Federal Money Boosts IT Investment In Insurance Exchanges

These grants give states additional resources and flexibility to invest in technology services and skills that they need to establish online exchanges, which must be operational by Jan. 1, 2014. The federal government has already provided more than $1 billion to assist with state insurance exchange development.

Developing state exchange websites presents complex technological considerations as the exchanges aggregate data from federal and state agencies as well as from health plans, consumers, and employers, noted Janice Young, program director for analyst firm IDC's health research.

"Building state insurance exchanges is one of the most significant new initiatives in healthcare insurance in recent decades. Exchanges support entirely new programs, processes, customers, information and data, much of which has yet to be clarified," Young said. "The integration issues can't be understated because a lot of information, including eligibility and financial data, needs to be available as individuals participate in these programs."

Several states have outlined how they intend to use their funds to bolster their technological capabilities. Iowa, for example, will use its $27 million grant to conduct focus groups and stakeholder outreach regarding user interface design and program development, and continue to plan and develop an integrated, automated eligibility system.

The resulting Iowa Health Benefit Exchange (IHBE) will offer one-stop shopping both for individuals and employers looking to purchase and enroll in healthcare plans. Specifically, Iowa will use its grant money to:

-- Redesign the current database and Web application to develop an intuitive website for residents and businesses.

-- Implement an enterprise service bus, a software model used for interacting between software applications.

-- Integrate the eligibility system into the state's system for Medicaid and Children's Health Insurance Program.

-- Integrate the eligibility system into the IHBE to facilitate the determination of Medicaid and CHIP eligibility, as well as tax credit subsidies or other eligibility for qualified health plan participation.

-- Further automate eligibility business processes and incorporate expanding populations into online enrollment.

New York will use its $95 million grant to hire executive leadership that will work toward developing the exchange in several areas. The state expects to:

-- Further improve the IT systems needed to operate the exchange

-- Continue work to establish New York's All Payer Claims Database and develop the back-end operations of the exchange call center to provide customer support and other consumer assistance activities.

-- Design a campaign to educate prospective users in preparation for open enrollment in October.

Vermont will use the $104 million it is receiving mainly to develop IT systems that can run its state exchange and ensure interoperability with other state healthcare systems built as part of the greater eligibility modernization project. It will hire additional IT staff, implement an outreach and training program, and review its organizational structure to make sure the enrollment process is easy both for consumers and employers.

According to the HHS, California, Hawaii, Iowa, and New York were awarded Level One Exchange Establishment grants, which provide one year of funding to states that have begun the process of building their exchange. Connecticut, Maryland, Nevada, and Vermont were awarded Level Two Establishment grants, which HHS awards to states that are further along in building their exchanges. These grants provide funding over multiple years.

Through state exchanges, consumers are able to apply for health insurance online and learn if they are eligible for tax credits, cost-sharing reductions, or other healthcare programs such as the Children's Health Insurance Program. Small businesses become eligible to receive tax credits for coverage purchased for employees through the exchange. These competitive marketplaces make purchasing health insurance easier and more understandable and offer consumers and small businesses the benefits of increased competition and choice.