In­sur­ance in­fu­sion

Nearly $220 mil­lion awarded for ex­changes

Modern Healthcare - - THE WEEK IN HEALTHCARE - Jes­sica Zig­mond

De­spite con­tin­ued uncer­tainty sur­round­ing the fu­ture of last year’s health­care re­form law, more than half of states are forg­ing ahead to es­tab­lish health in­sur­ance ex­changes. Last week, HHS an­nounced it had awarded al­most $220 mil­lion in in­sur­ance ex­change grants to 13 states to help them get up and run­ning by the 2014 tar­get date. There are a host of state ex­change-re­lated grants, in­clud­ing plan­ning grants, which have been awarded to 49 states (all but Alaska) and Washington, D.C., while seven states have re­ceived early-in­no­va­tor grants for health in­for­ma­tion tech­nol­ogy pur­poses. States that have shown progress with their plan­ning grants qual­ify for one-year “level one” ex­change es­tab­lish­ment grants, and “level two” es­tab­lish­ment grants pro­vide mul­ti­year fund­ing to states that are fur­ther along in the process.

“What’s in­ter­est­ing to me is that with this new an­nounce­ment of awards, we’re now up to 29 states that have re­ceived level one es­tab­lish­ment grants to set up state-based ex­changes,” said Jen­nifer Tol­bert, di­rec­tor of state health re­form at the Henry J. Kaiser Fam­ily Foun­da­tion. “Also of note: one state, Rhode Is­land, in this re­cent an­nounce­ment, re­ceived level two, which will take the state through 2014 to full im­ple­men­ta­tion of their state ex­change.”

Twelve more states re­ceived level one fund­ing, in var­i­ous amounts, last week: Alabama, Ari­zona, Delaware, Hawaii, Idaho, Iowa, Maine, Michi­gan, Ne­braska, New Mex­ico, Ten­nessee and Ver­mont.

“From the fed­eral per­spec­tive, the re­quire­ments are the same across all states,” Tol­bert said, re­fer­ring to the cri­te­ria for fund­ing. “But the poli­cies within each state dif­fer. Some states that have re­ceived level one grants have been pro­hib­ited from spend­ing that money,” she con­tin­ued. “The in­ter­nal dy­nam­ics—both po­lit­i­cal and oper­a­tional—dif­fer across the states. Rhode Is­land has set up their ex­change in a way the ex­change has the au­thor­ity to pur­sue that level two grant.”

Mean­while, sev­eral states that are chal­leng­ing the le­gal­ity of the Pa­tient Pro­tec­tion and Af­ford­able Care Act have ac­cepted fund­ing to es­tab­lish ex­changes. That’s the case in Ne­braska, where state of­fi­cials op­pose the law. The state has re­ceived a plan­ning grant and a level one grant in the amount of $5.4 mil­lion.

“Why, in this time of con­strained bud­gets, would the gov­er­nor ask for $5 mil­lion more for an idea he op­poses, re­fuses to im­ple­ment and wants to re­peal?” Sen. Ben Nel­son (DNeb.) said in a weekly con­fer­ence call with lo­cal news me­dia, ac­cord­ing to a news re­lease from Nel­son’s of­fice. “Per­haps he should send it back.” Nel­son added that those funds should not be spent un­til the state has a plan in place for an ex­change.

Dave Heine­man, Ne­braska’s Repub­li­can gov­er­nor, re­sponded in an in­ter­view with a lo­cal news­pa­per that his ad­min­is­tra­tion would not build an ex­change un­til the U.S. Supreme Court rules on the law but would plan a sys­tem “to pro­tect Ne­braska from a fed­eral takeover.”

In Au­gust, Kansas Gov. Sam Brown­back, also a Repub­li­can, said he would re­turn the $31.5 mil­lion ex­change grant the state re­ceived as an “early in­no­va­tor,” say­ing the re­quire­ments that came with the money were oner­ous.

Re­gard­less of what the U.S. Supreme Court de­cides next year re­gard­ing the Af­ford­able Care Act’s con­sti­tu­tion­al­ity, states are not pre­cluded from set­ting up their own ex­changes, Tol­bert noted. Mas­sachusetts and Utah, for ex­am­ple, have set up ex­changes independent of the law.

HHS also an­nounced a six-month de­lay in the dead­line for states to ap­ply for fed­eral fund­ing to help them im­ple­ment ex­changes and a clar­i­fi­ca­tion that states will still be el­i­gi­ble for other ex­change grants even af­ter the Jan­uary 2013 dead­line they face for fed­eral cer­ti­fi­ca­tion.

Melinda Dut­ton, a part­ner in the health­care divi­sion of con­sult­ing firm Manatt, Phelps & Phillips, noted that a list of fre­quently asked ques­tions that HHS pub­lished in con­junc­tion with the an­nounce­ment pro­vided more guid­ance. For ex­am­ple, HHS of­fered in­for­ma­tion about what a state and fed­eral part­ner­ship might look like.

Even though last week’s fund­ing and guid­ance from HHS could prove help­ful to states, there is no guar­an­tee that they will be fully oper­a­tional in two years.

“While there are a hand­ful of states mak­ing sig­nif­i­cant and im­por­tant progress, a lot of states are again still more in the ini­tial plan­ning stages,” she said. “So there is a real ques­tion as to whether states will be fully ready on Jan. 1, 2014.”

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