Insurance Exchange should be its own agency, staff recommends

By Barbara Pash
For MarylandReporter.com

Health council staff recommended that the Health Care Reform Coordinating Council make the Maryland Insurance Exchange — the new entity for people without insurance and others to purchase coverage — an independent government agency.

At a meeting Tuesday morning, council members discussed this and several other recommendations about how federal health reforms will be implemented in the state.

“This is an ongoing conversation,” said John Colmers, secretary of the Department of Health and Mental Hygiene. He and Lt. Gov. Anthony Brown serve as co-chairs of the council, which is implementing the federal reform in the state. Final recommendations will be presented on December 17.

Much of Tuesday’s discussion centered on the future Maryland Insurance Exchange — which will allow uninsured individuals and small employers to purchase coverage — and its format. By law, the exchange must be in existence by March 23, 2012.

Maryland expects to have the exchange’s basic structure and governance rules ready by 2011, and then to finalize the exchange in 2012. Coverage can be purchased through the exchange in 2014.

The exchange must work collaboratively with Medicaid. The state received a $1 million federal planning grant, and more federal funds may be available subsequently. There will be tax credits for eligible individuals and families, cost-sharing subsidies, and applicants must verify income and citizenship status.

Health staff advocated making Maryland’s exchange an independent government agency. Federal law allows for the state exchanges to be state-operated, multi-state or nonprofit. Brown asked why staff did not recommend it be a nonprofit.

Both options were considered, said council staffer Chuck Milligan. However, it is easier for an independent government agency to coordinate with other state government agencies. Essential government functions, such as regulations and oversight, are not easily delegated to a nonprofit. For the exchange to be successful, he said, it will need access to the range of government, including leadership.

Acting Maryland Insurance Commissioner Beth Sammis, who is also a council member, said the exchange will be unique.

“We are creating a place for buyers,” she said. “I can’t think of any place [like this that] exists in Maryland government.”

The insurance commission will talk with insurance companies about establishing their premiums for the exchange — and companies may have to pay a fee to participate, Sammis said.

Colmers emphasized that the 2011 General Assembly must pass a bill to establish the exchange. Otherwise, he said, “we can’t meet the other deadlines” for federal health reform.

“By mid-2013, we have to have an exchange that can be tested by the federal government,” said Colmers, adding that the process has to begin “immediately” and to get as “far down the road” as possible.

Staff also urged that eligibility and enrollment into exchange health plans be part of a continuous process, and not two separate systems.

Though much attention is being focused on the new insurance exchange, Milligan called employer-sponsored insurance “the backbone of coverage in the state and nation.” Staff recommended preserving a strong base of employer insurance, although they need to work on “bending the cost curve” and simplifying enrollment.

Other projects

Colmers also talked about other ongoing council projects that are part of the federal health reform implementation. A recruitment drive to attract 200 primary care providers to a multi-payer model will launch Jan. 1. A wellness program with 103 Maryland businesses, representing about 175,000 employees, will launch December 2011.

An “all-payer system” – a Medicare waiver — is also in the works, Colmers said. The Maryland Hospital Association (MHA) has proposed a series of principles for changes to the rate system, in order to, again, “bend the cost curve” and maintain the waiver. Discussions with the MHA have focused on a bundled payment initiative for admissions and readmissions.

“There are constraints on Medicare payments nationally. We have to look differently at the way our system functions,” said Colmers. “I suspect there may be different models that will be developed for different parts of the state,” for example, to cover physician services and costs. Colmers said he plans to discuss this issue with other parts of the health care system.

While costs may rise initially with the all-payer system, Colmers expects the overall cost will decrease eventually.

Also in the works is a state-wide telemedicine project that involves electronic health records and a health information exchange. The state has received $5.5 million in federal funding to encourage electronic record-keeping at regional centers. This fall, five Montgomery County hospitals connected to the exchange, and 18 more hospitals around the state have expressed interest.

Colmers will be leading a series of public hearings about health reform around the state on Nov. 22 and 23 and Dec. 1 and 2.