Common use of Legal Authority and Governance Clause in Contracts

Legal Authority and Governance. Arkansas’s 2011 legislative session convened in January, shortly after the Exchange Planning Grant was awarded and prior to implementation of the various stakeholder inclusion activities described below. AID supported passage of HB2138 xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2011/2011R/Pages/BillInformation.aspx?measureno=HB2138) to establish a State-Based Marketplace in Arkansas. Insurance carriers, producers, consumer advocacy organizations including Arkansas Advocates for Children and Families and AARP-Arkansas, ACHI, Arkansas Hospital Association, and Arkansas Foundation for Medical Care also were advocates for the bill. However, opposition to ACA by Republican legislators prevented the bill’s passage. The GOP was in the minority in the Arkansas Legislature at the time but nonetheless had the votes to hold up the AID’s entire budget bill (appropriation bills in Arkansas require a super-majority of 75 percent for passage) because of opposition to “Obamacare,” as opponents liked to refer to the ACA. The Governor and the Commissioner held firm and maintained the Exchange Planning Grant ($1 million) in the AID budget. On the fourth vote, the AID budget passed. The issue of establishing a Marketplace in Arkansas was assigned to the House Committee on Insurance and Commerce for interim study between the 2011 and 2013 legislative sessions. Following the 2011 legislative session, planning activities to xxxxxx support for an Arkansas Marketplace continued. Legislators were appointed to the Steering Committee. Others attended work group sessions and community meetings. Timing for state Marketplace authority was complicated by the fact that the General Assembly did not meet again in regular session until 2013. Non-budget items are rarely heard during sessions in even-numbered years which typically only take up fiscal matters. Non-appropriation bills require a supermajority vote to be considered. Governor Xxxxx stated he would not call a special legislative session to seek Marketplace authority nor establish Marketplace authority through an Executive Order. He has consistently maintained that he would not “go against the wishes” of the Legislature on this issue. Without enabling legislation, an official governance structure had not been designated for Marketplace planning. Stakeholder feedback regarding possible governance options was obtained through various methods with findings consistent with HB 2138 that recommended a quasi-governmental model connecting a non-profit board with the AID. As part of our planning process, this feedback was obtained using a targeted survey of Marketplace workgroups, an Internet-based survey for the general public, and community meetings. The Marketplace Planning Workgroups continued to address specific governance issues throughout 2011. When CMS identified the option for an SPM model, the Governor in December 2011 directed AID to begin planning to establish an SPM. AID formally established the AHCD under the administrative direction of Xxxxxxx Xxxxx and the Division began to establish the infrastructure needed for Arkansas to partner with HHS in the development of an SPM. AHCD advised HHS that Arkansas will be responsible for both the Plan Management and Consumer Assistance functions of the SPM as allowed by federal and state statutes and published guidance. Arkansas’s plans were confirmed in Governor Xxxxx’x Declaration letter to DHHS Secretary Xxxxxxxx on December 12, 2012. (See xxxx://xxx.xxxxxxxx.xxx/FFE/GovBeebePartnershipLetter.pdf.) As stated in the letter, this puts Arkansas in a good position to transition to a State-Based Marketplace in the future should legislative or other action so direct. Subsequent to the Governor’s letter, on December 17, 2012, AHCD submitted Arkansas’s completed Blueprint Application to HHS for an SPM to operate starting in Plan Year 2014. On December 31, 2012, Arkansas received conditional approval from CMS to operate as an SPM. A letter from Secretary Xxxxxxxx to the Governor on January 3, 2013 confirmed that HHS was granting Arkansas conditional approval to establish an SPM in 2014. (See xxxx://xxx.xxxxxxxx.xxx/AR_Partnership_Release.pdf) The 2013 legislative session in Arkansas convened with a Republican majority for the first time since Reconstruction. There were great expectations as the AHCD moved forward after receiving approval of the Level One B grant in December 2012. However, this enthusiasm was tempered by the reality that a new Republican majority in the Legislature could very well vote to strip the SPM from the Insurance Department’s budget, as was the strategy in 2011, leaving the possibility that fewer would receive health insurance coverage so important to a low-income state such as Arkansas. But momentum changed in our favor following the introduction of the Private Option concept. Governor Xxxxx and Republican legislative leaders provided public support for the project, despite much of the Republican Party being opposed. The plan enjoyed universal support among Democrats. Governor Xxxxx and Surgeon General Xxxxxxxx presented the plan to Secretary Xxxxxxxx in February and received concept approval. The appropriation for the Division of Medical Services within the Department of Human Services included authority to spend the Medicaid expansion dollars. AHCD’s Xxxxx was among state officials who appeared during a question- and-answer session before a “committee of the whole” in the House of Representatives on April 8. Republican legislative leaders presented the bill. Some supporters of the bill couched it as an “anti-Obamacare” vote because it wasn’t a direct expansion of the Medicaid program as envisioned in the ACA. There were uncertain and tense moments while the plan was pending before the Legislature, needing a supermajority of 75 percent to pass. But in the end the Private Option and the SPM survived in Arkansas. Amendments that helped xxxxxx necessary votes included a provision making clear that Arkansas could withdraw from the program if the federal government required states to pay more. The governor described the amendments as simply making clear what was already in the bill. Each bill passed again, with the amendments. The legislation will have wide-ranging impact on the state of Arkansas overall, but more specifically its uninsured population, the Arkansas Medicaid program, and the AHCD within the AID. We believe the general health of the state will see major improvements as a result of the ACA’s implementation in Arkansas in cooperation with our Legislature. In addition, providers and insurers will benefit economically. Overall, there were several items passed during the 2013 legislative session relative to the Affordable Care Act that will greatly impact the operations and future of the Marketplace. Governor Xxxxx signed the Arkansas Health Care Independence Act (Acts 1497 xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1497.pdf and 1498 xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1498.pdf) on April 23, 2013. This Act and the companion appropriation (Act 1496 xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1496.pdf) will result in federally-funded premium payments being paid to private insurers to cover individuals newly eligible for Medicaid under the ACA expansion to 138% of the Federal Poverty Level. The governor also signed Act 1500 (xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1500.pdf) to create a new, non-profit, quasi-governmental governing board that provides for a possible shift to a State-Based Marketplace as early as July 1, 2015 for Plan Year 2016. The Arkansas Health Insurance Marketplace would be exempt from all laws governing state agencies, except the Freedom of Information Act. The act called for board members to be appointed by July 1, 2013, including three appointees by the governor, three by the House speaker, and three by the Senate president pro tempore. The insurance commissioner and the director of the Department of Human Services will also be members. Other members will be both consumer and industry representatives. A section of the legislation specifies that the insurance commissioner maintains authority to carry out his or her regulatory duties. There will be a legislative oversight body. Employees would not be considered state employees and would be ineligible to participate in the state retirement system. The functions of the SPM would transfer to the new Marketplace if the Marketplace board decides to establish an SBM. This legislation was pending for several weeks before action was taken. XXX worked extremely hard during the session to help improve the bill, which initially called for a SBM run by a non-profit with little state input. Numerous conversations occurred between the sponsor, AID officials, and others desiring for the state government to maintain a strong role in the Marketplace. The legislation subsequently was amended to, among other things; add the Insurance Commissioner and Department of Human Services Directors to the board. The board has been appointed but has yet to meet. In the interim, the advisory committees for AHC will continue consulting with the AID regarding policies for the SPM. We are pleased that several of the newly appointed members have insurance experience and/or are members of AHC advisory committees. The newly-appointed Board of Directors is:  Governor Xxxx Xxxxx’x Appointments: Xxxx Xxxxxxxxxxx, Little Rock, Vice President of Network and Business Development at HealthScope and member of the AHC Plan Management Advisory Committee; Xxxxx Xxxxxx, Little Rock, partner at Eichenbaum, Liles P.A. in Little Rock; Xxxxxxxxx Xxxxx Xxxx, Little Rock, retired Justice of the Arkansas Supreme Court, member of the AHC Steering Committee and co-chair of the AHC Plan Management Advisory Committee.  Senate President Pro Tempore Xxxxxxx Xxxxxxxxx’x Appointments: Xxxxx Xxxxx, Central, former state senator; Xxxx Xxxx, Little Rock, President, Xxxx Xxxxxxxx Corporate Benefits and member of the AHC Plan Management Advisory Committee; Xxxx Xxxxxx, Little Rock, Xxxxxxxx Insurance Executive Vice President.  House Speaker Xxxx Xxxxxx’x Appointments: Xxxxxxxx Xxxx, Little Rock, Vice President and Treasurer of Xxxxxxx’x Inc.; Dr. Xxxxx Xxxxx, Xxxxx, former Branch Chief of Pharmacy Services, Arkansas Department of Health; Xxxx Xxxxxxx, Little Rock, founder and owner of Xxxxxxx Agency.  Other Members of the Board (by virtue of their positions): Xxx Xxxxxxxx, Arkansas Insurance Commissioner; Xxxx Xxxxx, Arkansas Department of Human Services Director. The other piece of legislation that directly affects the AHCD is Act 1439 (xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1439.pdf). It requires navigator and non-navigator assisters (Guides, Certified Application Counselors, and Licensed Producers) helping inform citizens of the programs under the ACA and facilitating enrollment in a Marketplace plan to receive licensure from the AID. The AID plans to set the annual license fee at $35 a year. In order to qualify for a license, a navigator/non-navigator must pass background checks. Overall, AID is pleased with the substance of these bills and continues to be excited about the future during the implementation process. Act 1373 (xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1373.pdf), the AID appropriation bill that includes spending authority for the SPM, passed both xxxxxxxx following an initial hold in the House, and was signed into law by Governor Xxxxx on April 19, 2013. We continue to work to build relationships with legislators and help them understand how the SPM works in Arkansas and how it can help their constituents. Key to that effort is diligently answering legislators’ questions quickly and completely. We have invited the key Republican supporters of the Private Option to meet with AID leadership and to attend AHCD advisory committee meetings. The legislators have taken us up on our offer and we have exchanged helpful information. They articulated that the supermajority providing the margin of victory for the Private Option remains fragile, and we are aware that consensus must be maintained during regular legislative sessions each odd- numbered year and fiscal, or budgetary, sessions each even-numbered year.

Legal Authority and Governance. Arkansas’s 2011 legislative session convened in January, shortly after the Exchange Planning Grant was awarded and prior to implementation of the various stakeholder inclusion activities described below. AID supported passage of HB2138 xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2011/2011R/Pages/BillInformation.aspx?measureno=HB2138) HB 2138 to establish a State-Based Marketplace in Arkansasan Arkansas Health Benefits Exchange. Insurance carriers, producers, consumer advocacy organizations including Arkansas Advocates for Children and Families and AARP-Arkansas, ACHI, Arkansas Hospital Association, and Arkansas Foundation for Medical Care also were advocates for supported the bill. However, the opposition to ACA by a vocal minority of Republican legislators legislators, and partisan politics of the 2011 session, prevented the bill’s passage. The GOP was in the minority in the Arkansas Legislature at the time but nonetheless had the votes to hold up the AID’s entire budget bill (appropriation bills in Arkansas require a super-majority of 75 percent for passage) because of opposition to “Obamacare,” as opponents liked to refer to the ACA. The Governor and the Commissioner held firm and maintained the Exchange Planning Grant ($1 million) in the AID budget. On the fourth vote, the AID budget passed. The issue of establishing a Marketplace in Arkansas It was assigned to the House Committee on Insurance and Commerce for interim study between the 2011 and 2013 legislative sessionsstudy. Following the 2011 legislative session, planning activities to xxxxxx support for an Arkansas Marketplace Exchange continued. Legislators were appointed to the Steering Committee. Others attended work group sessions Workgroup Sessions and community Community meetings. Timing for state Marketplace authority State Exchange Authority was complicated by the fact that the General Assembly did does not meet again in regular session until 2013. Non-budget items are rarely heard during sessions in even-numbered years which typically only take up a fiscal matters. Non-appropriation bills session of the legislature and require a supermajority vote to be consideredfor inclusion. Governor Xxxxx stated he would not call a special legislative session to seek Marketplace Exchange authority nor establish Marketplace Exchange authority through an Executive Order. He has consistently maintained stated that he would not “go against the wishes” of the Legislature on this issuewhich failed to pass the Exchange enabling legislation in 2011. Without enabling legislation, an official governance structure had not been designated for Marketplace Exchange planning. Stakeholder feedback regarding possible governance options was obtained through various methods with findings consistent with HB 2138 that recommended a quasi-governmental model connecting a non-profit board with the AID. As part of our planning process, this feedback was obtained using a targeted we gathered the following information regarding the best governance structure: • Targeted Survey - Our contractor, First Data, conducted an email survey of Marketplace workgroups, an Internetthe Exchange Planning Workgroups/Steering Committee and 35 members completed the survey. The results reflected the preference for a public trust (quasi-based survey for governmental) model with AID as the State oversight agency (78.8%). This finding was affirmed by the Steering Committee and the six Exchange Planning workgroups in follow- up meetings. • Survey of the general publicpublic – Our contractor, UAMS, posted a survey on the Exchange Planning website and had 432 valid responses. Forty-six percent (46%) of those favoring exchange planning recommended “A public organization overseen by a separate non-profit commission/board”, 36.5% recommended a “State Agency,” and 17.8% recommended a “not-for-profit organization.” Of those who preferred a connection with an “existing state agency,” 69.4% preferred AID. • Community Meetings - With a few exceptions, most participants wanted to see AID regulate insurance plans and companies. On the issue of operational control, there was less agreement. Three models of governance were identified: (1) placement within a state agency, (2) awarding governance of the Exchange to a not-for-profit through a bidding process, and community meetings(3) governance by a board or commission. The Marketplace Planning Workgroups continued Of the three models, each had supporters and detractors. Participants noted concern that the Exchange needs to address specific be free from excessive regulations, while maintaining strong accountability. Several persons stated that in order to meet tight deadlines, the Exchange will need to be nimble with regard to purchasing and hiring. That will also be important for making changes in response to ongoing continuous improvement activities. There were advocates for various combinations of the three models. Regardless of the governance issues throughout 2011. When CMS identified the option for an SPM model, the Governor in December 2011 directed AID to begin planning to establish an SPM. AID formally established the AHCD under the administrative direction of Xxxxxxx Xxxxx and the Division began to establish the infrastructure needed for Arkansas to partner with HHS in the development of an SPM. AHCD advised HHS participants felt that Arkansas will there should be responsible for both the Plan Management and Consumer Assistance functions of the SPM as allowed by federal and state statutes and published guidance. Arkansas’s plans were confirmed in Governor Xxxxx’x Declaration letter to DHHS Secretary Xxxxxxxx on December 12, 2012. (See xxxx://xxx.xxxxxxxx.xxx/FFE/GovBeebePartnershipLetter.pdf.) As stated in the letter, this puts Arkansas in a good position to transition to a State-Based Marketplace in the future should legislative or other action so direct. Subsequent to the Governor’s letter, on December 17, 2012, AHCD submitted Arkansas’s completed Blueprint Application to HHS for an SPM to operate starting in Plan Year 2014. On December 31, 2012, Arkansas received conditional approval from CMS to operate as an SPM. A letter from Secretary Xxxxxxxx to the Governor on January 3, 2013 confirmed that HHS was granting Arkansas conditional approval to establish an SPM in 2014. (See xxxx://xxx.xxxxxxxx.xxx/AR_Partnership_Release.pdf) The 2013 legislative session in Arkansas convened with a Republican majority for the first time since Reconstruction. There were great expectations as the AHCD moved forward after receiving approval of the Level One B grant in December 2012. However, this enthusiasm was tempered by the reality that a new Republican majority in the Legislature could very well vote to strip the SPM from the Insurance Department’s budget, as was the strategy in 2011, leaving the possibility that fewer would receive health insurance coverage so important to a low-income state such as Arkansas. But momentum changed in our favor following the introduction of the Private Option concept. Governor Xxxxx and Republican legislative leaders provided public support for the project, despite much of the Republican Party being opposed. The plan enjoyed universal support among Democrats. Governor Xxxxx and Surgeon General Xxxxxxxx presented the plan to Secretary Xxxxxxxx in February and received concept approval. The appropriation for the Division of Medical Services within the Department of Human Services included authority to spend the Medicaid expansion dollars. AHCD’s Xxxxx was among state officials who appeared during a question- and-answer session before a “committee of the whole” in the House of Representatives on April 8. Republican legislative leaders presented the bill. Some supporters of the bill couched it as an “anti-Obamacare” vote because it wasn’t a direct expansion of the Medicaid program as envisioned in the ACA. There were uncertain and tense moments while the plan was pending before the Legislature, needing a supermajority of 75 percent to pass. But in the end the Private Option and the SPM survived in Arkansas. Amendments that helped xxxxxx necessary votes included a provision making clear that Arkansas could withdraw from the program if the federal government required states to pay more. The governor described the amendments as simply making clear what was already in the bill. Each bill passed again, with the amendments. The legislation will have wide-ranging impact on the state of Arkansas overall, but more specifically its uninsured population, the Arkansas Medicaid program, and the AHCD within the AID. We believe the general health of the state will see major improvements as a result of the ACA’s implementation in Arkansas in cooperation with our Legislatureaccountability. In addition, providers and insurers will benefit economically. Overall, there were several items passed during the 2013 legislative session relative to the Affordable Care Act that will greatly impact the operations and future group charged with oversight should be representative of the Marketplace. Governor Xxxxx signed the Arkansas Health Care Independence Act (Acts 1497 xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1497.pdf geographic, professional, and 1498 xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1498.pdf) on April 23, 2013. This Act and the companion appropriation (Act 1496 xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1496.pdf) will result in federally-funded premium payments being paid to private insurers to cover individuals newly eligible for Medicaid under the ACA expansion to 138% cultural diversity of the Federal Poverty Level. The governor also signed Act 1500 (xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1500.pdf) to create a new, non-profit, quasi-governmental governing board that provides for a possible shift to a State-Based Marketplace as early as July 1, 2015 for Plan Year 2016. The Arkansas Health Insurance Marketplace would be exempt from all laws governing state agencies, except the Freedom of Information Act. The act called for board members to be appointed by July 1, 2013, including three appointees those impacted by the governor, three by the House speaker, Exchange and three by the Senate president pro tempore. The insurance commissioner and the director should operate under strong conflict of the Department of Human Services will also be members. Other members will be both consumer and industry representatives. A section of the legislation specifies that the insurance commissioner maintains authority to carry out his or her regulatory duties. There will be a legislative oversight body. Employees would not be considered state employees and would be ineligible to participate in the state retirement system. The functions of the SPM would transfer to the new Marketplace if the Marketplace board decides to establish an SBM. This legislation was pending for several weeks before action was taken. XXX worked extremely hard during the session to help improve the bill, which initially called for a SBM run by a non-profit with little state input. Numerous conversations occurred between the sponsor, AID officials, and others desiring for the state government to maintain a strong role in the Marketplace. The legislation subsequently was amended to, among other things; add the Insurance Commissioner and Department of Human Services Directors to the board. The board has been appointed but has yet to meet. In the interim, the advisory committees for AHC will continue consulting with the AID regarding policies for the SPM. We are pleased that several of the newly appointed members have insurance experience and/or are members of AHC advisory committees. The newly-appointed Board of Directors is:  Governor Xxxx Xxxxx’x Appointments: Xxxx Xxxxxxxxxxx, Little Rock, Vice President of Network and Business Development at HealthScope and member of the AHC Plan Management Advisory Committee; Xxxxx Xxxxxx, Little Rock, partner at Eichenbaum, Liles P.A. in Little Rock; Xxxxxxxxx Xxxxx Xxxx, Little Rock, retired Justice of the Arkansas Supreme Court, member of the AHC Steering Committee and co-chair of the AHC Plan Management Advisory Committee.  Senate President Pro Tempore Xxxxxxx Xxxxxxxxx’x Appointments: Xxxxx Xxxxx, Central, former state senator; Xxxx Xxxx, Little Rock, President, Xxxx Xxxxxxxx Corporate Benefits and member of the AHC Plan Management Advisory Committee; Xxxx Xxxxxx, Little Rock, Xxxxxxxx Insurance Executive Vice President.  House Speaker Xxxx Xxxxxx’x Appointments: Xxxxxxxx Xxxx, Little Rock, Vice President and Treasurer of Xxxxxxx’x Inc.; Dr. Xxxxx Xxxxx, Xxxxx, former Branch Chief of Pharmacy Services, Arkansas Department of Health; Xxxx Xxxxxxx, Little Rock, founder and owner of Xxxxxxx Agency.  Other Members of the Board (by virtue of their positions): Xxx Xxxxxxxx, Arkansas Insurance Commissioner; Xxxx Xxxxx, Arkansas Department of Human Services Director. The other piece of legislation that directly affects the AHCD is Act 1439 (xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1439.pdf). It requires navigator and non-navigator assisters (Guides, Certified Application Counselors, and Licensed Producers) helping inform citizens of the programs under the ACA and facilitating enrollment in a Marketplace plan to receive licensure from the AID. The AID plans to set the annual license fee at $35 a year. In order to qualify for a license, a navigator/non-navigator must pass background checks. Overall, AID is pleased with the substance of these bills and continues to be excited about the future during the implementation process. Act 1373 (xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1373.pdf), the AID appropriation bill that includes spending authority for the SPM, passed both xxxxxxxx following an initial hold in the House, and was signed into law by Governor Xxxxx on April 19, 2013. We continue to work to build relationships with legislators and help them understand how the SPM works in Arkansas and how it can help their constituents. Key to that effort is diligently answering legislators’ questions quickly and completely. We have invited the key Republican supporters of the Private Option to meet with AID leadership and to attend AHCD advisory committee meetings. The legislators have taken us up on our offer and we have exchanged helpful information. They articulated that the supermajority providing the margin of victory for the Private Option remains fragile, and we are aware that consensus must be maintained during regular legislative sessions each odd- numbered year and fiscal, or budgetary, sessions each even-numbered yearinterest policies.

Legal Authority and Governance. Arkansas’s 2011 legislative session convened in January, shortly after the Exchange Planning Grant was awarded and prior to implementation of the various stakeholder inclusion activities described below. AID supported passage of HB2138 xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2011/2011R/Pages/BillInformation.aspx?measureno=HB2138) HB 2138 to establish a State-Based Marketplace in Arkansasan Arkansas Health Benefits Exchange. Insurance carriers, producers, consumer advocacy organizations including Arkansas Advocates for Children and Families and AARP-Arkansas, ACHI, Arkansas Hospital Association, and Arkansas Foundation for Medical Care also were advocates for supported the billxxxx. However, the opposition to ACA by a vocal minority of Republican legislators legislators, and partisan politics of the 2011 session, prevented the bill’s passage. The GOP was in the minority in the Arkansas Legislature at the time but nonetheless had the votes to hold up the AID’s entire budget bill (appropriation bills in Arkansas require a super-majority of 75 percent for passage) because of opposition to “Obamacare,” as opponents liked to refer to the ACA. The Governor and the Commissioner held firm and maintained the Exchange Planning Grant ($1 million) in the AID budget. On the fourth vote, the AID budget passed. The issue of establishing a Marketplace in Arkansas It was assigned to the House Committee on Insurance and Commerce for interim study between the 2011 and 2013 legislative sessionsstudy. Following the 2011 legislative session, planning activities to xxxxxx support for an Arkansas Marketplace Exchange continued. Legislators were appointed to the Steering Committee. Others attended work group sessions Workgroup Sessions and community Community meetings. Timing for state Marketplace authority State Exchange Authority was complicated by the fact that the General Assembly did not meet again in regular session until 2013. Non-budget items are rarely heard during sessions in even-numbered years which typically only take up a fiscal matters. Non-appropriation bills session of the legislature and require a supermajority vote to be consideredfor inclusion. Governor Xxxxx stated he would not call a special legislative session to seek Marketplace Exchange authority nor establish Marketplace Exchange authority through an Executive Order. He has consistently maintained stated that he would not “go against the wishes” of the Legislature on this issuewhich failed to pass the Exchange enabling legislation in 2011. Without enabling legislation, an official governance structure had not been designated for Marketplace Exchange planning. Stakeholder feedback regarding possible governance options was obtained through various methods with findings consistent with HB 2138 that recommended a quasi-governmental model connecting a non-profit board with the AID. As part of our planning process, this feedback was obtained using a targeted we gathered the following information regarding the best governance structure: • Targeted Survey - Our contractor, First Data, conducted an email survey of Marketplace workgroups, an Internetthe Exchange Planning Workgroups/Steering Committee and 35 members completed the survey. The results reflected the preference for a public trust (quasi-based survey for governmental) model with AID as the State oversight agency (78.8%). This finding was affirmed by the Steering Committee and the six Exchange Planning workgroups in follow- up meetings. • Survey of the general publicpublic – Our contractor, UAMS, posted a survey on the Exchange Planning website and had 432 valid responses. Forty-six percent (46%) of those favoring exchange planning recommended “A public organization overseen by a separate non-profit commission/board”, 36.5% recommended a “State Agency,” and 17.8% recommended a “not-for-profit organization.” Of those who preferred a connection with an “existing state agency,” 69.4% preferred AID. • Community Meetings - With a few exceptions, most participants wanted to see AID regulate insurance plans and companies. On the issue of operational control, there was less agreement. Three models of governance were identified: (1) placement within a state agency, (2) awarding governance of the Exchange to a not-for-profit through a bidding process, and community meetings(3) governance by a board or commission. The Marketplace Planning Workgroups continued Of the three models, each had supporters and detractors. Participants noted concern that the Exchange needs to address specific be free from excessive regulations, while maintaining strong accountability. Several persons stated that in order to meet tight deadlines, the Exchange will need to be nimble with regard to purchasing and hiring. That will also be important for making changes in response to continuous improvement activities. There were advocates for various combinations of the three models. Regardless of the governance issues throughout 2011. When CMS identified the option for an SPM model, the Governor in December 2011 directed AID to begin planning to establish an SPM. AID formally established the AHCD under the administrative direction of Xxxxxxx Xxxxx and the Division began to establish the infrastructure needed for Arkansas to partner with HHS in the development of an SPM. AHCD advised HHS participants felt that Arkansas will there should be responsible for both the Plan Management and Consumer Assistance functions of the SPM as allowed by federal and state statutes and published guidance. Arkansas’s plans were confirmed in Governor Xxxxx’x Declaration letter to DHHS Secretary Xxxxxxxx on December 12, 2012. (See xxxx://xxx.xxxxxxxx.xxx/FFE/GovBeebePartnershipLetter.pdf.) As stated in the letter, this puts Arkansas in a good position to transition to a State-Based Marketplace in the future should legislative or other action so direct. Subsequent to the Governor’s letter, on December 17, 2012, AHCD submitted Arkansas’s completed Blueprint Application to HHS for an SPM to operate starting in Plan Year 2014. On December 31, 2012, Arkansas received conditional approval from CMS to operate as an SPM. A letter from Secretary Xxxxxxxx to the Governor on January 3, 2013 confirmed that HHS was granting Arkansas conditional approval to establish an SPM in 2014. (See xxxx://xxx.xxxxxxxx.xxx/AR_Partnership_Release.pdf) The 2013 legislative session in Arkansas convened with a Republican majority for the first time since Reconstruction. There were great expectations as the AHCD moved forward after receiving approval of the Level One B grant in December 2012. However, this enthusiasm was tempered by the reality that a new Republican majority in the Legislature could very well vote to strip the SPM from the Insurance Department’s budget, as was the strategy in 2011, leaving the possibility that fewer would receive health insurance coverage so important to a low-income state such as Arkansas. But momentum changed in our favor following the introduction of the Private Option concept. Governor Xxxxx and Republican legislative leaders provided public support for the project, despite much of the Republican Party being opposed. The plan enjoyed universal support among Democrats. Governor Xxxxx and Surgeon General Xxxxxxxx presented the plan to Secretary Xxxxxxxx in February and received concept approval. The appropriation for the Division of Medical Services within the Department of Human Services included authority to spend the Medicaid expansion dollars. AHCD’s Xxxxx was among state officials who appeared during a question- and-answer session before a “committee of the whole” in the House of Representatives on April 8. Republican legislative leaders presented the bill. Some supporters of the bill couched it as an “anti-Obamacare” vote because it wasn’t a direct expansion of the Medicaid program as envisioned in the ACA. There were uncertain and tense moments while the plan was pending before the Legislature, needing a supermajority of 75 percent to pass. But in the end the Private Option and the SPM survived in Arkansas. Amendments that helped xxxxxx necessary votes included a provision making clear that Arkansas could withdraw from the program if the federal government required states to pay more. The governor described the amendments as simply making clear what was already in the bill. Each bill passed again, with the amendments. The legislation will have wide-ranging impact on the state of Arkansas overall, but more specifically its uninsured population, the Arkansas Medicaid program, and the AHCD within the AID. We believe the general health of the state will see major improvements as a result of the ACA’s implementation in Arkansas in cooperation with our Legislatureaccountability. In addition, providers and insurers will benefit economically. Overall, there were several items passed during the 2013 legislative session relative to the Affordable Care Act that will greatly impact the operations and future group charged with oversight should be representative of the Marketplace. Governor Xxxxx signed the Arkansas Health Care Independence Act (Acts 1497 xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1497.pdf geographic, professional, and 1498 xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1498.pdf) on April 23, 2013. This Act and the companion appropriation (Act 1496 xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1496.pdf) will result in federally-funded premium payments being paid to private insurers to cover individuals newly eligible for Medicaid under the ACA expansion to 138% cultural diversity of the Federal Poverty Level. The governor also signed Act 1500 (xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1500.pdf) to create a new, non-profit, quasi-governmental governing board that provides for a possible shift to a State-Based Marketplace as early as July 1, 2015 for Plan Year 2016. The Arkansas Health Insurance Marketplace would be exempt from all laws governing state agencies, except the Freedom of Information Act. The act called for board members to be appointed by July 1, 2013, including three appointees those impacted by the governor, three by the House speaker, Exchange and three by the Senate president pro tempore. The insurance commissioner and the director should operate under strong conflict of the Department of Human Services will also be members. Other members will be both consumer and industry representatives. A section of the legislation specifies that the insurance commissioner maintains authority to carry out his or her regulatory duties. There will be a legislative oversight body. Employees would not be considered state employees and would be ineligible to participate in the state retirement system. The functions of the SPM would transfer to the new Marketplace if the Marketplace board decides to establish an SBM. This legislation was pending for several weeks before action was taken. XXX worked extremely hard during the session to help improve the bill, which initially called for a SBM run by a non-profit with little state input. Numerous conversations occurred between the sponsor, AID officials, and others desiring for the state government to maintain a strong role in the Marketplace. The legislation subsequently was amended to, among other things; add the Insurance Commissioner and Department of Human Services Directors to the board. The board has been appointed but has yet to meet. In the interim, the advisory committees for AHC will continue consulting with the AID regarding policies for the SPM. We are pleased that several of the newly appointed members have insurance experience and/or are members of AHC advisory committees. The newly-appointed Board of Directors is:  Governor Xxxx Xxxxx’x Appointments: Xxxx Xxxxxxxxxxx, Little Rock, Vice President of Network and Business Development at HealthScope and member of the AHC Plan Management Advisory Committee; Xxxxx Xxxxxx, Little Rock, partner at Eichenbaum, Liles P.A. in Little Rock; Xxxxxxxxx Xxxxx Xxxx, Little Rock, retired Justice of the Arkansas Supreme Court, member of the AHC Steering Committee and co-chair of the AHC Plan Management Advisory Committee.  Senate President Pro Tempore Xxxxxxx Xxxxxxxxx’x Appointments: Xxxxx Xxxxx, Central, former state senator; Xxxx Xxxx, Little Rock, President, Xxxx Xxxxxxxx Corporate Benefits and member of the AHC Plan Management Advisory Committee; Xxxx Xxxxxx, Little Rock, Xxxxxxxx Insurance Executive Vice President.  House Speaker Xxxx Xxxxxx’x Appointments: Xxxxxxxx Xxxx, Little Rock, Vice President and Treasurer of Xxxxxxx’x Inc.; Dr. Xxxxx Xxxxx, Xxxxx, former Branch Chief of Pharmacy Services, Arkansas Department of Health; Xxxx Xxxxxxx, Little Rock, founder and owner of Xxxxxxx Agency.  Other Members of the Board (by virtue of their positions): Xxx Xxxxxxxx, Arkansas Insurance Commissioner; Xxxx Xxxxx, Arkansas Department of Human Services Director. The other piece of legislation that directly affects the AHCD is Act 1439 (xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1439.pdf). It requires navigator and non-navigator assisters (Guides, Certified Application Counselors, and Licensed Producers) helping inform citizens of the programs under the ACA and facilitating enrollment in a Marketplace plan to receive licensure from the AID. The AID plans to set the annual license fee at $35 a year. In order to qualify for a license, a navigator/non-navigator must pass background checks. Overall, AID is pleased with the substance of these bills and continues to be excited about the future during the implementation process. Act 1373 (xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1373.pdf), the AID appropriation bill that includes spending authority for the SPM, passed both xxxxxxxx following an initial hold in the House, and was signed into law by Governor Xxxxx on April 19, 2013. We continue to work to build relationships with legislators and help them understand how the SPM works in Arkansas and how it can help their constituents. Key to that effort is diligently answering legislators’ questions quickly and completely. We have invited the key Republican supporters of the Private Option to meet with AID leadership and to attend AHCD advisory committee meetings. The legislators have taken us up on our offer and we have exchanged helpful information. They articulated that the supermajority providing the margin of victory for the Private Option remains fragile, and we are aware that consensus must be maintained during regular legislative sessions each odd- numbered year and fiscal, or budgetary, sessions each even-numbered yearinterest policies.

Legal Authority and Governance. Arkansas’s 2011 legislative session convened in January, shortly after the Exchange Planning Grant was awarded and prior to implementation of the various stakeholder inclusion activities described below. AID supported passage of HB2138 xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2011/2011R/Pages/BillInformation.aspx?measureno=HB2138) HB 2138 to establish a State-Based Marketplace in Arkansasan Arkansas Health Benefits Exchange. Insurance carriers, producers, consumer advocacy organizations including Arkansas Advocates for Children and Families and AARP-Arkansas, ACHI, Arkansas Hospital Association, and Arkansas Foundation for Medical Care also were advocates for supported the bill. However, the opposition to ACA by a vocal minority of Republican legislators legislators, and partisan politics of the 2011 session, prevented the bill’s passage. The GOP was in the minority in the Arkansas Legislature at the time but nonetheless had the votes to hold up the AID’s entire budget bill (appropriation bills in Arkansas require a super-majority of 75 percent for passage) because of opposition to “Obamacare,” as opponents liked to refer to the ACA. The Governor and the Commissioner held firm and maintained the Exchange Planning Grant ($1 million) in the AID budget. On the fourth vote, the AID budget passed. The issue of establishing a Marketplace in Arkansas It was assigned to the House Committee on Insurance and Commerce for interim study between the 2011 and 2013 legislative sessionsstudy. Following the 2011 legislative session, planning activities to xxxxxx support for an Arkansas Marketplace Exchange continued. Legislators were appointed to the Steering Committee. Others attended work group sessions Workgroup Sessions and community Community meetings. Timing for state Marketplace authority State Exchange Authority was complicated by the fact that the General Assembly did does not meet again in regular session until 2013. Non-budget items are rarely heard during sessions in even-numbered years which typically only take up a fiscal matters. Non-appropriation bills session of the legislature and require a supermajority vote to be consideredfor inclusion. Governor Xxxxx stated he would not call a special legislative session to seek Marketplace Exchange authority nor establish Marketplace Exchange authority through an Executive Order. He has consistently maintained stated that he would not “go against the wishes” of the Legislature on this issuewhich failed to pass the Exchange enabling legislation in 2011. Without enabling legislation, an official governance structure had not been designated for Marketplace Exchange planning. Stakeholder feedback regarding possible governance options was obtained through various methods with findings consistent with HB 2138 that recommended a quasi-governmental model connecting a non-profit board with the AID. As part of our planning process, this feedback was obtained using a targeted we gathered the following information regarding the best governance structure:  Targeted Survey - Our contractor, First Data, conducted an email survey of Marketplace workgroups, an Internetthe Exchange Planning Workgroups/Steering Committee and 35 members completed the survey. The results reflected the preference for a public trust (quasi-based survey for governmental) model with AID as the State oversight agency (78.8%). This finding was affirmed by the Steering Committee and the six Exchange Planning workgroups in follow- up meetings.  Survey of the general publicpublic – Our contractor, UAMS, posted a survey on the Exchange Planning website and had 432 valid responses. Forty-six percent (46%) of those favoring exchange planning recommended “A public organization overseen by a separate non-profit commission/board”, 36.5% recommended a “State Agency,” and 17.8% recommended a “not-for-profit organization.” Of those who preferred a connection with an “existing state agency,” 69.4% preferred AID.  Community Meetings - With a few exceptions, most participants wanted to see AID regulate insurance plans and companies. On the issue of operational control, there was less agreement. Three models of governance were identified: (1) placement within a state agency, (2) awarding governance of the Exchange to a not-for-profit through a bidding process, and community meetings(3) governance by a board or commission. The Marketplace Planning Workgroups continued Of the three models, each had supporters and detractors. Participants noted concern that the Exchange needs to address specific be free from excessive regulations, while maintaining strong accountability. Several persons stated that in order to meet tight deadlines, the Exchange will need to be nimble with regard to purchasing and hiring. That will also be important for making changes in response to ongoing continuous improvement activities. There were advocates for various combinations of the three models. Regardless of the governance issues throughout 2011. When CMS identified the option for an SPM model, the Governor in December 2011 directed AID to begin planning to establish an SPM. AID formally established the AHCD under the administrative direction of Xxxxxxx Xxxxx and the Division began to establish the infrastructure needed for Arkansas to partner with HHS in the development of an SPM. AHCD advised HHS participants felt that Arkansas will there should be responsible for both the Plan Management and Consumer Assistance functions of the SPM as allowed by federal and state statutes and published guidance. Arkansas’s plans were confirmed in Governor Xxxxx’x Declaration letter to DHHS Secretary Xxxxxxxx on December 12, 2012. (See xxxx://xxx.xxxxxxxx.xxx/FFE/GovBeebePartnershipLetter.pdf.) As stated in the letter, this puts Arkansas in a good position to transition to a State-Based Marketplace in the future should legislative or other action so direct. Subsequent to the Governor’s letter, on December 17, 2012, AHCD submitted Arkansas’s completed Blueprint Application to HHS for an SPM to operate starting in Plan Year 2014. On December 31, 2012, Arkansas received conditional approval from CMS to operate as an SPM. A letter from Secretary Xxxxxxxx to the Governor on January 3, 2013 confirmed that HHS was granting Arkansas conditional approval to establish an SPM in 2014. (See xxxx://xxx.xxxxxxxx.xxx/AR_Partnership_Release.pdf) The 2013 legislative session in Arkansas convened with a Republican majority for the first time since Reconstruction. There were great expectations as the AHCD moved forward after receiving approval of the Level One B grant in December 2012. However, this enthusiasm was tempered by the reality that a new Republican majority in the Legislature could very well vote to strip the SPM from the Insurance Department’s budget, as was the strategy in 2011, leaving the possibility that fewer would receive health insurance coverage so important to a low-income state such as Arkansas. But momentum changed in our favor following the introduction of the Private Option concept. Governor Xxxxx and Republican legislative leaders provided public support for the project, despite much of the Republican Party being opposed. The plan enjoyed universal support among Democrats. Governor Xxxxx and Surgeon General Xxxxxxxx presented the plan to Secretary Xxxxxxxx in February and received concept approval. The appropriation for the Division of Medical Services within the Department of Human Services included authority to spend the Medicaid expansion dollars. AHCD’s Xxxxx was among state officials who appeared during a question- and-answer session before a “committee of the whole” in the House of Representatives on April 8. Republican legislative leaders presented the bill. Some supporters of the bill couched it as an “anti-Obamacare” vote because it wasn’t a direct expansion of the Medicaid program as envisioned in the ACA. There were uncertain and tense moments while the plan was pending before the Legislature, needing a supermajority of 75 percent to pass. But in the end the Private Option and the SPM survived in Arkansas. Amendments that helped xxxxxx necessary votes included a provision making clear that Arkansas could withdraw from the program if the federal government required states to pay more. The governor described the amendments as simply making clear what was already in the bill. Each bill passed again, with the amendments. The legislation will have wide-ranging impact on the state of Arkansas overall, but more specifically its uninsured population, the Arkansas Medicaid program, and the AHCD within the AID. We believe the general health of the state will see major improvements as a result of the ACA’s implementation in Arkansas in cooperation with our Legislatureaccountability. In addition, providers and insurers will benefit economically. Overall, there were several items passed during the 2013 legislative session relative to the Affordable Care Act that will greatly impact the operations and future group charged with oversight should be representative of the Marketplace. Governor Xxxxx signed the Arkansas Health Care Independence Act (Acts 1497 xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1497.pdf geographic, professional, and 1498 xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1498.pdf) on April 23, 2013. This Act and the companion appropriation (Act 1496 xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1496.pdf) will result in federally-funded premium payments being paid to private insurers to cover individuals newly eligible for Medicaid under the ACA expansion to 138% cultural diversity of the Federal Poverty Level. The governor also signed Act 1500 (xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1500.pdf) to create a new, non-profit, quasi-governmental governing board that provides for a possible shift to a State-Based Marketplace as early as July 1, 2015 for Plan Year 2016. The Arkansas Health Insurance Marketplace would be exempt from all laws governing state agencies, except the Freedom of Information Act. The act called for board members to be appointed by July 1, 2013, including three appointees those impacted by the governor, three by the House speaker, Exchange and three by the Senate president pro tempore. The insurance commissioner and the director should operate under strong conflict of the Department of Human Services will also be members. Other members will be both consumer and industry representatives. A section of the legislation specifies that the insurance commissioner maintains authority to carry out his or her regulatory duties. There will be a legislative oversight body. Employees would not be considered state employees and would be ineligible to participate in the state retirement system. The functions of the SPM would transfer to the new Marketplace if the Marketplace board decides to establish an SBM. This legislation was pending for several weeks before action was taken. XXX worked extremely hard during the session to help improve the bill, which initially called for a SBM run by a non-profit with little state input. Numerous conversations occurred between the sponsor, AID officials, and others desiring for the state government to maintain a strong role in the Marketplace. The legislation subsequently was amended to, among other things; add the Insurance Commissioner and Department of Human Services Directors to the board. The board has been appointed but has yet to meet. In the interim, the advisory committees for AHC will continue consulting with the AID regarding policies for the SPM. We are pleased that several of the newly appointed members have insurance experience and/or are members of AHC advisory committees. The newly-appointed Board of Directors is:  Governor Xxxx Xxxxx’x Appointments: Xxxx Xxxxxxxxxxx, Little Rock, Vice President of Network and Business Development at HealthScope and member of the AHC Plan Management Advisory Committee; Xxxxx Xxxxxx, Little Rock, partner at Eichenbaum, Liles P.A. in Little Rock; Xxxxxxxxx Xxxxx Xxxx, Little Rock, retired Justice of the Arkansas Supreme Court, member of the AHC Steering Committee and co-chair of the AHC Plan Management Advisory Committee.  Senate President Pro Tempore Xxxxxxx Xxxxxxxxx’x Appointments: Xxxxx Xxxxx, Central, former state senator; Xxxx Xxxx, Little Rock, President, Xxxx Xxxxxxxx Corporate Benefits and member of the AHC Plan Management Advisory Committee; Xxxx Xxxxxx, Little Rock, Xxxxxxxx Insurance Executive Vice President.  House Speaker Xxxx Xxxxxx’x Appointments: Xxxxxxxx Xxxx, Little Rock, Vice President and Treasurer of Xxxxxxx’x Inc.; Dr. Xxxxx Xxxxx, Xxxxx, former Branch Chief of Pharmacy Services, Arkansas Department of Health; Xxxx Xxxxxxx, Little Rock, founder and owner of Xxxxxxx Agency.  Other Members of the Board (by virtue of their positions): Xxx Xxxxxxxx, Arkansas Insurance Commissioner; Xxxx Xxxxx, Arkansas Department of Human Services Director. The other piece of legislation that directly affects the AHCD is Act 1439 (xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1439.pdf). It requires navigator and non-navigator assisters (Guides, Certified Application Counselors, and Licensed Producers) helping inform citizens of the programs under the ACA and facilitating enrollment in a Marketplace plan to receive licensure from the AID. The AID plans to set the annual license fee at $35 a year. In order to qualify for a license, a navigator/non-navigator must pass background checks. Overall, AID is pleased with the substance of these bills and continues to be excited about the future during the implementation process. Act 1373 (xxxx://xxx.xxxxxx.xxxxx.xx.xx/assembly/2013/2013R/Acts/Act1373.pdf), the AID appropriation bill that includes spending authority for the SPM, passed both xxxxxxxx following an initial hold in the House, and was signed into law by Governor Xxxxx on April 19, 2013. We continue to work to build relationships with legislators and help them understand how the SPM works in Arkansas and how it can help their constituents. Key to that effort is diligently answering legislators’ questions quickly and completely. We have invited the key Republican supporters of the Private Option to meet with AID leadership and to attend AHCD advisory committee meetings. The legislators have taken us up on our offer and we have exchanged helpful information. They articulated that the supermajority providing the margin of victory for the Private Option remains fragile, and we are aware that consensus must be maintained during regular legislative sessions each odd- numbered year and fiscal, or budgetary, sessions each even-numbered yearinterest policies.