Updated March 28 at 6:28pm

Speed bumps ahead for the health-benefits exchange?

By Richard Asinof
Contributing Writer
When the first six states – Colorado, Connecticut, Maryland, Massachusetts, Oregon and Washington – were granted conditional approval by the Obama administration on Dec. 10, 2012, to operate their new state-run, health-insurance exchanges, Rhode Island had not yet filed its application.

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Speed bumps ahead for the health-benefits exchange?


When the first six states – Colorado, Connecticut, Maryland, Massachusetts, Oregon and Washington – were granted conditional approval by the Obama administration on Dec. 10, 2012, to operate their new state-run, health-insurance exchanges, Rhode Island had not yet filed its application.

Later that week, Christine Ferguson, the executive director of the R.I. Health Benefits Exchange, told business leaders the new online marketplace for health insurance may not be fully up and running by Jan. 1, 2014, the start-up deadline.

Both facts appear to be in sharp contrast to where the Ocean State stood a little more than a year ago. On Nov. 29, 2011, Rhode Island became the first state in the nation to receive $58 million in the second phase of federal grants to help build the new exchange’s infrastructure. With that grant, Rhode Island had received a total $64.8 million in federal funding to build its exchange. At that time, federal officials hailed Rhode Island as being “at the forefront of health care innovation.”

The state did submit its application – a 1,000-page document with appendices – to operate the health-insurance exchange on Dec. 12 (two days before the deadline) and on Dec. 20, Rhode Island became the 11th state to win conditional approval to operate its own state-run health-insurance exchanges under the Affordable Care Act.

But a year after the Ocean State was roundly praised for its work on health care reform, U.S. Health and Human Services Secretary Kathleen Sebelius offered more measured words, saying Rhode Island “has made significant progress,” in developing its exchange.

(As of Jan. 23, 17 states and the District of Columbia had received such approval to operate their own exchanges.)

Ferguson told Providence Business News that Rhode Island has not fallen behind the curve because of the last-minute submission of its plans. “We chose not to submit the final documentation until we had run it through a couple of people to ensure that everyone who needed to review it had a chance to do so,” she said.

When asked to clarify her comments to business leaders at a PBN-sponsored Dec. 13 “Employment Trends 2013” forum that the exchange may not be ready to ramp up to full operation by its starting date, Ferguson said: “It will be operational. There will be more advanced functionality – such as comparisons of provider network outcomes – that won’t be available on day one because we won’t yet have the data.”

According to Christine Hunsinger, spokeswoman for Ferguson, the apparent disconnect in Ferguson’s comments is the difference between what it will take to have the exchange up and running to meet the federal standards by Jan. 1, 2014, and “the full vision of the health exchange when it is completed,” years down the road.

“It’s an aggressive time frame to achieve a very complicated result,” Hunsinger said of the Jan. 1 deadline. “What you’ll see from now until [the exchange] goes live is a moving of benchmarks and a change in designs and timelines,” she continued, calling it a natural part of the process. But Hunsinger said emphatically that the exchange “will be up and operational” when it has to be, and she also rejected the idea that Rhode Island may have lost its leadership position. “I would disagree with that assessment,” she said.

Should the exchange not be able to fully meet its operational deadlines, it could prove problematic for employers.

“Considering Rhode Island was given such a huge grant and has been working on the project for quite some time, [a delay] would be very disappointing and an administrative headache for employers who are working diligently to comply,” said Lynn F. Flynn, director of human resources at Rhode Island Medical Imaging, which has locations in six Rhode Island communities.

The Rhode Island Business Group on Health also expressed concerns about the exchange’s ability to meet its deadlines. “We have some concerns that all such large projects are often subject to missing aggressive deadlines,” said Kate Kennedy, interim executive director of RIBGH. “We’re also interested in learning how the exchange plans to service and attract businesses to it. We are also concerned about the ongoing funding as a self-sustaining entity.”

Donald Nokes, who is president and co-founder of NetCenergy as well as serving as president of the board of directors of RIBGH, says the group has prepared more than two pages of questions it plans to ask Ferguson when she is a guest at the RIBGH meeting on March 22. “From a business perspective, we’ve been trying to target the issues that are important to health care in Rhode Island,” Nokes said. “We’re now focused on the exchange, and we want to educate our constituents about it.”

Beyond the close-to-the-deadline filing of the state’s application and questions about how fully functional the exchange may be at the outset, there are other warning signs of speed bumps ahead.

After more than a month of negotiations, Rhode Island finally signed a three-year contract for $105 million with Deloitte Consulting on Jan. 18 to build the core component of the exchange, the systems integrator, which will determine the eligibility of Rhode Islanders using the exchange, according to Hunsinger. About 84 percent of the contract will be paid for with federal grants to build the exchange (about $28 million) as well as federal funds (about $58 million) available through Medicaid, according to Hunsinger. The remaining contract costs will be paid from state coffers from the Department of Human Services (about $8 million) and the Executive Office of Health and Human Services (about $5 million).

The systems integrator is the first step in a larger effort, known as the “Unified Health Infrastructure Project.” UHIP seeks to centralize information about Rhode Island’s health care system, linking the Office of the Health Insurance Commissioner, the Executive Office of Health and Human Services, the Department of Health, the Department of Human Services, which manages the state’s Medicaid program, and the exchange. Included in this system will be the creation of Rhode Island’s All Payor Claims Database, now being built by a Maine technology contractor.

UHIP was described in a planning document as “the largest multiagency systems build in the history of the state.” In total, the new IT system will take five years to be fully built, according to the document.

As a result of the prolonged negotiations with the contractor to build the systems integrator, the earliest that an online demo will be available to enable consumers to browse through what kinds of health-insurance plans and options will be offered is by “the end of the summer,” Ferguson said. Other states that won conditional approval for operation before Rhode Island were already working with their system integrator, according to Ferguson, although none of them are offering any exchange browsing yet, either.

At the heart of Rhode Island’s exchange is the vision that small businesses, their employees and consumers will be able to research, shop and buy health-insurance products and plans through an online marketplace from four initial health insurers – Blue Cross & Blue Shield of Rhode Island, UnitedHealthcare of New England, Tufts Health Plan and Neighborhood Health Plan of Rhode Island. An estimated 294,000 Rhode Islanders are expected to use the exchange to determine eligibility for subsidized health insurance, including Medicaid customers.

In addition, another 73,000 Rhode Islanders – 57,000 for individual coverage and another 16,000 for small group coverage – will buy insurance during the exchange’s first years of operation, according to planning documents.

In total, more than one-third of the state’s population is expected to buy health insurance through the exchange.

Exactly what those plans and products are, how much they will cost, and what surcharges, if any, will be added to help make the operation of the exchange sustainable are in negotiation, according to Ferguson.

Ferguson remains optimistic. “To this point we have successfully worked through any disagreements that may have existed around some very complicated issues. I’m not saying it’s all roses,” she added, describing the process.

Another source of potential delay is the changing requirements for health-insurance-plan subscriber contracts under the Affordable Care Act. R.I. Health Insurance Commissioner Christopher F. Koller has proposed new regulations for all subscriber contract forms in the commercial market. The review of those new forms will begin March 1 and be ongoing, according to Koller.

Another potential stumbling block is that, under the health care reform law, OHIC now has the authority to review rates to be charged for particular plans in the small-business and individual markets offered on the exchange, not just rate increases.

Aside from the challenges that the complexity of the exchange creates, an inability to ramp up staffing to meet the exigencies of the exchange’s operational deadlines also may cause problems.

Ferguson was appointed to her new position on June 21, 2012, by Gov. Lincoln D. Chafee. She is a former aide of the governor’s father, the late U.S. Sen. John Chafee. Seven months later, Ferguson operates out of a small Statehouse office with skeletal staff support.

At the same time that the exchange is ramping up to the start-up deadline, so, too, must Ferguson build her own staff to manage the exchange’s operations, what the planning document calls “adequate infrastructure,” with new hires and consulting contracts paid for by federal funds through 2015. Currently, Ferguson said the exchange has four employees, plus herself. She could not tell PBN what the full-time staffing will be in January 2014.

Customer service – being able to respond promptly to an estimated 60,000 inquiries a month when the exchange begins operation in 2014 – is recognized as a crucial component of the exchange’s success.

“The exchange will need to function more as a business than as a government agency,” said Lt. Gov. Elizabeth H. Roberts. “To be successful, it will have to have great customer service.”

The customer-service infrastructure is currently being built from the ground up, but the RFP to develop outside capacity has not yet been posted, according to Tricia Leddy, deputy director of the exchange. Instead, Rhode Island stakeholders have first been asked to comment on the exchange’s approach before the RFP is issued. The Rhode Island Health Coverage Project, a joint effort of The Economic Progress Institute and R.I. Kids Count, offered the following advice: While agreeing that building a fully integrated consumer support infrastructure is essential to launching a successful health-benefits Web portal, it suggested that the RFP go further and “require that the vendor specify how the contact center will achieve integration with other consumer-support channels, including those offering in-person support.”

The compressed timeline for building the exchange’s customer-service component is being driven by the Jan. 1, 2014, deadline to be operational.

It is difficult to say where Rhode Island stands as compared to other states, because “there are so many moving parts to the endeavor,” said Enrique Martinez-Vidal, vice president for state policy and technical assistance at Academy Health in Washington, D.C. He also serves as director of the State Coverage Initiatives, a national program of the Robert Wood Johnson Foundation that provides technical assistance to state leaders in order to help them move health care reform forward at the state level.

“Each state is starting in a different place,” he said. “Rhode Island may not be leading in regard to IT [and its selection of a systems integrator], but it may be leading in other areas, such as policy decisions.”

“Is Rhode Island where it should be? I would be say, yes,” Martinez-Vidal said. “Could it be in a better place? Maybe. Rhode Island is as well-positioned as any other state. But I don’t want to whitewash this and make you think that [the task of building the exchange] is going to be easy; it will be nonstop work once [Rhode Island] has selected a systems integrator.”

Major resources will be spent on promotion, marketing and consumer research as part of a campaign to sell the exchange to consumers. Given the ongoing national political and ideological divide around health care reform, Ferguson believes that efforts under way to create messaging and marketing to promote the exchange are critical to achieving customer buy-in. Market research and focus groups are being conducted by the Wakely Consulting Group, as part of an $18.9 million contract with the Clearwater, Fla., firm, whose tasks include educating the public and attracting consumers. Previously granted federal funds are being used for this contract.

How much money is allocated in the exchange’s budget to pay for different services is not yet transparent. For instance, it is unclear exactly how much has been budgeted for Ferguson’s marketing campaign and media buys, in part because Rhode Island does not yet have a communications plan in place, according to Martinez-Vidal. The State Coverage Initiatives program held a technical-assistance course in Washington, D.C., the week of January 13 for 10 states, including Rhode Island, focused on communications strategies, budgeting and staffing issues.

In its report released on Jan. 9, “Rhode Island’s Health Benefit Exchange: Progress and Challenges,” the Rhode Island Public Expenditure Council voiced cautious optimism, saying the state had made substantial progress. The success or failure of the exchange, the report said, was dependent on design, take-up rates, access, marketing and operational costs. In order for the exchange to achieve its goals, the report continued, “high levels of accountability, with clear delineation of responsibility and adequate oversight are imperative.”

Technically, Ferguson told PBN that she reports to Richard A. Licht, director of the R.I. Department of Administration, and that he represents the state’s final decision-making authority on how the exchange spends its money. All contracts undergo an extensive review, according to Ferguson, one that includes Licht, Koller and Steven M. Costantino, secretary of the R.I. Executive Office of Health and Human Services.

Licht said that while Ferguson works closely with him and they meet frequently, she reports to Chafee. “The administrative details of the interaction of the exchange and the Department of Administration are still being worked out,” Licht added. As the state’s chief purchasing officer, Licht continued, he makes all final decisions on contracts for the entire executive branch, when required, with “significant input” from the agency.

Inside government, officials say they are not worried that the R.I. Health Benefits Exchange could fall behind its schedule to be up and running by Jan. 1, 2014.

“[Lt. Gov. Roberts] is aware of the federal deadlines that must be met, and she is confident that the exchange office will meet them to have the exchange up and running to serve Rhode Islanders on time for 2014,” said Maria Tocco, Roberts’ spokeswoman.

Rhode Island’s two largest commercial health insurers, Blue Cross and UnitedHealthcare, both declined comment.

Dennis D. Keefe, president and CEO of Care New England, said: “At this point, I am not yet concerned. … Let’s allow Christy Ferguson time to get her feet on the ground in Rhode Island before we sound any alarms.”

The exchange has its own 12-member advisory board, with former U.S. Attorney Margaret Curran as chair and Geoff Groves, president and CEO of Pilgrim Screw, as vice-chair. Koller, Costantino and Licht are members. It is charged with using public input to make design and policy recommendations to build the exchange. Its other members include: Michael Gerhardt, a former executive with Blue Cross & Blue Shield of Rhode Island; Linda Katz, of the Economic Progress Institute; Marta Martinez of Progresso Latino; Margaret Holland McDuff of Family Service of Rhode Island; Dr. Pamela McKnight, a nonpracticing neurologist; Dwight McMillan of The Basics Group; Tim Melia of UFCW Local 328, and Amy Zimmerman of the R.I. Department of Health.

In the end, as a division of the executive branch, responsibility for the exchange rests with Chafee and, in large part, the team he appointed to serve as the executive committee of the R.I. Healthcare Reform Commission, with the responsibility to oversee implementation of the Affordable Care Act in Rhode Island. Its members include: Koller, Roberts, who serves as chair, Costantino, and Licht. Ferguson is not a member.

In a Dec. 2012 interview with PBN, Chafee praised his team: “I rely on a good team. We have a good team. We’re lucky to have Christy Ferguson. We’re recognized nationally for the progress we’re making.” •


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Geeeez, tough crowd! Christy Ferguson has only been on the job since June of 2012. For any one who doesn't know or remember, she was Director of HHS and responsible for creating the RiteCare program. She will have a health insurance exchange up and running in 2014, no question about it. As a business owner, my insurance broker has been promoting the exchange for some time and I share the information with my employees. You won't have a problem attracting my business, I can assure you. Good luck to Ms. Ferguson and her 4 employees.

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