The Affordable Care Act public exchange program in Massachusetts has decided to switch to a group exchange administration system from the District of Columbia exchange.
The board of the Massachusetts Health Connector voted Thursday to start using the DC Health Link group exchange system for the 2018 open enrollment period.
Massachusetts has set up a locally run exchange program, rather than using the federal government’s HealthCare.gov exchange program.
Like other ACA exchanges, the Massachusetts exchange offers two types of coverage: individual coverage and small-group coverage. It sells coverage to small employers through its Small Business Health Options Program division.
The Massachusetts SHOP division serves 1,385 groups with 6,106 plan members, according to a staff memo.
The Massachusetts SHOP division has been using an administration system from a local vendor. The current system is too expensive, lacks features employers and brokers want, and cannot provide “horizontal options,” or multi-plan coverage menus, the staff says.
The ACA now requires insurers to classify plans by “metal levels,” or benefits richness levels. For an employer, a “horizontal option” is an arrangement that lets the workers choose any coverage option available within a single metal level. An employer could use a horizontal option to let workers choose any gold plan, or any silver plan.
Because of the high cost of the current group administration system, its lack of flexibility and the lack of a horizontal option, ”the current SHOP platform is unsustainable,” the staff says.
The exchange staff has tried shopping for a new SHOP administration system three times. The first two times, it tried using a conventional procurement process. It was unhappy with the proposals.
This time around, the exchange staff asked other ACA exchange programs whether any of them had a good SHOP system that the Massachusetts exchange could use. The managers of two locally run exchange programs, the Rhode Island exchange and the D.C. exchange, both provided detailed information.
The Massachusetts exchange staff recommended that the board go with the D.C. exchange system because of D.C.’s experience with running a large SHOP division.
The D.C. exchange serves 3,700 small groups with a total of 60,000 employees, and brokers handle about 90 percent of the D.C. group accounts, according to another staff memo.
The Massachusetts exchange hopes to use $4.1 million in federal ACA grants to shift to the D.C. SHOP system.
The current schedule calls for Massachusetts to field test the D.C. group system by Aug. 1 and to have the system available for general use by Nov. 15.
“We will begin immediately working with carriers to ensure readiness,” the exchange staff says.
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