June 20th, 2013
One June 19, 2013, the Government Accountability Office (GAO) released a report examining the Center on Medicare and Medicaid Services (CMS) efforts to establish federally facilitated health insurance exchanges (FFEs) and a companion report analyzing federal and state efforts to establish health insurance exchanges for small businesses, or SHOP exchanges. I do not normally blog about government reports, but the GAO reports are the best windows we have had so far into the frustratingly opaque process of CMS exchange implementation. I do not intend to describe the reports in their entirety, as much of their content is already well understood by readers of the Health Affairs blog. This post, however, will cover the new information found in the reports.
The GAO reports were greeted with glee by Republican congressmen opposed to the ACA. “The law is indeed a train wreck with no relief in sight,” said Congressman Sam Graves. But, viewed in another light, the reports document the remarkable progress that CMS has made toward ACA implementation despite the formidable obstacles it has faced. Under the best of circumstances, creating and implementing a program that will revolutionize the way in which individual and small group health insurance is underwritten and sold in the United States, providing financial assistance through the tax system and Medicaid to millions of Americans who cannot afford health insurance, and organizing health insurance markets to promote choice and competition — and to do all this in the timeframe allowed by the ACA — would have been a daunting task. In particular, the challenges of establishing an IT system that can coordinate information from numerous federal and state data sources to establish eligibility for federal premium tax credits and enroll individuals and small groups in health insurance have been formidable.
But conditions have been far from ideal. First, Congress has refused to provide funding for the task beyond the initial billion dollars found in the ACA for all federal implementation activities. This is a massive effort that in better times would have received funding commensurate to the task. As the GAO reports document, HHS has been forced to cobble together funds from a variety of sources — HHS’s General Departmental Management Account, CMS’s Program Management Account, the Prevention and Public Health Account, and HHS’ Nonrecurring Expense Fund — to come up with a shoestring budget to implement the federal exchanges. (The latter two sources have only been used for activities that assist with eligibility, enrollment assistance, and educational activities.)
Second, the leadership of CMS, HHS, and the other federal implementing agencies has been forced to spend hundreds of hours preparing for and testifying at House oversight hearings. These have served no purpose other than to provide a platform for political grandstanding for anti-ACA politicians, but have robbed agency leadership of valuable time that could have been spent directing implementation activities. It is a bitter irony to see the heads of those committees now criticizing those agencies for lagging in implementation efforts.
Third, although the reports do not directly discuss this, the Obama administration damaged its own cause by suspending rulemaking activity in the months leading up to the 2012 election. Apparently the administration concluded that it could not risk alienating voters by pushing ahead with ACA implementation during the heart of a reelection campaign, but several months of valuable time were lost as rulemaking languished in the fall of 2012.
Finally, and most importantly, the federal government has been forced to take on many of the tasks that Congress assumed in drafting the Affordable Care Act would be the province of the states. The ACA invited the states to maintain their traditional role regulating insurance markets and to establish the new individual and small group insurance market exchanges. Adamant political opposition from Republican governors (and more particularly from Republican state legislators) has left CMS with a far greater task than was originally envisioned.
The reports clarify the shape of the present landscape. CMS will operate the individual exchange in at least 34 states and the SHOP exchange in at least 33 states. As of May 2013, 17 states (including the District of Columbia) have been conditionally approved to operate state-based exchanges, although it is possible that some of those states will not make it to the finish line. Utah has been conditionally approved to operate only the SHOP exchange.
Fifteen states with federal exchanges are expected to assist CMS in carrying out certain exchange functions. Six states (Arkansas, Delaware, Illinois, Michigan, New Hampshire, and West Virginia) have been conditionally approved as formal partnership states that will assist with plan management and consumer assistance activities, while a seventh (Iowa) will assist with plan management only. Eight additional states (Kansas, Maine, Montana, Ohio, South Dakota, Utah, and Virginia) will informally assist with plan management. No state, however, has yet received final approval to operate its own state or partnership exchange. CMS is monitoring the progress of the states towards full certification, and may end up having to perform some exchange functions in some state-exchange or partnership states.
Plan management and consumer assistance are the traditional functions of insurance departments, so formal or informal partnership states are in essence only continuing their customary regulatory activities. Nevertheless, nineteen states have refused to even provide this much help, forcing the federal government to perform all exchange functions in these states, unnecessarily duplicating functions the states are already performing themselves. Further, eleven states have notified HHS that they either lack the authority to enforce any of the ACA insurance reforms or are refusing to enforce them. In these states, HHS will have to enforce the entire law itself, using its authority under the Public Health Service Act.
The specter of state insurance departments approving insurance forms with preexisting conditions exclusions and that exclude preventive services coverage, or rates that discriminate against women in violation of federal law, is hard to imagine. I have had the privilege of getting to know many state insurance regulators through my work as a consumer representative to the National Association of Insurance Commissioners and know them to be conscientious men and women with a high respect for the law. It cannot be easy for many of them to have been put in this position of resistance to the law of the land by their governors and state legislatures. I expect that most will do that they can to make sure that insurers comply with the law.
Where We Stand Now
So where do the reports show the implementation process to be, four months before the exchanges open their doors and seven months before the market reforms go into effect and premium tax credits and cost-sharing reduction payments become available? To quote from the individual exchange report’s summary:
Much progress has been made, but much remains to be accomplished within a relatively short amount of time. CMS’s timelines provide a roadmap to completion; however, factors such as the still-evolving scope of CMS’s required activities in each state and the many activities yet to be performed—some close to the start of enrollment—suggest a potential for challenges going forward. And while the missed interim deadlines may not affect implementation, additional missed deadlines closer to the start of enrollment could do so. CMS recently completed risk assessments and plans for mitigating risks associated with the data hub, and is also working on strategies to address state preparedness contingencies. Whether these efforts will assure the timely and smooth implementation of the exchanges by October 2013 cannot yet be determined.
In other words, we are at the eleventh hour for implementation and much remains to be done. There is every reason to be concerned, and to give the agencies the support and resources they need to get the job done, but the train is still on the track and a “train wreck” is not inevitable.
The reports delve deeper into the discrete tasks that have been accomplished and have yet to be accomplished before implementation. The SHOP exchange report is particularly detailed in this regard. CMS has published most of the final rules needed to implement the exchanges, although a few, like the navigator rule, are still in proposed form.
CMS has released the final eligibility and enrollment applications needed for the exchanges. It still needs to complete some steps to enable the FFEs to test key eligibility and enrollment functions, including the calculation of premium tax credits and cost-sharing reduction payments, verification of income, and verification of citizenship or lawful presence. CMS expects to have these functions completed by July 2013 and be able to process applications through all channels (phone, mail, online, in-person) by October. CMS has begun to establish technical, security, and data sharing agreements with federal partner agencies and the states, which it expects to complete to meet the October 1 deadline. Internal and external testing of the federal data hub, arguably the most complex exchange component, began in October of 2012 and is still underway. CMS claims to be on schedule, but with several critical tasks yet to go.
Insurers that intend to market qualified health plans through the exchange submitted their applications by May 3, 2013. CMS intends to evaluate and certify these plans by July 31, 2013 to load them on the exchange website by September 15, 2013. States that are performing plan management functions are expected to notify CMS by July 31, 2013 as to their evaluation of QHP proposals.
The exchange function that seems to be most behind schedule is consumer assistance. CMS had intended to issue a funding announcement for the navigator program in February of 2013 and to make two rounds of awards in June and September. Instead, the announcement was delayed until April 9, 2013, and awards are not anticipated until August 15, 2013. Although CMS says that it expects to have navigator programs operational in each of the 34 states with a federal exchange by October 1, navigators will have to undergo training and certification and pass an exam before they can begin serving consumers. A number of states have adopted navigator licensure laws that impose additional requirements, some quite onerous. It is hard to see how the program will be up and running by October 1, although it is quite possible to have it in place soon thereafter in most states.
Six of the partnership states will be operating consumer assistance programs that will supplement the navigator program. These states are, according to CMS, making progress but several are behind schedule. The CMS call center and the Healthcare.gov website relaunch are scheduled for June 2013. A contract has been let by CMS for English-language media outreach and a contract for Spanish-language outreach is scheduled for June, with translation of educational materials into 25 languages to follow.
CMS has spent $394 million for 64 different types of projects with 55 different contractors from 2010 through March 2013. Most of these funds came from the CMS Program Management Account (66 percent) followed by the Health Insurance Reform Implementation Fund (28 percent). The largest expenditures were for the development of FFE information technology systems.
The SHOP report addresses state as well as federal SHOP exchange activities. It covers much of the same ground as the individual FFE exchange report, but additionally contains a section on “key activities” that remain to be completed by the 18 state exchanges. These “key activities” are a subset of the more than 100 required activities listed in the Blueprint application, and varied in number from state to state. Most apply to the individual as well as the SHOP exchange.
As of the end of March, states had on average completed only 15 percent of the required key activities, with the total number yet to be completed varying from state to state. Most remaining eligibility and enrollment activities were targeted to be completed by July 31, plan management activities from July to September, and consumer assistance by October, 2013. Many of these key activities were never intended to be completed until the summer of 2013, but CMS estimates that 44 percent of those scheduled to be completed by March of 2013 were behind schedule. About 40 percent of these delayed activities were related to CMS, with over a quarter of them attributable to CMS delays. CMS noted that the states were making progress on delayed activities and that the state exchanges were still expected to meet the October 1, 2013 deadline for being up and running.
In its response to the GAO reports, CMS stated that it expects that exchanges will be up and running by October 1, 2013 in every state. This may be the case, although the implementation of any major program in the public or private sector is always attended by glitches and disruptions, and the exchanges will be no exception. In any event, the exchanges only open for applications on October 1. The true deadline for enrollment, the market reforms, and provision of premium tax credits is January 1, 2014, and much will happen between October and the end of December 2013.
If, however, we have a “train wreck” or anything like it, much of the blame will have to be borne by House Republicans and by the recalcitrant states that have done everything they could do to make it happen.Email This Post Print This Post
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