(a) Eligible contracting entities. The State may elect to authorize an Exchange established by the State to enter into an agreement with an eligible entity to carry out one or more responsibilities of the Exchange. Eligible entities are:
(1) An entity:
(i) Incorporated under, and subject to the laws of, one or more States;
(ii) That has demonstrated experience on a State or regional basis in the individual and small group health insurance markets and in benefits coverage; and
(iii) Is not a health insurance issuer or treated as a health insurance issuer under subsection (a) or (b) of section 52 of the Code of 1986 as a member of the same controlled group of corporations (or under common control with) as a health insurance issuer; or
(2) The State Medicaid agency, or any other State agency that meets the qualifications of paragraph (a)(1) of this section.
(b) Responsibility. To the extent that an Exchange establishes such agreements, the Exchange remains responsible for ensuring that all Federal requirements related to contracted functions are met.
(c) Governing board structure. If the Exchange is an independent State agency or a non-profit entity established by the State, the State must ensure that the Exchange has in place a clearly-defined governing board that:
(1) Is administered under a formal, publicly-adopted operating charter or by-laws;
(2) Holds regular public governing board meetings that are announced in advance;
(3) Represents consumer interests by ensuring that overall governing board membership:
(i) Includes at least one voting member who is a consumer representative;
(ii) Is not made up of a majority of voting representatives with a conflict of interest, including representatives of health insurance issuers or agents or brokers, or any other individual licensed to sell health insurance; and
(4) Ensures that a majority of the voting members on its governing board have relevant experience in health benefits administration, health care finance, health plan purchasing, health care delivery system administration, public health, or health policy issues related to the small group and individual markets and the uninsured.
(d) Governance principles.
(1) The Exchange must have in place and make publicly available a set of guiding governance principles that include ethics, conflict of interest standards, accountability and transparency standards, and disclosure of financial interest.
(2) The Exchange must implement procedures for disclosure of financial interests by members of the Exchange board or governance structure.
(e) SHOP independent governance.
(1) A State may elect to create an independent governance and administrative structure for the SHOP, consistent with this section, if the State ensures that the SHOP coordinates and shares relevant information with the Exchange operating in the same service area.
(2) If a State chooses to operate its Exchange and SHOP under a single governance or administrative structure, it must ensure that the Exchange has adequate resources to assist individuals and small employers in the Exchange.
(f) HHS review. HHS may periodically review the accountability structure and governance principles of a State Exchange.