Could HHS Be Default Healthcare Regulator in Half the Country?

The information technology (IT) infrastructure required is a massive component of the exchange, basically the groundwork that needs to be laid before anything substantive can begin, and it is a time-consuming and expensive process. For California, a state intent upon having an exchange even if the law had been stricken, companies have already gone through a competitive bidding process to secure rights to implement the exchange. California announced today it chose Accenture to implement the statewide health insurance exchange, the California Healthcare Enrollment, Eligibility and Retention System (CalHEERS) under a $359 million, contract. 

Accenture will lead the development of the system that will enable Californians to determine their eligibility for subsidized health benefits, compare insurance plan options and enroll in coverage. The target date for completion is October 2013, to allow individuals to begin pre-enrollment in health plans in advance of the January 2014 deadline for all states to implement a health insurance exchange. 

Both state and federal regulators are working on their own data systems for healthcare information.

Another element is financing and the assessments under a federal exchange system, which will be the job of the federal government for licensed insurers in the exchange.

States are going to need to decide if they want to expand Medicaid since today’s opinion gives the state the option to do so. “I think many states will have to take a hard look at their budgets before they agree to this new expansion,” Petersen, Morris Manning, said. To be sure, many state commissioners and some attorney generals’ offices have moaned about their budgets in various forums.

States like Florida expressed dissatisfaction with the decision, but said they would move ahead.

“With the affirmation of the Affordable Care Act, I remain concerned about the potential for increased health insurance premiums and continued disruption to the stability of the marketplace for many Floridians,” stated Florida Insurance Commissioner and NAIC President Kevin McCarty, speaking in his state office capacity. “Nevertheless, we will work with the Florida Legislature and Gov. [Rick] Scott (Rep.) to implement the Supreme Court’s decision and develop an implementation strategy that minimizes market disruption and allows Florida’s health insurers and HMOs to continue to provide coverage in our state,” McCarty stated.

States such as Kansas, Maryland, New York, Oklahoma, Oregon, Wisconsin and a multi-state consortium led by the University of Massachusetts Medical School were selected to receive a total of approximately $241 million in early innovator grants for IT infrastructure to operate the exchanges. States that received this  “Early Innovator” funding are also eligible for Level One and Level Two Establishment funding. Level Two funding requests are due this week, or on June 29.

“How are states going to be charged under a federal partnership?” asked Pennsylvania Insurance Commissioner Mike Consedine, back in March. 

Consedine, in an interview with Lifehealthpro.com today after the decision, said that probably all states, including Pennsylvania, are looking at flexibility with the HHS guidelines.

He noted that even though Pennsylvania was one of the states that challenged the constitutionality of the law, the state had also pragmatically applied for and gotten an HHS Level One grant for $33 million to explore a state-based exchange, and was in the preliminary planning stages, and engaging KPMG as it works behind the scenes.

KPMG was hired by the Pennsylvania Insurance Department as part of the Commonwealth’s ongoing analysis of options to be considered in determining the Commonwealth’s plans to comply with the health insurance exchange requirements of PPACA.

Of significant concern to states is the self-funding — at the end of the day, will taxpayers directly or indirectly have to pay for the exchange? That is what the state will be exploring with the grant money to determine what decision it would make in terms of pursuing a state-based exchange, Consedine said.

KPMG spelled out different risks under both the state and federal scenarios, and Pennsylvania is mulling its options, as are other states, but said it welcomed the clarity finally brought about by the High Court’s decision today.

Even states that are trying vigorously, and which have led state exchange action on the legislative action front with enabling laws passed before 2012, like Illinois, are having trouble meeting deadlines.  

Some states have taken early grant money and done nothing else but explore options, Some have refused it or  have returned it, or allegedly used it to form a foregone conclusion.  Back in December, Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Tom Harkin (D-IA) called for a federal investigation into whether South Carolina Governor Nikki  Haley exploited taxpayer dollars for political purposes. 

Emails published by the state Post and Courier reportedly demonstrate that Committee member and state Department of Health and Human Services Director Tony Keck was under clear instructions from Haley regarding the outcome of the process, according to Harkin.

“The idea that the federal government will run 25 exchanges keeps them up at night,” Don Garlitz, executive director of the exchange solutions arm of bswift Inc., Chicago said at a recent industry conference covered by Allison Bell. “They don’t want that.”  

One possibility is that HHS will start granting waivers to extend times, given that it has missed deadlines for rules or instead issued interim guidelines on many elements of the law, as with essential health benefits. American Action Forum recently put out a report that said its research found that PPACA regulations have missed nearly half of their statutory deadlines. Of the PPACA regulations with legal deadlines, 47 percent, 20 of 42, have broken the mandated implementation schedule.

“Perhaps the most expensive ‘tardy’ regulation involved forcing health plans and third party administrators to publish a ‘uniform’ summary of benefits for health plans. The Administration was supposed to issue a final rule by March 23, 2011, but a rule was not published until almost a year later,”  the Forum said, estimating a cost of $146 million for it.

HHS officials were not available for comment immediately on extension or waiver possibilities.

Of course, whether the exchanges function and are sustainable after a year is another story.

As Willis Group, the global insurance broker, noted through an executive, “employers and their advisors will now continue to move forward with their plans … The issues regarding employer plans versus individual marketplace for insurance for their employees will still be issues employers will grapple with. The penalty (or tax as the Supreme Court has now labeled it) is still relatively small and with the hint that taxpayers might just refuse to pay the tax, it remains to be seen whether that tax will be enough of an incentive to get taxpayers to purchase insurance (or otherwise seek coverage) in enough numbers to make the insurance reforms work within the context of the private insurance market.”

Jay M. Kirschbaum, practice leader at the Willis Human Capital Practice, concluded that “if that market does not offer a cost effective alternative to an employer plan (and given the cost impact of the insurance reforms that is not only possible, but likely) the employer provided market will still likely offer the best option for most employees.”

For exclusive, ongoing coverage of the PPACA verdict and its impact on the industry, visit  www.lifehealthpro.com/PPACA.