Election Impact: States Now Face a Tight Deadline for Implementing Health Insurance Exchanges—Will the IT Be Ready?

Nov. 13, 2012
CSC’s Jordan Battani has been following developments around the creation of the state health insurance exchanges under the ACA; she shares her perspectives on the challenges facing state governments going forward—including the intense IT challenges involved

The November 6 elections yielded numerous implications for healthcare, none of them more momentous than the cementing of some policy certainty around federal healthcare reform. Following the June 28 affirmation of the constitutionality of the Affordable Care Act (ACA) by the Supreme Court, the only practical remaining question for the healthcare industry was the outcome of the November federal elections—both in the U.S. Senate and House of Representatives, and in the presidential election. With the reelection of President Barack Obama and the results in the Senate and House (where Democrats retained control of the Senate and Republicans kept control of the House), it appears clear now that no fundamental changes will be made to the ACA (though there remains the potential for small legislative tinkering around the margins).

With the November elections completed, state governments now face stringent deadlines going forward for implementing the statewide health insurance exchanges, or for letting the federal government establish exchanges in their stead. Not surprisingly, laying the IT foundation for such exchanges is expected to be a major challenge for the states, says Jordan Battani. Battani, the managing director of the Waltham, Mass.-based Global Institute for Emerging Health Care Services at the Falls Church, Va.-based CSC, has been closely following developments in this area. The California-based Battani spoke recently with HCI Editor-in-Chief Mark Hagland about the latest in this sphere. Below are excerpts from that interview

Following the November 6 elections, what’s the latest with regard to the establishment of the health insurance exchanges?

From a big-picture perspective, there are a couple of things that have been challenging all along for the states in this process, and, kind of like for a drowning person going down for the third time, some state government people said, maybe after the election, we won’t have to do this; and now they do. And the whole point here is to create an online marketplace for consumers to shop for health insurance. But the other element is to create a one-stop shop for eligibility determination for any of the government programs, including both federal and state programs. Eligibility is fairly straightforward for Medicare, but it’s not at all straightforward for Medicaid; every state has different eligibility requirements, and in some states, those even differ by counties. And that’s the eligibility verification landscape right now, and it’s the elephant in the room.

Jordan Battani

Once the healthcare reform-related deadline passes, there are a bunch of new kinds of eligibility verification that have to be determined, with the full implementation of the ACA. And there are all kinds of new eligibility verification rules that come into play in 2014; and they’re really around eligibility for all the health insurance subsidies. Medicare eligibility is pretty much at CMS [the federal Centers for Medicare & Medicaid Services]. But with Medicaid eligibility, some of it will be at CMS, some will be at the state level. And the subsidy verification level will be really complicated, but there’s an additional player that comes online—actually, two of them—the Department of Labor, and the Internal Revenue Service, per the income requirements. So now the challenge for the states is not just to create an online, portal-based marketplace; they also have to be able to catch all those data feeds from the feds and the states, all those different agencies, and send information back as well; and it’s not well-defined yet. And the effective date of coverage is January 1, 2014; and just as in the private marketplace, they really have to be ready in the fall of 2013 to be prepared for open enrollment. So they really have just a year. And these deadlines were really aggressive when they were passed in 2010; and they’re terrifying now.

And there’s another whole element to this. If you think of the health insurance exchange as a diagram, on the one side, you have individual consumers and employer groups; and then this information flows back and forth to and from different state and federal agencies on the eligibility verification; and then you have a whole bunch of feeds going back and forth with commercial health plans. And we’re seeing health plans looking around now and are saying, yeow! How are we going to do this? Because they don’t have functionality that’s easy to plug into a portal. And there are a lot of data flows involved. And it will have to be a continuous series of flows.

Are any states close yet in terms of their creating the exchanges?

The challenge for the early adopters is that they’ve been dependent on all the definitions for the interface standards coming out of the agencies, and the definitions have not yet been finalized; so even the early adopters are challenged. Is anybody ready to go? No. The best-positioned is probably Massachusetts, because their existing exchange was the model for the national system; but even they don’t have this built yet. And the option for states is to default to the system developed by the federal government; but even that one hasn’t been built yet—they’re on the same timeline.

So what will happen?

What will happen officially right now is that everyone will be ready for open enrollment in the fall of 2013, and be ready for the opening of the exchanges on Jan. 1, 2014.

Will any of this directly affect providers?

Yes, because the other thing that happens in 2014 is that there’s a massive expansion of Medicaid eligibility that goes into effect; and there’s the new and very significant requirement for everyone to have health insurance. And that really is good news for providers, because your uncompensated care should decline precipitously. But the patients who show up will often have longstanding health problems, and they will also be people who have not interacted much with the health insurance world. And don’t expect right out of the gate that these people will be able to use self-service mechanisms. So you’ll see lots of pent-up demand, and not very sophisticated users. So in terms specifically of the exchanges, if there’s a delay, it will have to be a full-year delay, because of the way these programs work. Medicare and Medicaid, like private health insurers, work on calendar year schedules.

And whenever you have an initiative that takes more than one cycle to complete, it’s code for “never.” And this is magnificent and national in scope: if you think about it, Medicare came up in one year, in 1965. And they knew who the beneficiaries were, because they were in the Social Security system. It’s a comparison that people don’t make very often, but it’s a relevant comparison. We were able to bring up the Medicare program in 12-15 months, but the world was a lot simpler then. Back then, we knew who everyone was; they were already effectively enrolled. But that’s not true of this population.

There are some implications for providers here. First, the reality is that payment rates are going down for hospitals; and anything that expands eligibility for some program is probably good for hospitals, especially because the uncompensated care problem was becoming unsustainable. On another level, there’s a question here for hospitals as purchasers of care for their own employees. Because there’s a movement among employers to do what they did with pensions, to get out of defined benefit programs and get into defined contribution programs, and that will now happen in healthcare. And a lot of hospitals may release their employees into these exchanges, or move to a defined a contribution plan, and having exchanges where their employees can shop for insurance options, will be a huge benefit. I don’t see hospitals doing this wholesale, and here in the West where I am, the labor organizations won’t let them do it; but health employers will have a harder time in the new environment coping with their benefit costs.

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