HHS' Insurance Exchange IT Grants Offer Little to Payers

Last week, the Department of Health and Human Services announced that it would offer grants to states to develop the IT systems behind healthcare reform-mandated insurance exchanges.

The grants "will reward States that demonstrate leadership in developing cutting-edge and cost effective consumer-based technologies and models for insurance eligibility and enrollment for Exchanges," HHS says in a statement. "This will help to create a simpler, consumer-oriented system for individuals, families and businesses to sign up for the health insurance plan that they choose." They will be awarded by February 15, 2011, "to up to five states or coalitions of states that have ambitious yet achievable proposals that can yield IT models and best practices that will benefit all states," the statement continues.

The goal is for states to use the money to develop consumer-friendly interfaces for the healthcare exchanges, similar to any other online-sold product, HHS says. However, Kunal Pandya, senior analyst for Aite Group, notes that there still is some uncertainty around exactly how health insurance products will be presented to consumers.

"It would be a little bit of an integration nightmare if [states] decide to do live enrollment with the exchanges, because then the insurers would have to do some integration or mapping with the exchanged on a state-by-state basis," Pandya tells >. "Right now, they're leaning toward more of a link approach, where you can hyperlink directly to the health plan's website and enroll there so you don't have to take the additional step of integrating with the exchanges that are live."

This means that health insurers are likely to stay on the sidelines for now and simply observe what shakes out as development continues, Pandya says. Their main concern when it comes to exchanges at this time is to provide the insurance products themselves in line with federal law.

"It's basically the governments and nonprofit organizations that are going to be selected by the state governments that are going to be in charge of setting up these exchanges," Pandya notes. "It's still very early to say what healthcare payers' roles will be."

Funding will vary based on states’ proposals, HHS says. In a press conference, Jay Angoff, director of the Office of Consumer Information and Insurance Oversight (OCIIO); and Joel Ario, deputy director of the OCIIO and director of health insurance exchanges, told reporters they were looking to states for direction on the amount of grant money they would need.

Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio