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From Health Law Daily, June 19, 2013

Many tasks still need to be completed for federal and state establishment of Small Business Health Options Programs (SHOP)

By Anthony H. Nguyen, JD

The Government Accountability Office (GAO) examined federal and state readiness to establish Small Business Health Options Programs (SHOP) and found that many tasks still need to be completed in various areas before the October 2013 deadline (GAO Report, GAO 13-614, June 19, 2013). The GAO Report describes the (1) roles of the federal government and states in establishing SHOPs and (2) status of actions taken and planned by the government and states in preparing to establish SHOPs. Although the GAO’s objective was to focus on the status of the SHOPs instead of individual exchanges, the GAO noted that the progress made in establish SHOPs and the exchanges were interrelated. The GAO stated that whether CMS’s contingency planning would assure the timely and smooth implementation of the exchanges by October 2013 could not yet be determined.

Background. For 2014, CMS granted conditional approval to 18 states to establish state-based SHOPs and to 17 states to operate health insurance exchanges for individuals. CMS is required to operate a federally facilitated SHOP and a federally facilitated exchange (FFE) for individuals in the remaining states. Of the 33 states with federally facilitated SHOPs and 34 states with FFEs, 15 states are expected to assist CMS to carry out certain functions of the exchange.

Observations. According to the GAO, many activities remain to be completed in the following core functional areas: (1) eligibility and enrollment, (2) plan management, and (3) consumer assistance. While CMS has established timelines for completion of the activities, the GAO noted that some were behind schedule. Examples cited by the GAO included funding awards and development of a training curriculum for a key program to provide outreach and enrollment assistance to small employers and employees are delayed by about two months.

As for state progress, CMS data showed that most had completed preliminary activities such as obtaining the necessary authority to operate an exchange, as well as making progress in each of the core functional areas. However, the GAO found that the specific activities CMS intended to undertake in each of the state-based and partnership exchanges could change if states did not make adequate progress toward completion of their key activities. For instance, CMS conditional approval to states to participate in a partnership exchange was contingent on states meeting several conditions, such as obtaining authority to undertake exchange activities and completing key activities by specified target dates. In one instance, CMS officials indicated that Michigan—a state that had been conditionally approved by CMS to participate in a partnership exchange—had not been able to obtain the legislative authority needed to use federal grant funds to pay for exchange activities.

Among all states, about 40 percent of the key activities that were behind schedule were related to CMS—either the agency revised the target completion dates or CMS’s own actions required states to delay completion of an activity. The remainder of the delays was attributable to state factors including coordination between state agencies or procuring contract support. About 44 percent of the key activities CMS initially targeted for completion by March 31, 2013, were behind schedule, although CMS reported that it had revised many target dates and other delays were not expected to affect exchange operations.

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