CMS plans to distribute $ 20 million in grants to state-based markets that will fund technology upgrades to improve performance and the consumer experience.
The grants, part of the U.S. Rescue Plan Act, are intended to help SBMs meet federal market requirements and provide faster insurance enrollment and eligibility decisions.
For states with currently approved SBMs, these subsidies will act as a form of federal maintenance funding, said Adam Block, a New York health economist and former CMS regulator.
Typically, states will have to pay for costly improvements to the SBM infrastructure or use money raised as user fees from health insurers that sell policies in the markets, he said. States will receive federal aid, he said.
CMS will award up to 21 grants to SBMs that meet application requirements, including those using the federal HealthCare.gov platform for consumer eligibility and enrollment determinations, rather than a state-run website.
Fifteen states have fully state-based health insurance exchanges, including Nevada, New Jersey and Pennsylvania, most recently to leave the federal system and establish their own markets. A further six states manage most of their exchange operations but use HealthCare.gov instead of their own registration platforms. Residents and insurance carriers in the remaining states rely on federal infrastructure and HealthCare.gov.
SBMs enrolled 3.8 million customers during the most recent open enrollment period, compared to 8.3 million in states using the federal market, CMS data show.
Applications for the new grants are scheduled for July 20 and CMS will issue grants in early September, according to the agency. The grants will run from the date of the grant until September 9, 2022.
A CMS spokesman said SBMs also provide funding toward consumer notifications and education, stakeholder training, state and federal reports, a call center, staff training, or other program policies or procedures for implement federal requirements.
While SBMs are in a strong position with President Joe Biden’s administration in terms of insurer participation and disclosure, there is also room for operational improvement, said Joel Ario, CEO of Manatt Health in Albany , New York. Ario is a former federal exchange regulator and has also served as insurance commissioner in Pennsylvania and Oregon.
“The new funding flow, about a million dollars per state, is a very welcome money,” he said. “In a world where technology is constantly changing at lightning speed, all exchanges can use more resources to continue to upgrade their technologies.”
Finance will ideally improve the market environment for markets and encourage more states to establish their own markets, Ario said.
“States that take ownership of their own markets can do a better job … with targeted awareness and enrollment, as well as with the adoption of policy reforms that support and improve markets,” Ario said. “From a public policy perspective, both are easier to do with a state market than under the federal market.”