By John Reichard, CQ HealthBeat Editor
October 29, 2010 -- Already stressed by many implementation headaches from the new health overhaul law, states have a real migraine when it comes to the IT challenge in setting up fast, accurate computer systems for insurance exchanges. Federal officials Friday announced a grant program they hope will ease the pain.
IT systems in the exchanges will have to handle a variety of complex transactions: finding the right health plan, determining the eligibility of applicants for coverage programs, enrolling people in plans, and administering subsidy payments.
Exchange IT systems will have to interact smoothly with databases operated by states, the Internal Revenue Service and health plans to get the job done. And if they don't, consumers using the exchanges will get frustrated and angry, potentially causing a backlash against the law.
The Department of Health and Health Services (HHS) said it will award "innovator grants" to five entities, whether individual states or coalitions of states, to design and implement leading-edge IT systems HHS aims to promote as models for other states to follow.
Officials wouldn't say, however, how much money they will pay out. "We are looking for the states to establish the parameters of the project, how ambitious they want to be, and what those costs would be," Joel Ario, an HHS official, told reporters in a telephone press briefing Friday. Ario is director of the Office of Health Insurance Exchanges in the HHS Office of Consumer Information and Insurance Oversight.
Ario said states not chosen for the grants will save money because they won't have to reinvent the wheel—they can simply use the same designs as those developed by the grant recipients. That approach will make it easier for HHS to evaluate IT systems in deciding whether to certify that an exchange is ready to handle its duties under the overhaul law.
States must obtain that certification by 2013; exchanges must begin operating under the law by 2014. The residents of states that fail to obtain certification will be required to use a federal insurance exchange.
HHS said in a news release that the two-year grants will be awarded by Feb. 15 to five applicants "that have ambitious yet achievable proposals that can yield IT models and best practices that will benefit all states."
All states, including the five awarded grants under the program, will be able to apply in February for other federal grant money to cover the costs of creating the exchanges. But once they are established, states will have to find other funding sources.
"It's going to take a lot to make it work," Washington and Lee University Law professor Timothy Jost said last week concerning the IT challenges exchanges must master. "If we flop there, the exchanges could be a miserable failure," Jost told a Washington, D.C. forum. "If people apply for tax credits and don't hear for weeks and then things get screwed up and they have to come in somewhere and provide lots of documents that's going to be a disaster," he said.