I think this is a fairly daunting list. The biggest one however is eligibility which I think really should be handled by the Feds.
(1) Adverse selection: Coverage options available within the exchanges “have to be vibrant and able to attract a sufficient number of covered lives to make it economically worthwhile,” says former Illinois Insurance Commissioner Mike McRaith. Elizabeth Sammis, Ph.D., Maryland’s assistant insurance commissioner, agrees and says it will be important that individuals and small employers are enthusiastic about the exchanges and see them as a place they “can buy coverage they want at a price they can afford.” According to McRaith, regulation of insurers — both on and off the exchanges — ultimately will be the deciding factor for every state in determining whether their exchange becomes a viable marketplace. If an exchange is left with too many potentially expensive enrollees, “then we could see two parallel markets develop without any intersection,” he tells HEX. McRaith left his commissioner post May 31 to lead the Treasury Dept.’s new Federal Insurance Office in Washington, D.C.
(2) Eligibility: Most states will need to develop and implement an eligibility system for their exchanges as well as for their Medicaid program. “If we were only doing this for exchange customers, it would be easier, but since we also have to determine eligibility for Medicaid, and coordinate with older, legacy systems that are not as flexible as what we want for the exchange, it means we have a lot of planning and work to do,” says Joan Henneberry, director of the Colorado Health Insurance Exchange. HHS last month proposed regulations on eligibility (see story, p. 1).
(3) Legacy Medicaid systems: Not only will technology be needed to enroll members in an exchange, it also will have to allow members to easily switch between Medicaid and subsidized coverage as eligibility status changes. Moreover, it will need to transmit and receive data from HHS regarding subsidies and citizenship status, and collect and remit premiums, Sammis explains. While Kentucky’s 17-year-old legacy system integrates eligibility determinations for the state’s income maintenance programs, Special Needs Adoption Program and Medicaid, the IT needed for the exchange requires the ability to determine eligibility and administer health benefits beyond Medicaid, says Jill Midkiff, a spokesperson for Kentucky’s Cabinet for Health and Family Services. Kentucky, she tells HEX, might pursue the enhanced Medicaid match rate that allows states to claim a 90/10 rate for the design, development and installation of a new Medicaid eligibility system. She says the state is considering the State Exchange Establishment Cooperative Agreement as an additional source of funding for developing an IT exchange infrastructure. Kansas Insurance Commissioner Sandy Praeger (R) agrees that there will need to be a “great IT effort” between Medicaid and private insurers that participate in the exchange. “Within that concept we will need to have in place safeguards to keep [enrollees] in a medical home and not have them moving from plan to plan because of income eligibility changes,” she tells HEX.
(4) Federal deadlines: While the exchanges must be operational by Jan. 1, 2014, they must be set up and tested well before that. Carrie Haughawout, assistant director for health policy at the Ohio Dept. of Insurance, calls the federal timeline “extremely aggressive” and says it will be a challenge for every state. “We’re chasing a moving target. I’m sure we can get to where we need to be once we know the parameters, but we’re operating inside of a box without them.” Praeger agrees that moving forward without federal guidance, or governance in place for the exchange, is close to impossible. “Even by compressing these preliminary stages, we will have little time for pilot implementations to test exchange rules and functionality.” Christina Urias, director of Arizona’s Dept. of Insurance, says a team of consultants has been hired to help her state meet the deadlines. The need to meet timelines established by the reform law — and figure out how to coordinate efforts between state agencies — has created a “monumental task” for states, she says. Cindi Jones, director of the Virginia Health Reform Initiative, says the design and implementation of the exchange within the federal deadlines is difficult because of the eligibility and enrollment requirements. And political consensus must be built among all stakeholders, she says. While Maryland’s Sammis agrees that the deadlines can be crushing, she says a tight timeframe can ensure forward momentum. “Sometimes we work better when we have deadlines,” she says.
(5) Momentum: Because Nevada’s legislature meets only every other year, it’s critical that legislation is enacted this session “to demonstrate to the federal government that we are serious and we are moving forward with the exchange,” says Nevada Insurance Commissioner Brett Barratt. He says he has been meeting every other week with a committee of state agency directors to discuss the framework needed to govern the exchanges. Maintaining forward momentum, he explains, is necessary to ensure that the state is eligible for the next round of federal grants that will be used to build out the exchange. Merle Scheiber, director of insurance for South Dakota, echoes that thought and says demonstrating a sufficient amount of progress in time to achieve HHS approval is among his top challenges.
(6) Governance: “The best thing any state can do is to get working as soon as possible,” says Sammis. In April, Maryland Gov. Martin O’Malley (D) signed a bill to establish the state’s exchange as a quasi-public agency. The state recently assembled a nine-member insurance exchange board, which held its first meeting in June. “This is the foundation needed to move ahead,” says Sammis. On Aug. 5, Maryland’s exchange board issued several RFPs to find consultants to conduct studies and make recommendations on a number of issues including the operating model, public relations and advertising strategies, and financing for the exchange.
(7) State mandates: Colorado’s Henneberry says the basic benefit package is an area where there needs to be consistency across states. “Once we know what the mandatory package looks like, then we will have extensive conversations about whether or not we should have additional state-mandated benefits. It will be important for everyone to remember that everything we add will drive up the cost of the premiums, and that anything beyond federal requirements will be paid for by the state or the consumers.”
(8) Business model: Before the framework can be developed, Rhode Island Insurance Commissioner Christopher Koller says the state must first identify the “unmet needs” among individuals and small employers and determine how the exchange can meet those needs. “To overcome this we are using planning funds to develop and test business models, we have tightly integrated planning between our Medicaid agency and my office, and we have a public stakeholder process to vet the ideas.”
(9) Brokers: Participation in an exchange could depend on the role that agents and brokers play. Consumers and small employers will need help navigating the exchanges. “In my mind, the exchanges will not be successful without the brokers,” says Barrett. “They will need to be an integral part and they will need to be paid for their services so it’s worthwhile for them to assist consumers and employers.”
(10) Care delivery: It will be important that the exchanges do more than just enroll members in coverage, says Jeannette DeJesús, special advisor to the governor on health care reform and deputy commissioner of Connecticut’s Dept. of Public Health. “We need to make sure that we’re not just providing insurance but that we have an adequate provider work force available to address people’s health needs…[and] that we’re taking advantage of opportunities to make the delivery of care more efficient,” she says. “In the midst of the huge task of setting up the exchange, it is easy to lose sight of the public health and prevention component of health reform, but we won’t succeed at our core goals without an integrated approach.”
