Analysts: For States, Federal Exchange Services Might Be Cheaper

States and their exchanges should be good at handling outreach, education and in-person consumer assistance because they can use existing community-based resources — including their broker-agent distribution system to help with those functions, the analysts say.

States and state-based exchanges that decide to handle consumer assistance functions will have to consider matters such as figuring out what kinds of consumer ombudsman “Navigator” capacity and consumer assistance capacity might be needed to reach uninsured and underinsured state residents.

States also need to develop communication and referral rules and programs that their exchanges can use to reach out Naviggators, agents and brokers, the analysts say.

Any information technology systems an exchange adopts should support brokers and Navigators, the analysts say.

The analysts say some states, such as those participating in multi-state consortiums, might be in a good position to handle the high-tech consumer assistance functions as well as the human-to-human functions.

In the financial management section, the analysts note that, in 2014, the federal government will cover state-based exchange administrative costs.

In 2015, the state-based exchanges are supposed to use user fees, grants and other sources of revenue, such as website advertising revenue, to cover the cost of their own operations.

Medicaid is supposed to cover any exchange costs related to exchange activities related to Medicaid.

To cover costs related to commercial coverage, a state could have an exchange impose user fees on insurers that sell coverage through exchange or impose a fee on all individual and small group issuers in the state, the analysts say.

HHS officials said in November, in a response to questions, that the FEE will not charge states for any services the FFE provides, the analysts report.

HHS officials have said in a letter and in discussions at a meeting in September that the FFE likely will fund its costs with user fees, the analysts say.

PPACA itself gives the states the authority to charge exchange fees but does not explicitly provide the FFE with exchange user fee authority, but another federal law gives the FFE general user fee authority, the analysts say.

“Whether the authority to charge user fees on issuers flows from [PPACA] or from the federal government’s general user fee authority, the federally-facilitated exchange can and in fact must charge such fees in order to sustain the exchange,” the analysts say. “While the federally facilitated exchange has the authority to charge fees on issuers participating in the exchange, it would seem that only the state could decide to extend these fees to issuers outside the exchange.”