Implementation of a Health Insurance Exchange (HIX) is a colossal task, presenting an array of complex challenges for the Centers for Medicare and Medicaid Services (CMS) and states.  Regardless of your views on the ACA, the task of implementing Health Insurance Exchanges is truly extraordinary.

In a nutshell, design and implementation of a HIX involves, for example:

  • Creating an entirely new health insurance marketplace, replete with new policies, procedures, and practices – regulatory, financial, programmatic, contractual, actuarial, administrative – never before attempted, in either scale or substance.
  • Creating a unique, entirely new enterprise architecture, with new information systems, databases, work flows, reporting capabilities, linkages of legacy data systems of multiple federal and state agencies and programs, and linkages to health insurers participating as Qualified Health Plans (QHPs).
  • Creating a seamless, consumer-friendly, entirely web-based portal for consumers to be screened for Medicaid and CHIP eligibility, apply for complex new federal premium and cost sharing subsidies, verify compliance with the individual mandate and parental mandate, shop among multiple QHPs with multiple government-regulated products and benefit designs, collect their employer’s subsidies (if any), and enroll themselves and family members in a QHP.  The HIX must also have a similar portal to support health insurance purchasing by small employers.

All this – and much more – must be done under a tight timeframe and consistent with many federal rules, many of which are not yet finalized and likely won’t be until spring.  Further, it must be done while states and CMS are implementing an assortment of other market reforms and major changes to Medicaid and Medicare mandated by the Affordable Care Act (ACA) health reform law.  Each Exchange must be fully operational by September 2013, in time for the initial open enrollment period starting October 1, 2013.  Coverage starts on January 1, 2014.

To get a sense of the magnitude of the system-related complexity and inter-relationships of a HIX, check out this diagram prepared by the very capable folks at the Department of Vermont Health Access (DVHA) and DVHA’s Division of Health Reform (DHR).  And keep in mind this graphic is 50,000 foot systems view of one state’s planned consumer portal and each state is different.

It now appears that the CMS Center for Consumer Information and Insurance Oversight (CCIIO) will have to implement a federal-run Exchange (“federally facilitated” is the euphemism) in about 25 states.  Some 18 states and DC plan to operate a state-run Exchange, while the remaining 7 states will likely have a HIX jointly run by CMS and the state (partnership exchange).  For the latest, visit the Kaiser Family Foundation’s Exchange Monitor.

All the debate about ACA – pro and con – aside, kudos to the hardworking souls – CMS staff, state staff, and consultants – engaged in creating the Exchanges.