Kansas and Oklahoma return health reform grant to implement health insurance exchange « Health Insurance Advisory

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Kansas and Oklahoma return health reform grant to implement health insurance exchange

Author: Administrator | Aug 21 2011 | Kansas, Maryland, Massachusetts, New York, Oklahoma, Oregon, Wisconsin

Kansas is returning a $31.5 million grant to lead the way on health insurance exchange development, marking one of the largest rejections of federal money to implement a piece of the new healthcare law.

Kansas will send back to the Department of Health and Human Services (HHS) an Early Innovator Grant it was awarded in February to build technology infrastructure for the medical insurance exchanges that other states could use as a model.

Two of the seven states that have received the grants have now returned them. Oklahoma Gov. Mary Fallin turned back a $54 million grant in April after mounting pressure from state GOP lawmakers. A handful of states have meanwhile rejected $1 million grants to help plan medical insurance exchanges.

“There is much uncertainty surrounding the ability of the federal government to meet its already budgeted future spending obligations,” Kansas Gov. Sam Brownback said in a statement. “Every state should be preparing for fewer federal resources, not more. To deal with that reality Kansas needs to maintain maximum flexibility. That requires freeing Kansas from the strings attached to the Early Innovator Grant.”

Brownback, who met with key legislators Tuesday morning before making the announcement, may have telegraphed the move in May when he directed Insurance Commissioner Sandy Praeger to slow down the implementation timelines she proposed in the state’s Early Innovator Grant application. Brownback asked Praeger to delay a RFP for vendors to build parts of the health insurance exchange, scheduled to go out in July.

Like many Republican-led states, Kansas is weighing how to move forward on an health insurance exchange. While many are not enthusiastic about implementing a key piece of the new healthcare law, called the Patient Protection and Affordable Care Act, they’re less thrilled with the idea of HHS running an exchange in the state if they fail to act. Praeger, also a Republican, is the chairwoman of Health Insurance and Managed Care Committee of the National Association of Insurance Commissioners. She has been an enthusiastic proponent of exchanges.

Kansas and Oklahoma have staked the position that accepting the Early Innovator Grant would have attached too many federal requirements to their states’ exchanges. Fallin, who had initially touted Oklahoma’s Early Innovator Grant, later framed her decision to return the money as an opportunity to build a medical insurance exchange on the state’s terms.

“We have addressed concerns expressed by implementing strict safeguards to prevent the implementation of the federal health care exchange while definitively laying out the framework for a free market-based network that will empower consumers by providing a place for individuals, families and small businesses to shop for affordable, quality health insurance plans,” Fallin said after returning the grant.

Kansas, despite returning the grant and failing to introduce health insurance exchange legislation this year, has been working toward building its own exchange over the past few months. Work groups have been meeting throughout the summer to consider key policy questions, and they met as recently as Monday and Tuesday to discuss setting up an exchange.

“All of that information will be taken into consideration in drafting a bill that will be introduced in 2012,” Linda Sheppard, who heads health insurance and healthcare reform implementation in Kansas, said during a recent Bipartisan Policy Center event on exchange development.

Sheppard told the Washington audience that the state’s plan to revamp its Medicaid eligibility system made Kansas an attractive candidate for an Early Innovator Grant because health insurance exchanges, set to open in 2014, must help individuals determine eligibility for Medicaid, CHIP or subsidies to purchase insurance on the exchange. The state’s Medicaid agency had been planning to soon announce a vendor to build a new Medicaid eligibility system that would work with the state’s exchange, Sheppard said.

Sheppard also acknowledged there are strong political forces that could derail efforts to pass legislation next year with a looming Jan. 1, 2013, deadline for states to have their exchanges ready for HHS approval.

“We very much do recognize it’s going to be a challenge for us to get legislation passed in our 2012 session,” she said.

The remaining Early Innovator states include Maryland, Oregon, New York, Wisconsin and a New England consortium led by Massachusetts. Wisconsin is the only state helmed by a Republican governor that has not returned its grant.

“We are disappointed that Kansas has given up an opportunity to be a leader in the development of technology for state medical insurance exchanges, which could have benefited the citizens of Kansas as well as those in other the parts of the country,” an HHS spokesman said.

Kansas so far has used around $500,000 of its original grant, according to HHS.

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