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State HIX Early Deadlines Extended

 |  By John Commins  
   November 16, 2012

States that plan to operate their own "state-based exchanges" for health insurance under the Patient Protection and Affordable Care Act were supposed to tell that to the federal government Friday. 

The deadline, however, has been extended by a month.

Health and Human Services Secretary Kathleen Sebelius, in a letter Thursday to Louisiana Gov. Bobby Jindal and Virginia Gov. Bob McDonnell, announced that HHS has pushed until Dec. 14 what would have been the deadline for state-based exchanges to submit both the letter of declaration stating their intent and a "blueprint" detailing how they would work.

States that want to pursue a "partnership exchange" that relies on the federal government still have until Feb. 15, 2013 to submit a declaration letter and blueprint.

Timeline already tight
The extended SBE deadline, which came just days after President Barack Obama's re-election, compacts an already tight vetting and implementation schedule. HHS is supposed to certify HIX blueprints by Jan. 1, 2013.  Those that are certified are supposed to be ready for open enrollment by Oct. 1, 2013 and operational on Jan. 1, 2014.  

Observers say the delays and extensions do not necessarily mean that the January 2014 startup will be delayed, but the tight schedule allows little margin for error.

"It's ambitious," says Kansas Insurance Commissioner Sandy Praeger. "I know the health plans are concerned about the ability for HHS to get the products approved when we don't have any essential health benefits assigned. We know what they are in general categories but not specifically."

Praeger says health plans need to see the details around the assigned benefits before they can start their development process. "They have to develop the forms and marketing materials and rates that have to be justified and actuarially sound and approved. There is a lot of work left to be done," she says. "There is time to get it done but it is going to put a crunch on the states. Even if it is a federal exchange, states' departments of insurance have to approve those products after HHS has approved them. As states' departments are concerned, we are worried that we are going to get a flood of filings at the same time and not have the capacity to get it done in a timely fashion."

'I don't think it's panic'
Alan Weil, executive director of the National Academy for State Health Policy, says the deadline extension is not a signal that the process is in disarray, but more of an acknowledgement that states were waiting to see which party won the White House.

Republican challenger Mitt Romney had pledged to abolish "Obamacare" if he won the presidency, making moot any preparations for exchanges.

"I think everyone is realizing that 10 days after the election is a little too short for states that are trying to figure out what to do," Weil says. "For those states that already pretty much knew where they were going it didn't much matter. But there were a lot of state sitting on the fence that are now ready to get off but 10 days is too quick. HHS is just looking to ensure that the states who want to give this a closer look have that opportunity."

"I don't think it's panic," Weil says. "The administration wants all of the states that are ready and willing to take a role in implementation to do so. This is one more opportunity to let those who might be able to do that play that role."

HHS said it will stand by the Jan. 1, 2014 operational start up for the exchanges. Weil puts little credence in speculation that HHS would delay the startup, even though by some estimates the federal government could save $23 billion with a one-year pushback.

"There is something like 15 states that are planning to do this and they would not be happy to be told ‘Thanks for the hard work, but put it on ice for a year,'" he says.

"The other thing is it is easy to talk about how much money you'd save, but remember this was a political compromise piece of legislation that included significant payment reductions to providers that they were willing to accept with the promise that their uncompensated care burden would go down as people gained coverage," Weil says.

'A little more time to get ready'
If you keep all of the cuts but don't do the coverage, sure, you can save some money. But you are also reneging on a deal that was designed to make it possible to afford this coverage.  You really can't just look at one side of the ledger and say this will save money. It's more complicated than that."

Praeger says delaying the exchanges may be considered as the lame duck Congress looks for a way to stave off the mandatory budget cuts and tax hikes that go into under the "fiscal cliff."

"It might be in the long run better for everyone if it could be delayed a year, except for the folks who are going to benefit from the financial assistance," she says. "I don't know if there is a way to accommodate them that also gives us a little more time to get ready. But it wouldn't surprise me if it is in the mix as the Congress re-convenes."

Weil acknowledges that reviewing and certifying the exchanges and monitoring their implementation over the next 13 months will prove challenging but he says federal officials have already known that for months.

"It's been clear for some time that there were going to be a bunch of states that wanted to do it themselves and a bunch of states that didn't want to do it at all and a bunch of states in the middle, which is why they created the partnership model," he says.

"It's been difficult to know the numbers of states in each category but the existence of the categories is no surprise. The hard part is now you have to make all three of those models work. But again, we've never been in a situation where it seemed like everyone was going to be in one thing or another."

Weil says he believes the exchanges will be "operational" by Jan. 1, 2014, but likely not without hiccups.

"There will be bugs just like there were with Medicare Part D and the prescription drug benefits," he says. "It's not going to be perfect the day it starts. But this is something that they have been working on for a long time. The deadlines have been clear for a long time. I think we know what it takes to get it done and they will be up and running."

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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