The Patient Protection and Affordable Care Act (PPACA) requires the establishment of a state health insurance Exchange for individuals, and a SHOP Exchange for small group employers, or one that merges the health insurance purchasing system into one Exchange to help consumers access, compare and purchase health insurance programs. Although a number of states have made solid progress in establishing a state-based Exchange, many other states have made little headway. At this time, fewer than 20 states have made substantive progress towards establishing an Exchange/SHOP. According to Marilyn Tavenner, acting Administrator of the Centers for Medicare and Medicaid Services (CMS), thirty states have suspended their efforts to create a state based health insurance Exchange/SHOP until the Supreme Court rules on the constitutionality of PPACA, and the November elections have been completed. In addition, some states continue to struggle with how to fund their Exchanges, and many questions remain on what role Brokers will play in the Exchange.
Just last week, BenefitMall blogged about the politics associated with establishing a state health insurance Exchange and the different formats an exchange may assume, including a completely state-run Exchange, a fully federally-facilitated Exchange (FFE), or an FFE coupled with a State Partner. This blog addresses some of the information technology (IT) issues associated with running an Exchange.
The IT Challenge
Recently, experts pointed out an emerging challenge that will add to the difficulty of states to meet the current January 1, 2013 deadline to receive HHS certification for their Exchange/SHOP– the complexity of implementing an adequate information technology system for an Exchange.
One of the central elements of the PPACA health insurance Exchange concept is that the Exchange has to design and implement an IT system that will be capable of seamlessly receiving applicants’ on-line demographic, income, citizenship, and eligibility information. The IT system then has to be able to communicate with a centralized, federal data processing/repository system that will process the applicant’s demographics, income and citizenship information.
The Data Services Hub
The federal processing center/repository system to support state-based Exchanges is being referred to as the “Data Services Hub.” The Hub will verify citizenship, immigration status, and tax information with various governmental agencies, including the Social Security Administration, the Department of Homeland Security, and the Internal Revenue Service. The Data Services Hub also will communicate a determination about an applicant’s eligibility for various programs. If the applicant is not eligible for a particular program, the Exchange will then electronically poll the participating insurance carriers, and respond back with appropriate benefit plans for which the applicant is eligible.
This week, a bipartisan group of 17 states, in conjunction with HHS, announced they have developed a tool that may ease the implementation of the health insurance Exchange’s technical component. The group, funded by several nonprofit organizations, created a consumer interface they say will save states months of work. The tool, called Enroll UX 2014, determines the order and types of options visible to a consumer utilizing an Exchange website. Although this tool will serve an important purpose, states must still design and implement other IT functions to be certified by 2013.
Other IT Program Specifications
Last year, CMS issued Guidance for Exchange and Medicaid Information Technology (IT) Systems 2.0 that provided insights and information on the proposed Data Services Hub. The stated purpose of the guidance is to “…assist states as they design, develop, implement, and operate technology and systems projects related to the establishment and operation of Health Insurance Exchanges as well as coverage expansions and improvements under Medicaid and the Children’s Health Insurance Program (CHIP), and premium tax credits and cost-sharing reductions under the Affordable Care Act.”
The Guidance further states, “The Health Insurance Exchange core functions, as well as the eligibility and enrollment functions for tax credits, Medicaid and CHIP, will be governed using this IT Guidance through a System Development Life Cycle (SDLC)-type model that includes life-cycle phases and transition stage gate reviews for such items as business service descriptions/definitions, requirement specifications, system design specifications, data models, interface control documents, and integration test cases.”
At the same time, HHS also issued Eligibility and Enrollment Blueprint – Exchange Business Architecture Supplement - which is only available on a restricted basis – that provides more detail on the system architecture. HHS has issued a contract with CGI Federal, Inc. to build the Data Services Hub. CGI has a successful history of working with the federal government on IT issues.
Current Status of the State Efforts
Even with the announcement of Enroll UX 2014, many industry insiders fear the technical component of the Exchanges may prove fatal to their successful implementation. According to Mila Kofman, the former Maine Insurance Commissioner, “People fear that the technology piece is just not going to be quite there…The states that want the state-based exchange might not be able to be certified.” States may see this dilemma, and simply choose to wait to spend precious funding on IT contracts. Patrick Howard of Deloitte Consulting estimates only seven states have finalized contracts with vendors to build these IT systems.
Meeting this data threshold will remain the single largest hurdle for the Exchange concept. We will continue to monitor the progress that is being made to overcome this challenge.
If you would like to read more about the new Exchange rules, please go here. We will continue to keep you up-to-date on these and other developments in our ever-evolving marketplace. Please visit www.HealthcareExchange.com for blog posts, polls, surveys and numerous resources, or you may visit www.benefitmall.com to view past Legislative Alerts.
The views expressed in this post do not necessarily reflect the official policy, position, or opinions of BenefitMall. This update is provided for informational purposes. Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.