Three States Move to Next Phase of Building their Health Benefits Exchanges – Say Ahhh! A Children’s Health Policy Blog

This week, the Department of Health and Human Services
(HHS) awarded the first round of grants to help states establish health
insurance exchanges.  State
officials in Washington, Indiana and Rhode Island were granted a total of $35
million to begin building their exchanges. In announcing the grants HHS said
that the states “will use the money to build up the necessary information
technology systems — a major undertaking for which even conservative governors
have sought federal help.”

An HHS fact sheet summarizes the grant
activities as follows:

* Indiana received almost $7 million “to strengthen the
health information technology systems that will be integral to its Exchange.
Additional funding will support project management, legal, actuarial, and
financial expertise and general policy support.”

* Rhode gets $5.2 million “to strengthen health
information technology systems, develop an integrated consumer support program
to provide support to individuals and small businesses, and strengthen its
business operations.”

* Washington will receive nearly $23 million “to develop
options and recommendations on policy decisions that will have a significant
impact on the Exchange. The grant will also provide funds to develop a health
information technology system that will support its Exchange.”

The establishment grants follow a round of planning
 where each state (except Alaska, which didn’t apply) received a $1
million to get started on the exchange planning process, and the awarding of a
total of $241 million to six “innovator” states and one New England-based
multi-state consortium to develop exchange information technology (IT) infrastructures
that other states can adopt and adapt.

Each of the new exchange establishment grants was for
level 1 funding, which means the state sought funding for an initial year of
work. Alternatively states may apply for level 2 and incorporate all of their
funding needs for the establishment and operation of the exchange(s) through
2014. HHS designed the establishment grant opportunity with maximum flexibility
for states. States can apply for funds on a rolling basis, and can either seek
multi-year funding (level 2) or take a step-by-step approach by applying for
annual project grants (level 1). Award amounts, sufficient to fulfill the
purposes of the funding opportunity, will vary based on the proposed activities
and specific needs of each state. Funds can be used for a number of different
activities, including consulting with stakeholders, making legislative and
regulatory changes, governing the exchange, establishing information technology
(IT) systems, performing oversight and ensuring program integrity.

In order to securing ongoing funding, each state must
make progress toward establishing an Exchange, implementing market reforms and
meeting other benchmarks as the Secretary may establish. Benchmarks must be
identified in each of these core areas: background research; stakeholder
involvement; legislative/regulatory action; governance; Exchange IT systems;
program integration; financial management; oversight and program integrity;
health insurance market reforms; providing assistance to individuals and small
businesses, coverage appeals and complaints; and business operations/exchange

Examples of critical benchmarks include evidence of
collaboration between exchanges and state Medicaid agencies or submission of
data collected by the state Consumer Assistance programs regarding problems
consumers encounter and actions taken by the state to resolve them.

The next funding cycle will close on June 30, 2011.
Quarterly opportunities will continue for a total of five more quarters until
June 29, 2012. Decisions on grant applications will be made approximately 45
days after each application due date.

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