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States now under the gun to implement health insurance exchanges

They face big IT challenges in complying with federal exchange standards

July 13, 2012 06:11 AM ET

Computerworld - The Patient Protection and Affordable Care Act (ACA), which the Supreme Court found constitutional last month, requires all states to roll out health insurance exchanges where consumers can compare in one place plans based on price, deductibles and benefits.

Two central elements of the ACA affect states: they have to set up the health insurance exchanges (HIXs) and take part in a Medicaid expansion.

Massachusetts was the first state, and it is still only one of a handful, to have already implemented a HIX. The commonwealth created its HIX -- called HealthCare Connector -- six years ago, so it has had plenty of time to refine it.

And yet, Scott Devonshire, CIO at HealthConnector, knows federal guidelines for HIXs will require a significant IT upgrade, even for a mature system such as his.

"There are a lot of nuances involved in the ACA-compliant exchange," he said. "We're really working closely with the federal government to get guidance on policies. We've had a functioning exchange over the past years, but as many similarities as there are [to the federally compliant HIX] there are just as many differences."

For example, Massachusetts has three insurance plan tiers - gold, silver and bronze - just as an ACA-compliant exchange requires. But the state also has sub-levels, such as Bronze-low, medium and high. The ACA model has no such sub-categories.

According to The Centers for Medicare & Medicaid Services (CMS), the federal agency overseeing HIX deployments, state and federal exchanges are major IT implementations that combine portal technologies, content management, full e-commerce, CRM, online user experience and other information systems to produce a fully functional online marketplace.

"There are potentially 14 million new people walking through the electronic front door in light of ACA," said Garland Kemper, health and human services program director at services provider Unisys. "There are [state-based computer] systems that in some cases are 25 years old. They're legacy apps that, to modify the rules to reflect the new federal ones, will be very difficult. It varies state to state.

"This is going to be a huge impact to state government," she added.

The Congressional Budget Office estimates that 12 million consumers will buy health insurance in the HIX market in 2014, with that figure rising to nearly 28 million people by 2019. The overwhelming majority of those using the HIXs will be low-income people, contractors who don't have an employer-sponsored plan or those already insured through employer plans, but whose family members aren't covered.

"About 17 million of those newly insured (those below 133% of the Federal Poverty Level) will receive coverage through an expanded Medicaid program," PricewaterhouseCoopers International (PwC) stated in a report they released in June.

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