In the first (and perhaps only) delay of health insurance exchange implementation, the Centers for Medicare & Medicaid Services is pushing back by one year the creation of the small business employee choice program in the federal HIX.
Mostly unnoticed by policy observers until recently, on March 11, among a litany of notices and rules published in the Federal Register, CMS said it was pursuing a "transitional policy" and delaying until 2015 employee choice and premium aggregation provisions of the federal SHOP program, where small business employees can select health plans from a menu, rather than being enrolled in one pre-selected by their employer.
The 16 states (plus Washington D.C.) creating their own exchanges will all likely implement the Small Business Health Options Program, or SHOP, in full but the 33 states that are set to default to the federal HIX will not see the option until 2015.
"We have also concluded that effective implementation of employee choice in the federally-facilitated SHOP will not be possible in 2014 because of operational challenges noted by the commenters," CMS officials wrote in the Federal Register on March 1, when the delay was first mentioned. Agency officials wrote later on March 11 that the delay also "is intended to provide additional time to prepare for an employee choice model and to increase the stability of the small group market."
This means employers shopping the federal exchanges will basically be selecting health plans for all their employees until enrollment begins for the 2015 plan year. In tandem with that, the federal SHOP's premium aggregation service -- bringing employers a single bill condensed from multiple insurers covering their employees -- will be delayed until 2015.
The delay of expanded employee choices and administrative simplification from premium aggregation will be "a major let down" for many small businesses, said John Arensmeyer, CEO of the Small Business Majority, a supporter of the ACA.
"We understand the proposed rule would only delay employee choice and simplified payments for one year," Arensmeyer, also the founder and CEO of the e-commerce company ACI Interactive, said in a statement. "However, both of these are key in distinguishing the exchanges from the outside health insurance market, which is why we strongly advise against the finalization of these rules."
The delay, Arensmeyer said, is even more frustrating because small businesses have long sought simpler billing procedures and expanded choice for individual employees, both of which the ACA was designed to help provide.
"These kinds of benefits have historically been reserved for large businesses and public employees, while small businesses often have to offer a 'one-size fits all' plan with added administrative hurdles," Arensmeyer said.
CMS has not elaborated on the "operational challenges" that in part influenced the delay, and the challenges may be equally facing CMS and insurers. The premium aggregation service is among one of the more complex IT functions the federal exchange will be providing, requiring integration of data systems between the HIXs and multiple insurers, in addition to financial calculations of subsidies based on tax information. The $13.9 million contract for the federal SHOP premium aggregation service was signed just last September, awarded to WellPoint subsidiary National Government Services.
As CMS has faced a short and ever-shortening timeline for HIX implementation some policy and IT researchers have argued that delays of some sort are inevitable.