DOI, CHFS officials speak to Health and Wellness Council

Two key state officials spoke to the Kentucky Chamber Health and Wellness Council during its most recent meeting on July 11. Carrie Banahan, executive director of the Office of Health Policy at the Kentucky Cabinet for Health and Family Services (CHFS), and Bill Nold, director of the Health and Life Division at the Kentucky Department of Insurance (DOI), said their agencies are meeting weekly to discuss health care reform implementation, specifically how an exchange would operate in Kentucky. CHFS is mostly charged with administering the exchange while DOI is primarily focused on its regulatory function. Banahan said CHFS used its first planning grant, which totaled $1 million, to hire the University of Kentucky to assess the insurance market in Kentucky. UK is compiling and analyzing a wealth of data, including the number of insured and uninsured by county, health benefit plans currently offered, and what plans should be offered in an exchange. The report is expected to be completed in August and will be posted on Kentucky’s health care reform website.

CHFS also applied for a Level One Establishment Grant on June 30, requesting $7.6 million for continuing exchange development. If awarded, a significant portion of the money will be used to hire an information technology consultant to determine the technology requirements that will be needed to operate an exchange, including a new Medicaid eligibility system to replace the current 20-year-old system. Funding is also being sought for financial management, program integrity, sustainability, actuarial services, consumer assistance and staff support. Banahan said the outcome of the grant application should be determined by August 15.

Nold said DOI is working with insurers to institute new market reforms and applauded the insurer community for its vigilant response to DOI’s requests for new forms and documents. DOI applied for a rate review grant to enhance its rate review process to make it more efficient and transparent. Nold said Kentucky is already ahead of the curve on this issue since federal authorities have looked at DOI’s existing process and have deemed it effective, while only about half the states even have a process at all. DOI is also awaiting a determination on whether it has an effective appeals process, though Nold expects federal authorities to conclude that process is effective as well. Nold also mentioned DOI’s request for a waiver that would allow the state to gradually implement the medical loss ratio (MLR) requirements for the individual market through 2014. Federal authorities are expected to respond to the state’s application within 15-20 days.

Both officials noted they are working on a tight timeline, as states must be able to demonstrate they are capable of operating an exchange by January 2013, with the exchanges ultimately becoming operational in January 2014. As part of this requirement, the state must show it has the legal authority to establish an exchange. Some states have passed exchange-enabling legislation, while other states have relied on their governors to issue an executive order. Banahan said the state is considering both options, including filing a piece of legislation next session.

Banahan concluded by saying the state would continue to reach out to stakeholders as they gather more information and the development of an exchange becomes more firmly established.