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NM health exchange denied $100 million for website changes

ALBUQUERQUE, N.M. — The denial of nearly $100 million in federal grant funding to retool New Mexico’s health exchange eligibility and enrollment system has exchange leaders scratching their heads on how to pay for the technological changes.

Health exchange CEO Amy Dowd ruled out any prospect of asking for state funds.

“We have never requested or used any state funds, and we have no plans to request state funds,” Dowd said Wednesday. She also said there are no plans to increase fees the exchange plans to charge insurance carriers to cover the health exchange’s operational costs.

She said the health exchange board is committed to moving ahead with its plan to run a state-based exchange, though doing so is not required by law.

A state-run exchange would mean more flexibility to customize services for individuals, she said. The board is now considering whether to tap $48 million remaining from previously received federal grant funds, or to continue to be a hybrid system. At present, the state operates the portion of the website for the small-business health-insurance market, while it acts as a portal to the federal Healthcare.gov site for the individual marketplace.

“If we continue building our own local technology platform, we will have to reallocate significant funding away from outreach and other efforts in order to fund the continued technology development,” Dowd said.

If the exchange continues to be a hybrid, the federal Center for Medicare & Medicaid Services (CMS), which oversees establishment of the health exchanges, would have to approve a lease arrangement and the state would have to start making payments. The exchange pays nothing now to access Healthcare.gov.

Board chair JR Damron said he didn’t know what that cost might be. He expects New Mexico representatives to meet with federal officials after the Affordable Care Act enrollment period ends on Feb. 15.

The health exchange learned in December that CMS had denied its application for $97 million in grant funding. The money was primarily intended for technology upgrades to comply with CMS requirements for individual-insurance exchanges.

“We didn’t expect to get $97 million — but we didn’t expect to get nothing,” Damron said.

He said the exchange was working on upgrades when CMS in early November said the design needed to offer simpler access to plan information. He said the requested changes added “tens of millions” to the cost.

Gov. Susana Martinez questioned the need for the design changes in a cover letter included with the grant application the state exchange submitted later that month.

“These changes have significant implications for the stand-up of New Mexico’s exchange and add unnecessary cost with only marginal, if any, value to customers,” Martinez’s letter said.

CMS spokesman Bob Moos said a committee awarded money based on scores given to grant applicants, and determined that New Mexico and Rhode Island were not “worthy of funds.” He didn’t say how many states had applied for the funding.

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