As feds tout cov­er­age ex­pan­sion, states scram­ble to build ex­changes

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Stom­achs churned across the coun­try last week af­ter HHS Sec­re­tary Kath­leen Se­be­lius un­leashed a mas­sive pub­lic­ity push to no­tify mil­lions of unin­sured Amer­i­cans that they would soon qual­ify for “af­ford­able, qual­ity health­care cov­er­age.” There’s lit­tle ev­i­dence to sug­gest states will be ready to open the in­surance ex­changes needed to meet the an­tic­i­pated rush.

“They are tear­ing their hair out,” said one health in­surance ex­change con­sul­tant about of­fi­cials in states await­ing the long-de­layed fed­eral in­for­ma­tion needed for launch­ing their in­surance mar­ket­places.

The pub­lic­ity cam­paign, which in­cluded a re­designed en­roll­ment in­for­ma­tion web­site and a mul­ti­me­dia pro­mo­tion ef­fort, is the lat­est sign that the ma­jor cov­er­age ex­pan­sion at the heart of the Pa­tient Pro­tec­tion and Af­ford­able Care Act is fast ap­proach­ing. It is ramp­ing up pres­sure on states that are ei­ther plan­ning or con­tem­plat­ing to launch health in­surance ex­changes.

Those ex­changes are at the heart of state and fed­eral ef­forts to of­fer af­ford­able health in­surance plans to more than half the es­ti­mated 16 mil­lion pre­vi­ously unin­sured Amer­i­cans ex­pected to take ad­van­tage of the law in its first year. The re­main­der will re­ceive cov­er­age through ex­panded state Med­i­caid pro­grams— at least in those states that choose to ac­cept fed­eral fund­ing for the ef­fort (See story, p. 7).

The tight­en­ing time frame for build­ing the ex­changes has brought into sharper fo­cus myr­iad ques­tions the fed­eral government still hasn’t an­swered and the lo­gis­ti­cal chal­lenges in­her­ent to such a his­toric ex­pan­sion of pri­vate in­surance cov­er­age.

“Imag­ine just a mil­lion peo­ple who have never filled out those kinds of forms be­fore and don’t know how to shop and haven’t gone through open en­roll­ment once a year for their en­tire adult lives,” said Jor­dan Bat­tani, a man­ag­ing di­rec­tor at Com­puter Sciences Corp., which is pro­vid­ing con­sult­ing ser­vices to states on the startup of ex­changes. “They’re all hit­ting the water at the same time on Oct. 1 try­ing to use th­ese sys­tems. It’s hard to imag­ine how this could hap­pen on time.”

Top in­surance in­dus­try ex­ec­u­tives agree the states face daunt­ing odds in meet­ing the ACA’s dead­lines. The abil­ity of fed­eral and state health in­surance ex­changes to be­gin en­rolling mil­lions of con­sumers in nine months “seems chal­leng­ing,” Stephen Hem­s­ley, CEO of Unit­edHealth Group, told stock an­a­lysts last week.

The pres­sure has spawned re­peated spec­u­la­tion that var­i­ous ex­change-re­lated reg­u­la­tory dead­lines will be de­layed. Last week, ru­mors swept the coun­try that the Feb. 15 dead­line for states to sub­mit part­ner­ship ex­change ap­pli­ca­tions had been ex­tended. States have the op­tion of forg­ing a part­ner­ship with the fed­eral government or neigh­bor­ing states.

Fed­eral of­fi­cials moved quickly to quash the ru­mors. “We’ve been get­ting lots of ques­tions about this. … There have been ab­so­lutely no changes in pol­icy,” Amanda Cow­ley, act­ing di­rec­tor of state health ex­changes at HHS, told state health of­fi­cials in an e-mail.

But mis­un­der­stand­ings abound, es­pe­cially in states that are mov­ing in op­po­site di­rec­tions on ex­changes and Med­i­caid ex­pan­sion. Last June, the U.S. Supreme Court gave a green light to the ex­changes by up­hold­ing the law’s in­di­vid­ual man­date, but gave states the right to opt out of the Med­i­caid ex­pan­sion.

For in­stance, Mis­sis­sippi In­surance Com­mis­sioner Mike Chaney ap­plied to launch a state-run ex­change against the wishes of the state’s Repub­li­can lead­er­ship. He told the gov­er­nor and state leg­is­la­tors that the state-run ex­change will be needed to keep the fed­eral government from forc­ing un­wanted growth in the state’s Med­i­caid pro­gram.

“A fed­er­ally fa­cil­i­tated ex­change will in­crease the fed­eral government’s involvement in Med­i­caid el­i­gi­bil­ity,” he told Mod­ern Health­care in an e-mail. “And while they can­not ex­pand

Med­i­caid un­der PPACA, they could use new Med­i­caid el­i­gi­bil­ity and en­roll­ment rules to in­crease cur­rent Med­i­caid rolls.”

A CMS of­fi­cial said the fed­eral government does not have the author­ity to grow a state’s Med­i­caid rolls against its wishes.

Such types of mis­un­der­stand­ings fol­lowed HHS’ de­ci­sion to with­hold most de­tails about how they plan to run the fed­er­ally op­er­ated ex­change, which will cover ev­ery state that does not op­er­ate ei­ther its own ex­change or one in part­ner­ship with the fed­eral government. “A lot is rid­ing … on the fed­eral government get­ting the fed­eral ex­change up and run­ning, but I wouldn’t bet against the feds on this,” said Heather Howard, di­rec­tor of the State Health Re­form As­sis­tance Net­work, a pro-re­form ad­vo­cacy group. “They have a lot of ex­pe­ri­ence in build­ing sys­tems.”

State of­fi­cials hop­ing to meet the Feb. 15 dead­line for state ex­change plans—and even those hop­ing for a dead­line ex­ten­sion—have con­tin­ued to plead for de­tails on the fed­eral ver­sion. But even with­out de­tails of the fed­eral ex­change, other long-over­due fed­eral ac­tions are needed to pro­vide cer­tainty in key ar­eas, ac­cord­ing to health in­dus­try of­fi­cials and pol­icy ex­perts.

One of the el­e­ments needed for the op­er­a­tion of both fed­eral and state ex­changes as well as ex­panded state Med­i­caid pro­grams is an op­er­a­tional fed­eral data hub to help de­ter­mine el­i­gi­bil­ity for en­roll­ment and sub­si­dies. The dig­i­tal link will pro­vide real-time ac­cess to the data­bases of seven fed­eral de­part­ments and agen­cies to ver­ify a range of de­tails, in­clud­ing the in­comes and cit­i­zen­ship sta­tus of 7 mil­lion Med­i­caid and Chil­dren’s Health In­surance Pro­gram ap­pli­cants and 9 mil­lion ex­change ap­pli­ca­tions ex­pected to be­gin ar­riv­ing Oct. 1.

“We’ve heard a lot of ques­tions as to whether or not the fed­eral data hub would be ready on time,” said Cheryl Smith, a di­rec­tor at Leav­itt Part­ners, which pro­vides ex­change ex­per­tise to a range of states.

The hub’s data is also crit­i­cal for ap­pli­cants, since they will need to know if they qual­ify for ex­change sub­si­dies or if their in­come falls be­low the in­come thresh­old that ex­empts them from new fed­eral tax penal­ties for fail­ing to carry qual­i­fied cov­er­age next year.

States and in­sur­ers also need fi­nal ver­sions of pro­posed fed­eral rules gov­ern­ing cru­cial com­po­nents of the ex­changes, such as the es­sen­tial health-ben­e­fits package. It’s mak­ing life dif­fi­cult for firms, since in­surance com­pa­nies typ­i­cally need about 18 months to de­velop new plans, ac­cord­ing to Robert Zirkel­bach, press sec­re­tary for Amer­ica’s Health In­surance Plans, the in­dus­try trade group. “Health plans are start­ing, but some of the fi­nal rules and reg­u­la­tions are still out­stand­ing,” he said.

Last week, ma­jor in­sur­ers such as Unit­edHealth, Aetna and Hu­mana said their ex­change of­fer­ings for the in­di­vid­ual and small-busi­ness mar­ket would prob­a­bly be lim­ited to about half or fewer of the states.

The in­sur­ers and state-run health ex­changes are await­ing long-de­layed tech­ni­cal spec­i­fi­ca­tions from HHS for how their in­for­ma­tion sys­tems are sup­posed to con­nect with the fed­eral data sys­tems, Com­puter Sciences’ Bat­tani said. Such de­tails are crit­i­cal if the mil­lions of ap­pli­cants are to get a Trav­e­loc­ity-like en­roll­ment ex­pe­ri­ence that pro­vides real-time feed­back, in­stead of the week­s­long pa­per ap­pli­ca­tion pro­cesses that still char­ac­ter­ize many state health pro­grams. “If the will is there to do it, it won’t be pretty but you could do it with­out some of the au­to­ma­tion,” Bat­tani said. But “it would be a mess.”

TAKE­AWAY: State of­fi­cials are still wait­ing on the fed­eral government to pro­vide guid­ance for set­ting up in­surance ex­changes, which are due to be­gin op­er­a­tions on Oct. 1.

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