This week, the Department of Health and Human Services (HHS) awarded the first round of grants to help states establish health insurance exchanges. State officials in Washington, Indiana and Rhode Island were granted a total of $35 million to begin building their exchanges. In announcing the grants HHS said that the states “will use the money to build up the necessary information technology systems — a major undertaking for which even conservative governors have sought federal help.”
An HHS fact sheet summarizes the grant activities as follows:
* Indiana received almost $7 million “to strengthen the health information technology systems that will be integral to its Exchange. Additional funding will support project management, legal, actuarial, and financial expertise and general policy support.”
* Rhode gets $5.2 million “to strengthen health information technology systems, develop an integrated consumer support program to provide support to individuals and small businesses, and strengthen its business operations.”
* Washington will receive nearly $23 million “to develop options and recommendations on policy decisions that will have a significant impact on the Exchange. The grant will also provide funds to develop a health information technology system that will support its Exchange.”
The establishment grants follow a round of planning grants where each state (except Alaska, which didn’t apply) received a $1 million to get started on the exchange planning process, and the awarding of a total of $241 million to six “innovator” states and one New England-based multi-state consortium to develop exchange information technology (IT) infrastructures that other states can adopt and adapt.
Each of the new exchange establishment grants was for level 1 funding, which means the state sought funding for an initial year of work. Alternatively states may apply for level 2 and incorporate all of their funding needs for the establishment and operation of the exchange(s) through 2014. HHS designed the establishment grant opportunity with maximum flexibility for states. States can apply for funds on a rolling basis, and can either seek multi-year funding (level 2) or take a step-by-step approach by applying for annual project grants (level 1). Award amounts, sufficient to fulfill the purposes of the funding opportunity, will vary based on the proposed activities and specific needs of each state. Funds can be used for a number of different activities, including consulting with stakeholders, making legislative and regulatory changes, governing the exchange, establishing information technology (IT) systems, performing oversight and ensuring program integrity.
In order to securing ongoing funding, each state must make progress toward establishing an Exchange, implementing market reforms and meeting other benchmarks as the Secretary may establish. Benchmarks must be identified in each of these core areas: background research; stakeholder involvement; legislative/regulatory action; governance; Exchange IT systems; program integration; financial management; oversight and program integrity; health insurance market reforms; providing assistance to individuals and small businesses, coverage appeals and complaints; and business operations/exchange functions.
Examples of critical benchmarks include evidence of collaboration between exchanges and state Medicaid agencies or submission of data collected by the state Consumer Assistance programs regarding problems consumers encounter and actions taken by the state to resolve them.
The next funding cycle will close on June 30, 2011. Quarterly opportunities will continue for a total of five more quarters until June 29, 2012. Decisions on grant applications will be made approximately 45 days after each application due date.
