A recent report from the Urban Institute highlighted the different roles that states have taken in development of health insurance exchanges where the federal government is heavily involved in operating them.
The report charted the progress of Alabama, Michigan and Virginia in their participation of a federally-run health insurance exchange or a partnership exchange under the Affordable Care Act (ACA). Health insurance exchanges are scheduled to be open for enrollment in October.
Although states have less opportunity for customization in a federally-facilitated exchange (FFE) or partnership exchange than in a state-based exchange, not all federally-run exchanges will look alike.
States may join in alongside the federal exchange operators, such as in formal partnerships in managing qualified health plans, or through informal participation in other operations, according to the report, which was supported by the Robert Wood Johnson Foundation.
Currently, seven states have partnership exchanges, 27 states defaulted to the federally-facilitated exchange and 16 states plus the District of Columbia have state-based exchanges, according to the Kaiser Family Foundation.
Michigan and Virginia are actively engaged in their exchange's development at multiple levels. However, state contacts for the report noted that more information and guidance from the government is needed.
Among the report's findings, state departments of insurance seem to view the regulations and their role in the exchanges "as a continuation or modification of their work pre-reform." It is part of their larger role in putting in place private market reforms, including essential health benefits, actuarial value and modified community rating, which will apply to the insurance market outside of and inside the exchange beginning in 2014.
Federally-run exchanges face unique challenges, including establishing consumer assistance programs, funding and the political environment at the state and national level.
"The success of FFEs will be aided significantly where state government plays an active role," said the report authors, Linda Blumberg, a senior fellow, and Shanna Rifkin, a research assistant, both at the Urban Institute's Health Policy Center.
For example, Michigan will perform both plan management and had planned to conduct customer assistance under its partnership model with the federally operated exchange, with plan management overseen by the state Department of Insurance and Financial Services (DIFS).
But because the state legislature did not appropriate funds awarded from a federal exchange establishment grant, the federal government will be responsible for consumer assistance functions in Michigan. DIFS has access to other funds, the report noted. Organizations can apply for federal navigator funds, but there is uncertainty among the broker community about the role of navigators and how the program will be administered.
Michigan will take on determination of plan actuarial value among its plan management functions under full ACA market reforms, applying to both inside and outside the exchange marketplace. Also a new task for the state is assuring the managed care network is adequate.
Virginia is taking on all of the federal responsibilities associated with plan management in a partnership model without submitting a blueprint to be a partnership, at least in 2014, but as a participant in the FFE, under what's called a marketplace plan management exchange. Virginia will rely on federal grant funding to pay for the operations to carry out the plan management function.
The state also will not be involved in consumer assistance related to exchange issues, such as helping consumers with exchange administration or tax credits.
The report noted that despite opposing expanding Medicaid eligibility, Virginia is anticipated to have active information sharing between the federally run non-group exchange and the state's Medicaid program.
Alabama, however, is lagging as a result of political and administrative hurdles the state has faced and they have no plans to assist in the exchange's development, the report said.
In Alabama, the federal government is handling plan management and insurance market reforms and performing rate review since the state does not have an effective rate review program for either the individual or small group markets.
"At the time of the report, there was no understanding of how the state agencies, such as the Department of Insurance or Medicaid, might interact with the federal exchange that could be underway by consumer groups outside of state government--there had been no press coverage of any education or outreach efforts, all stakeholder groups that had formed in support of the exchange study commission had disbanded," the report said.
In addition to the compressed time frame and frustration in communications between the states and the federal agency managing the implementation of the exchanges--the Center for Consumer Information and Insurance Oversight (CCIIO)--IT system readiness continues to be the biggest challenge, the report noted.
Michigan and Virginia are concerned about how information will be exchanged between the state departments of insurance and the federally run exchanges--for example, the specific data elements from insurers on each qualified health plan and information verifying that each plan meets federal exchange requirements.