The passage of the Patient Protection and Affordable Care Act (ACA) resulted in significant changes to the ways Americans will access and purchase health insurance. A key feature of the ACA, and one that may have the biggest impact on state budgets and personnel, is the requirement for states to have a health insurance exchange (HIX) up and functioning by January 1, 2014. This paper outlines the steps which states must take should they elect the Federally Facilitated Exchange (FFE) model and includes a high-level roadmap for implementing the FFE at the state level. Cognosante summarizes the recommended actions for states to adopt the FFE model and highlights key areas and actions required to achieve successful implementation.

1. This white paper contains data that shall not be duplicated, used, or disclosed in whole or in part without the express
permission of Cognosante. Copyright© 2012.

2. A Roadmap for States Using the Federally Facilitated Exchange
September 2012
Contents
INTRODUCTION ............................................................................................................................................ 1
EXCHANGE BASICS ...................................................................................................................................... 1
IMPLEMENTATION AND OPERATIONS OPTIONS ................................................................................................ 2
STATE ROADMAP TO FFE IMPLEMENTATION ........................................................................................... 2
STATE CONSIDERATIONS AND ACTIONS .................................................................................................... 4
OTHER CONSIDERATIONS ............................................................................................................................... 5
FUNDING ....................................................................................................................................................... 5
ABOUT COGNOSANTE .................................................................................................................................. 6
Exhibits
Exhibit 1. Health Insurance Exchange Timeline........................................................................................... 1
Exhibit 2. Comparison of the SBE, SPE, and FFE Options .......................................................................... 2
Exhibit 3. State Roadmap to FFE Implementation ....................................................................................... 3
Exhibit 4. FFE and State Business Area-Required Actions .......................................................................... 4
Exhibit 5. Exchange Funding Opportunities ................................................................................................. 5
Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this white paper.
ii

3. A Roadmap for States Using the Federally Facilitated Exchange
September 2012
INTRODUCTION
The passing of the Patient Protection and Affordable Care Act (ACA) and the subsequent upholding of
the majority of the law by the Supreme Court have resulted in significant changes to the way Americans
access health insurance. A key feature of the ACA, and one that may have the biggest impact on state
budgets and personnel, is the requirement to have a health insurance exchange (HIX) available and
functioning by a government-defined deadline.
States have the option of implementing a state-based exchange (SBE) that fulfills the HIX requirement.
Those that cannot or choose not to implement a functional SBE by the deadline may participate in the
Federally Facilitated Exchange (FFE) provided by the Department of Health and Human Services (HHS).
This document summarizes the actions for a state to adopt the FFE and highlights the key areas and tasks
required to achieve successful implementation.
EXCHANGE BASICS
As shown below, States must have a HIX in operation by January 1, 2014, and they must submit a
blueprint by November 16, 2012. For states that do not have an approved or conditionally approved HIX
by January 1, 2013, a FFE will be implemented by the Centers for Medicare & Medicaid Services (CMS).
CMS considers the FFE to be an interim solution until states implement their own SBEs, which must be
an easy-to-use and efficient operation that establishes consistent rules and business processes to ensure a
seamless and high-quality customer experience.
Exhibit 1. Health Insurance Exchange Timeline
CMS and the Center for Consumer Information and Insurance Oversight (CCIIO) are currently building
the FFE. HIX business functions and system components included in the FFE are web portal; plan
management; eligibility management; enrollment; financial management; consumer assistance; Small
Business Health Options Program (SHOP); and marketing & outreach. Business functions and system
components not included in the FFE are interfaces between the federal data services hub (DSH) and state
Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this white paper.
1

4. A Roadmap for States Using the Federally Facilitated Exchange
September 2012
systems, in-person consumer assistance, health plan licensing and insurance commissioner
responsibilities.
Implementation and Operations Options
Should a state not create its own SBE, there are two options for FFE implementation and operations: full
FFE implementation, or a state partnership exchange (SPE).
In full implementation, CMS provides, hosts, and operates all system components and business functions
included in the FFE scope above. The state is responsible for all interfaces with state systems and in-
person consumer assistance. In a SPE, the state may opt to operate plan management, consumer
assistance or both. A side-by-side comparison of the SBE, SPE, and FFE options is shown below.
Areas/Business Functions SBE SPE FFE
Web Portal State Federal Federal
Plan Management State Federal or State Federal
Eligibility Determination State Federal and State Federal and State
Enrollment Management State Federal Federal and State
Financial Management State Federal Federal
Consumer Assistance State Federal and/or State Federal
Marketing & Outreach State Federal Federal
SHOP State Federal Federal
Exhibit 2. Comparison of the SBE, SPE, and FFE Options
Regardless of the exchange model selected, the Federal Data Services Hub (DSH) is at the center of all
transactions to and from the FFE and the only point to which any partnered entity can connect with
federal systems, including the FFE.
STATE ROADMAP TO FFE IMPLEMENTATION
States electing the FFE Exchange model will be required to plan, coordinate, and implement various
components to support the FFE. State actions should be in coordination with CMS actions to ensure an
on-time launch of a fully-functioning FFE. A high level roadmap for implementing a FFE at the state
level is shown in the below figure
Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this white paper.
2

5. A Roadmap for States Using the Federally Facilitated Exchange
September 2012
Exhibit 3. State Roadmap to FFE Implementation
Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this white paper.
3

6. A Roadmap for States Using the Federally Facilitated Exchange
September 2012
STATE CONSIDERATIONS AND ACTIONS
Each FFE business area requires distinct actions by the FFE and the state, as shown in the following table.
Exhibit 4. FFE and State Business Area-Required Actions
Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this white paper.
4

7. A Roadmap for States Using the Federally Facilitated Exchange
September 2012
Other Considerations
States must determine how to implement and operate interfaces between state systems and the FFE,
including individual account transfers, Department of Insurance (DOI) (risk adjustment, plan
management, reinsurance), and Health Insurance Portability and Accountability Act (HIPAA)
transactions. States must also implement governance and protocols for data collection, coordination, and
reconciliation functions. This includes coordinating eligibility determination processes and operations,
coordinating and reconciling processes and data for enrollment and disenrollment from plans, and
collection of eligibility source data for support of audits.
States’ data systems may need to be modified to accept, generate, and transmit HIPAA transactions. For
example, if eligibility determinations are received by a state’s Medicaid Management Information
Systems (MMIS), the MMIS must be able to accept the HIPAA health plan enrollment transaction. If the
state continues to determine eligibility for non-MAGI medical assistance programs, the system must be
able to generate and transmit a HIPAA health plan enrollment transaction to the FFE as a notice of an
individual’s health insurance coverage. The FFE will be entity reporting to the IRS on individual
coverage status and must have a record of all enrollments to avoid levying an erroneous consumer
penalty.
Communication between the State and the FFE is essential to Payment error rate measurement (PERM)
and payment accuracy measurement (PAM). PERM and PAM audits cover the entire path of claim
payment, from whether a client is eligible to accuracy and merit of the actual provider service payment. If
a client is deemed eligible by the FFE, the state must record that to protect against culpability and
potential financial liability for erroneous payments.
FUNDING
The ACA provides funding to states to establish a HIX (SBE or SPE) or build interfaces to the FFE.
Grant funds are available to build and test interfaces to the DSH to support certain functions of the FFE.
Establishment grants will be awarded through the end of 2014. They are available for three years after
award and can be used to sustain the first year of operation. Exchange funding opportunities are shown in
the below table.
Funding Source Funding Type Eligible Start Date Funding Expiration Date
Establishment One Grant Block Grant Quarterly through One year after grant award
10/15/2014 (extension available on request, up
to 5 years)
Establishment Two Grant (through Block Grant Quarterly through Three years after grant award
end of start-up year) 10/15/2014 (extension available on request, up
to 5 years)
Medicaid Modernization APD 90% FFP 2011 12/31/2015
Funding for DDI (cost-allocated
portions only)
Medicaid Modernization APD 75% FFP Upon certification of Dependent on DDI implementation
Funding for Operations (cost- Eligibility system by 12/31/2015
allocated portions only)
Regular Medicaid and SCHIP 50% FFP Anytime None
Funding (non-Medicaid (Medicaid)/ 65%
Modernization) (SCHIP)
Brokers, Health Plans, Employers Fees 10/1/2013 (?) End of Exchange
State General Fund 100% State 10/1/2013 End of Exchange
Funds
Advertisers Fees 10/1/2012 (?) End of Exchange
Exhibit 5. Exchange Funding Opportunities
Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this white paper.
5

8. A Roadmap for States Using the Federally Facilitated Exchange
September 2012
ABOUT COGNOSANTE
Cognosante has consulted with states such as Utah, Oregon and the District of Columbia on the
implementation of their HIX programs; we understand the challenges states face and we are actively
working with our clients to find the best possible solutions to these challenges. Cognosante currently
supports CMS in the development of the FFE, giving us a unique understanding of FFE systems and how
they integrate with other state systems. Our expertise results from the combined knowledge of the ACA,
exchanges, and the FFE and our understanding of how health care reform can impact other state programs
such as Medicaid and CHIP; and our proven ability and capacity to implement and operate consumer
assistance centers to scale.
Use or disclosure of data contained on this sheet is subject to the restriction on the title page of this white paper.
6