Health IT stands out as insurance exchange hurdle

A GAO investigation of seven state exchanges finds some are encountering unexpected technical problems in setting up coverage marketplaces.

By — Posted June 14, 2013

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A handful of states highlighted in a federal watchdog’s report have encountered some administrative challenges in setting up their respective health insurance exchanges under the Affordable Care Act. But despite these setbacks, all of them say they’ll be ready to start enrolling consumers in the fall.

Sen. Charles Grassley (R, Iowa), the top Republican on the Senate Judiciary Committee, had requested that the Government Accountability Office investigate the actions states had taken to develop their exchanges and the challenges they faced in setting up these insurance marketplaces. All exchanges must be ready to begin their enrollment processes by Oct. 1 for coverage that will take effect on Jan. 1, 2014.

As part of its research, the GAO interviewed officials in the District of Columbia as well as in six states: Iowa, Minnesota, Nevada, New York, Oregon and Rhode Island. All of these states plan to operate their own exchanges, except for Iowa, which will partner on an exchange with the federal government. Any state not launching its own exchange or a partnership exchange will default to a federally operated marketplace.

The report found that the seven states varied in their respective operating structures (link). Whereas Nevada, New York and Rhode Island plan to base their exchanges within existing state agencies, Oregon’s exchange will operate as a public corporation that will perform governmental functions.

The states also were in various stages of creating information technology platforms to upgrade or replace outdated enrollment and eligibility systems. Some have “identified challenges with the complexity and magnitude of the IT projects, time constraints, and guidance for developing their systems,” the report stated. States also have encountered hurdles in developing revenue options to finance their exchanges. Several want to charge fees to participating insurers in their respective marketplaces, for example, but this may be difficult “given uncertainties related to exchange enrollment, on which the fees are based,” according to the GAO.

In a statement, Grassley observed that the GAO’s findings highlighted “the complexity states face in setting up exchanges and how CMS’ workload will increase dramatically in getting exchanges off the ground. The challenges that need to be overcome by Oct. 1, 2013, remain significant.”

Even early adopters challenged

Health insurance exchanges are in flux in other states, even in Connecticut, which has been one of the more progressive states in establishing a marketplace.

There have been some recent changes in that exchange market, “some due to federal decisions tied to actuarial calculations, and some due to plan design adjustments based on insurer concerns,” said Matthew Katz, executive vice president and CEO of the Connecticut State Medical Society.

All of the states surveyed by GAO have taken steps to determine which qualified health plans should participate in the exchange.

Steven DeToy, director of government and public affairs with the Rhode Island Medical Society, said the state’s exchange expects to offer 20 to 25 qualified health plans, giving physicians ample opportunity to seek participation in the plan networks. “What hasn’t been determined yet is what are the rates going to be for the plans on the exchange” and if consumers will be able to afford the coverage, he said.

California already has announced its rates and plans for 2014.

In Connecticut, several plans have submitted proposals for premium rates, including HealthyCT, the statewide plan co-sponsored by the medical society. Based on the state’s progress, it’s too early for doctors to decide which networks they might participate in, or if they will seek plan options for themselves or their practice employees on the exchange, Katz said. Rate proposals are under review by the Connecticut insurance department.

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