Successfully Implementing a Federally-Facilitated Exchange


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The Affordable Care Act directs the Secretary of Health and Human Services to establish and operate a Federally-Facilitated Exchange in any state that does not elect to establish a state-based exchange. As the deadline for state submission of a state blueprint and declaration letter approaches, many states are faced with implementing a FFE by the statutorily required enrollment date of October 1, 2013. While a FFE allows states to meet federal timeline mandates, its implementation provides states with limited options and flexibility. Cognosante's latest white paper helps states understand how to successfully implement a Federally-Facilitated Exchange.

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Successfully Implementing a Federally-Facilitated Exchange

  1. 1. © 2012 Cognosante, LLC. All rights reserved.7926 Jones Branch Drive, Suite 330 McLean, Virginia 22102 • 480-481-5965 •
  2. 2. IntroductionThe Affordable Care Act (ACA) directs the Secretary of the Department of Health andHuman Services (HHS) to establish and operate a Federally Facilitated Exchange (FFE) inany state that does not elect to establish a State-Based Exchange (SBE). As the dead-line for state submission of a state blueprint and declaration letter approaches, manystates are faced with implementing an FFE by the statutorily required enrollment date ofOctober 1, 2013.While an FFE allows states to meet federal timeline mandates, its implementation pro-vides states with limited options and flexibility. States are challenged to determine whatactivities they must undergo to implement an FFE successfully.State ActionsWhile there are still many unknowns, thereare a number of steps that states can takenow to better prepare for the FFE. TheCenters for Medicare and Medicaid Ser-vices (CMS) has repeatedly stated it ispreparing for “Day One” FFE implementa-tion, meaning that CMS is working towardcritical FFE functionality to be ready by the deadlines. States need to begin prepara-tions now. The following are some of the activities to consider.• Create a strategic vision for implementing an FFE: As the first step in the “on ramp,” states should create a shared, high-level common vision and strategy. States must understand key dates, deliverables, and activities in their FFE implementation project schedule. Additionally, states need to understand what resources, including technical capabilities, are required and where additional staffing and capabilities are to be obtained.• Understand the state’s technical environment: Many states have previously com- pleted IT gap analysis studies as part of the Planning Grant efforts. States implement- ing an FFE will now need to understand the specific requirements and the necessary changes to their Medicaid and Children’s Health Insurance Program (CHIP) eligibility systems that will be required to perform the account transfer function with the FFE. Each state faces unique challenges with this task. States now need to include activi- ties related to interfacing with the FFE, processing, and managing of account trans- fers. These activities may need to be carefully integrated into a state’s eligibility modernization project.• Identify state capabilities and resources that can be leveraged: With several key in- itiatives already in progress, states face resourcing challenges. It is critical for states to secure partners that can provide the subject-matter expertise, experience, and capability to help them prepare for implementing an FFE.• Develop the technical capability needed to interface with the Exchange: Currently, CMS has identified seven potential interfaces with the state Medicaid/CHIP envi- ronment. These interfaces will be used to establish the account transfer with Medica- id/CHIP, then to process notifications, renewals, life-change events, and determina- tions of eligibility (or ineligibility). States must be prepared to not only implement the © 2012 Cognosante, LLC. All rights reserved. 7926 Jones Branch Drive, Suite 330 McLean, Virginia 22102 • 480-481-5965 •
  3. 3. necessary interfaces, but to be able to process case data, update Medicaid/CHIP case information, receive and link self-attestation documentation from the FFE to in- dividual Medicaid/CHIP eligibility cases, and potentially be able to track and report the status of cases for interaction with customer assistance or in response to Federal reporting requirements.• Assess Medicaid Expansion impacts: In the wake of the Supreme Court decision in June 2012, many states are reassessing their Medicaid expansion options and costs. Federal guidance regarding the ability of an FFE to support state expansion options has not yet been issued. States need to understand the gaps in FFE flexibility and capability then accordingly adjust their options or develop internal capabilities to support these options as guidance becomes available.• Review plan management, plan certification, and qualification processes and ac- tivities: The guidance issued in May 2012 stipulates that the FFE’s role and authority does not extend beyond the Exchange or otherwise affect state laws pertaining to which health insurance products maybe sold in the individual or small group mar- kets. States must understand what products are being offered through the FFE and what flexibility they are given to limit or prevent products that are not certified in their state from being offered on the FFE. States are still expected to play their tradi- tional and primary role in the regulation of the market and the products that are be- ing offered. However, how these processes are to merge with the FFE are still to be defined and confirmed with each state.• Review consumer assistance capabilities: The FFE will provide the call center capa- bilities. The FFE will also provide outreach, education, and limited broker/navigator assistance for helping individuals enroll on the FFE. States have the option to provide in-person assistance. This is an area where requirements are still evolving. States should understand the hand-offs and touch-points between in-person assistance delivered in walk-in eligibility offices and the FFE.Develop an On-ramp StrategyIn implementing an FFE, states should be-gin with the end in mind. HHS has indi-cated that an FFE is a temporary solutionfor states and that states still have to pre-pare for operating a SBE or State Partner-ship Exchange (SPE) after 2014. States mustnow begin considerations of whether theSPE or SBE is the right solution for futureyears. Each state must understand its op-tions, opportunities, timelines, and create aroadmap to implement an FFE — and eventually transition from an FFE to a sustainable,state-controlled and operated Exchange.Time is diminishing quickly for states to develop the necessary interfaces and processesto interact with an FFE. Since deadlines are fixed, CMS will likely decide the schedule,milestones, deliverables, and test conditions for states. This places the responsibilityclearly on states to analyze and develop process flows, make the necessary software © 2012 Cognosante, LLC. All rights reserved. 7926 Jones Branch Drive, Suite 330 McLean, Virginia 22102 • 480-481-5965 •
  4. 4. and operational changes, and to perform testing and certification activities for statesystems that interact with the FFE.States implementing an FFE need to begin preparations immediately or face the diffi-cult task of implementing numerous system changes in a limited timeframe. States mustbe ready for open enrollment by October 1, 2013 — less than one year. The May 2012General Guidance on Federally-facilitated Exchanges, published by HHS, reveals manyspecific activities to coordinate with states. However, much of the detail has not beenspecified. The guidance discusses at a high level the project schedule, state develop-ment specifications, and testing and certification be process for interfacing state Medi-caid/CHIP systems with an FFE. It should be noted that the process has not been fullycommunicated by HHS, meaning that this key area for state involvement is still evolving.The majority of system changes need to occur in the Medicaid/CHIP eligibility systems.CMS has acknowledged that this is the primary interface between an FFE and the stateand where the individual account transfer process will occur. States are responsible fordeveloping not only the interfaces to an FFE, but also developing the capabilities withintheir eligibility system to process transactions and exchange case level information withan FFE, preferably in a real-time environment.As an additional challenge, many states are in the process of modernizing their eligibili-ty systems. Interfacing with an FFE may not be part of the scope for these eligibilitymodernization projects and will need to be managed in addition to the current eligibili-ty system implementation effort. States should consider modifying their advanced plan-ning documents (APD) to incorporate needed changes to the eligibility system. If astate has not yet initiated a modernization APD, the state may benefit financially by le-veraging the cost allocation special rules to help finance the eligibility modernizationeffort.With about 35 states expected to use an FFE, securing additional resources with the sub-ject-matter expertise to assist states in the preparation, implementation, testing, andcertification effort is critical. Federal guidance delays also limit the time that states haveto find resources that understand the program requirements. Cognosante provides ex-perts in system assessment, planning, quality assurance, and implementation who areprepared to help states immediately. Cognosante documents the unique perspective,challenges, and technical capabilities of the state. To develop this understanding,Cognosante conducts validation sessions with state subject-matter experts and vision-ing sessions with state leaders utilizing the CMS Seven Conditions and Standards as adiscussion guide. Cognosante focuses on:• Creating high-level vision and strategy for the implementation of an FFE• Understanding state technology capabilities and resources• Planning for Medicaid expansion• Scheduling, testing, and certificationThe outcome of this assessment provides a comprehensive as-is understanding of statecapabilities and a blueprint for the to-be vision of the Exchange solution for 2015 andbeyond. The resulting gap analysis provides insight to the unique capabilities, needs,and situation of the state. © 2012 Cognosante, LLC. All rights reserved. 7926 Jones Branch Drive, Suite 330 McLean, Virginia 22102 • 480-481-5965 •
  5. 5. Cognosante provides the strategic planning and analysis, knowledge of Medica-id/CHIP, Exchange subject-matter expertise, and experience with Exchange interfacedevelopment that states need to succeed in implementing an FFE. Leveraging our vastexperience in Medicaid Information Technology Architecture (MITA) state self-assessments, we assist states in the development of the to-be vision and as-is currentcondition and gap analysis. Once the assessment and gap analysis are completed,Cognosante works with states to identify strategic choices. Cognosante identifies andprovides states with a range of solution options, including developing a roadmap, fortransitioning from an FFE to an SPE or SBE solution.Key Areas of State EngagementThe scope of integration points betweenstate systems and an FFE has not yet beenfully defined. States should plan for the de-sign and delivery of a mix of policies, sys-tem enhancements and external interfaces that will touch on the following key areas:Medicaid and CHIP Eligibility and EnrollmentStates need to determine the changes re-quired of eligibility systems to process,track, and report on account transfer ac-tivities from an FFE. State Medicaid/CHIPsystems and the FFE will need to determinein near real time whether the individual is enrolled by Medicaid/CHIP or a QualifiedHealth Plan (QHP). States will need to be prepared to process X12 transactions to verifyeligibility and process enrollment. Integration points between an FFE and Medica-id/CHIP include the following.• Each state must decide whether the FFE will assess or determine eligibility for the state’s Medicaid and CHIP programs. If the FFE determines eligibility for these pro- grams, the FFE decision is final and the state must accept the FFE determination. If the state decides the FFE will only assess eligibility, the FFE will verify the information contained on the application, and transfer the account/case to Medicaid/CHIP for assessment. After the account is transferred, the state is required to utilize the infor- mation from the applicant’s FFE application to determine eligibility and may not fur- ther verify the information contained therein or request additional information from the applicant. In either case, the FFE must electronically transfer and the state must receive the eligible or potentially eligible individual’s account.• The FFE will need to determine at the time of application whether the applicant is currently enrolled in Medicaid/CHIP.• States will need to provide the FFE with relevant information from the state such as information regarding the state’s applicable MAGI-based income standards for Medicaid/CHIP.• AN FFE will use certain state-based data sources such as the State Wage Information Collection Agency and the unemployment benefits agency to support assessments or determinations of Medicaid/CHIP eligibility, and to determine eligibility for Ad- vance Premium Tax Credit (APTC) or Cost Sharing Reductions (CSR). © 2012 Cognosante, LLC. All rights reserved. 7926 Jones Branch Drive, Suite 330 McLean, Virginia 22102 • 480-481-5965 •
  6. 6. • States will need to electronically acknowledge the receipt of an account trans- ferred from the FFE to Medicaid/CHIP.• Individuals who apply for Medicaid/CHIP through the state’s eligibility determination process, and who are determined not eligible by Medicaid/CHIP, must be electron- ically transferred to the FFE for enrollment in a QHP and potential enrollment in an in- surance affordability program. The FFE will then be responsible for determining if an individual is eligible and enroll the individual appropriately.• Eligibility appeals are subject to future regulation, but it is likely some level of coordi- nation and state specific communication will be necessary.In the May 2012 guidance, HHS indicated that it will continue to work with states to en-sure coordination with state eligibility processes. Both the FFE and Medicaid/CHIP eligi-bility rules outline mutual responsibilities and call for a memorandum of understandingto specifically identify roles, responsibilities and timelines. Data-sharing agreements andstandards for information exchange will be particularly critical. HHS has promised furtherguidance and toolsets to delineate tasks, schedules, and specifications for develop-ment and testing of FFE and Medicaid/CHIP interactions.Lacking more specific guidance or specifications from HHS on account transferring re-quirements, states cannot complete their requirements analysis and all resulting systemchanges at this time. Many questions remain for states that HHS has yet to address. Forexample:• For states that already have other HHS programs integrated into a universal applica- tion such as SNAP/TANF, what questions will an FFE application support for these in- dividuals? What pre-screening questions will the application contain for a state’s MAGI exempt population? Will an FFE be able to accommodate the rules and op- tions for a state’s Medicaid Expansion population?• How will an FFE application and account transfer process ensure “no wrong door”? How will states synchronize their application process with that of an FFE if states may no longer ask additional questions as stipulated under the current guidelines? How will information be conveyed to the Medicaid/CHIP program in the account transfer process? What specific account information data will be passed to Medicaid/CHIP from an FFE? How will documents used for self-attestation of income and residency be passed to the Medicaid/CHIP case management system?Despite these many questions, states must begin activities now, understanding somerequirements will change. To do otherwise jeopardizes state readiness.Cognosante provides the understanding of Medicaid/CHIP eligibility and case man-agement necessary to help implement the needed changes for account transfer andfor Modified Adjusted Gross Income (MAGI) processing. We will ensure that the neces-sary application data is gathered, verified, and processed to either assess or determineeligibility during the interface process with an FFE. Cognosante is leading the effort tovalidate requirements, design, and construct the external interfaces for the Oregon Ex-change. With our understanding of interface development, Medicaid eligibility policy,MAGI rules, and experience with both SBEs and the FFE development, Cognosante isqualified and positioned to help states successfully implement an FFE. © 2012 Cognosante, LLC. All rights reserved. 7926 Jones Branch Drive, Suite 330 McLean, Virginia 22102 • 480-481-5965 •
  7. 7. Consumer Assistance and Customer ServiceCMS will provide a call center for an FFE. However, state Medicaid/CHIP agencies, theDepartment of Insurance and the FFE will need to share information and coordinate ac-tivities and protocols closely to help consumers resolve issues and ensure handoffs be-tween entities go as smoothly as possible. Questions states should consider are:• Should the Medicaid/CHIP call center have access to consumer information in an FFE and will the FFE call center have access to information in Medicaid/CHIP? How is this best accomplished? What interfaces may be necessary?• What training must a state Medicaid/CHIP call center staff have to support ques- tions about the Exchange and QHPs? What will be the process for warm hand-offs of callers to/from an FFE call center?• How will an FFE appeals process coordinate with state Medicaid/CHIP agencies?States may choose to provide in-person consumer assistance in the SPE model. Statesare awaiting further guidance from HHS on what functions they would be required toperform.Cognosante built and implemented an ISO-certified call center operation for CMS thatservices the nation’s providers. This same call center is used on behalf of the MissouriMedicaid Program to perform member eligibility determination, enrollment, and cus-tomer service for the Missouri Rx Senior Pharmacy Assistance Program (SPAP) program.We understand the importance of the seamless integration of the various levels of con-sumer assistance — both technically and from a process and training perspective. Ourteam will guide your state through the decisions you need to make to prepare you foran FFE.Plan ManagementIn the FFE model, the FFE’s role and authority are limited to the certification and man-agement of participating QHPs. Federal authority does not extend beyond the FFE oraffect otherwise applicable state law governing which health insurance products maybe sold in the individual and small group markets. HHS has declared that it intends towork with states to preserve the transitional responsibilities of state insurance depart-ments and seeks to harmonize policies with existing state programs and laws whereverpossible.States may use grant funding available under section 1311 of ACA for the develop-ment, refinement, and testing of plan management functions under an SPE. To ensureoperational efficiency, the state will have the choice to conduct all plan managementand/or consumer assistance activities in this model. With regard to plan management,the state would operate all plan management functions including analysis and reviewsnecessary to support QHP certification, collection and transmission of data to an FFEand management of certified QHPs.Under the SPE, HHS will enter into agreements with state partners to establish roles andresponsibilities and outline specific workflows, deliverables, review standards, and time-frames. In addition to possible integration with SERFF, states may elect to use the Feder-al plan management system to carry out plan management activities, or may deter-mine that using a specially configured COTS plan management solution is a better op- © 2012 Cognosante, LLC. All rights reserved. 7926 Jones Branch Drive, Suite 330 McLean, Virginia 22102 • 480-481-5965 •
  8. 8. tion. Many questions surround what options are available, what functionality will beprovided, and on what timeframe they will be released. In addition, sample agree-ments have not yet been shared with states who are contemplating assuming planmanagement activities, making it difficult for states to determine whether they want totake on the plan management role, and if so to what level.Questions states need to consider include:• How much will operational control of state insurance markets (and competition in those markets) change under the FFE model? Will a limited offering of plans under an FFE meet the needs of state citizens?• Are there state benefit mandates that are above and beyond the minimum Essen- tial Health Benefits? If so, how does that impact plan management and connectivi- ty to the FFE?• To what level will the state and the state’s carriers need to understand the new process to ensure participation and available plans on the Exchange for Plan Year One and beyond?• What functionality will the state and state’s carriers need to best manage their plan offerings available on the FFE?• What are the regulatory and policy issues that need to be addressed and for what participants? What memoranda of understanding need to be in place and to whom should they be targeted?• What IT assets/interfaces need to be developed by the Department of Insurance to engage with an FFE?• To what level can — and should — plan management be aligned with the existing regulatory processes for each state? How can this alignment be handled once for both FFE and potential future SBE preparation to maximize the effort’s impact?Why Cognosante?Cognosante is uniquely positioned to assist states in planning and executing implement-ing an FFE. Since the ACA’s passage, Cognosante has assisted states in the planningand establishment of state exchanges. Cognosante has assisted states in the develop-ment of the Early Innovator, Planning and Establishment Grant submissions, as well asconducting and leading visioning sessions to assist stakeholders in key elements of es-tablishing an Exchange. More recently, Cognosante led efforts to create the Exchangeblueprint for the Utah Health Exchange and is currently assisting the Oregon Health Au-thority in requirements validation, design, and construction of external interfaces for theOregon Exchange and the DHS Modernization projects.Cognosante is part of the team developing the FFE system. Cognosante support in-cludes: providing system design leadership and functional subject-matter expertise forthe areas of eligibility, enrollment, and plan management; contributing to system de-velopment efforts for the eligibility and enrollment, plan management, and financialmanagement components; executing quality verification plans to ensure functionaland technical compliance of the system with CMS-established requirements; and plan- © 2012 Cognosante, LLC. All rights reserved. 7926 Jones Branch Drive, Suite 330 McLean, Virginia 22102 • 480-481-5965 •
  9. 9. ning and facilitating state-focused communication efforts related to the implementa-tion of an FFE for specific states.Cognosante personnel participate in sprints to develop iterative versions of plan man-agement and eligibility and enrollment modules. We have provided elaboration of thedetailed functional architecture blueprint for the overall system, leveraging subject-matter expertise in MITA and spearheading the development of an exchange-specificcorollary, the Exchange Information Technology Architecture (EITA). © 2012 Cognosante, LLC. All rights reserved. 7926 Jones Branch Drive, Suite 330 McLean, Virginia 22102 • 480-481-5965 •