GAO Says Federally Run Exchanges May Not Be Ready by October Start

Reprinted from HEALTH PLAN WEEK, the most reliable source of objective business, financial and regulatory news of the health insurance industry.

By Patrick Connole, Editor

June 24, 2013 Volume 23 Issue 22

Confirming a situation that health insurance industry stakeholders have known for months, the Government Accountability Office (GAO) on June 19 said CMS is making progress in setting up federally facilitated exchanges (FFEs) for individuals and Small Business Health Options Program (SHOP) exchanges, but the marketplaces may not be ready in time for open enrollment on Oct. 1.

Carriers are fighting the same timelines to prepare coverage offerings for exchanges and tie their technical operations into federal data systems, which industry sources call a challenging task given the immense work that building health IT systems demands. “Any IT in health care takes longer than anybody anticipated. IT budgeting is guesswork, educated guesswork. But it is a whole lot harder to do because of the many data links, use cases that are weird and the multi-stakeholder environment where getting a consensus on anything is hard,” Erik Johnson, senior vice president, Avalere Health LLC, tells HPW.

Offering the first independent review of exchange preparations, GAO said CMS is behind schedule on finalizing consumer eligibility for federal subsidies, certifying health plans and preparing navigators to assist consumers in enrollment, among other issues.

“GAO is finally providing the truth,” Robert Laszewski, president of Health Policy and Strategy Associates, LLC in Alexandria, Va., tells HPW. HHS has consistently said that it will be open and ready for business this fall, and even has contingency plans if systems are not in place, but has not provided a detailed summary of the timeline for preparations. Laszewski says CMS has not been open about the troubles it has had in preparing for exchange startups, and that GAO’s depiction of how ready CMS is matches what insurers have been saying for some time.

Feds Have Much To Do, but Little Time

Johnson says the enormity of the task of creating a single federal model for running FFEs in 34 states, and at the same time arranging separate state-federal partnership exchanges and certifying state-based exchanges, has proved daunting despite best efforts. “They [CMS] don’t have the ability to focus on one thing,” he says.

GAO said CMS is behind its own deadlines in core areas like eligibility and enrollment, plan management and consumer assistance. “To support consumer-eligibility determinations, for example, CMS is developing a data hub that will provide electronic, near real-time access to federal data, as well as provide access to state and third party data sources needed to verify consumer-eligibility information. While CMS has met project schedules, several critical tasks, such as final testing with federal and state partners, remain to be completed,” GAO said.

The report went on to note that in the area of plan management, in which CMS must review and certify the qualified health plans (QHP) seeking to do business in FFEs, there also is work remaining. “Though the system used to submit applications for QHP certification was operational during the anticipated time frame, several key tasks regarding plan management, including certification of QHPs and inclusion of QHP information on the exchange websites, remain to be completed,” GAO said.

Consumer assistance functions, thought key to helping the public enroll on exchanges, also have not moved along as expected. “Funding awards for Navigators have been delayed by about two months, which has delayed training and other activities,” the report said. GAO said the lack of progress by the states has also hampered CMS efforts. “CMS is depending on the states to implement specific FFE exchange functions, and CMS data show that many state activities remained to be completed and some were behind schedule,” the report said.

A positive note on exchange readiness was struck on June 13 during a panel discussion on health insurance exchanges at the Gorman Health Group’s annual forum outside of Washington, D.C. During that session, Rebecca Pearce, executive director of the Maryland Health Benefit Exchange, said on May 30, her state’s exchange became the nation’s first state-based exchange to submit information to — and receive information back from — the Federal Data Services Hub. The Final Detailed Design Review (FDDR) is a live real-time data verification demo that all state exchanges are required to complete. The data hub is expected to link state insurance exchanges to a handful of federal agencies (e.g., HHS, IRS, Homeland Security, Citizenship and Immigration Service, Social Security) to verify applicant information, such as citizenship and household income. HHS has not commented when it comes to the development or testing of the data hub.

“We are the only state to have actually connected to the Federal Data Services Hub live” during the FDDR demo, Pearce told conference attendees. The demo included verification of Social Security numbers, citizenship and eligibility for advance premium tax credits.

Another speaker at the conference played down Maryland’s success. Linda Tiano, an attorney at the law firm Epstein Becker and Green, said she worried about scalability. “Once it’s up and running, you’ve got 50 states trying to send and receive data on a daily basis,” she said.

View the GAO report on the status of CMS efforts to establish FFEs at www.gao.gov/products/GAO-13-601 and a separate GAO report on SHOP exchanges at www.gao.gov/products/GAO-13-614.

http://aishealth.com/archive/nhpw062413-03