Thursday, April 18, 2013 | 2 a.m.
It’s crunch time for health care, as the states that elected to set up their own insurance exchanges under the Affordable Care Act enter the homestretch to Oct. 1, the date by which they have to start taking patients.
It’s also panic time for a handful of states where legislatures decided only in the past few weeks to green-light state-based exchanges that now must be designed, contracted and rolled out in a fraction of the time other states took to organize their approaches to constructing the new insurance plan marketplaces.
To simplify the challenge, such states are resorting to what might in another circumstance seem a sketchy solution: Copying other states, such as Nevada, that more or less have their act together.
“We have to have this up and ready to take applications in October, and ready to provide coverage in January — so the only way we can hope to stay within that time frame is to piggyback on what other states have done,” said Idaho state Sen. John Goedde, who served on the state’s health care working group and helped guide legislation to authorize the Idaho exchange through the legislature in late March. “We’re going to have the advantage of not recreating the wheel, because of what states like Nevada have done.”
In this case, Nevada is only too happy to share its notes.
“The biggest thing is helping out and not putting more waste out there or have states duplicating efforts,” said C.J. Bawden, spokesman for the Silver State Health Exchange. “Once we have moved forward, some other state doesn’t have to go out there and start from scratch.”
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The Silver State Health Insurance Exchange was never slated to be a pioneer among state exchanges.
The new health care exchanges are government-regulated marketplaces where people can choose between various health insurance plans that have been vetted to meet certain standards of quality and care. Through the exchanges, such individuals would be able to compare plans and premiums, and also be able to access government subsidies to make those plans cheaper.
Designers expect the primary customers of the new exchanges to be small businesses that don't presently have insurance plans and uninsured individuals looking to insure themselves and their families.
In early 2011, the federal government tapped seven proposed health care exchanges -- Kansas, Maryland, New York, Oklahoma, Oregon, Wisconsin and a consortium of New England states -- to design “consumer-friendly IT infrastructure” that other states could emulate.
Having that IT backbone, the Department of Health and Human Services said at the time, was “critical to the success of the exchanges,” and having “reusable and transferable” technology, federal officials said, “will help states to establish their exchanges quickly and efficiently using the models and building blocks created by the Early Innovator states.”
But things didn’t exactly go as planned. Over the course of 2011 and 2012, the politics surrounding the component parts of the health care law started to drown out earlier plans.
In the Republican-led House, lawmakers voted to repeal “Obamacare” at least 33 times, and 27 states sued the federal government to declare the law unconstitutional in a case that went all the way to the Supreme Court. In demonstrations of solidarity with their cause, Oklahoma Gov. Mary Fallin announced that her state would return its innovation grant money to the federal government. A few months later, Gov. Sam Brownback of Kansas followed suit. In early 2012, still six months before the Supreme Court would decide to uphold Obamacare, Wisconsin Gov. Scott Walker also declined the exchange seed money.
The presumed Republican innovators were out.
At the same time, out West, Nevada Gov. Brian Sandoval’s Republican administration — in no small part being egged on by a Democratic-led Legislature and a veto-proof majority supporting health care — kept plugging away at a Nevada-designed health care exchange system, even as they joined the suit to repeal the federal health care law.
Sandoval signed the Silver State Health Exchange’s establishment legislation in the summer of 2011 and a board of governors was appointed by early fall; by the winter, the board and its advisory committees were holding meetings at least monthly and by the spring, the state was soliciting proposals from private contractors to actually construct the exchange to Nevada’s specifications. By the time the state received conditional approval for its exchange in January of this year, the establishment decisions had been made, and construction was already well underway.
“They really swiftly moved forward and made a lot of decisions quickly,” said Sonya Schwartz, program director of State Refor(u)m, a project of the National Academy for State Health Policy that tracks health care implementation. “It’s pretty remarkable how much they’ve gotten done.”
Nevada designed its Silver State exchange system to serve as a very centralized resource for new insurance customers. At a bare minimum, states were required to equip their exchanges to determine Medicaid eligibility, rate and present comparative data on health care plans, and facilitate the purchase of health insurance for those not otherwise able to access coverage through employers or a federal program.
Nevada’s set-up takes things a step further: It was the first state that elected to fully aggregate premiums instead of leaving it to the insurance companies to calculate an individual’s premium obligations, after taking into account what tax subsidies, employer contributions and other considerations might be relevant to a particular individual’s circumstances.
The state exchange is also integrated with the federal and state offices that administer and manage the Medicaid program; part of a “no wrong door” approach that Nevada elected to pursue to make the process more consumer-friendly.
Nevada has been widely praised for focusing on making its exchange both protective of consumer interests and user-friendly. State planners also cite a call center that is expected to be up and running by October, as a key component of their customer outreach strategy.
For the Nevada exchange’s designers, the goal has been to achieve a customer-oriented exchange while keeping both the system open to new market entrants and the in-house overhead relatively low.
At first blush, achieving those ends might seem contradictory.
“Nevada’s in the free market exchange camp: They’re not an active purchaser of insurance,” Schwartz explained. “But the Nevada exchange is actually going to take the money, referring when someone pays, and that requires more work on their part.”
But costs in Nevada’s exchange system are parsed out to the participant insurance companies, on a per-member, per-month model that directors estimate will come out to about $5 per month. And instead of designing that labor-intensive system from scratch, Nevada subcontracted out the design and execution to the Xerox company, taking its existing models for building exchange systems and requesting a few tweaks to make the system reflect the priorities of the Silver State Exchange.
“Instead of doing a ground-up build, as other states have, we are taking an off-the-shelf model, and tweaking it the 10 percent that it needs to run in the state of Nevada,” Bawden said. “It’s a system that other states could use and tailor to their needs.”
That is the message — and the example — that Nevada has been taking on the road to other states; especially those, such as Idaho and New Mexico, that just joined the pack of 16 states, plus the District of Columbia, that elected to establish their own independent, state-based exchange systems to provide health insurance to the presently uninsured.
“Nevada is one of the cases we looked to,” said Mike Nunez, executive director of the New Mexico Health Insurance Alliance, a working group that did early-stage fact finding about state health care exchanges before the legislature approved an exchange for New Mexico in late March.
Nunez couldn’t elaborate how Nevada’s example might ultimately resonate in New Mexico, because the board that will make those decisions is now being appointed.
But he hinted at geographic and demographic similarities that made Nevada a more attractive example for New Mexico’s designs than many other states with independent exchanges. Like Nevada, New Mexico has a high proportion of uninsured residents (in both states, approximately 23 percent of the population is uninsured), and a large complement of native American tribes that must be seamlessly integrated into the exchange’s IT system.
“We have limited time and a new law and a new board that’s about to convene,” Nunez said. “We looked at what Nevada had done because as they described things to me, they were available for other states, to save cost and time.”
In Idaho, Nevada’s influence has been far more regular: The state has hosted Idaho representatives eager to see Nevada’s exchange construction in action, and late last year, Silver State Exchange officials made trips to Idaho to brief the state’s exploratory Health Care Exchange Working Group. According to national health care experts, Idaho appears all but poised to copy the Silver State’s example whole, once the membership of their board is finalized this month.
“We contacted them over a year ago…we knew they were ahead of us, so we wanted to ask: ‘What mistakes did you make so that we do not,’” said Tom Shores, state president of the Idaho Association of Health Underwriters and a member of the Idaho Health Exchange Working Group.
“Our challenge is similar to Nevada’s,” Shores explained. “We have a pretty diverse state, where about half of the population of Idaho lives in the Boise Valley, a fourth of the population exists in the north and the rest of the population is small towns all throughout the state.”
“But in Nevada, you guys are way ahead of us, as far as putting a program together,” Shores continued. “What we’re hoping happens is that we’ll have the ability to go in and tweak a lot of the software that has been put together…It will cost us considerably less.”
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That, as Nevada exchange officials said, was the point of the Silver State’s outreach: To bring down costs for others. But there may also be an incentive for the Silver State in peddling its approach: If more states adopt the Nevada-style model, it could also bring down the cost of operating the exchange in Nevada.
“There’s this model we’ve been championing, and it’s the ‘exchange in the box,’ if you will,” said Dan Schuyler, a director with Leavitt Partners, a health care consulting firm. “What is really attractive and intriguing about this model is the cost to build this can be shared among different states. There’s no upfront cost to utilize these components to build this exchange. It’s all paid for on a back-end per-member, per-month fee.”
While no state has explicitly adopted the ready-made, participant-funded model advisory companies like Leavitt advocates, Nevada’s health exchange payment model comes close.
Not all aspects of Nevada’s plan are exportable, however, even to late-comer Republican-led states hunting for an example state to emulate.
For example: Nevada is cooperating with the federal government’s request to expand Medicaid coverage. So is New Mexico. But Idaho has yet to make a final determination — and is leaning toward rejecting the idea.
“Idaho’s a state of stubborn people — there’s a lot of people who qualify for a Medicaid policy that just haven’t signed up for one because they don’t want to have anything to do with the federal government,” Shores said, explaining the a la carte approach to the new health care requirements in Idaho.
Such differences could cause problems with importing technology.
“Medicaid expansion does play a role in regards to sharing technology because the expansion will require the rules engine that does the eligibility to be changed — and those changes could be quite significant,” Schuyler said. “But most of the idea-sharing will be around the actual operationalizing of the exchange from a policy perspective. How did you effectively reach out to consumers, how did you effectively integrate your exchange with your state Medicaid system … whatever the model.”
Experts say it is easier for states to share policy ideas when they can warm to a state’s general political stance.
“The problems (setting up an exchange) can be anything … It’s often the nitty-gritty, operational issues,” Schwartz said. “But politics are always the first barrier.”
“What’s neat about Nevada is that they really are the first Republican-governor led state to firmly place themselves in the state exchange camp,” Schwartz said. “Politically, and culturally, I think Western states might have a ‘we can do it better’ attitude … And from what I can tell, they — or at least Idaho — are going to do it the Nevada way.”