Racing the clock, NM chooses hybrid fed/state exchange

Insurance exchange board member Ben Slocum of Lovelace Health Plan, left, and New Mexico Insurance Superintendent John Franchini speak during an exchange board meeting.

By Dennis Domrzalski, Reporter- Albuquerque Business First

The New Mexico Health Insurance Exchange board decided not to start over.

Instead, the board decided to piggyback on the work toward building New Mexico’s online insurance marketplace that had already been done by the New Mexico Health Insurance Alliance.

Meeting in Albuquerque last week, the exchange’s board voted to hire two companies that had already been vetted by the Alliance in late 2012 and earlier this year.

The board hired Mike Nunez as its interim CEO. Nunez has been the Alliance’s executive director since November 2009 and led the organization’s efforts to begin building the exchange last year.

The Alliance had issued RFPs for a vendor to build the exchange’s software and for a firm to manage the overall project. It had been set to award contracts in February, but politics got in the way.

Several state legislators questioned whether the Alliance had the authority to set up the exchange. Gov. Susana Martinez said it did, but legislators disagreed. During the recent 60-day legislative session, Martinez and lawmakers haggled over legislation to create the exchange. A bill was finally passed and Martinez signed it in late March.

But during the political wrangling, the Alliance’s work on the exchange was halted.

Exchange Chair Dr. J.R. Damron said during the two-day board meeting that more than three months had been lost in the effort to build the exchange and that important decisions had to be made quickly.

After hiring Nunez through at least the first quarter of 2014, the board voted to hire, a Silicon Valley firm, to build New Mexico’s exchange. Getinsured bid $39.9 million for the five-year project, lower than the $60 million bid that Deloitte LLP had submitted.

Under the terms of the deal, New Mexico will, in effect, be renting the software from Getinsured and the California firm will host the exchange on its servers.

Exchange board member Ben Slocum, the CEO of Lovelace Health Plan, said the deal was the best for New Mexico because Getinsured, which is building exchanges for California and Mississippi, will be obligated to keep the program current. That means the exchange won’t have to worry about hiring an entire division to write computer code, Slocum added.

Under the proposal from Deloitte, New Mexico would have owned the software and would have had to make any upgrades itself, which would have been a costly proposition, Slocum said, adding that the trend in the health care industry is to let third-party vendors own and host critical software.

Slocum said the job Getinsured must do — integrating data on hundreds of thousands of people with government agencies like the IRS — is a massive undertaking, and he cautioned the board against actually owning the software.

“If I have to move a data center across town, it will cost $5 million. It’s a massive project,” Slocum said.

The board also voted to hire the Public Consulting Group as the effort’s project manager. The firm had bid $1.7 million under the RFP the Alliance had issued.

Realizing that it was nearly impossible to meet the Oct. 1 deadline of getting both an individual and small business exchange operational by Oct. 1 as required by the federal Affordable Care Act, the board voted to temporarily make New Mexico’s exchange a joint state/federal effort.

That means the state will enroll and qualify small businesses to buy insurance, while the federal government will do the same for individuals.

Board members said the exchange will be a complex technical endeavor. It will have to be linked to the IRS and other federal and state agencies and will use information from those organizations to determine whether individuals qualify for Medicaid or subsidies for health insurance.

So far, five insurers have filed to sell on New Mexico’s exchange: Lovelace Health Plan, Presbyterian Health Plan, Blue Cross and Blue Shield of New Mexico, New Mexico Health Connections and Molina Healthcare of New Mexico.

Albuquerque Business First

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