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November-December 2010 St@teside

Federal Guidance and Funding for Exchange-Based Information Technology Systems Announced


The Patient Protection and Affordable Care Act (ACA) has created significant operational challenges for the states that will be expected to determine eligibility and facilitate enrollment through health insurance exchanges by 2014. Each state will need an information technology (IT) solution that will efficiently collect information from consumers and existing state and federal agencies (including Social Security, the Internal Revenue Service, and state-based programs such as Medicaid and the Supplemental Nutritional Assistance Program) and then match those consumers with the correct program or subsidy amount. States face several barriers as they seek to accomplish this task.

First, states will need to connect with federal programs, but the specifications on how to do that have not yet been issued by the federal government. Second, many states have antiquated eligibility and enrollment systems in their Medicaid programs that might not be up to the tasks required by the new law. Third, states are unlikely to have the resources to replace these systems. Finally, there is the potential for enormous waste if every state designs an IT solution on its own; many of the elements required by each state will be required in every state.

The Department of Health and Human Services made three announcements in recent weeks that will help states overcome these barriers. On October 29, 2010, the Office of Health Insurance Exchange announced that they will fund Cooperative Agreements for five states (or groupings of states) that are poised to become early innovators in the area of IT for eligibility determination and enrollment. These states will be asked to blaze a trail, and their learnings will be made available, free of charge, to other interested states. Successful applications will include letters of agreements from states that have agreed to work with an early innovator. The final pre-application call will take place on Tuesday, December 14, at 3 p.m. EST. See the grant application for full details. 

On November 8, 2010, the Centers for Medicare &  Medicaid  Services announced a notice in the Federal Register that proposes an increase in federal matching funds to states for designing and developing new information technology systems needed to support Medicaid eligibility systems that will interface with state insurance exchanges. Once the rule becomes final, CMS will pay 90 percent of these costs rather than the previous 50 percent. In addition, they will pay 75 percent of costs for maintenance and operations of existing systems. This funding will complement the 100 percent federal funding that will be available to support the IT infrastructure of the exchanges.
In order to qualify for the enhanced payments, states must develop eligibility systems that:
  • Promote a seamless, integrated enrollment experience for consumers in the exchange;
  • Employ service-oriented architecture that pulls information from relevant state and federal sources;
  • Uses standards-based business rules that are non-proprietary, open to the public, and that are accessible and adaptable by other states;
  • Protects the privacy of consumers;
  • Is efficient and scalable, leveraging the concept of a shared pool of configurable, secure technology resources;
  • Shares and analyzes data in order to promote transparency, accountability and evaluation; and
  • Performs at a high level, including being able to do real time transactions accurately and consistently.

Finally, CMS and the Office of Consumer Information and Insurance Oversight issued “initial technical guidance that will help states decide how they will design, develop, and implement new or improved IT systems for the new health insurance exchanges, Medicaid and CHIP.” This guidance, consistent with the performance standards listed above, calls on states to develop seamless, user-friendly, enrollment and eligibility systems that are integrated between Medicaid and the exchange. The guidance also underscores expectations related to efficiency, adverse selection, public outreach and engagement, accountability and transparency. They expect that this is just their first installment of such guidance; further information will be forthcoming.