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June Exchange Board Meeting: Vision, Level I Grant Application, Program Integration

The fourth Exchange Board meeting (agenda) was held at the Department of Health Care Services in Sacramento yesterday. The meeting’s featured guest was Joel Ario, Director of the Office of Health Insurance Exchanges at the Center for Consumer Information and Insurance Oversight in Washington, DC. The focus of this meeting was largely on developing effective IT, creating a thorough and suited Level I establishment grant application, and ensuring the Exchange offers the highest quality consumer experience.


The federal vision is for exchanges to be competitive and transparent. They should be a single point of entry for subsidies, CHIP and Medicaid. Exchanges should work to simulate the best experience consumers have in selecting products on successful corporate websites. Stakeholders suggested: state flexibility, avoid reinventing the wheel, and keep the Exchange simple for consumers.

State Power

The federal government’s goal is the development of state-based exchanges with the federal option as a fallback for states that either do not meet the deadlines to create exchanges or do not wish to create an exchange. A federal hub will also be created through which states can verify enrollee income and citizenship. Federal information on exchanges can be accessed at www.healthcare.gov.

Planning for the Future

There are three goals for 2011: 1) Provide states with establishment grants, 2) Establish IT both in the IT innovator states and the federal system and 3) Release first set of regulations (website standards, defining navigators, establishing broad guidance for certification) soon and second set of regulations (defining essential health benefits) in the fall.

In 2012, the goal is to finalize the regulations and conclude both federal and state IT systems. January 1, 2013 is the deadline for states to meet Exchange requirements. The year 2013 will be for testing IT and starting the bidding process for contracting with insurers. In addition, states should begin enrollment at the end of 2013 in preparation for the January 1, 2014 start date.

Level I Establishment Grant Application

To date, three states have applied for Level I establishment grants. The applications reflect the unique systems of each state. Rhode Island ($5-$6M) is more focused on its regulatory power to secure favorable rates and slow rate increases. Indiana ($5-$6M) is the opposite of Rhode Island, a very unrestricted market, and is interested in increasing use of HSAs where consumers have more skin in the game. Washington ($25M) is focused on a three-way partnership with employees, employers and the state. All states are building on current systems instead of starting from scratch. California is developing its Level I grant application (see overview and summary) for $40M. The grant period will be from July 1, 2011 – June 30, 2012 with 90-day retroactivity for incurred costs. The application proposes hiring 75 FTEs. Two thirds of the budget will be for consultant costs. The application addresses 11+ core areas, as required in the federal guidelines for proposals, deliverables and budget. The funds will be used to develop a three-year plan, take necessary steps to prepare for operations, begin core area implementation, conduct stakeholder participation and create a staffing plan. The Board hopes to approve the application at the next meeting on June 28. In Spring 2012, they plan to submit a Level II grant application. The Level I grant is seen as a building block.

Staffing the Exchange

The Exchange Board’s recruitment subcommittee selected CPS HR Consulting to conduct the recruitment (see brochure). The board encourages the public to submit recommendations to Pam Derby, the CPS recruiter. Although it is a national search, the ideal candidate is someone who is familiar with California’s complexities. The goal is to select someone by August.

Program Integration

Toby Douglas, DHCS director, explained that they expect Medi-Cal to grow by 2M beneficiaries (currently 7.4M) in 2014. DHCS foresees several areas of integration with the Exchange, including:

  • Eligibility: The systems will need to work together. They should be consumer-friendly, high quality, and offer real-time enrollment.
  • Purchasing: There are currently 4.5M people enrolled in Medi-Cal managed care. That number is expected to grow in 2014, which will allow for purchasing power. There must be a coordinated focus on delivery system reform, payment reform, etc. We must make sure that Medi-Cal is not left behind in this process.
  • Branding and Outreach: It will be important to connect with both the uninsured and those who have individual private coverage and public coverage to explain the options for application and enrollment.

Progress to Date

In mid-2010, 49 states applied for planning grants. In October 2010, seven states were approved for IT innovator grants and were awarded funding in February 2011. Also in February 2011, three states applied for establishment grants. The next application cycle, during which CA will apply, is this month. States not ready for Level II grants are encouraged to apply for Level I grants as building blocks (which CA plans to do).

Public Comment

Stakeholders were most concerned with ensuring access for consumers. They touched on issues such as linguistic and cultural barriers. Stakeholders urged the Board to conduct focus groups on access and enrollment before establishing the IT system.