Health Insurance Exchanges

Apart from eligibility determination, the second cornerstone of state health IT reform will be the creation of the state-run health insurance exchanges — brand-new entities in almost all states that will require a great deal of time and effort in order to be up and running by 2014.

One newspaper referred to the concept of health insurance exchanges as “buying insurance Travelocity style.” The concept is that qualifying health insurance companies will offer their wares within the exchanges. Individuals, families and small businesses will log on to an exchange site, compare the offerings and purchase competitively priced insurance.

Some states will create their own online insurance exchanges, which will be managed either by state agencies or nonprofit entities. It’s expected that some states will create entirely new agencies to run the health insurance exchanges. Oregon, for instance, is creating the Oregon Health Authority to implement the Affordable Care Act, and this entity will most likely oversee the state’s exchange. A number of other states, perhaps the majority, will build and run their health insurance exchange within the office of the state insurance commissioner.

How Should States Move Forward?

Like any major technology-related initiative, decisions must be made regarding people and processes, as well as technology. Decisions on functionality and the processes needed to support the exchange will be based on new requirements and will end up changing how eligibility determination and claims administration processes will need to be adjusted. Incorporating requirements for enhanced self-service will affect the process flows as well as define the technology requirements.

Legacy eligibility systems must be assessed to determine their capability to handle additional volume, expanded interfaces and data-sharing, rapidly changing policies and support for streamlined processes. Commitments to enhance or replace legacy eligibility systems will result from this analysis. When enhancing or replacing these systems, states might consider adding the health-care eligibility capabilities to the current legacy system or as a component of a new MMIS. Consideration must also be given to incorporating other state health-care programs, such as the Children’s Health Insurance Program, into long-term plans.

States must also determine how Medicaid eligibility rules will be defined. For example, which should be the rules in the front-end insurance portal versus the back-end eligibility system? The significant policy changes required by the health reform law will drive demand for a modern rules engine that supports flexible implementation of policy. Moving to a rules-based application will enhance the state’s ability to add new program categories, quickly implement policy changes, and standardize policy application to accurately determine eligibility and address variable federal medical assistance percentage rates.

Once these high-level decisions are made, development of requirements, federal approval documents and procurement vehicles can still take a significant amount of time before actual work on system modifications can begin.

As states look ahead to the federal deadlines in 2014, there is a pressing need to take action now. Applying for federal planning grants provides the opportunity for states to articulate their high-level concepts and strategies. This includes designating the state’s key stakeholders — which can include the entity or agencies to be responsible for the exchange — and identifying the basic approach, methodologies, schedule and techniques that will guide decision-making and implementation.

As currently envisioned, over the next three years, all 50 states must prepare to flip the switch on health reform — an act that’s expected to expand coverage to 32 million more people and change the insurance rules for every American. Controlling growth in health costs will be an ever-present priority as will the focus on improving quality and achieving greater value for the nation’s health-care investment. Medicaid agencies will be at the heart of making this work. And technology will be the vital foundation to making this historic transformation a success.

John Petraborg  | 

John Petraborg is the client industry executive of HP Health and Human Services