In follow up to the Supreme Court’s recent ruling, senior officials at the US Department of Health and Human Services (HHS) described the agency’s willingness to partner with stakeholders and reported measurable progress on implementing the Affordable Care Act at a forum convened by HHS on Tuesday in Washington, DC.

Marilyn Tavenner, Acting Administrator of the Centers for Medicare and Medicaid Services (CMS) observed that “we are on track” to meet implementation timelines required by the law. Speakers expanded on Tavenner’s remarks, providing new details on the implementation process.

Health Insurance Exchanges

Michael Hash, Director of the HHS Office of Health Reform reported that 13 states have expressed interest in launching health insurance exchanges in their states,1 allowing them flexibility to tailor the programs to residents’ specific needs. Other states will establish a partnership with the federal government through which HHS will provide administrative and technical support to reduce operational burden. In states that do not select another option, HHS will operate Federally-Facilitated Exchanges (FFEs) in the State. The agency will launch a secure Federal Data Hub to provide one-stop, real-time access to data from multiple Federal agencies needed to operate the exchanges. Where states request additional support, HHS can help certify health plans, qualify eligible participants, evaluate actuarial value of essential benefits, and provide other assistance as needed. HHS released its finalized blueprint for setting up health insurance exchanges on Tuesday, August 14, 2012.2 Applications to establish exchanges for 2014 are due by November 16, 2012. States may also opt to launch exchanges in subsequent years. Federal grant money is available on a rolling basis to study, design and launch health insurance exchanges.

Figure 1: Flexible Exchange Options for States

Please click here to view image.

Medicaid Expansion

Cindy Mann, Director of the Center for Medicaid and State Operations, described HHS’ efforts to modernize the Medicaid Program, simplify and standardize the application process and coordinate coverage for all beneficiaries, including the “dual eligibles.” States that voluntarily extend their Medicaid benefits to childless adults at or below 133 percent of the Federal Poverty Level will qualify for substantial Federal matching funds: the Fed will cover 100 percent of the incremental expansion costs for the first three years, then gradually decrease its match to 90 percent by 2020. Mann addressed concerns that the federal government could cut matching funds in the current fiscal environment by noting that Congress has historically increased, not decreased the federal match rate for Medicaid programs. She underscored the voluntary nature of the expansion and reminded the audience that States would have the option to restrict Medicaid eligibility in future years if needed as “maintenance of effort” requirements are eliminated.

Innovation in Health Care Delivery

Richard Gilfillan, MD, Director of the Medicare Innovation Center, commented that it can take about 17 years for best practices to be implemented in the current health care system. He described federal government interest in reducing that timeframe by testing new health care delivery models that the Secretary of HHS has authority to implement broadly if they expand access to care, improve health outcomes and reduce cost. Stakeholders may apply for Federal innovation grants to develop and test new delivery models. Applications for the current round of grants will be received through September 17, 2012.

HHS is actively soliciting recommendations as it proceeds with program implementation. It will hold additional forums in Atlanta, Chicago, and Denver in the coming weeks.


The Supreme Court ruling on the Affordable Care Act provided the certainty needed to move forward with implementing health care reform. While the next Congress may repeal or replace parts of the law, stakeholders should closely follow details on implementation over the coming months: Regulations are still in development and interested parties may be able to secure clarifications or refinements before final rules are released. There may also be opportunities to partner with HHS and/or the states to develop IT infrastructure, business plans, or consumer outreach and education programs. Manufacturers, hospitals, and clinicians should evaluate the implications of the new law for their products and services and consider ways to deepen or adjust their market position in order to build business opportunities and reduce risks associated with the step-wise implementation of the law.