State-based marketplaces - For the people

With the Supreme Court's King v. Burwell decision in the history books and open enrollment for a new year rapidly approaching, now is a great time for state leaders to reassess their role in delivering access to quality, affordable healthcare coverage.

Health insurance is a complex issue that involves many stakeholders, including state agencies, insurance carriers, brokers and providers. It requires eligibility determination, a range of payment models and a variety of funding mechanisms — and that's just scratching the surface.

When used correctly, technology can simplify access to healthcare instead of adding to the complexity. It can reduce taxpayer liability and risk exposure while sustainably cutting dependence on federal funds. An intuitive and flexible technology solution that works in concert with state agencies and operational processes is necessary to achieve these goals.

That's why forward-thinking states are exploring highly configurable, easy to implement, sustainable and cost effective IT solutions. With the right technology solution, states can address specific needs based on population, demographics, income levels, health conditions and other key factors. Technology can provide the flexibility to expand health and ancillary benefits and integrate Medicaid and other programs, providing a single solution that works across all state-sponsored programs and benefits.

What works best — a state or federal marketplace?

Many states chose to use a Federally Facilitated/Sponsored Marketplace (FFM) to provide health insurance coverage to residents, and that may have made sense before the Burwell vs. King decision. But it is not an optimal long-term solution. Since Individual and Small Business Health Options (SHOP) exchange technology has matured, FFM states should take a fresh look at available technology.

Many states that run their own SHOP marketplace find that a technology solution that has ties to local brokers and is configured to the state's unique policies and needs can significantly increase small businesses employee participation. Some states have also found that beginning with SHOP implementation and later transitioning to a full State-Based Marketplace (SBM) is a responsible path to success and financial sustainability.

Leasing an out-of-the-box SBM that can be affordably rolled out and operated can improve financial sustainability while delivering the policy levers and control that FFM can't match. Unlike an SMB, FFM cannot be customized to meet states' requirements or accommodate state-specific programs. That makes it more difficult for states to accomplish health and delivery system reform objectives.

"M-powerment" — returning marketplace control to the states

It makes sense for states to consider the SBM option since that's the only way to control implementation of critical healthcare policy decisions. Nearly half of applicants enrolling via marketplaces are ultimately Medicaid-eligible, so a system that enables Medicaid integration is more efficient than coordination alone — and it delivers a better experience for constituents.

Massachusetts demonstrated this recently when it reached a major milestone: program eligibility was determined for one million residents within a single system. The 2015 open enrollment period marked the first time in Massachusetts healthcare reform history that consumers could use a single system to learn program eligibility and shop, select and pay for a health plan. In another first, the platform gave consumers the ability to complete a single online application, immediately learn what subsidized or unsubsidized program they qualify for, and select and pay for a new health plan. The integrated eligibility function now allows the state to provide faster, easier and better access to coverage.

Another factor states should consider when assessing marketplace control is the expansion of Medicaid alternatives, which are gaining popularity with Medicaid Qualified Health Plan (QHP) premium assistance. States that want a more proactive role in continuity of coverage and eligibility determination will need to look to the SBM option since related functions may not be available through FFM.

Finally and most importantly to states that value fiscal responsibility, Medicaid integration provides a crucial lever and path to marketplace sustainability. With federal funds for exchanges no longer available as of 1/1/2015, a shared platform and unified Medicaid-subsidy eligibility with Medicaid cost allocation paves the way to eligibility for federal funds for Medicaid.

A post-Burwell v. King strategy for state healthcare reform success

The key takeaway is that SBM has the potential to offer the most control and efficiency, but states have to find the right solution. Experience shows that custom-built systems have been unsuccessful, costly and often unsustainable. They typically cost over $100 million to implement and even more to operate and maintain. They present multiple risk management and budgeting challenges. Even after significant investments, custom-built solutions tend to perform poorly, have limited flexibility and require expensive overhauls to deploy enhancements and expand functionality.

Off-the-shelf solutions are an interesting alternative because they are cheaper to implement and typically come with guaranteed updates and upgrades every year. While they offer fewer opportunities to customize, off-the-shelf solutions provide states with viable alternatives as part of a long-term strategy to control IT costs while continuing to move toward a single eligibility platform and continuous innovation. When evaluating an off-the-shelf solution, it pays to keep in mind that the right technology partner can make the difference between success and failure.

The bottom line is that states should work with IT partners to implement intelligent, out-of-the-box, intuitive solutions rather than invest in custom IT projects that have the potential to lose hundreds of millions of taxpayer dollars. It's important to find a private sector partner that offers a proven, turnkey solution and has experience seamlessly integrating programs. A partner that has worked with all parties — including states, federal agencies, carriers, brokers and private employers — can help ensure success and avoid common pitfalls. With the right partnership, states can deliver unified program access, protect financial assets and improve the customer experience for their constituents.

Maydad Cohen is responsible for strategy, business development, and delivery of hCentive solutions to the U.S. federal and state governments. Prior to joining hCentive, Maydad was Special Assistant to the Governor for Project Delivery in the Commonwealth of Massachusetts, where he led the implementation of an integrated eligibility and enrollment system for 2015 Open Enrollment.

The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.

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