Ferguson: HealthSource will not require state money in FY15 as feds relax funding guidelines

AFTER ADDITIONAL DISCUSSION with the U.S. Department of Health and Human Services, HealthSource RI Executive Director Christine Ferguson said Tuesday that no state general revenue will be needed to fund the exchange in fiscal year 2015.
AFTER ADDITIONAL DISCUSSION with the U.S. Department of Health and Human Services, HealthSource RI Executive Director Christine Ferguson said Tuesday that no state general revenue will be needed to fund the exchange in fiscal year 2015.

PROVIDENCE – Reversing her announcement last week that Rhode Island’s state-run health insurance exchange would require $4.6 million in the state budget for fiscal year 2015, HealthSource RI Executive Director Christine Ferguson said Tuesday that state funding would no longer be necessary after a clarification of the federal government’s role in the exchange.

In an emailed release sent out Tuesday afternoon, Ferguson said that she was contacted on May 23 by the Center for Consumer Information and Insurance Oversight, a division of the U.S. Department of Health and Human Services, to discuss how the state will be funded for calendar year 2015.

“CCIIO recognizes that Rhode Island is one of the most successful state-based exchanges in the nation and wanted to clarify that it would work with Rhode Island regarding the use of federal funds in calendar year 2015 as we work with the legislature to pass a [fiscal year 2015] budget,” said Ferguson in a statement. “With this pledge of cooperation and support from CCIIO, I believe that HealthSource RI will be able to continue and build on the progress it has made for Rhode Island with no state general revenue in fiscal year 2015.”

Previously, CCIIO guidelines established for state-run exchanges dictated that federal funding awarded to an exchange could only be used to cover development and startup costs, while operational costs must be paid for with state money, according to HealthSource RI spokeswoman Christine Hunsinger.

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While Ferguson had engaged the CCIIO in conversations about relaxing these guidelines, a lack of clarity about the ultimate outcome of those conversations led Ferguson to announce last week that lawmakers would need to find $4.6 million for the exchange in the fiscal 2015 budget. Ferguson made the announcement at a press conference where she also discussed the implications that turning over control of the exchange to the federal government could have for local businesses and rate payers. It was the media coverage surrounding the state-level consideration of the viability of making such a transition to a federally run exchange that prompted renewed discussions between Ferguson and the CCIIO, Hunsinger said.

During Ferguson’s conversation on Friday with CCIIO representatives, the federal agency agreed to offer flexibility with regard to how the previously awarded federal funding for the exchange in 2015 may be used going forward, with the expectation that Rhode Island will establish a sustainable funding plan for HealthSource RI in the near future. Being now able to allocate federal dollars for operational costs as well as development costs in 2015, Ferguson said, the exchange no longer requires state funding to cover those expenses.

Hunsinger said the CCIIO did not provide a set deadline by which HealthSource RI must put such a funding plan in place, but that the federal government would prefer to see the plan established “sooner rather than later.” In addition, the CCIIO did not at this time dictate a commitment from the state of Rhode Island to maintain the exchange under state control for a given length of time as a condition for the guideline flexibility.

“HealthSource RI will continue to explore opportunities to form public-private partnerships and to generate revenue through providing products and services to other states, as well as to industry partners,” said Ferguson in the release.

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