency says QHP rates will be impacting federal tax credits and thus federal spending.

See also: 

From PhysBizTech: Physician's fret over future, healthcare's 'suboptimal' status

The State Department's renewed focus on global health diplomacy

Healthcare Finance News: Urban Institute study finds hospitals could reap $293 billion under Medicaid expansion