CMS will hold a crucial review with Massachusetts Health Connector officials this week and decide whether the state can keep a state-based exchange or be forced to default to the federal exchange for the upcoming enrollment period, sources tell Inside Health Policy. Find broker software solutions for Massachusetts. The state is being closely watched by stakeholders because its state health reform law was a model for the ACA, yet the state ran into significant technical problems in making its existing exchange compliant with the newer federal requirements.

hCentive CEO Sanjay Singh — whose company is trying to salvage the state’s exchange — says he expects CMS will reach a conclusion this week after agency officials review the progress made between the two tracks of Massachusetts’ “dual track” plan.

Under that plan, which was announced in May, the state brought on hCentive to build a customized exchange using an “off the shelf” platform that has worked in other states, while it simultaneously prepared to link to the federal exchange should the state not be able to get a functioning state-based exchange in time. “We feel very good about the progress that we have made,” he said.

A spokesperson for the Massachusetts exchange confirmed that the exchange is still on the previously stated early-August timeline for a final decision, but would not respond to questions on exactly when CMS is supposed to do its evaluation. One consultant believes the evaluation will take place in the next few days, and another says signs have been positive lately that the state would be able to run its own marketplace for 2015 open enrollment. The next Massachusetts Health Connector board meeting takes place on Aug. 14.

Massachusetts exchange officials in July received a “green light” from CMS to continue with their “dual track” plan, which kept both the state-run exchange and federal exchange options open. Singh said the first week of July was a larger checkpoint with CMS but the company has been having weekly demos to demonstrate progress on the transition.

Other states trying to successfully get their own exchanges off the ground have faced decision points this summer. New Mexico decided late last month that it would stay on the federally facilitated exchange to enroll individuals in 2015, a setback from its desire to fully operate its marketplace for the next open enrollment period. Exchange spokesperson Monica Griego said the decision to stay with the federal enrollment platform for the individual market was based on a tight timeline for completing state-based exchange testing; the testing cycle would have been completed only in the beginning of November, so it was determined that staying with the FFE would be the safer option because testing could go on for a longer period of time.

Maryland has also had a number of checkpoints with CMS. According to staff materials, on June 23 the exchange went through a design “gateway review” with CMS and demonstrated integration with the federal data hub. Carrier integration testing begins Aug. 15 and an operational readiness review is supposed to take place on Sept. 9, according to an update given in July to the Maryland exchange board of directors. Maryland decided to scrap its existing system, but instead of transitioning to the federal exchange it decided to license technology developed by Deloitte for Connecticut’s exchange.

Part of the difficulty in using the federal technology for enrollment is that Massachusetts has many state-specific programs, Singh says, and getting the federal system to accommodate those elements would require a lot of custom effort. Thus going with the state-based exchange route is preferable, he said.

Massachusetts passed its own health reform law which served as a model for the federal law, and the state has a “state wrap” that provides subsidies on top of the ACA’s premium tax credits and cost-sharing subsidies in order to lower insurance costs further for certain individuals. Integrating the wrap into the technology has been complex and Singh suggested that continuing that program would be a challenge if Massachusetts went to the federal exchange.

The state wrap supplements ACA federal subsidies available on the exchange by providing additional financial support to individuals with incomes between 133 percent and 300 percent of poverty. According to a previous budget summary written by Massachusetts Gov. Deval Patrick (D), the combined state and federal subsidies are meant to put the costs of ACA coverage in line with what consumers were getting under the state’s Commonwealth Care program. Issuers participating on the exchange must propose wrap-compatible silver plans so that they are available to individuals within that income range, a Kaiser Family Foundation brief notes.

“These are very specific state requirements to be met,” Singh says. — Rachana Dixit Pradhan