State health care exchange plans still must be in place for approval by Jan. 1, 2013, but the U.S. Department of Health and Human Services (HHS) will help support the process operationally as states move toward exchange certification, according to Amanda Cowley, acting director  for state health exchanges at the department’s Centers for Medicare & Medicaid Services (CMS).

“States have made some progress,” Cowley told participants at America’s Health Insurance Plans state issues conference in Washington Thursday. “States are a lot smarter now than they were a year ago. Over 80% of states have done background research.”

The extent to which states have started to act varies widely, but HHS is “seeing a movement and is very pleased with that,” Cowley said.

HHS is trying to “intensify” its response to the states, and has been holding listening sessions and “imagining a highly collaborative” process.

A proposed HHS  rule allows for conditional approval of a state exchange  if the state is advanced in its preparation but cannot demonstrate complete readiness by the January  2013 deadline. The proposed rule also allows states that are not ready for 2014 to apply to operate the exchange for 2015 or any subsequent year. HHS will continue working with states to support their progress.

According to a source, HHS is may be hiring another 150 people just to work on exchanges.

If a state does none of these things or rejects the creation of a state health care exchange, those that would be insured default to a federal exchange in the PPACA.

So far, two states, Massachusetts and Utah, have -– and have had — exchanges up and running. According to a recent chart, 9 states have enacted state exchanges, 12 states have failed legislation, 6 states have legislation pending, 17 states have either an executive order or study underway, and 8 states have no bill or anything else.

Some insurance companies are wondering how, if a federal exchange takes over, as might happen with the short legislative sessions in 2012 being the last chance for some states to pass a bill, how a federal exchange would handle things like Medicare eligibility.

Many health plans, like many Blue Cross and Blue Shield plans, think the state exchanges are preferable to a federal exchange and are at least hoping the state exchanges will help them add new members.

Some are worried about issues such as possibility that there will be a brain drain—that  health plans’ good IT people might leave and join the federal exchanges.

“From what  I have seen,  states overwhelmingly want state exchanges,” Krista Drobac, the National Governors Association’s health policy director, said at the AHIP conference. She said states need more guidance on key issues to help them make their case to state legislators. They also do not want to be responsible for doing program integrity around the exchanges to begin with, she said.

HHS has extended  the comment period for exchange rules pertaining to risk adjustment and other issues, such as infrastructure questions, and huge IT challenges.