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Howdy, Pardner: HHS and the States Discuss Exchange Collaboration

By Jane Norman, CQ HealthBeat Associate Editor

September 20, 2011 -- The Department of Health and Human Services (HHS) has fleshed out the details on how states can cooperate with the federal government in setting up health insurance exchanges, a middle ground between states going it alone or leaving it to the federal government to completely take over their exchange operations, something neither side likely wants to happen.

Last week, HHS officials met in Washington with representatives from 46 states, the District of Columbia and two territories. Federal officials laid out options for how state officials can set up their exchanges in partnership with the federal government in ways that work best for each state.

The meeting followed on proposed rules HHS issued in July in which officials touted the flexibility that would be available for states.

The proposed rules—comments for which are due by Sept. 28—were another benchmark on the road to full implementation of the exchanges in 2014. Most states have not yet completed setting up their exchanges, though Rhode Island Gov. Lincoln D. Chafee recently issued an executive order creating an exchange in his state. He also appointed the public members of an exchange board that was created in the executive order, who will serve alongside four government officials on the board. A former U.S. attorney, Margaret "Meg" Curran, will serve as chairwoman.

"The exchange will give more Rhode Islanders access to affordable health coverage," said Chafee in a written statement. "There are still many decisions to be made about the specific details of how the exchange will work. I am confident that Attorney Curran and the board will ably guide the best design for a Rhode Island exchange."

In Washington, HHS officials posted on the website a news release outlining the "partnership model" that states may adopt. The five core functions of the state exchange are consumer assistance, plan management, eligibility determination, enrollment and financial management. In partnerships, both states and HHS would operate parts of the exchange, though HHS remains responsible for ensuring the state exchange meets standards in the health overhaul law (PL 111-148, PL 111-152), according to documents prepared for the meeting.

In the partnership model, states could decide on the plan management option, which means they would collect and analyze insurance plan information, monitor plans and collect and analyze data. HHS would coordinate with the state when it comes to consumer complaints and enrollment issues. "Where appropriate, HHS will help to ensure that exchanges meet all of the required standards so consumers have access to a range of high quality plan options," says an HHS statement.

A second option is for the state to conduct the consumer assistance functions such as in-person consumer help, manage the navigator program that helps people find insurance choices and educate consumers about the exchange. HHS would handle more centralized operations, such as managing call centers, the consumer website and written correspondence with consumers.

States could also decide to do both consumer assistance and plan management in partnership with HHS. In that case the federal government would manage all of the other exchange functions.

"States entering into partnership will agree under the terms of their grants to ensure insurance department, Medicaid, and CHIP cooperation to coordinate business processes, systems, data/information, and enforcement," say the HHS documents.

A timeline published on the HHS website indicates that in the fall of 2011 through the summer of 2012, states will identify the kinds of technical assistance they need, as soon as possible. Exchanges will begin to be approved in summer 2012, with June 29 the last date to apply for exchange establishment grants.

The deadline for conditional or full approval of an exchange is Jan. 1, 2013. States may move from conditional to full approval after that date, though, HHS says. Enrollment of consumers is to begin in 2013 and full use of the exchanges is set to launch in 2014.

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