CMS’ final regulations on exchanges will be out in a “couple of months,” HHS Secretary Kathleen Sebelius said Thursday, responding to House Energy and Commerce Committee Republicans who complained to her about the lack of guidance for states setting up health insurance exchanges and asked when the regulations would be issued.

State exchanges are expected to begin enrolling beneficiaries in 18 months, and states still do not have direction from CMS on the requirements for insurance benefits and cost sharing that insurance policies in those exchanges must meet. States also would like CMS to finish regulations on the individual-market exchange, requirements for federal approval of exchanges, the establishment and operation of the federal exchange, and other aspects of the health reform law’s exchange requirements. Health subcommittee Chair Joe Pitts (R-PA) said states cannot prepare without them.

HHS seemed to have no sense of urgency, Rep. Mike Rogers (R-MI) said, and the proposed rule on exchanges provided no sense of certainty. Rep. Michael C. Burgess (R-TX) said he was concerned that states would quickly bump up against deadlines.

Sebelius said Republicans were mischaracterizing the progress of the state-exchange rule and said states would have final rules in time. “They need them in the next couple of months,” she said. “They will have them in the next couple of months.”

But that response did not satisfy Republican lawmakers.

“I would submit this is symbolic with the state of regulation in Washington,” Pitts said. “Washington writes some vague rule for some parts of the law and delays rules for other parts of the law, deadlines are not met, states healthcare providers and consumer are left in the dark and Washington thinks it can dump a thousand requirements on states and the private sector at the last minute with no consequences for patient health.”

A coalition of stakeholders representing business, provider and other industry groups in late February said HHS needs to release final rules on exchanges soon if states have any hope of implementing the health reform law provision within statutory deadlines, and a source representing retailers said at the time that the administration, as demonstrated by recent moves, appears to recognize that states might not be ready to have exchanges running on time (see related story).

The Choice and Competition Coalition—a consortium of business, insurer and provider groups that lobbies on exchange policy—said final rules on exchanges should be released in the first quarter of 2012. States need adequate time to build exchanges and health plans need time to develop and price products prior to filing them with states early next year to be prepared for open enrollment in the fall of 2013.

Other members pressed Sebelius on the contraception mandate and potential enforcement measures listed in a Congressional Research Service memo. HHS would be allowed to impose a penalty of $100 per day for each individual to insurance issuers that violate the mandate.

Sebelius said no organization would be fined for faith, and an exception, potentially through third party administrators or a third-party plan, would be found for groups with an objection of conscience. The department is meeting with religious organizations, labor leaders and women’s groups, and Sebelius said a contraception rule will be informed by those conversations and with the 28 states that have contraception mandates already in place.

News Medical 

A roundup of reports on what’s happening on the ground in several states, where Republican governors have been opposed to implementing the health law’s insurance exchanges.

Politico Pro: Neb. Exchange In Works Despite ACA Stance

Nebraska Republican Gov. Dave Heineman officially opposes implementing an exchange until after the Supreme Court rules on the health care reform suit, but his state’s department of insurance appears to be doing the work necessary to have an exchange certified by HHS on time if the law is upheld. In fact, while the Heineman administration is rooting against the law, officials think a Nebraska-based exchange will be ready as soon as the Supreme Court issues its decision. In an email obtained by POLITICO, Nebraska Department of Insurance health analyst Michael Sciullo wrote to vendors on Monday to let them know the department would soon issue a request for information on “vendor progress ... for the continued planning and design of Nebraska’s potential Health Insurance Exchange” (Feder, 2/27).

Politico Pro: Walker: We May Wind Up With An Exchange

Wisconsin Gov. Scott Walker, who last month rejected $38 million from the Obama administration to build a health insurance exchange, says his state may wind up doing its own exchange if “legal and political options are exhausted” by November. But if it does, it’s likely to be as market-driven as possible -; with the state staying far in the background. Before returning the HHS funding, Walker announced late last year that Wisconsin would halt all exchange planning unless the Supreme Court upheld the Affordable Care Act. However, Walker told POLITICO on Sunday that he would wait until the November elections to figure out a path for a state-based exchange (Millman, 2/27).

Meanwhile, a Texas official says the state is ready to move forward in its implementation efforts -

The Texas Tribune: Health and Human Services Commission Health Leaders Say They’re Ready for Federal Reforms

On Monday, state officials at a joint meeting of the House Insurance and Public Health committees told lawmakers that Texas is ready to move forward with President Obama’s health care reform package next month, regardless of whether the U.S. Supreme Court strikes down parts or all of it. “It has been a balancing act trying to determine how much planning to do versus waiting for the outcome,” Billy Millwee, the deputy commissioner of the Health and Human Services Commission, told the panel. ... “I don’t think we’ve lost anything, given the unknown factors” (Tan, 2/27).

Houston Chronicle: Texans With Health Insurance Expected To Reach 91 Percent

The percentage of Texans with health insurance will increase to 91 percent - up from 74 percent today - after the national health care law takes effect in 2014, the state’s Medicaid director told lawmakers Monday. ... An estimated 2.3 million Texans will still lack health insurance after the Affordable Care Act takes effect, partially because undocumented immigrants are not eligible for coverage, State Medicaid Director Billy Millwee told a joint meeting of the House Public Health and Insurance committees (Scharrer, 2/27).

Published 2/27/2012

By ROBERT PEAR

WASHINGTON — States are lagging in the creation of health insurance exchanges, the supermarkets where millions of consumers are supposed to buy subsidized private coverage under President Obama’s health care overhaul.

Many states are waiting for a Supreme Court decision or even the November election results, to see whether central elements of the new law might be overturned or repealed. But that will be too late to start work. By Jan. 1, 2013, the Obama administration will decide whether each state is ready to run its own exchange or whether the federal government should do the job instead.

Republican governors and state legislators across the country are split. Some want to set up rudimentary exchanges with limited features — as a defensive tactical maneuver — rather than cede control to Washington. More-conservative Republicans do not want to do anything at all.

After a great deal of bickering and bargaining, the insurance exchanges emerged as a centerpiece of the 2010 health care law, crucial to achieving Mr. Obama’s promise of affordable coverage for all Americans.

The issue was a major topic of discussion over the weekend at the winter meeting of the National Governors Association here, and it is expected to come up Monday when governors meet with Mr. Obama at the White House.

Gov. Dave Heineman of Nebraska, a Republican who is chairman of the governors association, said his state would not “default to the federal government.” But he said “it would be a costly mistake to spend millions of taxpayer dollars” building an exchange before the Supreme Court issues its decision in a challenge to the health care law, which is expected in late June.

“Let’s just wait,” Mr. Heineman said.

A handful of states, including California, Connecticut, Maryland, Oregon, Rhode Island, Vermont and Washington, are moving at a brisk pace to establish exchanges.

In Washington, State Senator Karen L. Keiser, a Democrat who is chairwoman of the Senate health care committee and a leader of the National Conference of State Legislatures’ health committee, said: “Since 2010, many states that were making solid progress, like Iowa and Maine, have gotten stymied. The Tea Party set back health care reform in states where its members were most active.”

State Representative Gregory D. Wren of Alabama, a Republican who is co-chairman of the health reform task force of the conference of state legislatures, said he was distressed to see states postpone action. “The sands in the hourglass are slipping away across the country,” he said.

Mr. Wren has introduced a bill to create an Alabama exchange, but he said that Gov. Robert Bentley, a Republican and a dermatologist, was “taking a wait-and-see approach, to see what the Supreme Court says.”

Research by the nonpartisan Urban Institute found that 14 states had made significant progress in creating exchanges, 16 had made little or no progress and 20 were somewhere in between.

Paradoxically, said one of the researchers, Matthew Buettgens, “states making the least progress could benefit the most,” because they have large numbers of uninsured residents.

In another curious twist, insurance companies, which battled Mr. Obama over health care in 2009 and 2010, are now urging state officials to set up exchanges. They generally prefer state regulation, and they stand to gain because the United States Treasury will send subsidy payments directly to insurers on behalf of low- and moderate-income people who enroll in health plans offered through an exchange.

“Insurance companies are making planning and investment decisions around the Affordable Care Act,” said Representative Joe Courtney, Democrat of Connecticut. “They want to make sure the exchanges work.”

The federal government has given out more than $600 million to help states establish exchanges, but states must figure out how to pay the operating costs.

Kathleen Sebelius, the secretary of health and human services, said: “States continue to go at their own pace as they set up their exchanges. This is a natural result of a process that gives states maximum flexibility.”

Proponents, including Gov. Andrew M. Cuomo of New York, a Democrat, say the exchanges will simplify the purchase of insurance and cut costs by increasing competition. Each exchange will have a Web site where consumers and small businesses can compare insurance prices and benefits.

Information technology will be the backbone of every exchange. The complexity of the computer systems needed to verify eligibility, enroll consumers, calculate subsidies and connect the exchange to state Medicaid agencies has slowed work in some states.

State officials, who are cutting budgets to cope with fiscal problems, are often reluctant to spend state revenues.

In Pennsylvania, Gov. Tom Corbett, a Republican, has received $34 million in federal money to develop contingency plans for an exchange even as he denounces the federal law as unconstitutional. A state-run exchange would allow Pennsylvania to “control its own destiny,” said the state insurance commissioner, Michael F. Consedine.

In New Hampshire, Gov. John Lynch, a Democrat, was eager to set up an exchange. But state legislators blocked the idea and forced the insurance commissioner to return $666,000 provided by the federal government for a state-run exchange. “If the federal government sets up an exchange here in New Hampshire, we will not be complicit,” said State Representative Neal M. Kurk, a Republican.

In Oklahoma, State Representative Mark E. McCullough, a Republican, wanted to set up an exchange “as a defensive maneuver, so we could maintain as much control as possible.” But the proposal touched off a furious debate. “We are arguing whether to set up a noncompliant exchange or just sit tight and do nothing.” Mr. McCullough said

In Iowa, State Senator Jack Hatch, a Democrat, is leading efforts to create an exchange. But his bill has only “a one-in-four shot of being passed,” he said.

“Consumer groups, insurance brokers, Democratic legislators and moderate Republicans would like to set up an exchange,” Mr. Hatch said. “But they are being held up by radical conservatives, a Tea Party group, who don’t want to do anything.”

Mr. Hatch said that Gov. Terry E. Branstad, a Republican, was “hiding, remaining silent because he’s afraid to go up against the conservative wing of his party.”

Tim J. Albrecht, a spokesman for Mr. Branstad, said: “That’s simply untrue. If Obamacare is forced on the states, we will be ready. But no state legislation is needed this year.”

Wisconsin began planning an exchange last year under an executive order issued by Gov. Scott Walker, a Republican. But he repealed his own order last month and told state officials to stop work on the exchange.

Florida, which is leading the court challenge to the new law by 26 states, has not made any commitment to set up an exchange and is “taking a wait-and-see approach,” said Jack McDermott, a spokesman for the Florida Office of Insurance Regulation.

Texas is also taking a hard line. “Gov. Rick Perry believes that the federal health care law is unconstitutional, misguided and overreaching,” said his spokeswoman, Lucy Nashed. “Because of that, there are no plans to implement an exchange in Texas.”

In Michigan, Gov. Rick Snyder, a Republican, has urged the Legislature to create an exchange. But his request has stalled in the Republican-led House, where Speaker Jase Bolger says he wants to wait for the Supreme Court ruling.

In Ohio, Democrats have introduced legislation to create an exchange. But State Senator Michael J. Skindell, the sponsor of the Senate bill, said that Gov. John R. Kasich, a Republican, and Republicans who control both houses of the Legislature “are not doing anything with regard to development of an exchange.”

Lt. Gov. Mary Taylor, a Republican who is director of the Ohio Insurance Department, said, “The Obama administration has not issued clear guidance on how either a federal or state exchange will work.”

Bills to create exchanges are gaining momentum in New York and New Jersey. Connecticut established an exchange last year.