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Officials in all the early innovator states say timing is one of the biggest if not the biggest challenge in doing the work, as HHS must certify exchanges by 2013 and the initial open enrollment period begins in October of that year. Sources have varying opinions on whether the early innovator work will actually be transferable to other states -- a health care consultant says a minority of states would probably leverage the work they are doing, because it makes sense from a time, resource and cost perspective. Much of the technology would be transferable because the projects must follow federal data and IT standards.

Still, the source concedes that a majority of states will probably want to do their own IT development, either because they want to feel like they have independence and control over their exchange or they will look at innovator grant models and discover they don't align with the concepts or business processes that these states have developed. Cindy Gillespie, who leads the health care practice at McKenna Long & Aldridge, says most of the states she has talked to are not looking to the early innovators. While all states will share lessons with one another and early innovators have to make available what they do, she has not heard of states waiting to see what early innovators develop.

But Jay Himmelstein, a professor at the University of Massachusetts Medical School and director of the New England early innovator exchange collaborative that involves six states, says many small-population states have expressed interest in the early innovator work as a way to potentially lower developmental and operational costs for their exchanges, and the consultant says West Virginia has had conversations with a few early innovators, plus other states, about their work.

The states have begun filling an HHS web site -- calt.hhs.gov -- with materials related to exchange IT development, such as business requirements and requests for proposal, and eventually they will populate the site with actual codes that they hope other states may be able to use for their own exchanges, sources say. Meetings and conversations have taken place among early innovators and other states, such as a December meeting convened by the Center for Consumer Information and Insurance Oversight where early innovators gave a presentation to a group of states with lower populations such as Hawaii, Delaware and South Dakota.

Here is a progress report on where those four early innovators are, based on interviews Inside Health Policy conducted with those involved:

New England

Grant amount: $35.6 million

While the first year of the Massachusetts Early Innovator Collaborative agreement, otherwise known as the New England Collaborative for Insurance Exchange Systems, has focused on intensive planning, the group is now reviewing bids for the Massachusetts exchange's systems integrator, and Vermont and Rhode Island have signed on as design partners with the state. Signing such an agreement means those states will take on an active role in the design phase of the project and have access to more resources for incorporating IT components into their state exchange design, Himmelstein says. The systems integrator -- which the New England collaborative hopes to contract with in the next month - will bring together many important components of the exchange.

Himmelstein says the three other states involved in the early innovator collaborative -- Connecticut, Maine and New Hampshire -- have expressed interest in being operational partners. A health care consultant familiar with the project tells Inside Health Policy that Connecticut is also considering signing on as a design partner and therefore taking on a larger role.

. From day one the collaborative has focused on communicating with other states about what they can expect from their design as it evolves, Himmelstein says. Exchange IT components that states might be able to share include a reform law-compliant web portal, a standardized connection to the federal data hub and business rules to make eligibility determinations based on the information received from the hub. But major areas that will need tailoring to local needs, for example, are connections to state Medicaid programs and health plans.

Maryland

Grant amount: $6.2 million

Kevin Yang, the chief information officer for the Maryland Health Benefit Exchange, says the exchange has awarded a portion of its main IT contract to Noridian Administrative Services. The Noridian contract is for a part of the first of a three-phase IT procurement process, Yang said. Noridian's contract focuses on the core functions of the individual exchange, such as eligibility and enrollment, plan selection and a “no wrong door” portal for consumers.

Yang says Maryland has talked with other states about its early innovator work, either in a one-on-one state conversation or in settings created by CMS with the early innovator collaborative group. Yang did not specify which states have approached Maryland, but the health care consultant says that a few states from the Midwest have had conversations with the state. States had also been in talks with Wisconsin before that early innovator state decided to halt its implementation, the consultant says.

Yang says that the states have asked for Maryland’s thoughts on items such as which models it would use, business requirements and how it would structure IT procurement. Any discussion of actual technical components is too early at the moment, he says.

The second piece of the first IT procurement phase for Maryland's exchange deals with technical components of the SHOP exchange, for which Maryland exchange officials are still working on contracting strategies, Yang said. That piece of the project would need to use funding apart from the early innovator grant.

Oregon

Grant amount: $48.1 million

Nora Leibowitz, director of planning and implementation at the Oregon Health Insurance Exchange Corporation, says the state's first step was to purchase “off-the-shelf” Oracle software that the state will configure to meet the needs of the exchange without having to start totally from scratch. Now with its software solution in hand, the Oregon Health Authority -- the official recipient of the early innovator grant -- is working on an RFP for a systems integrator that will allow the state to configure the Oracle software and figure out connections with outside systems such as the federal data hub, other data sources and connections to carriers and state agencies.

The Oracle software will help the state achieve the “no wrong door” goals, Leibowitz said, noting that the innovator funding is being spent on the exchange side of things while enhanced federal Medicaid matching dollars will help the state do eligibility and enrollment system work. Before the early innovator grant opportunity came along, the state had already been looking to modernize its patchwork of legacy systems by purchasing a commercial off-the-shelf system, she said.

When asked whether a blip in the federal contracting process for the data hub -- which resulted in CMS having to re-award the contract for an integral piece of not only state exchanges but the federally facilitated exchange -- would hinder Oregon's progress on a systems integrator RFP, Leibowitz said that, even if CMS were done with its data hub work, the state would still make sure it had multiple data sources to rely on. The state is looking at its full range of options for data sources, she said.

Oregon was one of the first in the country to pass exchange enabling legislation, and earlier this month Gov. John Kitzhaber (D) signed the state's latest exchange bill that provides for legislative approval of the exchange's business plan. Leibowitz says she feels confident that Oregon's exchange will be fully certified as a state exchange by HHS by next year.

New York

Grant amount: $27.4 million

New York Medicaid Director Jason Helgerson says the state is in the final stages of the procurement process for an IT systems integrator -- which is where most of the focus has been as a part of the early innovator work.

The health care consultant says because the state has not progressed on enabling legislation for its exchange New York has not chosen an exchange IT vendor, but as soon as it gets that legislation passed it will likely drive more progress on the exchange front.

New York is the only early innovator state that has not passed some sort of exchange law in the last two years (an establishment bill is still pending in the state Senate), although it has received two rounds of Level One establishment grants in addition to its early innovator grant.

The consultant said New York originally had two RFPs out, one to overhaul the state's Medicaid system and one for the exchange. But the Medicaid RFP got shelved and the state ended up retaining its current Medicaid vendor, Computer Sciences Corporation. The source added that in the state's exchange RFP, New York identified that CSC would be its systems integrator and they would subcontract out to vendors that responded to the exchange RFP, a process still pending.