This is the third in a series of articles about Rhode Island's implementation of its health insurance exchange. Read the introductory post here

Now that Rhode Island has established a governance structure for its health benefits exchange and developed a conceptual model for the online insurance marketplace that streamlines the purchasing process for users, the state needs someone to actually build the necessary technological infrastructure. At the end of April, the state issued a Request for Proposals (RFP), asking software vendors to submit their plans for producing the health exchange that state officials envisioned.

Final proposals are due June 8, but interested companies must send a letter of intent by May 25, stating that they will present an application. State officials told Governing that the number of letters received will be withheld until the entire RFP process has been completed, in accordance with Rhode Island law, to prevent placing the state at a “competitive disadvantage.”

Under the state’s timeline, vendors that submit proposals will make presentations to an evaluation committee, commissioned by Rhode Island Director of Administration Richard Licht, in mid-June. The committee will include representatives from all state agencies involved with the exchange: the Office of the Health Insurance Commissioner, the Medicaid office, the Department of Health and Human Services and the exchange board.

Finalists will be selected (and sent additional clarifications) by June 22. The second round of proposals from those finalists will be due July 9. State officials will select a winning submission by July 20, and a contract will be then drafted and signed by August 20.

The U.S. Department of Health and Human Services has stipulated that states must demonstrate by Jan. 1, 2013 that they will be able to operate a state-run exchange. The Affordable Care Act (ACA) dictates that exchanges must be fully functional by Oct. 1, 2013.

The exchange’s development will be primarily funded by nearly $60 million in federal establishment grants that Rhode Island has already received and enhanced federal Medicaid funding. Applicants must offer a bid surety of $1.5 million with their proposal, and the winning vendor must provide a performance bond worth half of the contracted price for the project.

As Governing has already detailed, the model for the health exchange underwent an evolution during planning over the last year. Input from various stakeholder groups transformed the purchasing experience from a multi-tiered process to a streamlined application that, in one step, would determine whether a user was eligible for Medicaid or, if not, qualified for federal tax subsidies under the ACA while also presenting the available insurance plans they could buy.

Up to 862,000 residents will utilize the exchange, according to state estimates.

“It is vitally important that the state pursue a model that is seamless to the customer,” Linda Katz, policy director at the Economic Progress Institute and a member of the exchange governing board, previously told Governing. The exchange’s informational and technological infrastructure “should be invisible to the consumer,” said Elena Nicolella, Rhode Island’s Medicaid director.

It's a tall order: companies must harness data from various state and federal resources while constructing a simple and efficient user experience. According to state documents, Rhode Island will award the contract to a vendor (or vendors) based on costs and other factors “in the best interest of the state.” Applicants will be scored based on their relevant experience, project management plan, technical specifications and estimated costs for nine specific tasks. They are:

  1. Designing and implementing the general infrastructure platform and accompanying software components necessary to run the exchange;
  2. Establishing an eligibility verification and determination system;
  3. Crafting an application and plan selection process;
  4. Incorporating existing Medicaid enrollees into the new system;
  5. Certifying qualified health insurance plans and setting up the small-business section of the exchange;
  6. Utilizing the exchange to determine eligibility for other state welfare programs;
  7. Providing hosting sites (through cloud technology) for the exchange and accompanying data centers;
  8. Operating and maintaining the above technological system;
  9. Developing a financial management system capable of handling exchange transactions.

Companies can opt to file an application for all nine tasks, tasks 1-8 only or task 9 only. Rhode Island also established some basic qualifications that vendors must meet: they must have completed at least two large-scale health and human services IT projects and, for task 9 only, they must have three years of experience in performing financial management functions.

Successful vendors are also expected to draw on resources made available by the federal government and the New England States Collaborative Insurance Exchange Systems collaborative, a collection of states sharing resources about exchange technology, of which Rhode Island is a member.

Top scorers from the first round (a score of 75 percent or greater on the state’s scale) will be invited to tweak their proposals, based on comments from the evaluation committee, and resubmit during the second round of applications.

Rhode Island’s complete RFP for the Unified Health Infrastructure Project, as the project is officially known, is below.