On the Fence: IT Implications of the Health Benefit Exchanges

i On the Fence: IT Implications of the Health Benefit Exchanges

On the Fence:IT Implications of the

Health Benefit Exchanges

Acknowledgements:

NASCIO would like to express its thanks and gratitude to the members of the 2011 Health CareWorking Group and its Co-Chairs, Lisa Feldner, CIO, State of North Dakota and EdwardDriesse, CIO, State of Louisiana, for lending their time and expertise to help guide this prod-uct’s development.

Barbara Oliver, State of LouisianaGeorge Boersma, State of MichiganLinda Boles, Cisco Systems IncEaster Asi Bruce, American SamoaJohn Castaldi, CA TechnologiesCharles Cephas, SymantecRaj Chaudhary, Crowe Horwath LLPHarvey Chute, Northrop GrummanMark Dalglish, Fujitsu Network CommunicationsRobert M Dallas, Alcatel-LucentVinay Dattu, State of TennesseeBrian DeVore, IntelRafael C Diaz, State of IllinoisJack Doane, State of AlabamaStephanie Doiron, AT&TBrian Erdahl, Deloitte Consulting LLPCatharine Evans, Oracle USA IncScott Fairholm, Commonwealth of PennsylvaniaDavid Finn, SymantecLarry Ford, ACS Government SolutionsSteve Fowler, State of ColoradoVivian J Funkhouser, Motorola SolutionsJohn Galloway, Sierra SystemsDeborah Gaymon, AT&TBrien Green, Bentley Systems IncKennan Hogg, Software AGTom Jarrett, LexisNexisBrian Kelly, SymantecJabeen Khan, Commonwealth of Pennsylvania

Mary Lalouch, Software AGCharles Leadbetter, Berry Dunn McNeil & ParkerLeah Lewis, State of ColoradoMike Maxwell, SymantecCathy McMahan, IBMSean McSpaden, State of OregonSteven McStay, Dell IncUrvashi A Mehra, CA TechnologiesTerry C. Miller, CSCBob Nelson, SAS InstituteSteve Nichols, State of GeorgiaPatricia O’Donnell, JPMorgan ChaseDr. Craig P Orgeron, PhD, State of MississippiJohn Paulson, State of MinnesotaBrendan M Peter, CA TechnologiesHolli Ploog, CGI Technologies & Solutions IncLauren Plunkett, State of ColoradoMike Quinnelly, Oracle USA IncBob Raymond, NetAppWill Rice, State of TennesseeLauren Sallata, ACS Government SolutionsEric Simon, HPElaine A. Solomon, HPTim Study, HPDavid Taylor, State of FloridaAndy Thurai, L-1 Identity SolutionsKathy Twomey, Citrix SystemsVince Vickers, ZanettAmanda White, INPUT

ii On the Fence: IT Implications of the Health Benefit Exchanges

NASCIO would also like to thank Chad Grant, NASCIO Policy Analyst, for his work as leadNASCIO staff on this project as well as Doug Robinson, NASCIO Executive Director and SamHearn, AMR Graphic Designer, for their guidance and creative services regarding this publication.

Finally, NASCIO extends a special thanks to those state CIOs and their staff who contributed inthe development and revision of this product.

Please direct any updates, questions or comments to Chad Grant at [email protected] or (859)514.9148.

Founded in 1969, the National Association of State Chief Information Officers (NASCIO) repre-sents state chief information officers and information technology executives from the states, ter-ritories, and the District of Columbia. The primary state government members are senior officialswho have executive level and statewide responsibility for information technology leadership.State officials who are involved in agency level information technology management may partic-ipate as associate members. Representatives from other public sector and non-profit organiza-tions may also participate as associate members. Private sector firms may join as corporatemembers and participate in the Corporate Leadership Council.

AMR Management Services provides NASCIO’s executive staff.

DisclaimerNASCIO makes no endorsement, express or implied, of any products, services or web sitescontained herein, nor is NASCIO responsible for the content or activities of any linked websites. Any questions should be directed to the administrators of the specific sites to whichthis publication provides links. All information should be independently verified.

1 On the Fence: IT Implications of the Health Benefit Exchanges

“In deploying health information technology(HIT)…we also are at the cusp that is facedby every pioneering enterprise” –Dr. DavidBlumenthal, Former National Coordinatorfor Health Information Technology”

Despite the contentious debate over nationalhealth care reform there seems to be one trendthat has gained some degree of consensus at thestate level – planning for implementation ofstate health benefit exchanges. As of Septem-ber 2010, forty-eight states and the District ofColumbia have received planning grants and ef-forts continue in the development of roadmapsby which the states can tailor their exchanges tomeet the needs of constituents.

State officials from both sides of the aisle seemto have varying interest in the concept of a ben-efits exchange. The goal will be to increase stateinsurance coverage by simplifying the enroll-ment process through a user friendly online sys-

tem. The intent is to create more market com-petition and hopefully drive down increasinglyhigh premiums. The Patient Protection and Af-fordable Care Act (PPACA) has already pro-vided $2.8 billion in funding to states to buildbenefit exchanges, expand Medicaid eligibilityand continue prevention efforts. In addition tothe substantial amount of funding states have al-ready received, they will receive billions moreduring 2011 and beyond.1

The Affordable Care Act provides states withthe unique opportunity to either develop and runtheir own exchange or default to the federalgovernment to establish and operate the ex-change. As shown in Figure 1, a total of 41states have already filled measures opposing atleast some part of health care reform or propos-ing alternative policies. Only six states have en-acted health insurance exchanges as of May2011, and two of these (Massachusetts andUtah) predated passage of the health care law.2

Figure 1: NCSL 2011 State Legislation Opposing Elements of Federal Health Reform3


What Is An Exchange?

An exchange is a mechanism for organiz-ing the health insurance marketplace tohelp consumers and small businessesshop for coverage in a way that permits asimple comparison of available plan op-tions based on price, benefits and services,and quality. By pooling people together, re-ducing transaction costs, and increasingtransparency, exchanges create more effi-cient and competitive markets for individu-als and small employers.

Historically, the individual and small grouphealth insurance markets have sufferedfrom adverse selection and high adminis-trative costs, resulting in low value for con-sumers. Exchanges will allow individualsand small businesses to benefit from thepooling of risk, market leverage, andeconomies of scale that large businessescurrently enjoy.

Beginning with an open enrollment periodin 2013, exchanges will help individualsand small employers shop for, select, andenroll in high-quality, affordable privatehealth plans that fit their needs at competi-tive prices. Exchanges will assist eligibleindividuals to receive premium tax creditsor coverage through other Federal or Statehealth care programs. By providing one-stop shopping, exchanges will make pur-chasing health insurance easier and moreunderstandable.

If a state finds it in their best interest to set uptheir own exchange they will be required toserve individuals receiving tax credits as wellas those who are purchasing insurance on theirown. The law further requires states to establisha Small Business Health Option Program(SHOP) for employers with up to 100 employ-ees. States can operate these systems separatelyor combine them into a single exchange. Todate, nearly $296 million worth of grants havebeen made available to states and territories tostart planning for the creation of health benefitexchanges. This funding includes the “Early In-novator” grants that have been awarded to sixstates and a consortium of states in developingan array of models for exchanges’ informationtechnology systems.4 Details of the early inno-vator states can be found in Appendix I.

There is a great deal of variation that can existwhen defining the purpose of an exchange – itcan serve as market organizer much like Utah’sHealth Exchange or it can be used as a tool thatdrives market reform like the MassachusettsConnector. Regardless of how a state choosesto approach cost containment, they have theflexibility of joining regional exchanges thatmay share the same standards for quality andprice of coverage.

The PPACA builds upon the efforts of theAmerican Recovery and Reinvestment Act(ARRA) by promoting the use and implemen-tation of health information technology. Thisanalysis is exclusive to the state health benefitexchanges mandated by PPACA, but please ref-erence NASCIO’s Profiles of Progress 4: StateHealth IT Initiatives , HITECH in the States:Action List for State CIOs and The MITATouch: State CIOs and Medicaid IT Transfor-mation as a resource for federal directives thathave also had major health IT implications forthe states.

While guidance from the Department of Healthand Human Services (HHS) and the Centers forMedicare &Medicaid Services (CMS) are min-imal and still forthcoming, states should be pre-pared to start planning and implementing intheir state.5 State CIOs will play varying rolesin health care reform, but irrespective of theirresponsibilities it will be imperative to providesound leadership and provide feedback to gov-ernors on any IT gaps that may exist during thismomentous time.

http://www.nascio.org/committees/healthIT/








Functions an Exchange Must Meet7

The PPACA mandates core functions thatan exchange must meet in order to qualify.The main requirements would be:

● Maintenance of a web portal for pro-viding information on plans to currentand prospective enrollees

● Operation of a toll-free hotline● Assignment of a price and quality rating

to plans● Certification, recertification and decer-

tification of plans● Presentation of plan benefit options in

a standardized format● Provision of information on Medicaid

and CHIP eligibility and determinationof eligibility for individuals in these pro-grams

● Provision of an electronic calculator todetermine the actual cost of coveragetaking into account eligibility for pre-mium tax credits and cost sharing re-ductions

● Certification of individuals exempt fromthe individual responsibility requirement

● Establishment of a navigator programthat provides grants to entities assistingconsumers

● Additional exchange functions include:○ Presentation of enrollee satisfaction

survey results○ Provision for open enrollment periods○ Consultation with stakeholders,

including tribes○ Publication of data on the exchange’s

administrative costs

I. The Affordable Care Act: Implementinga State Exchange

As states start to contemplate the long checklist of things that need to be accomplishedprior to implementing an exchange, there isone vital question that needs to be answeredby the executive branch – does the state wantto have control of the governance and archi-tecture or would the state like to delegate thisresponsibility to the federal government. Asimple question, but still a highly contentiousissue that will need to be determined prior torationalizing what governance options wouldbe best for your state.

Exchange Design OptionsSpecific to state exchange planning efforts,there will inevitably be varying opinions fromstate to state on how they would like to struc-ture the governance model. During the 2011legislative session, states may debate legisla-tion creating health insurance exchanges orthey may defer this option to later years, de-pending on existing authority to carry out im-plementation or to block implementation. If astate chooses to move forward there are sev-eral options that exist:

●An exchange could be established as aclearing house for all plans offered by allissuers

●An exchange could be designated as a pur-chaser that selectively contracts with in-surance plans

●An exchange could be a clearing house,purchaser and/or a market organizer8

Exchanges are also required to be operated bya governmental agency or non-profit entity es-tablished by the state. States have the flexibil-ity to contract with eligible entities to carryout one or more duties of the exchange. De-spite the numerous requirements, states havethe flexibility to choose if they would like to


California: Governance of the State Exchange● Independent, five member exchange governing board within state government; mem-

bers must have significant demonstrated expertise in various exchange-related healthcare areas, such as the individual and small group markets

● Appointed by Governor and legislature● Significant conflict of interest provisions that generally bar anyone working as insurers,

agents or brokers, health care facilities, and health care providers● One year revolving door provision● Board members are unpaid

establish one exchange, subsidiary exchangesthat serve geographically distinct areas withinthe state, or join a regional exchange servingmultiple states.9 In addition, the number of ex-changes that exist is left up to the state to de-cide. They may want to combine the employerand individual exchanges or leave them asseparate entities. Regardless of the gover-nance model a state chooses it will be held ac-countable for being self-sustaining by January1, 2015.

In Figure 2 you will find an example of howthe State of California, the first state to pass

exchange legislation under PPACA, plans tostructure its governance model under the stateSenate and House bills that were passed andsigned into law by GovernorSchwarzenegger.10 In addition to the Califor-nia example, states may also want to consultthe model exchange statues that were devel-oped by the National Association of InsuranceCommissioners.11 Other states that havepassed legislation and received the Governor’sapproval for moving forward on a health bene-fits exchange are West Virginia and Maryland.

Figure 2: California Governance Model12


Building a First-Class Citizen Experiencethrough the use of Business ArchitectureIf you were to ask citizens what they wouldlike to experience when navigating enrollmentin the exchange, Medicaid or CHIP – it wouldmost likely be a seamless system that gener-ates health coverage options and enrollment inreal-time. Fortunately, this is also a require-ment of the Centers for Consumer Informationand Insurance Oversight (CCIIO) who areoverseeing the federal funding for the ex-change. Over the past decade consumer serv-ices have evolved by leading businesses in theUnited States and this has put more demandon states to accommodate and replicate thishigh level customer experience.

Eligibility evaluation will be done, for mostcitizens seeking enrollment, through a prede-termined set of rules established for the ex-changes, Medicaid and CHIP. State CIOs canuse common systems and integration of sys-tems to avoid duplication of costs, processes

and effort on the part of either the state or thebeneficiary.13 HHS guidance has suggestedthat states will not be obligated to independ-ently establish their own interfaces and con-nections for verification and this will be donethrough federal agencies such as the InternalRevenue Services (IRS), the Department ofHomeland Security (DHS), the Social SecurityAdministration, and DHHS. In addition, CMSwill be implementing a data service that ex-changes can use for one source of verificationfor all of the federal programs listed above. Itis expected that IT systems have the capabilityto generate transparent data on program evalu-ation and performance management.14 Generalbusiness practices should be a top priority forState CIOs, but the design of IT systems forstates should ultimately meet the statutory re-quirements mandated by the Affordable CareAct. Figure 3 provides a map of the criteriaand organizations that will determine eligibil-ity requirements.

Figure 3: Criteria for Determining Eligibility15


What Are The Fiscal Implications forStates?In addition to the legislative and technical chal-lenges states face with implementation, it is im-perative that state CIOs consider the possiblebudgetary impact the Affordable Care Actcould have on states. An enormous variation al-ready exists across states in terms of health in-surance coverage rates, generosity of coverageunder state-administered public programs, gen-erosity of state-financed programs to purchaseprivate coverage, health insurance regulation,and other factors that affect state responsibili-ties and budgets.16 The health benefit exchangeestablishment grants, which will later be dis-cussed in further detail, should be used to es-tablish an initial revenue structure and budgetthat will be fiscally sustainable by the 2015deadline.

One of the few existing exchanges, the Massa-chusetts “Connector,” can be used as an exam-ple to calculate what the cost may be for statesthat project high levels of membership. The

costs to maintain and run the “Connector” areapproximately 4% of average premiums withenrollment at approximately 187,000 citizens,but this may vary by state. Because the ex-changes must be self-supporting by 2015, it isimportant that states create a strategy to pay forthe cost associated with17:

●Staff salaries and benefits●Appeals●Marketing●Advertising and communication●Customer service and premium billing●Enrollment and eligibility services●Website development and maintenance●Professional services and consulting● Information technology●Facilities and related expenses

An example of recent legislation, which wassigned into law by West Virginia GovernorEarl Ray Tomblin on April 4, 2011, demon-strates how states plan to fund the exchangesthrough assessing fees. Figure 4 is an examplefrom the text of West Virginia Senate Bill 408.

Figure 4: West Virginia Funding Structure18

§33-16G-6. Funding; publication of costs.(a) On and after July 1, 2011, the board is authorized to assess fees on health carriers sell-ing qualified dental plans or health benefit plans in this state, including health benefit planssold outside the exchange, and shall establish the amount of such fees and the manner ofthe remittance and collection of such fees in legislative rules. Fees shall be based on pre-mium volume of the qualified dental plans or health benefit plans sold in this state and shallbe for the purpose of operation of the exchange.

(b) The exchange shall publish the average costs of licensing, regulatory fees and anyother payments required by the exchange, and the administrative costs of the exchange,on an Internet website to educate consumers on such costs. This information shall includeinformation on moneys lost to waste, fraud and abuse.


Strategize for SustainabilityIt is an unprecedented time for the states withthe federal government providing the initialfunding to develop and implement exchanges.The main caveat is that as of January 1, 2015the state exchanges will need to be fully func-tioning and also self-sustaining. The Afford-able Care Act did take into account the needfor revenue to maintain operations and gavethe leeway to charge user fees or assessmentsto fulfill operational needs. Because the user

fees will be the basis for operating revenue, itwill be essential that enrollment is achievedquickly to gain as many enrollees as possible.States that project lower citizen enrollmentmay want to consider the benefits of collabo-rating with other states on a regional exchangethat may be a more viable option for maintain-ing a sustainable exchange. Figure 5 providesa summary of the initial funding opportunitiesfor states to plan, design and implement ex-change operations.

Figure 5: Initial Funding Opportunities for Infrastructure19


Maximizing the Benefits of State Health In-surance Establishment GrantsOn January 20, 2011 DHHS announced ex-change establishment grants for states that aremaking progress towards establishing ex-changes. While states are doing this at differ-ent paces, there are two options for fundingrequests:

1. States with a rapid pace for establish-ing exchanges can apply for multi-yearfunding.

2. States that plan to establish an ex-change through a step-by-step processmay find it beneficial to request fund-ing for each project year.

The grants being awarded are based on currentprogress and states have the option to applyfor either a level one or level two establish-ment grants. (See Figure 6) As deadlines near,the flexible grant process will give the statesthe opportunity to work at their own rate andestablish their own timeline for building anexchange. The funding to the states is in-tended to be flexible and can used for numer-ous purposes, but states should consider usingthe funds to conduct background research,consult with stakeholders, govern the ex-change, conduct financial management, ensureprogram stability and most importantly forstate CIOs, building out the information tech-nology systems.

Figure 6: Establishment Grants – Level One and Level Two20

Level One Establishment Grants: These grants provide up to one year of funding tostates that have made some progress under their exchange planning grant. States mayplan to reapply for a second year of funding under the level one establishment grants ifnecessary to meet the criteria to apply for level two establishment grants.

Level Two Establishment Grants: This category of grants is designed to provide fundingthrough December 31, 2014 to applicants that are further along in the establishment of anexchange. In applying for level two establishment grants, states must meet specific eligibil-ity criteria, including that the state has:

● Legal authority to establish and operate an exchange that complies with federal require-ments available at the time of the application;

● A governance structure for the exchange;● A budget and initial plan for financial sustainability by 2015;● A plan outlining steps to prevent fraud, waste, and abuse; and● A plan describing how consumer assistance capacity in the state will be created, contin-

ued, and/or expanded, including provision for a call center.


II. The State CIOs Role in Health Care Re-form

Changing the landscape of the health care in-dustry may begin with decisions at the execu-tive level, but where the rubber meets the roadis the level at which citizens will interact.Through the use of interoperable IT systems,greater customer service levels can beachieved and a higher level of efficiency andsatisfaction can be gained through consoli-dated and streamlined efforts.

Coordinate and Streamline Eligibility Sys-temsAccommodating the approximately 36 millioncitizens entering the health insurance marketin the United States will require a massivesimplification of eligibility and enrollmentsystems. Most states currently depend upon acounty-based eligibility platform designedaround the cumbersome and intrusiveprocesses of welfare eligibility systems.21

State CIOs will need to assess the capabilitiesof existing legacy systems that may be veryexpensive to replace and may require a greatdeal of time to update. States like Oregon cur-rently depend on statewide eligibility plat-forms, but must automate medical eligibilitydetermination to make the state exchangefunctional and usable.

The Affordable Care Act is going to requirestates to rethink the way they have designedeligibility systems in the past. The new portalsmust assure that they are able to serve as aseamless one-stop shop for individuals andfamilies who may encounter fluctuating in-comes from year-to-year, move to a new geo-graphical location or may have a disabilitythat qualifies them for enrollment. Real-timeeligibility decisions will need to be madethrough the proper flow of information be-tween Medicaid, CHIP and the exchange. Inaddition to maintaining proper flow of infor-

mation, the enrollment and eligibility systemsmust be able to verify citizenship and incomelevels – state CIOs need to ensure that these sys-tems are interoperable and will be able to thwartoff fraud and abuse.

Coordinating the flow of information fromMedicaid, CHIP and the exchange is a mas-sive undertaking, but state CIOs should con-sider how to integrate other social servicesprograms into a single point of entry andbreak down the siloed atmosphere of thesesystems. States that commit to combiningthese social systems will reap the rewards ofimproved customer service and efficiencies.Due to the importance of streamlining eligibil-ity and enrollment, it will be discussed in fur-ther detail in section three.

Fulfill Core Functions of the AffordableCare ActOne of the main deliverables that governorswill want to see is that the state is able to ful-fill the core functions that are set forth by theAffordable Care Act. State CIOs should beginplanning with stakeholders to achieve thesecore functions of the exchange:

●Maintenance of a web portal for providinginformation on plans or programs to cur-rent and prospective enrollees

●Operation of a toll-free hotline●Ability to provide transparency of priceand quality rating to plans

●Presentation of plan benefit options in astandardized format

States will also be responsible for provision-ing of information on Medicaid and CHIP eli-gibility and determination of eligibility forindividuals in these programs. As states beginto promulgate strategic plans, state CIOsshould first address core functions that willneed to be met for implementation.


Making Data InteroperableFederal, state, local and tribal governmentscontinually face mandates for informationsharing and providing bundled services to oneanother. The use of Information Architecture,which is one of the most important assets ofan enterprise, can help define data into usableformats in a timely and accurate manner. StateCIOs should consider Information Architec-ture as a way that can provide demonstrableand repeatable approach in assuring the align-

ment of information assets and businessprocesses throughout the enterprise. Not onlywill this information be shareable at the enter-prise level, but also across organizationalboundaries. Figure 7 depicts how InformationArchitecture enhances interoperability be-tween all government bodies. For more infor-mation on Enterprise Architecture (EA) pleasereference the NASCIO EA DevelopmentToolkit at:www.nascio.org/resources/EAresources.cfm

Figure 7: Information Architecture Enhances Interoperability


Follow Sound Principles When Developingthe Technical ArchitectureWhen developing IT systems, architects seekto sustain secure interoperability through theuse of standards and this should remain con-sistent with state CIOs involved with imple-menting the health benefit exchanges.

●Use Transaction Standards – The use ofHealth Insurance Portability and Account-ability Act of 1996 (HIPAA) transactionstandards will make systems interoperableand more secure through the use of na-tional standards, code sets, employee andprovider identifiers, and will strengthenprotection for security and privacy of per-sonal health information. In addition tousing HIPAA, Secretary Sebelius ap-proved the use of the National InformationExchange Model (NIEM) as a unifiedmethod of facilitating the enrollmentprocess and common date exchange.22

NASCIO has long been an advocate of theNIEM discipline and recently released thefollowing letter of support and Call to Action.

●Secure Protected Health Information(PHI) –While HIPAA will provide spe-cific privacy and security guidance, stateCIOs and state Chief Information SecurityOfficer’s (CISO) should also be aware ofstate laws that may impose further regula-tion.

●Apply Flexible Approach to System De-velopment – Systems will need to be ableto integrate through seamless coordinationwith numerous stakeholders such as healthplans, small businesses and employers,health plans, brokers and the entitlementprograms that states provide.

●Plan for Scalability – States should antic-ipate a large expansion of citizens whowill qualify for entitlement programs and

for subsidies from the Affordable CareAct. Leveraging resources like cloudcomputing should be taken into considera-tion for storage of large amounts of data.

●Fulfill Transparency Goals – Providingstate constituents with public transparency,program benchmarks, and policy analysiswill reaffirm that your state is performingthe necessary processes and is striving fora high level of system quality and per-formance.

Recruiting the Right TeamMany state CIOs face recruiting and retentionbarriers due to budget constraints, lack of quali-fied applicants and the protracted steps withinthe hiring process. Finding the right individualsto implement the IT requirements of the Afford-able Care Act may require innovative recruit-ment and retention strategies in theever-changing state IT workforce.23 Partneringwith human resources or civil service leaders inyour state to identify a clear and concise strat-egy will ensure you have the most qualifiedstaff for implementing IT systems.

In addition, state CIOs should consult with de-partment or agency leaders to identify staff thatcan contribute to a more seamless system. Thismay also include stakeholders or members ofthe vendor community that will be involvedwith the implementation process.

YouMay NOT Have to Reinvent the WheelWhile each state may have unique circum-stances, it is imperative to consider the similari-ties that exist in state IT systems. State CIOsshould take into consideration the potential sav-ings from the reuse of existing architectures andsystems. The state recipients of “Early Innova-tor” grants are likely candidates for multi-statecollaborative efforts and should be consulted asleaders in system design. In addition, statesshould take into account the two states that havealready implemented a health benefit exchange– Massachusetts and Utah.

http://www.nascio.org/newsroom/pressrelease.cfm?id=99

http://www.nascio.org/committees/EA/


Multi-State Collaboration: Driving CostSavings and New InnovationsDespite the numerous challenges that exist forestablishing and maintaining a multi-state col-laborative, these agreements can be the cata-lyst for innovation in states. State CIOs whoplan to embark on partnerships with otherstates will need to first identify the key driversand any possible pitfalls that may exist inreaching mutually defined goals. States thatseek to collaborate with other states may con-sider some of the key benefits that may cometo fruition24:

●Cost reduction●Establishing relationships between organi-zations

●Providing increased and better services tocitizens

●Streamlining processes and speed transac-tions

● Improving information-sharing and quality●Leveraging enterprise solutions●Sharing risk●Addressing fiscal constraints and loweradministrative costs by leveraging mutualresources

●Taking advantage of enterprise informa-tion sharing

Figure 8: Massachusetts and Utah Exchange Web Pages

III. Streamlining Eligibility and EnrollmentSystems

It is imperative that, under the AffordableCare Act, states are able to seamlessly directconsumers to information about enrollment inprograms related to health care and makeavailable to lower income individuals andfamilies the proper channel for coverage. TheAffordable Care Act could potentially put astrain on outdated legacy systems and may re-quire state CIOs to upgrade to new systems alltogether in order to handle the largest expan-sion of health coverage for lower-income peo-ple since the enactment of Medicare andMedicaid.25

At the crux of the Affordable Care Act, thelaw requires that the new health benefit ex-changes serve as enrollment “portals” that willallow people to sign up for either Medicaid orthe exchange through real-time income report-ing.26 The two main groups of eligible citi-zens are:

1. Medicaid Eligible: This category of el-igible individuals and families consistsof everyone under 133 percent of the


federal poverty level and will bring ap-proximately 16 million new peopleinto the entitlement program.27

2. Citizens Receiving Subsidies: Individ-uals and families with incomes be-tween 133-400 percent of poverty willbe eligible for subsidies in the ex-change and it is expected that nearlytwenty-four million people will qualify.28

Because enrollment will increase by 50 per-cent overall and by a much larger proportionin some states, it is important for state CIOs tobe pro-active in working with leadership anddetermine strategic planning goals and time-lines for success. As part of the planningprocess, the Department of Health and HumanServices (DHHS) released a document in No-vember of 2010 that was entitled Guidance forExchange and Medicaid Information Technol-ogy (IT) Systems. While Version 1.0 is the ini-

tial document issued and helps create a pri-mary framework and approach for developingIT systems, it will be updated and expandedon over time.

The DHHS IT guidance should be consideredto be a critical source of information as statesmove forward with implementation. DHHSdoes not intend to impose a single IT solutionon states and has stated they would like togive them flexibility in meeting key businessobjectives. There will be numerous variablesas states begin to construct and assemble theirexchange, Medicaid, and CHIP systems - in-cluding business models, size of the state, ma-turity of the current systems, governancemodels and other contributing factors. Statesshould continue to follow guidance announce-ments from DHHS at:http://www.hhs.gov/ociio/regulations/health_insurance_exchange_info_tech_sys.html

http://www.hhs.gov/ociio/regulations/health_insurance_exchange_info_tech_sys.html


Wisconsin – Leading the Way for States

ACCESS is Wisconsin’s web-based, self-ser-vice tool that makes it easy for Wisconsinitesto check whether they may be eligible forhealth benefits, food stamps and other assis-tance, apply for benefits, check benefits,renew benefits, report changes to keep theireligibility current.29 The consumer centric sys-

Figure 9: Wisconsin’s ACCESS Tool

tem allows citizens to use ACCESS from any-where there is internet access and the serviceis available 24 hours a day and 7 days a week.Figure 10 demonstrates how Oregon plans tomodel an integrated system that includes addi-tional social programs and conforms to the re-quirements of the Affordable Care Act.


A One-Stop ShopACCESS is the gateway for citizens seekingassistance and through a sophisticated infor-mation system states will be able to determineeligibility and enroll individuals. Because AC-CESS is fully integrated with both Wiscon-sin’s eligibility system, known as CARES,and its Medicaid management informationsystem (MMIS), consumers enter basic datalike age, income, and household size. AC-CESS can then take that consumer data thathas already been submitted and do an assess-ment on whether citizens are eligible for Bad-gerCare Plus or any of the numerous otherprograms. This information would includedata from exchanges between CARES andother federal and state databases.30

Wisconsin’s Transition by 2014Building upon the existing IT infrastructurethrough the use of Service-Orientated Archi-tecture (SOA), Wisconsin is preparing for2014 and has already received an “Early Inno-vator” grant from DHHS. Wisconsin’s pro-posal envisions a single, intuitive portalthrough which residents can access subsidizedand non-subsidized health care and otherstate-based programs (e.g. Medicaid, CHIP,child care). The Exchange will integrateacross health and human services programs topromote efficiency and lower overall adminis-trative costs.31 The ACCESS web-based sys-tem will be used to integrate with the currenteligibility system, ensuring an easy to use andstreamlined eligibility and enrollment system.For states that are interested in the re-use ofthis system they are able to test the ACCESS

Figure 10: Oregon Model for System Integration


experience through a prototype of the ex-change. Demonstrations have already begun inWisconsin and collaboration with other statescontinues. States that have successfully inte-grated ACCESS are the State of New York,the State of Georgia, the State of Colorado,the State of New Mexico and the State ofMichigan. For more information on theACCESS initiatives go to:https://access.wisconsin.gov/access/

IV. State CIOs and the Exchange Ahead

Whereas politicians and the courts will con-tinue to weigh the merits and legality of theAffordable Care Act, there are a few key areasthat states will need to act on in the near fu-ture. They will need to plan whether the statewill run the exchange or let the federal gov-ernment, what means will be used to establishauthority to implement the exchange and de-termine the governing body. During thisprocess state CIOs should anticipate beingcalled upon to provide guidance on coordinat-ing the numerous IT systems. Extensive workwill need to be done in order to provide a gapanalysis of what IT resources would be neededto meet performance metrics.

Key Questions State CIOs Should Consider�� This is an unprecedented time forhealth IT funding from the federal govern-ment. What is your state doing to prepare?

�� If your state plans to establish a state-run health benefits exchange, what is orwhat will be the role of the state CIO inthe new governance structure?

�� Medicaid eligibility and enrollmentsystems will need updating. What is yourstate doing to prepare for updating legacyMedicaid Management Information Sys-tems (MMIS)?

�� States should always find ways toeliminate costs through the consolidationof IT services. Has your state consideredmoving away from a “siloed approach”and integrating existing state benefit pro-grams in the exchange?

�� Has your state identified what stan-dards (such as HIPAA, NIST guidance,NIEM and MITA) will be used to achievesecure interoperability?

�� Have you started to work with thestakeholder community to identify specificfunctions that will need to be providedthrough the exchange?

�� Many states have already made a sub-stantial amount of progress that could bereplicated and re-used to create savings.Has your state considered collaboratingwith other states on prospective systemmodels or using existing methods andtechnology?

�� Is your state prepared to establish andmaintain a standardized web portal thatcan provide information on health insur-ance plans to current and future enrollees?

�� If your state plans to defer the respon-sibility of establishing an exchange to thefederal government, what coordinationwill be required for system integration?

�� Has your state considered collaboratingwith other states on a multi-state initiative?


Appendix I: Awardees of the Early InnovatorGrants32

The U.S. Department of Health and HumanServices (HHS) announced on February 16,2011 the award of seven cooperative agree-ments to help a group of “Early Innovator”states design and implement the InformationTechnology (IT) infrastructure needed to oper-ate Health Insurance Exchanges.

Using these new funds, the Early Innovatorstates will develop Exchange IT models thatcan be adopted and tailored by other states.Kansas, Maryland, New York, Oklahoma,Oregon, Wisconsin, and a multi-state consor-tium led by the University of MassachusettsMedical School will receive a total of approxi-mately $241 million.

All Early Innovator states have committed toassuring that the technology they develop isreusable and transferable. Using the grants,they will develop the building blocks for Ex-change IT systems, providing models for howExchange IT systems can be created. Thiswill help states establish their Exchangesquickly and efficiently using the models andbuilding blocks created by the Early Innovatorstates. At the same time, states continue tohave the flexibility to develop an Exchangethat best meets the needs of their uniquehealth insurance market without having tostart from scratch.

The seven grantees offer a diversity that willbe valuable to all states as they work to set uptheir Exchanges. The grantees represent dif-ferent regions of the country, as well as differ-ent Exchange governance structures andInformation Systems. This diversity will helpensure that a wide range of IT models are de-veloped, and every state will benefit.

Grant Specifics

The seven grantees were selected based ontheir readiness to develop and use innovativeIT approaches for their Exchange IT systems.Grantees showed that they have begun plan-ning work for their Exchanges and are com-mitted to establishing an Exchange that willserve their state. Grantees must have demon-strated their technical expertise and ability todevelop these IT systems on a fast trackschedule, and their willingness to share designand implementation solutions with otherstates.

To ensure the Exchange IT systems are com-prehensive, they must handle eligibility andenrollment in the Exchange as well as pre-mium tax credits and cost-sharing reductionsfor eligible consumers. The Exchange IT sys-tems must also be interoperable and integratedwith state Medicaid programs to allow con-sumers to easily switch from private insuranceto Medicaid and the Children’s Health Insur-ance Program as their eligibility changes. Inaddition, the IT systems must be able to pro-vide data to HHS or other Federal agencies asneeded.

Summary of State Proposals

Grantee: Kansas Insurance DepartmenAward Amount: $31,537,465

Procured and implemented by the KansasHealth Policy Authority (KHPA), Kansas isextending the new Kansas Medicaid/CHIP eli-gibility system (K-MED) and integrating K-MED with the Kansas Health InsuranceExchange. The State of Kansas is in prelimi-nary discussions with the State of Missouri topartner on an Exchange and other aspects ofthis initiative. Kansas is committed to sharingknowledge, work products and other intellec-tual property with other states that will be de-


ploying their exchange using a similar strat-egy. Depending on the interest of other statesand potential arrangements with strategic busi-ness partners, Kansas may explore the possi-bility of creating a “cloud” solution for otherstates to have their own instance of one ormore of these healthcare applications.

Grantee:Maryland Dept of Health and Men-tal HygieneAward Amount: $6,227,454

Maryland proposes to build off a prototype ithas already developed that models the point ofaccess for the Exchange, integration withMaryland legacy systems and the federal por-tal systems, and Maryland’s consumption ofplanned federal web services (e.g. verificationand rules). The technology foundation used byMaryland in its Healthy Maryland initiative iscurrently being used by several other states.This “point” solution will extend the existingHealthy Maryland platform, which was re-cently implemented.

Grantee: University of Massachusetts Med-ical SchoolAward Amount: $35,591,333

This is a multi-state consortia proposal led bythe University of Massachusetts MedicalSchool and will include individuals and smallbusinesses in Connecticut, Maine, Massachu-setts, Rhode Island, and Vermont. These con-sumers will be able to shop for, select, andpurchase affordable and high-quality healthplans consistent with national reform goals for2014. The proposed project approach will beto create and build a flexible Exchange infor-mation technology framework in Massachu-setts and share those products with other NewEngland states. The proposal hopes to learnfrom the Massachusetts Exchange implemen-tation and gain efficiencies so it can accelerateExchange development for participating NewEngland states.

Grantee: New York Department of HealthAward Amount: $27,431,432

New York proposes to build off its eMedNYMedicaid Management Information System(MMIS) system to build products for the Ex-change. The eMedNY Medicaid ManagementInformation System (MMIS) processes pay-ments for approximately one of every threehealth care dollars paid in the state. It is alsothe primary source of Medicaid data used forfinancial reporting, program analysis, audit-ing, and quality measurement. The Depart-ment plans to use MMIS’ assets as the basisfor designing and developing an Exchange toserve all New York State health insuranceconsumers. This approach will also result inthe development of Exchange IT componentsfully extensible and scalable to any other ju-risdiction.

Grantee: Oklahoma Health Care AuthorityAward Amount: $54,582,269 – Note that theState of Oklahoma returned the grant dollars.

The development of a model for eligibilityand enrollment via an exchange is the primarygoal of this grant initiative. Oklahoma pro-poses to extend its current technical architec-ture of Medicaid Management InformationSystem (MMIS) and several other systems toimplement the Oklahoma Health Infrastruc-ture and Exchange initiative. It will leveragetools such as the web-based real time claimsprocessing provider service portal created in2003 by the Oklahoma Health Care Authority.Providers may now enroll or re-enroll withSoonerCare Online Enrollment (OE) using theprovider service portal. Oklahoma will issuean RFP under this grant to conduct a gapanalysis to determine the necessary steps forits systems to become operational for the Ex-change factoring in portability and reuse.


Grantee: Oregon Health Authority (OHA)Award Amount: $48,096,307

Oregon is using commercially available, off-the-shelf software to create the Exchange. TheExchange Early Information Technology In-novation Grant will help Oregon create a mod-ular, reusable IT solution that will provide theExchange’s customers with seamless access toinformation, financial assistance and easyhealth insurance enrollment, with no gaps incoverage or assistance cliffs for anyone up to400% of the federal poverty level. The OHAestimates that 516,000 Medicaid clients and277,000 commercial insurance consumers willuse the Health Insurance Exchange to shop forand enroll in health coverage. Oregon is con-currently replacing the states eligibility sys-tems for Food Stamps, Temporary Assistancefor Needy Families (TANF), and Medicaidusing the Health and Human Services Frame-work.

Grantee:Wisconsin Department of HealthServicesAward Amount: $37,757,266

Wisconsin anticipates that the health insuranceexchange will help drive improvements in thedelivery of affordable, quality care for up to160,000 individuals in the non-group market,one million employees of small businesses,and 770,000 participants in the BadgerCarePlus and Medicaid programs, representingnearly 35% of the state’s population. Wiscon-sin’s proposal envisions a single, intuitive por-tal through which residents can accesssubsidized and non-subsidized health care andother state-based programs (e.g. Medicaid,CHIP, child care). The Exchange will inte-grate across health and human services pro-grams to promote efficiency and lower overalladministrative cost.


Appendix II: Additional Resources

The U.S. Department of Health and Human Services guidance for exchange and Medicaid ITsystems can be found at:www.hhs.gov/ociio/regulations/health_insurance_exchange_info_tech_sys.html

The Center for Consumer Information and Insurance Oversight (CCIIO) is charged with helpingimplement many provisions of the Affordable Care Act. CCIIO overseas the state based healthinsurance exchanges and more info can be found at:http://cciio.cms.gov/

The National Academy of State Health Policy has formulated several resources that showcasestates’ current work on health care reform. Information on states implementation strategies canbe found at:http://www.statereforum.org/

The State Health Access Data Assistance hosted an in-depth presentation and virtual tour of Wis-consin’s eligibility and enrollment system. The presentation can be found at:www.shadac.org/publications/wisconsins-eligibility-and-enrollment-system

The President’s Council of Advisors on Science and Technology (PCAST) released a report tothe President on realizing the full potential of health information technology. The report can befound at:www.whitehouse.gov/blog/2010/12/08/pcast-releases-health-it-report

The National Governor’s Association (NGA) Center for Best Practices has covered a broadrange of health financing, service delivery, and policy issues, including containing health-carecosts, health insurance trends and innovations, state initiatives in public health, aging and long-term care, disease management and health care information technology, healthcare quality, men-tal health and substance abuse, and health workforce. More information can be found at: www.nga.org

The National Council of State Legislatures (NCSL) provides an extensive amount of updates onrecent state legislation and has also released guidance on implementation of the Affordable CareAct. More information from NCSL can be found at:http://www.ncsl.org/IssuesResearch/Health/tabid/160/Default.aspx

NIEM, the National Information Exchange Model, is a partnership of the U.S. Department ofJustice, the U.S. Department of Homeland Security, and the U.S. Department of Health andHuman Services. It is designed to develop, disseminate and support enterprise-wide informationexchange standards and processes that can enable jurisdictions to effectively share critical infor-mation in emergency situations, as well as support the day-to-day operations of agenciesthroughout the nation. More information on NIEM can be found at:http://www.niem.gov/


Appendix III: Endnotes

1 “States and the Affordable Care Act: More Funding, More Flexibility,” Department of Healthand Human Services, February 25, 2011.www.healthcare.gov/center/reports/states02252011a.pdf2 Kaiser Health News, May 2011.www.kaiserhealthnews.org/Stories/2011/May/17/minnesota-health-exchange.aspx3 “State Legislation and Actions Challenging Health Care Reforms, 2011,” National Conferenceof State Legislatures, May 2011.www.ncsl.org/?tabid=18906#Map114 “States and the Affordable Care Act: More Funding, More Flexibility,” Department of Healthand Human Services, February 25, 2011.www.healthcare.gov/center/reports/states02252011a.pdf5 “Guidance for Exchange and Medicaid Information Technology (IT) Systems,” Department ofHealth and Human Services, November 2010.www.hhs.gov/ociio/regulations/joint_cms_ociio_guidance.pdf6 “Initial Guidance to the State on Exchanges,” Department of Health and Human Services.http://www.hhs.gov/ociio/regulations/guidance_to_states_on_exchanges.html7 Patient Protection and Affordable Care Act, Section 1311.8 “Implementing the ACA: California’s Health Exchange,” CA Health & Human ServicesAgency, November 2010.http://www.commonwealthfund.org/Content/Resources/2010/9 “Health Insurance Exchange Basics,” National Academy of State Health Policy, February 2011.http://www.nashp.org/publication/health-insurance-exchange-basics10 California Exchange Law, AB 1602 and SB 900, National Council of State Legislatures.www.ncsl.org/portals/1/documents/health/CAHBE.pdf11 National Association of Insurance Commissioners, “American Health Benefits Act,” Novem-ber 22, 2010.http://www.naic.org/index_health_reform_section.htm12 “Implementing the ACA: California’s Health Exchange,” CA Health & Human ServicesAgency, November 2010.http://www.commonwealthfund.org/Content/Resources/2010/13 “Guidance for Exchange and Medicaid Information Technology (IT) Systems,” Department ofHealth and Human Services, November 2010.www.hhs.gov/ociio/regulations/joint_cms_ociio_guidance.pdf14 “Guidance for Exchange and Medicaid Information Technology (IT) Systems,” Department ofHealth and Human Services, November 2010.www.hhs.gov/ociio/regulations/joint_cms_ociio_guidance.pdf15 “Health Insurance Exchanges Under PPACA,” HIMSS Conference Presentation 2011.16 CRS Report, Variation in Analyses of PPACA’s Fiscal Impact on States, September 8, 2010.www.politico.com/pdf/PPM153_bb_090910.pdf17 “Building Oregon’s Health Insurance Exchange,” Oregon Health Policy Board, December2010.www.oregon.gov/OHA/action-plan/exchange-report.pdf

http://www.commonwealthfund.org/Content/Resources/2010/Webinar-Health-Insurance-Exchanges.aspx

http://www.commonwealthfund.org/Content/Resources/2010/Webinar-Health-Insurance-Exchanges.aspx


18 West Virginia Senate Bill 408, Signed into law April 4, 2011.http://www.legis.state.wv.us/Bill_Status/19 “Medicaid’s Role in the Exchange,” National Academy for State Health Policy presentation atthe NAIC 2011 Spring Meeting.http://www.naic.org/committees_b_exchanges.htm20 “Health Insurance Exchange Establishment Grants Fact Sheet,” Department of Health andHuman Services.http://www.healthcare.gov/news/factsheets/exchestannc.html21 ”State Policymakers’ Priorities for Successful Implementation of Health Reform,” Alan Weil,National Academy of State Health Policy, May 2010.http://www.nashp.org/node/204122 HHS Electronic Enrollment and Eligibility, NIEM Recommendation.http://healthit.hhs.gov/portal/server.pt?open=512&mode=2&objID=316123 “State IT Workforce: Under Pressure,” NASCIO, January 2011.www.nascio.org/publications/surveys.cfm24 “Getting Started in Cross-Boundary Collaboration: What State CIOs Need to Know,”NASCIO, May 2007.www.nascio.org/publications/25 Benjamin D. Sommers and Sara Rosenbaum, “Issues In Health Reform: How Changes in Eli-gibility May Move Millions Back and Forth Between Medicaid and Insurance Exchanges,”Health Affiars, 30, no.2 (2011).http://content.healthaffairs.org/content/30/2/228.full.html26 Affordable Care Act, Section 1311, Affordable choices of health benefit plans, and Section 1401,Refundable tax credit providing premium assistance for coverage under a qualified health plan.27 Congressional Budget Office, Cost estimate of the Affordable Care Act: March 20, 2010.28 Congressional Budget Office, Cost estimate of the Affordable Care Act: March 20, 2010.29 “Optimizing Medicaid Enrollment: Spotlight on Technology,” The Kaiser Commission onMedicaid and the Uninsured, October 2010.www.kff.org/medicaid/upload/8119.pdf30 “Optimizing Medicaid Enrollment: Spotlight on Technology,” The Kaiser Commission onMedicaid and the Uninsured, October 2010.www.kff.org/medicaid/upload/8119.pdf31 “States Leading the Way on Implementation: HHS Awards ‘Early Innovator’ Grants to SevenStates,” Department of Health and Human Services, February 16, 2011.http://www.hhs.gov/news/press/2011pres/02/20110216a.html32 “States Leading the Way on Implementation: HHS Awards ‘Early Innovator’ Grants to SevenStates,” Department of Health and Human Services, February 16, 2011.http://www.hhs.gov/news/press/2011pres/02/20110216a.html

http://www.legis.state.wv.us/Bill_Status/bills_text.cfm?billdoc=SB408%20SUB2%20ENR.htm&yr=2011&sesstype=RS&i=408

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