Stepping Up the Pace

It's go time! The 2014 health insurance exchange deadline is officially looming for all states.

After a grueling, three-month debate over the hearing on the controversial Patient Protection and Affordable Care Act (ACA), the U.S. Supreme Court decided to uphold the law, including the individual mandate. However, the court is making it much clearer that the penalty serves more as a tax -– a mechanism Congress has power to exercise. Under this language, Americans are not necessarily being "forced" to purchase health insurance; they are merely encouraged.

The court also upheld Medicaid expansion, which will soon allow individuals making up to four times the poverty line to get Medicaid coverage. Under the current Medicaid program, individuals cannot sign up for plans on the basis of being poor alone; they must also fall under categories such as being pregnant, a child, or over the age of 65.

But for state governments, the most critical impact of the decision has to do with health insurance exchanges (HIXs). States are expected to have these online marketplaces up and running by January 2014. The U.S. Department of Health and Human Services (HHS) has awarded hundreds of millions of dollars to states to help them set up their exchanges and will be doing so through 2014. That doesn't mean, however, that states are ready.

In March, many states decided to pause planning for their insurance exchange in anticipation of the ruling. States including Alaska, Iowa, and Wyoming expected the court to find the health care reform law unconstitutional but believed an insurance exchange system was a viable solution for the uninsured. Other states -- specifically Texas, Maine, and South Carolina -- were not so eager. They have made extremely slow progress on setting up a benefit exchange.

Republican lawmakers in Maine approved a bill this spring that delayed state action on the state's insurance exchange. As a result, that state faces a considerably high risk in being forced to implement the federally run exchange, produced by CGI Group Inc. -– the law's penalty for states that fail to create their own is to have one that is federally run.

There are many states that have taken great strides in setting up their HIX. The following states have already contracted with vendors to set up their insurance exchange:

  • Oregon: The Oregon Department of Human Services awarded Oracle an $8.7 million contract in June 2011 for its insurance exchange system.
  • California: The California Health Benefit Exchange awarded Accenture a $359 million contract in June 2012 for the California Health, Eligibility, Enrollment and Retention System (CalHEERS).
  • Nevada: The Nevada Department of Health and Human Services awarded a $72 million contract to Xerox Corporation in June 2012 for the Silver State Health Insurance Exchange system.
  • Maryland: The Maryland Department of Health and Mental Hygiene awarded $67 million to a consortium of vendors led by Noridian, including Curam, Connecture, and CNSI, in February 2012 for the design, development, and implementation of a benefit exchange.
  • Washington: The Washington Health Care Authority awarded $63.1 million to Deloitte in April 2012 for its benefit exchange system.
  • New York: The New York State Department of Health awarded $37 million to Computer Sciences Corporation (CSC) for its benefit exchange system.
  • Mississippi: The Mississippi Comprehensive Health Insurance Risk Pool Association awarded eHealthinsurance Services, Inc. in June 2012 for Phase 1 of an insurance exchange portal.
  • Florida: The state awarded $68 million to Xerox in June 2012 for building a Small Business Health Options Program (SHOP) called Florida Health Choices; however, Gov. Rick Scott opposes creating a private insurance exchange.

States are expected to submit letters of intent, or blueprints, that confirm their intent to run a state-based or partnership exchange. The blueprint has two components: the declaration letter and the exchange application. The blueprints must be received by the Center for Consumer Information and Insurance Oversight (CCIIO) by Nov. 16, 2012.

Hawaii was the first state to submit a letter of intent to have an insurance exchange up and running by the Jan. 1, 2014, deadline. Hawaii's Web portal is expected to integrate with the state's new Medicaid eligibility system. The state recently awarded SH Consulting, LLC a $244,000 contract for system support consulting services for the new system.

Because there is very little time left, states may look to different procurement strategies in order to expedite the contracting process. For instance, Oregon utilized a special procurement for its insurance exchange, which as mentioned above was awarded to Oracle. The state released the solicitation on May 23, 2011, and closed the special procurement on May 30, 2011. The special procurement, released by the Oregon Health Authority, allowed the state to be flexible and swift in meeting the deadlines set by the Early Innovator Grant.

Other strategies may include states adding insurance exchange components onto existing contracts, such as for eligibility systems. Much of the information stored in these systems overlaps, which may make existing system contractors the most knowledgeable regarding what infrastructure will allow for optimal interoperability.

Another technique states may choose to use is procuring for multiple components of the exchange under the same contract, such as call center and program integration services. The Colorado Department of Health Care Policy and Financing utilized this technique and is currently in negotiations with CGI. If selected, the vendor will be expected to design and develop the insurance exchange Web portal and call center.

Quick-Fix Solutions Discouraged
Though the 2014 deadline is just around the corner, HHS does not want states to implement quick-fix solutions. For that, states may very well be granted some wiggle room in setting up their exchanges. Thus far, however, they haven't been. States are well aware they must pick up the speed of their implementation efforts. With that said, some states, such Wisconsin, Georgia, and Tennessee, will likely remain stagnant in their exchange efforts until after the November election, when it could potentially be overturned if Mitt Romney defeats President Obama.

Vendors must take into consideration that even states with governors who seem to oppose the ACA and its components completely are still making considerable headway in implementing insurance exchanges. For some states, the insurance exchange makes sense to solve the problem of the uninsured. For others, pushes for implementation were more of a defense mechanism against the risk of being forced to utilize the federal exchange.

In the short term, vendors can expect to see an influx of consultative opportunities released by states that have made minimal progress on insurance exchange implementation. States that have been rather sluggish will need assistance in performing gap analyses of their as-is and to-be technology environment.

Vendors also can expect states that were waiting on the ruling to move forward with releasing solicitations for actual system implementation. States will continue to release procurements to enhance or completely replace their eligibility systems. They also will be looking to contract for consumer assistance-related services, such as call centers. Kentucky, Washington, Idaho, California, and Oregon are among the many states that will be procuring these services separately from their insurance exchange portals.

Another factor to look out for is procurement relating to consultation and implementation of the Small Business Health Options Program (SHOP). California will be procuring for the SHOP exchange component separate from its main portal. The state recently awarded Pricewaterhouse Coopers, LLC to assist in its design and development.

The launch of the exchanges won't end the spending. In 2014 and beyond, vendors can expect to see more solicitations for marketing, outreach, and education-related initiatives because this will be the time consumers are actually signing up for health plans.

This article originally appeared in the September 2012 issue of Occupational Health & Safety.

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