California Up for Big Federal IT Grant for Exchange

In California politics, sometimes the simplest things are not so simple.

Take the Early Innovator grant, which allows cash-strapped California to apply for federal money to revamp its clunky, disjointed welfare computer system, as well as streamline and centralize its enrollment process.

The grant, from the Affordable Care Act, does not currently specify an upper limit but is likely to provide millions of dollars to restructure the state’s health services information technology system.

Basically, the feds are offering to underwrite a new state-of-the-art IT system that would support the implementation of the state’s health benefits exchange. That would clearly benefit California, and it sounds like an inoffensive proposition. Who wouldn’t want the state to draw down a large chunk of health information technology money to upgrade its system and help establish the exchange?

But politics can be like rug-making, and the threads that push and pull these decisions are intricately interwoven. Counties that stand to benefit from increased efficiency of health care services might lose out on supplying some of the work force to run those services.

One impediment to corralling this grant money is the deadline of Dec. 23 — which falls in the dead zone between the November election and the Jan. 3 swearing-in of a new governor.

Timing Is Everything

California is in an enviable position, Kelly Hardy of Children Now said. It’s the first state in the nation to pass legislation to establish a health benefits exchange, something that every state will have to do by 2014. Because California is first, and because it has the nation’s largest uninsured population, it stands to reap the early benefit of federal health care reform dollars. That momentum is important, Hardy said.

“The key here is, this is the time to continue to be in the lead with reform implementation,” Hardy said. “We need to put in these system simplifications to make the whole shebang work by 2014, and the sooner we start on that, the better.”

A group of 13 advocacy organizations, including Children Now, recently sent a letter urging state officials to go for the Early Innovator grant.

For their part, state officials have made it clear that they will apply for the grant, but the question is when. The Early Innovator grant has been offered to five states, including California, that have led the way with establishing exchanges. The early adopters could get that IT funding about four to six months earlier than the rest of the nation, and that time is critical, Hardy said. Federal officials will open up the application for health IT funding to all states sometime in the spring.

“The reason we want to take the opportunity is that it takes awhile to get information technology started. We could wait for the second round, but as [outgoing Secretary of Health and Human Services] Kim Belshé likes to say, 2014 is tomorrow,” Hardy said.

Working backwards, if the system starts enrolling people in the exchange in January 2014, that means that the entire system would need to be operational at the start of 2013, Hardy said, to work out any bugs. It takes a long time to design a new IT system of that scope and complexity, Hardy pointed out.

Currently, California has three separate IT systems across the state to handle Medi-Cal enrollment.

According to Wendy Lazarus of The Children’s Partnership, if California waits and possibly cannot get the system properly in place, the consequences could be significant.

“You look at the fact that we have multiple systems in place; well, all of those systems will have to reinvent themselves by 2014,” Lazarus said.

State of the State

California health officials are well aware of the timeline and want to move quickly, according to Amy Palmer of the California Health and Human Services department. But it’s also important to move forward as a group, she said.

“We have not made a final decision about whether or not to apply for the [Early Innovator] grant,” Palmer said. “We are working closely with a broad range of stakeholders to see if we can achieve common ground in support of a state application.”

If the state is unable to apply for the grant in that tight timeframe, by Dec. 23, the same pot of money will be available several months later, Palmer said, after the new governor takes office.

“These conversations continue,” Palmer said, “and if we cannot reach consensus, the conversation will continue into the new year. Federal officials have assured us the resources will be available even if we don’t qualify for the earliest grants available.”

One of the reasons California was able to pass health care reform legislation so quickly, Palmer said, is that the process has included all stakeholders.

“At this point,” she said, “we are continuing to focus our efforts on achieving the consensus we need to submit an application that reflects the best approach for the people of California.”

Early Innovator grants are expected to be awarded by Feb. 15, about the same time the grant program will be opened to the rest of the states. The process will likely take longer with so many states eligible, which is why the estimate of time difference is four to six months, not two.

If Not Now, Then Later

“I really hope California applies in December. If not, we need to begin work right away, anyway, to get this put in place [before the spring application deadline],” Lazarus said.

“What’s the alternative?” she asked. “If we sit on our hands, four other states will get these grants while we watch it go by.”

Counties may be balking at losing control over a system that needs to become centralized, Lazarus said. Labor unions also might have concerns about the loss of jobs in welfare centers. But the centralization of enrollment is something that every state will be required to do, she said.

“The good news about the health care reform bill and the innovator grants is that they set out clear requirements,” Lazarus said. “We can build it once and build it right.”

There will be some unintended consequences from increased efficiency and better care for Californians who need it, she said, and those concerns are important.

“Labor discussions will need to happen,” Hardy of Children Now said in agreement, “but they need to be in parallel with getting the process going. If it isn’t, we’re going to be in a world of hurt in 2014, and missing out on federal funding.”

The revamping of health care will help Californians, Hardy said. So far California has embraced health reform as an historic opportunity — and she hopes the same spirit will apply to this IT funding.

“I think it’s the difference between getting on the ground running, or waiting till later,” she said. “That’s the difference you’re looking at. And I don’t think we can afford to wait till later.”

“Fiscal (policy) is everything right now,” Lazarus said. “If we don’t aggressively go after these dollars, the alternative is to do it on our own schedule with our own money, so it’s imperative that we get these federal dollars,” she said. Lazarus added, “I think we have a lot of momentum in California. We were the first to enact exchange legislation. We have a lot going for us, and we’ve been putting the various building blocks in place quickly. We definitely have a head of steam that sets us apart from other states.”

“Now it’s time to start the second stage,” she said. “And that’s the implementation of it.”

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