Rais­ing the stakes on ex­changes

Prospects for ex­changes seem to defy both ex­tremes

Modern Healthcare - - FRONT PAGE - Rich Daly

The out­look for the es­tab­lish­ment of state-run health in­sur­ance ex­changes may be nei­ther as rosy as their sup­port­ers claim nor as dark as their crit­ics ex­pect. Even as sev­eral states re­cently re­jected the in­sur­ance mar­ket­places re­quired by the 2010 U.S. health­care over­haul, fed­eral reg­u­la­tors laid out a path that will make it eas­ier for states to change their minds and give more time for them to do so. The com­bined ef­fect of the dis­parate fed­eral and state ac­tions in­di­cates that state-run ex­changes are less likely in the orig­i­nal time frame of 2014 and more likely over a longer pe­riod.

Fed­eral of­fi­cials acted last week to al­low a go-slow ap­proach for state-run ex­changes. A “draft blue­print” for state ex­changes is­sued May 16 ap­peared to ex­tend a hard statu­tory 2015 dead­line for state ex­changes to at­tain fis­cal self-suf­fi­ciency to early 2018. That was the im­pli­ca­tion of the plan’s an­nounced avail­abil­ity of ex­change im­ple­men­ta­tion grants through­out 2014 and for three years to spend money that they could re­ceive up to 2015.

“What that sug­gests is that a slower ram­pup is per­mis­si­ble,” said Bruce Caswell, pres­i­dent and gen­eral man­ager of the health ser­vices seg­ment for Max­imus, a Re­ston, Va.based gov­ern­ment contractor.

The ex­tended time frame, de­tails of which an HHS of­fi­cial said will be clar­i­fied in fu­ture guid­ance, came as part of new ex­change guid­ance that em­pha­sized a greater fed­eral role over the next cou­ple of years. For ex­am­ple, the doc­u­ments es­tab­lished a Nov. 16 dead­line for states to sub­mit their plans if choos­ing to op­er­ate their own ex­changes or a state-part­ner­ship ex­change to­gether with HHS. If state plans fall short of the new re­quire­ments, then the fed­eral gov­ern­ment will run part or all of the ex­change un­til the state is ready to ramp up its own ver­sion.

“It makes re­ally clear that the re­la­tion­ship be­tween the states and the fed­eral gov­ern­ment is re­ally a long con­tin­uum,” said Deb­o­rah Bachrach, a health­care at­tor­ney with Manatt, Phelps & Phillips in New

York. De­spite the de­lin­eation of a pos­si­ble years- long fed­eral role in run­ning ex­changes in states that are ei­ther un­will­ing or un­able to op­er­ate such in­sur­ance mar­ket­places, the lat­est guid­ance leaves im­por­tant de­tails of the fed­eral ex­change un­clear. For ex­am­ple, the guid­ance does not spec­ify whether the fed­eral ex­change will be tai­lored to each state or whether a sin­gle fed­eral ex­change will serve all states that lack their own ver­sions.

HHS of­fi­cials have pur­posely slowed the re­lease of many de­tails of the fed­eral ex­change, ac­cord­ing to many health­care pol­icy ex­perts, to sub­tly en­cour­age states to de­velop their own ex­change.

Some Repub­li­cans who strongly op­pose the fed­eral law un­der which the ex­changes were au­tho­rized have urged states to nonethe­less cre­ate such ex­changes to avoid the im­po­si­tion of a fed­eral ver­sion over which they would have no con­trol.

Iron­i­cally, a caveat to the fed­eral-run ex­changes re­vealed in the re­cent guid­ance may in­crease some states’ com­fort with them.

The rules spec­i­fied that states can re­tain con­trol of el­i­gi­bil­ity de­ter­mi­na­tions un­der the fed­eral model. State lead­ers from across the po­lit­i­cal spec­trum have long viewed their con­trol of Med­i­caid el­i­gi­bil­ity de­ter­mi­na­tions as a crit­i­cal state power, and that led many to seek such con­trol in the fed­eral ex­change.

“That’s re­flec­tive of some of the con­cerns that were raised in the orig­i­nal di­a­logues around the fed­eral ex­change,” said Kath­leen Nolan, di­rec­tor of state pol­icy and pro­grams for the Na­tional As­so­ci­a­tion of Med­i­caid Di­rec­tors.

Last week also saw the re­lease of more than $181 mil­lion in HHS ex­change es­tab­lish­ment grants to four states, which brought the to­tal es­tab­lish­ment funds is­sued to $856 mil­lion. Although the fund­ing an­nounce­ment was fol­lowed by at least one of the four states, South Dakota, de­cid­ing that it would not pur­sue the cre­ation of an ex­change, last week’s guid­ance re­in­forced that states can use the fed­eral money for ac­tiv­i­ties that would even­tu­ally sup­port the cre­ation of state ex­changes. For ex­am­ple, the states can use last week’s funds to up­grade their Med­i­caid pro­grams’ data ex­change ca­pa­bil­i­ties, which is an up­grade that would be nec­es­sary if they were cre­at­ing an ex­change.

Fed­eral of­fi­cials may have lit­tle choice but to think long term be­cause few states have acted to cre­ate an ex­change through en­act­ing the nec­es­sary state laws or ex­ec­u­tive or­ders. Many states con­tinue to wait for a Supreme Court rul­ing on the law’s con­sti­tu­tion­al­ity be­fore un­der­tak­ing the cre­ation of an in­sur­ance ex­change.

Re­pub­li­can Gov. Den­nis Dau­gaard of South Dakota cited the court decision— ex­pected at the end of June—in his an­nounce­ment re­gard­ing the use of the ex­change funds. His an­nounce­ment fol­lowed the May 10 veto of leg­is­la­tion au­tho­riz­ing a state-run ex­change in New Jer­sey by Re­pub­li­can Gov. Chris Christie, who sim­i­larly cited the court’s pend­ing decision.

Last week also saw a leg­isla­tive panel in Louisiana de­feat ex­change-au­tho­riz­ing leg­is­la­tion.


Gov. Chris Christie, seen at a May 16 town hall, re­cently ve­toed leg­is­la­tion to es­tab­lish an in­sur­ance ex­change in New Jer­sey, say­ing that the fu­ture of the Af­ford­able Care Act is un­cer­tain.

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