HHS Awards 10 States With Exchange Establishment Grants

The U.S. Department of Health and Human Services (HHS) awarded Wednesday nearly $230 million in establishment grants to 10 states to aid in their development of health insurance exchanges created by the Affordable Care Act.
by | February 22, 2012

The U.S. Department of Health and Human Services (HHS) awarded Wednesday nearly $230 million in establishment grants to 10 states to aid in their development of health insurance exchanges created by the Affordable Care Act (ACA).

Five states (Arkansas, Colorado, Massachusetts, New Jersey and Pennsylvania) received their first Level I establishment grant. The other five (Kentucky, Minnesota, Nevada, New York and Tennessee) collected their second establishment grant. In total, 33 states and the District of Columbia have been given nearly $610 million in Level I establishment grants, which generally pay for the operational staff, consulting services and development of administrative infrastructure needed to establish an exchange. Rhode Island is the only state thus far to receive a Level II grant.

Under the ACA, if states choose to create their own exchange, they must demonstrate to HHS that they will be able to do so by Jan. 1, 2013. Exchanges are scheduled to be open for enrollment in October 2013 and be fully operational by Jan. 1, 2014.

HHS plans to extend the period in which states can apply for establishment grants through the 2014 calendar year, said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at HHS, in a conference call with reporters Wednesday afternoon. Establishment grants are good for one year, but states can apply for an extension when that year is up.

The department also finalized rules Wednesday regarding state innovation waivers created by the ACA and state Section 1115 waivers for Medicaid and Children Health Insurance Program (CHIP) projects.

The state innovation waivers, scheduled to take effect in 2017, allow states to apply for waivers from ACA provisions -- as long as they demonstrate their own initiatives will provide as comprehensive and extensive coverage as the federal law. The finalized rule, available here, dictates the process for collecting public input on state applications, the necessary contents of the applications and the criteria for evaluating the waivers after they are approved.

The White House supports the proposal of legislation that would allow the innovation waivers to go into effect in 2014, instead of 2017, Larsen said in the conference call.

Section 1115 waivers allow states to pursue innovative initiatives in their Medicaid and CHIP programs (such as reforms to their delivery systems and payment models) by exempting them from certain provisions of the Social Security Act. The rule finalized Wednesday, available here, restructures the process for public input on waiver applications, both before a state submits its application and after it is received by the federal government.

The table below outlines the states awarded grants Wednesday, the size of those awards and the total amount of grants received by the state.

State Grant
Arkansas $7.7 million (First grant)
Colorado $18 million (First grant)
Massachusetts $11.6 million (First grant)
New Jersey $7.7 million (First grant)
Pennsylvania $33.8 million (First grant)
Kentucky $57.9 million (Second grant, $65.6 million total)
Minnesota $26.1 million (Second grant, $30.3 million total)
Nevada $15.3 million (Second grant, $19.3 million total)
New York $48.5 million (Second grant, $59.3 million total)
Tennessee $2.2 million (Second grant, $3.8 million total)

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