Nevada’s Insurance Exchange Director Talks about Transitioning to a State-Based Marketplace and Saving Millions

NV Exchange Director Heather Korbulic

Nevada’s marketplace is poised to become the first to transition from the federal platform to an entirely state-run exchange. Its director explains how the move will save millions and improve residents’ health insurance.

Under the Affordable Care Act, states can either administer their own health insurance marketplaces as state-based marketplaces (SBMs), or default to the federally-run marketplace. Nevada is one of five states that operate a hybrid model – a state-based marketplace that uses the federal platform. These hybrid states are responsible for plan management and outreach and recruitment, which includes marketing activities, running local call centers, and coordinating with the state insurance department, while using the federal government’s technology platform and website to perform eligibility and enrollment functions.

Nevada’s marketplace – Nevada Health Link — is poised to become the first state in the nation to move away from the federal marketplace and transition to a full SBM. By transitioning, Nevada seeks greater flexibility to operate a marketplace tailored for its residents, while enabling the state to save millions in operational costs.

NASHP sat down with Nevada Health Link Executive Director Heather Korbulic to discuss the motivation behind Nevada’s transition, the value of state autonomy, and the future of the marketplaces.

Can you share the history of Nevada Health Link and why you are making this change?
To provide some history, in 2011, Nevada had approved statute to operate an SBM. However, when that SBM launched in 2014, the system did not work, creating significant issues for our consumers and carriers. Nevada had to decide whether to try again or begin using the federal platform—mostly to conduct required eligibility and enrollment functions. The FFM [federally facilitated marketplace] was essentially working at that time, and our board decided to transition to the SBM-FP model [state-based model that used the federal platform].

For the first two years as an SBM-FP, Nevada did not pay to use the federal platform, but in 2015, we were given notice that SBM-FPs would be required to pay a user fee. In 2017, the fee was set at 1.5 percent of premiums of plans sold through the marketplace, going up to 2 percent in 2018, and 3 percent thereafter. For comparison, the FFM collects a 3.5 percent assessment from insurers who offer coverage in FFM states.

In total, Nevada charges insurers in our state an assessment rate of 3.15 percent of premiums to [sell plans and] operate the marketplace. With the planned increases to the user fee, in 2019, Nevada would be left with only 0.15 percent of the assessment to conduct all of the functionality required of the SBM-FPs. We believe this would make the marketplace insolvent and unable to adequately perform its required functions.

Could you help us understand what these functions are—what distinguishes you from the FFM?
SBM-FPs operate local consumer assistance centers and conduct plan certification. We do stakeholder engagement in coordination with sister agencies like Medicaid and the state health department. As a state agency, we comply with all state oversight requirements along with federally-required oversight requirements for the marketplace. We operate the state navigator program, and do all our own marketing and outreach. A significant portion of our budget goes to outreach, as we have seen this as key to generating robust enrollment [which helps drive competition and affordability]. The federal government is responsible for the Healthcare.gov website and operating the integrated eligibility system for the state. (See Table 1 for a comparison of marketplace models.)

I think the role of the SBM-FPs is overlooked in discussions of the marketplace. The Nevada exchange has really honed in on our capabilities as a resource for Nevadans. We have become an important part of our community and have demonstrated success. Our consumers, carriers, state agencies and lawmakers have come to depend on us to answer their questions. Nevada lawmakers and our governor have shown commitment to the value that our marketplace has brought to our state.

This past year has given us some of the best insight into the value of having some state authority over our functionality. The national cuts to marketing and outreach this open enrollment period, and the confusion surrounding the existence of financial subsidies led to enrollment declines in many FFM states. By contrast, Nevada saw an increase in enrollment this year of 2.2 percent. We believe it had everything to do with our marketplace being a resource for Nevadans to connect to subsidies, and our work with our navigators and stakeholders to hammer the message of this year’s shortened enrollment period through focused marketing.

Table 1. State or Federal Authority over Marketplace Functions in Different Marketplace Models
Marketplace Functions State-Based Marketplaces (SBM) State-Based Marketplaces Using the Federal Platform

(SBM-FP)

Federally Facilitated Marketplaces (FFM)
Plan Management
Set and collect plan assessments State Both* Federal
Qualified health plan review and certification State State Federal**
Outreach and Marketing
Navigator/Assister program State State Federal
Marketing and advertising State State Federal
Agent/broker program State State Federal
IT/Operations
Integrated eligibility system State Federal Federal
Enrollment website State Federal Federal
Online consumer tools (e.g., calculators, provider directories, formularies) State Federal** Federal
Call center State Federal** Federal
Set special enrollment periods Both*** Federal Federal

*Plan assessments are fees paid by insurers to sell their insurance product through a marketplace. In SBM-FP states, the FFM collects a portion of assessments, known as a user fee, to operate the FFM. The SBM-FP user fee was 1.5% of premiums in 2017, 2% in 2018, and will be 3% in 2019.

** While the federal government has primary responsibility for these functions, many states also perform these functions to assure compliance with state standard or to ensure consumers have access to resources tailored to state-specific needs.

*** The parameters for special enrollment periods (SEPs) are defined by federal statute and regulation, but SBMs have flexibility to institute SEPs responsive to exceptional circumstances identified by the SBM.

What sort of improvements and savings do you anticipate after moving to the SBM model?
Nevada is in a good position to negotiate, we are essentially asking vendors for a “marketplace in a box” with all the pieces we need to make this work. We are a state agency with finite resources and want to clearly understand the costs of this packaged system — including technology and call center operations — so we can assess if it is affordable and whether it will be at a lesser cost than the FFM. Many vendors have now developed tested and proven products in this regard, with a limited market to sell them to—it is a win-win for them to work with us. Together, we will find savings and efficiencies to offer a better user experience and help our consumers.

From our initial research, we have found that Nevada could save significantly by moving to a fully functional, demonstrated product. In 2020, the 3 percent user fee will be approximately $12 million for our state, but we estimate that with our own platform operational costs will be closer to $6 million — a savings of 50 percent!

We also believe this is a chance for us to control our own destiny by managing our own marketplace. Having been an SBM-FP for several years now, we have seen the limitations that come with working with the FFM. There is very little flexibility given to states — any small change we request to try to tailor the system is almost impossible to accomplish.

There is also a lack of insight into our own state’s data. Without data, we have no sense of who our consumers are at any given moment. We are periodically provided zip code-level data breakdowns from CMS [Centers for Medicare & Medicaid Services] during the year but, for the most part, we do not know who is actively engaged in the system during the open enrollment season or other detailed information necessary to conduct truly targeted outreach. We think there are budgetary efficiencies to be found by having access to our own data — it will enable us to potentially increase enrollment and gain efficiencies from more direct consumer targeting.

What have you learned from other SBMs that helped guide Nevada’s approach?
I have learned a tremendous amount from my colleagues across the country as far as the technical components of how an SBM operates, however, what I have really walked away with is that no two SBMs are alike. There are so many differences in the ways that SBMs operate depending on how the marketplace fits in the state. This has been a helpful observation for Nevada because we know how we operate now, and we want to bring on a system that can accommodate what we want to do and will work with our state’s insurers and agencies like Medicaid.

“What I have really walked away with is that no two SBMs are alike. There are so many differences in the ways that SBMs operate depending on how the marketplace fits in the state.”

What advice do you have for states that are exploring a transition to an SBM?
Potentially, a state would need to pass some enabling legislation. Then they would need to invest in state agency staff and a small budget to operate the marketplace before it can begin collecting revenue. In Nevada, we have set aside $1 million for design, development, and implementation of our marketplace. Ultimately, it is a matter of investing and committing to the values that a SBM brings to a state and finding long-term savings.

There are many pending federal policy changes that bear national significant implications for health insurance coverage and marketplaces. What could these changes mean for consumers in Nevada?
In 2017, and continuing into 2018, we have seen uncertainty related to the ACA. We have come through the legislative endeavors to repeal the ACA last year, and now we are looking at executive rulemaking processes that could create disruption for our markets in Nevada.

I am concerned about rule-making related to Association Health Plans and what ability the state has to regulate those plans. I am also concerned about the Short Term Limited Duration Insurance proposed regulation. There is a time and place for short-term plans — for when consumers are between jobs or if they missed the open enrollment period — but these plans are not long-term solutions. We are concerned that consumers who do not qualify for premium subsidies will see these short-term plans as viable alternatives to qualified health plans, even though they do not offer the same level of benefits or consumer protections. We have seen some brokers try to game the system by directing consumers to enroll in a string of short-term plans, so that they can gain commissions for each enrollment, but ultimately that is not in the best interest of the consumer [who will have limited coverage, and have to manage constant shifts in benefits and networks].

During this upcoming open enrollment period, our marketplace will be focused on education campaigns to make sure we demonstrate to our consumers the value of having continuous coverage that meets the standards required for qualified health plans.

Is there anything else you feel it is important for leaders and consumers to know about your transition?
Everything that Nevada has had control over has been a demonstrable success. We have successfully made ourselves known as a resource in our community and for our consumers; we really are an important institution in our state. I believe the investments we are making in our new platform and the resulting savings we will achieve should be of interest to every state that wants to bring value to their insurance landscape.

View Nevada’s Request for Proposal for a technology vendor to help the state become a fully state-operated program.

Thank you to Heather Korbulic and Janel Davis of Nevada Health Link for their time and contributions to this article. Thank you to Christina Cousart, Trish Riley, Chris Kukka, and Rohan Narayanan for their critical support and feedback to this blog.

NASHP supports the State Health Exchange Leadership Network that provides a platform for state health insurance marketplaces staff and leaders to participate in peer-to-peer dialogue, discuss emerging issues, and share best practices. To learn more about the Network or NASHP’s work with the state-based marketplaces, contact Christina Cousart (ccousart@nashp.org)