CMS-10371 Revised FOA

U.S. Department of Health and Human Services
Centers for Medicare & Medicaid Services
Center for Consumer Information and Insurance Oversight

Cooperative Agreement to Support Establishment of State-Operated Health
Insurance Exchanges

Announcement Type: Amended
Funding Opportunity Number: IE-HBE-11-004
CFDA: 93.525

Date: November 29, 2011
Addendum to Cooperative Agreement to Support Establishment of State-Operated Health
Insurance Exchanges
Funding Opportunity Announcement (FOA) No. IE-HBE-11-0004 has been amended on the
terms and conditions provided in the FOA. This addendum provides a summary of the
amendments to the FOA by section. The amended FOA will immediately follow this addendum.
AMENDMENTS TO THE FUNDING OPPORTUNITY ANNOUNCEMENT
Amendments to Cooperative Agreement to Support Establishment of State-Operated Health
Insurance Exchanges, will be included in the body of the funding opportunity announcement in
bold, underlined text. This Addendum lists, by section, areas of the funding opportunity
announcement that have been amended.
Title Page
Amended to note that this announcement is issued by the Centers for Medicare &
Medicaid Services, Center for Consumer Information and Insurance Oversight.
Amended to reflect extension of Level One application deadlines through June 29, 2012.
Overview Information
Amended to note that this announcement is an amendment to an existing announcement.
Amended to note that this announcement is issued by the Centers for Medicare &
Medicaid Services, Center for Consumer Information and Insurance Oversight.
Amended to reflect extension of Level One application deadlines through June 29, 2012.

1

Section I. Funding Opportunity Description: 1. Purpose
Amended to strike phrase State-operated. Striking the phrase State-operated provides
clarity that Exchange Establishment cooperative agreement funds may be used for State
activities that support the establishment of a Federally-facilitated Exchange.
Amended language to refer to cooperative agreements instead of grants.
Amended to clarify that a Level One grantee may reapply for another Level One
Exchange Establishment cooperative agreement.
Amended to clarify when a Level One grantee may apply for a Level Two Exchange
Establishment cooperative agreement.
Added phrasing ―pursuant to section 1311(b).‖
Amended to state that more information on the model used by HHS to establish an
Exchange, including a State Partnership model, will be forthcoming.
Section I. Funding Opportunity Description: 2. Authority
Amended sentence to include phrasing ―pursuant to‖ and to refer to States and the
District of Columbia.
Section I. Funding Opportunity Description: 3. Background
Amended to reflect awarding of the seven Early Innovator cooperative agreements to
states/consortia of States and release of funding opportunity for Territory Cooperative
Agreements.
Amended to strike phrase State-operated.
Section I. Funding Opportunity Description: 5. Program Requirements
Amended to strike phrase State-operated.
Amended to provide full names of previous Exchange funding opportunity
announcements.
Amended to reflect awarding of the Early Innovator cooperative agreements to
States/consortia of States.
Amended part D. to replace Exchange Establishment grant funding with Exchange
Establishment cooperative agreement funding.
Amended part E. to use term cooperative agreement instead of grant.
Section II. Award Information: 5. Number of Awards
Amended to state that the total number of possible awards is based upon the number of
eligible entities for this funding opportunity. Also included reference to previous funding
opportunity which States must have received an award under in order to be eligible.
Section III. Eligibility Information: 1. Eligible Applicants
Amended to provide full names of previous Exchange funding opportunity
announcements and abbreviated names for the purposes of this FOA.
Amended to reflect awarding of the Early Innovator cooperative agreements to
States/consortia of States.
Amended to clarify language around duplication of efforts.

2

Amended to clarify when a Level One grantee may apply for a Level Two Exchange
Establishment cooperative agreement.
Amended to provide source for executive compensation reporting requirements.
Amended to correct email address.
Section III. Eligibility Information: 2. Cost-Sharing / Matching Medicaid Federal Financial
Participation
Amended to strike sentence ―States may utilize funds from this announcement to adapt
models for Exchange IT systems developed by ―Early Innovator‖ States‖ as this
statement is repeated in the next paragraph in this section.
Amended to update with link for Final Rule for Medicaid Program; Federal Funding for
Medicaid Eligibility Determination and Enrollment Activities. Removed link for the
Notice of Proposed Rulemaking.
Amended to instruct States to consult the most recent Federal cost allocation guidance,
including a link to IT Guidance 2.0.
Amended to provide a link to more information on A-87 waivers, including the TriAgency Letter.
Section III. Eligibility Information: 3. Other
Amended to strike phrase State-operated.
Amended to clarify eligibility under this FOA. The statement ―This funding opportunity
is open to the 50 States, consortia of States, and the District of Columbia to establish
State-operated Exchanges,‖ was amended to ―This funding opportunity is open to eligible
States, consortia of States, and the District of Columbia to establish Exchanges.‖
Amended to correct email address.
Section III. Eligibility Information: 4. Pre-Application Conference Call
Amended to update call information for pre-application calls in March and May 2012.
Amended to identify the CCIIO website as the location for transcripts and recordings, and
included the CCIIO website link.
Section IV. Application and Submission Information: 1. Address to Request Application
Package
Amended to correct email addresses.
Amended to include information that users should review Grants.gov compatibility
information for software and browsers in addition to Microsoft Vista and Office 2007.
Amended to reflect extension of Level One application deadlines through June 29, 2012.
Amended to remove ―division‖ from end of Division of Grants Management.
Section IV. Application and Submission Information: 2. Content and Form of Application
Submission
Amended SF-424 note to reflect that the applicant should insert the name of this
cooperative agreement funding opportunity, instead of using the term grant.

3

Section IV. Application and Submission Information: 2. Content and Form of Application
Submission, E. Project Narrative, i. Level One Establishment
Amended to strike phrase State-operated.
Amended to identify the Work Plan as the location for the required description of the
approach and activities that the grantee will undertake under each Core Area.
Section IV. Application and Submission Information: 2. Content and Form of Application
Submission, E. Project Narrative, ii. Level Two Establishment
Amended to strike phrase State-operated.
Section IV. Application and Submission Information: 2. Content and Form of Application
Submission, F. Work Plan
Provided instruction that States must distinguish in their Work Plans between activities
supported under this funding opportunity announcement application, and those supported
under other Exchange funding opportunity awards (to include activities supported under
previously awarded Exchange Establishment Cooperative Agreements).
Section IV. Application and Submission Information: 2. Content and Form of Application
Submission, G. Budget Narrative
Amended to include references to areas of the funding opportunity announcement where
an applicant can locate information on reimbursement of pre-award costs and prohibited
uses of funds.
Amended to include CCIIO website as an additional resource for allowable costs
information.
Amended to include the correct form, Application Form SF 424A.
Amended to include instruction on distinguishing funding used to support tasks under this
funding opportunity announcement application, and funding used to support tasks under
other Exchange funding opportunity awards (to include tasks supported under previously
awarded Exchange Establishment Cooperative Agreements).
Section IV. Application and Submission Information: 2. Content and Form of Application
Submission, J. Documentation Supporting Eligibility of Applicant (Level Two
Establishment Only)
Amended to provide instruction to include all information documenting eligibility for
Level Two Establishment into one attachment, even if the documentation provided is
duplicative of information provided elsewhere in the application.
Section IV. Application and Submission Information: 3. Submission Dates and Times
Amended to reflect extension of Level One application deadlines through June 29, 2012.
Section IV. Application and Submission Information: 5. Funding Restrictions, A.
Reimbursement of Pre-Award Costs
Amended to include reference to previously awarded Exchange Establishment
Cooperative Agreements.
Amended to reference cooperative agreement instead of grant.

4

Section IV. Application and Submission Information: 5 Funding Restrictions, B. Prohibited
Uses of Grant Funds
Amended to instruct States to consult the most recent Federal cost allocation guidance,
including a link to IT Guidance 2.0.
Amended to provide a link to more information on A-87 waivers, including the TriAgency Letter.
Section V. Application Review and Selection Information: 1. Criteria – Level One
Establishment, A. Project Narrative
Amended to include clarifying language on making progress within the Core Areas.
Section V. Application Review and Selection Information: 1. Criteria - Level One
Establishment, B. Work Plan
Revised paragraph instructing States to distinguish in their Work Plans between activities
funded through this opportunity and those funded through other Exchange funding
opportunities by removing the word pursued and replacing it with the word funded.
Amended language to include instruction on distinguishing among activities funded
under this application (if selected for funding) and those activities funded under
previously received Exchange Establishment Cooperative Agreements.
Section V. Application Review and Selection Information: 1. Criteria - Level One
Establishment, C. Budget Narrative
Amended to include Early Innovator Cooperative Agreements and previously awarded
Exchange Establishment Cooperative Agreements as part of the coordination discussion
for Exchange Establishment funding.
Amended to reference that States must provide a description of their capacity to manage
multiple grant/cooperative agreement funding streams.
Section V. Application Review and Selection Information: 1. Criteria - Level Two
Establishment, B. Work Plan
Revised paragraph instructing States to distinguish in their Work Plans between activities
funded through this opportunity and those funded through other Exchange funding
opportunities by removing the word pursued and replacing it with the word funded.
Amended language to include instruction on distinguishing among activities funded
under this application (if selected for funding) and those activities funded under
previously received Exchange Establishment Cooperative Agreements.
Section V. Application Review and Selection Information: 1. Criteria - Level Two
Establishment, C. Budget Narrative
Amended to include Early Innovator Cooperative Agreements and previously awarded
Exchange Establishment Cooperative Agreements as part of the coordination discussion
for Exchange Establishment funding.
Amended to reference that States must provide a description of their capacity to manage
multiple grant/cooperative agreement funding streams.

5

Section VI. Award Administration Information: 1. Award Notices
Amended language to match Federal Funding Accountability and Transparency Act
reporting requirements outlined under Award Administration Information, 5. Reporting.
Section VI. Award Administration Information: 2. Administrative and National Policy
Requirements
Amended administrative requirements to reflect 2 CFR Part 225 instead of 2 CFR Part
215.
Amended to clarify appropriate use of budgeted resources.
Amended to use term cooperative agreements instead of grants.
Section VI. Award Administration Information: 3. Terms and Conditions
Amended language to use cooperative agreements instead of grants.
Amended language to match Federal Funding Accountability and Transparency Act
reporting requirements outlined under Award Administration Information, 5. Reporting.
Amended to provide source for executive compensation reporting requirements.
Section VI. Award Administration Information: 4. Cooperative Agreement Terms and
Conditions of Award
Amended administrative requirements to reflect 2 CFR Part 225 instead of 2 CFR Part
215.
Section VII. Agency Contacts
Amended to update contact information.
Section VIII. Appendices, A. Appendix A: Description of the Eleven Exchange
Establishment Core Areas, 2. Stakeholder Consultation
Amended to use term ―Tribal‖ instead of ―Indian.‖
Section VIII. Appendices, A. Appendix A: Description of the Eleven Exchange
Establishment Core Areas, 10. Providing Assistance to Individuals and Small Businesses,
Coverage Appeals, and Complaints
Amended to add phrase ―health insurance plans‖ to complete sentence.
Section VIII. Appendices, A. Appendix A: Description of the Eleven Exchange
Establishment Core Areas, 11. Business Operations of the Exchange
Amended to remove Free Choice Vouchers as a minimum function of an Exchange. Also
removed free choice vouchers from eligibility determinations discussion.
Section VIII. Appendices, B. Appendix B: Example Milestones for Exchange
Establishment
Amended to include Early Innovator Cooperative Agreements within (1) Financial
Management; and (2) Oversight and Program Integrity discussion.
Amended to remove Free Choice Vouchers from list of milestones.
6

Section VIII. Appendices, D. Appendix D: Exchange Information Technology
Amended to remove ―Payment management system for Free Choice Vouchers‖ from list
of key modules in Exchange IT system.
Section VIII. Appendices, E. Appendix E: Guidance for Preparing a Budget Request and
Narrative in Response to SF 424A
Amended to reference cooperative agreement instead of grant.
Amended to include Early Innovator Cooperative Agreements and previously awarded
Exchange Establishment Cooperative Agreements within list of Exchange funding
opportunities that should not be supplanted with Exchange Establishment Cooperative
Agreement funding and added clarifying language.
Amended OCIIO to reference CCIIO.
Amended to update with link for Final Rule for Medicaid Program; Federal Funding for
Medicaid Eligibility Determination and Enrollment Activities.
Amended to instruct States to consult the most recent Federal cost allocation guidance,
including a link to IT Guidance 2.0.
Amended to provide a link to more information on A-87 waivers, including the TriAgency Letter.
Section VIII. Appendices, E. Appendix E: Guidance for Preparing a Budget Request and
Narrative in Response to SF 424A, F. Travel
Amended to provide guidance that travel requests should be for staff travel only.
Section VIII. Appendices, F. Appendix F: Guidance for Preparing Budget Request By
Core Area
Amended to include Early Innovator Cooperative Agreements and previously awarded
Exchange Establishment Cooperative Agreements within list of Exchange funding
opportunities that should not be supplanted with Exchange Establishment Cooperative
Agreement funding and added clarifying language.
Amended to remove Free Choice Vouchers as a minimum function of an Exchange.
Section VIII. Appendices, G. Appendix G: Federal Procurement Requirements for
Grantees
Amended to revise sentence on procurement procedures to instruct Grantees that they can
use their own procedures that reflect applicable State and local laws and regulations, as
long as those procedures conform to the applicable U.S. Department of Health and
Human Services regulations.

7

U.S. Department of Health and Human Services
Centers for Medicare &Medicaid Services
Center for Consumer Information and Insurance Oversight

Cooperative Agreement to Support Establishment of State-Operated Health
Insurance Exchanges
Announcement Type: Amended
Funding Opportunity Number: IE-HBE-11-004
CFDA: 93.525

Date: November 29, 2011

Applicable Dates
Letter of Intent: February 22, 2011
Level One Establishment
Application Due Dates: March 30, 2011; June 30, 2011; September 30, 2011; December 30,
2011; March 30, 2012; June 29, 2012
Level Two Establishment
Application Due Dates: March 30, 2011; June 30, 2011; September 30, 2011; December 30,
2011; March 30, 2012, June 29, 2012
Anticipated notice of award: 45 days after application due date

Period of Performance: Level One Establishment: Up to one year after date of award; Level Two
Establishment: From date of award up through December 31, 2014
PRA Disclosure Statement
According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of
information unless it displays a valid OMB control number. The valid OMB control number for this information
collection is 0938-1119. The time required to complete this information collection is estimated to average (463
hours) per response, including the time to review instructions, search existing data resources, gather the data needed,
and complete and review the information collection. If you have comments concerning the accuracy of the time
estimate(s) or suggestions for improving this form, please write to: CMS, 7500 Security Boulevard, Attn: PRA
Reports Clearance Officer, Mail Stop C4-26-05, Baltimore, Maryland 21244-1850.

8

Table of Contents
OVERVIEW INFORMATION ............................................................................................11
I.

FUNDING OPPORTUNITY DESCRIPTION .......................................................11
1. Purpose
11
2. Authority
12
3. Background
13
4. Exchange Principles and Priorities and Determinations by HHS
14
5. Program Requirements
15

II.

AWARD INFORMATION .......................................................................................18
1. Total Funding
18
2. Award Amount
18
3. Anticipated Award Dates
18
4. The Period of Performance
18
5. Number of Awards
18
6. Type of Award
18

III.

ELIGIBILITY INFORMATION .............................................................................19
1. Eligible Applicants
19
2. Cost-Sharing / Matching Medicaid Federal Financial Participation
20
3. Other
21
4. Pre-Application Conference Call
21

IV.

APPLICATION AND SUBMISSION INFORMATION .......................................22
1. Address to Request Application Package
22
2. Content and Form of Application Submission
25
3. Submission Dates and Times
37
4. Intergovernmental Review
37
5. Funding Restrictions
37

V.

APPLICATION REVIEW AND SELECTION INFORMATION .......................38
1. Criteria
39
2. Review and Selection Process
46
3. Anticipated Announcement and Award Date
47

VI.

AWARD ADMINISTRATION INFORMATION ..................................................47
1. Award Notices
47
2. Administrative and National Policy Requirements
47
3. Terms and Conditions
48
4. Cooperative Agreement Terms and Conditions of Award
49
5. Reporting
50

VII.

AGENCY CONTACTS .............................................................................................52

9

VIII. APPENDICES ............................................................................................................53
A. Appendix A: Description of the Eleven Exchange Establishment Core Areas 53
B. Appendix B: Example Milestones for Exchange Establishment
62
C. Appendix C: IT Gap Analysis for Project Narrative
78
D. Appendix D: Exchange Information Technology
81
E. Appendix E: Guidance for Preparing a Budget Request and Narrative in
Response to SF 424A
84
F. Appendix F: Guidance for Preparing Budget Request By Core Area
93
G. Appendix G: Federal Procurement Requirements for Grantees
95
H. Appendix H: Application Check-Off List
97

10

OVERVIEW INFORMATION
Agency Name: Department of Health and Human Services
Centers for Medicare & Medicaid Services
Center for Consumer Information and Insurance Oversight
Funding Opportunity Title: Cooperative Agreement to Support Establishment of StateOperated Health Insurance Exchanges
Announcement Type: Amended
Funding Opportunity Number: IE-HBE-11-004
Catalog of Federal Domestic Assistance (CFDA) Number: 93.525
Key Dates:
Date of Issue: January 20, 2011
Letter of Intent: February 22, 2011
Level One Establishment
Application Due Dates: March 30, 2011; June 30, 2011; September 30, 2011; December 30,
2011; March 30, 2012; June 29, 2012
Level Two Establishment
Application Due Dates: March 30, 2011; June 30, 2011; September 30, 2011; December 30,
2011; March 30, 2012, June 29, 2012
Anticipated notice of award: 45 days after application due date
Period of Performance: Level One Establishment: Up to one year after date of award; Level Two
Establishment: From date of award up through December 31, 2014
Pre-Application Conference Calls: (See Section III.C for more information)

I.
FUNDING OPPORTUNITY DESCRIPTION
1. Purpose
This Funding Opportunity Announcement (FOA) provides States, the District of Columbia, and
consortia of States, with financial assistance for the establishment of health insurance Exchanges
(Exchanges). Throughout this announcement, States, the District of Columbia, and consortia of
States will all be referred to as ―State(s).‖ States may choose whether to apply for Level One
Establishment or Level Two Establishment based on their progress. States can also choose at
what point to apply for grant funding based on their own needs and planned expenditures. If
there are any activities that are distinct for the District of Columbia or consortia, these will be
identified separately.

11

This cooperative agreement funding opportunity is designed to give States multiple opportunities
to apply for funding as they progress through Exchange establishment, which helps support their
progress toward the establishment of an Exchange. States may initially apply in this
announcement for either Level One or Level Two Establishment cooperative agreements. Level
One Establishment grantees may reapply for another Level One Establishment cooperative
agreement at a subsequent application deadline. Level One Establishment grantees may apply
for a Level Two Establishment cooperative agreement provided grantees have made sufficient
progress in the initial Level One Establishment project period and they are able to satisfy the
eligibility criteria for Level Two Establishment defined in Section III.1.
On March 23, 2010, the President signed into law the Patient Protection and Affordable Care Act
(P.L. 111-148). On March 30, 2010, the Health Care and Education Reconciliation Act of 2010
was signed into law. The two laws are collectively referred to as the Affordable Care Act. The
Affordable Care Act creates new competitive private health insurance markets – called
―Exchanges‖ – that will give millions of Americans and small businesses access to affordable
coverage. Exchanges will help individuals and small employers shop for, select, and enroll in
high-quality, affordable private health plans that fit their needs at competitive prices. Exchanges
will also assist eligible individuals to receive premium tax credits and cost sharing reductions or
help individuals enroll in other Federal or State health care programs. By providing one-stop
shopping, Exchanges will make purchasing health insurance easier and more understandable and
will put greater control and greater choice in the hands of individuals and small businesses.
The Affordable Care Act provides that each State pursuant to section 1311(b) may elect to
establish an Exchange that would: 1) facilitate the purchase of qualified health plans (QHPs); 2)
provide for the establishment of a Small Business Health Options Program (―SHOP Exchange‖)
designed to assist qualified employers in facilitating the enrollment of their employees in QHPs
offered in the SHOP Exchange; and 3) meet other requirements specified in the Affordable Care
Act.
These grants are a critical step so that States can be on track for achieving certification by
January 1, 2013 in accordance with Section 1321 of the Affordable Care Act. This planning
process will lead to State action, by legislation or other means, to create an Exchange entity with
the authority necessary to meet all the Exchange requirements of the Affordable Care Act. In
States that choose, now or at a later point in the process, not to establish an Exchange, the
Department of Health and Human Services (HHS) working with the State, will establish an
Exchange for residents and small businesses in the State. More information on this model,
including a State Partnership model, will follow and States should continue to view the
CCIIO website for more information.
2. Authority
This Cooperative Agreement is being issued by HHS pursuant to Section 1311 of the Patient
Protection and Affordable Care Act (P.L. 111-148), which authorizes this funding opportunity
for States and the District of Columbia.

12

3. Background
On March 23, 2010, the President signed into law the Patient Protection and Affordable Care
Act. On March 30, 2010, the Health Care and Education Reconciliation Act of 2010 was signed
into law. The two laws are collectively referred to as the Affordable Care Act. The Affordable
Care Act includes a wide variety of provisions designed to expand coverage, provide more health
care choices, enhance the quality of health care for all Americans, hold insurance companies
more accountable, and lower health care costs.
The Affordable Care Act provides each State with the option to set up a State-operated
Exchange. If a State elects not to operate an Exchange, or in the case of an Exchange that does
not meet the requirements of the law, HHS shall (directly or through agreements with a not-forprofit entity) establish and operate such Exchange within the State. An Exchange is an organized
marketplace to help consumers and small businesses buy health insurance in a way that permits
easy comparison of available plan options based on price, benefits, and quality. By pooling
people together, reducing transaction costs, and increasing price and quality transparency,
Exchanges create more efficient and competitive health insurance markets for individuals and
small employers.
Determining eligibility – including changes in eligibility – for various types of coverage can be
difficult and confusing for consumers. Exchanges will help consumers negotiate and overcome
these kinds of complexities. As a result, another key benefit of Exchanges will be more
streamlined access to and continuity of coverage.
Inability to afford coverage has been a principle factor causing tens of millions of Americans to
be uninsured. Historically, the individual and small group health insurance markets have suffered
from adverse selection and high administrative costs, resulting in low value and higher premiums
for consumers. Exchanges will allow individuals and small businesses to benefit from more
effective pooling of risk, which could help reduce premiums and increase market leverage and
economies of scale that large businesses currently enjoy in the insurance market.
The Exchange will carry out a number of functions as required by the Affordable Care Act,
including certifying qualified health plans, administering premium tax credits and cost-sharing
reductions, responding to consumer requests for assistance, and providing an easy-to-use website
and written materials that individuals can use to assess eligibility and enroll in health insurance
coverage, and coordinating eligibility for and enrollment in other state health subsidy programs,
including Medicaid and CHIP.
HHS has used a phased approach to provide States with resources for implementing Exchanges.
On September 30, 2010, HHS awarded the first phase of Exchange funding to 48 States and the
District of Columbia. Exchange Planning grants assist with initial planning activities related to
the implementation of the Exchanges. In connection with those planning grants, nine core areas
were identified for States to focus on in the planning process: Background Research, Stakeholder
Involvement, Governance, Program Integration, Regulatory/Legislative Actions, Technical
Infrastructure, Finance, Resources and Capabilities, and Business Operations. States that
received these funds have been carrying out planning activities under each of these nine core
areas.
13

In an effort to reduce replication and the cost of work on the IT components of the Exchange, the
Cooperative Agreement to Support Innovative Exchange Information Technology Systems
Funding Opportunity was announced in October 2010. In February of 2011, HHS awarded its
second phase of Exchange funding to six States and one consortium of States to develop
Exchange IT systems that will serve as models for other States. This approach aims to reduce
the need for each State to ―reinvent the wheel‖ and aids States in Exchange establishment by
accelerating the development of Exchange IT systems.
In an effort to ensure that all States have the opportunity to receive resources to plan and
implement an Exchange, HHS announced a third funding opportunity on January 19, 2011 for
those States that did not already receive Exchange Planning grant funds.
In order to give Territories the opportunity to receive similar resources, HHS announced a
funding opportunity on January 20, 2011 that provided early implementation funding to
Territories that elect to establish an Exchange consistent with Federal requirements.
Authorized costs integral to the planning and establishment of Exchanges are eligible for Federal
funding through January 1, 2015. This fifth phase of HHS funding will provide States with
financial support for activities related to the establishment of an Exchange, including the
development of Exchange IT systems. After January 1, 2015, Exchanges must be self funded.
4. Exchange Principles and Priorities and Determinations by HHS
As noted above, HHS appreciates that States are in varying stages of development in establishing
an Exchange and is fully committed to working with each State wherever it is in this process. In
order to understand the Program Requirements for successful applicants, it is important to have a
solid understanding of Exchange Principles and key determinations to be made by HHS.
Principles and Priorities
The Exchange Program Requirements are based on the provisions of the Affordable Care Act
and expressed in the Initial Guidance to States on Exchanges, released November 18, 2010.
Further information can be found at:
http://www.healthcare.gov/center/regulations/guidance_to_states_on_exchanges.html
Principles and priorities of the Exchange include:








Establishing a State-based Exchange
Promoting Efficiency
Avoiding Adverse Selection
Streamlined Access and Continuity of Care
Public Outreach and Stakeholder Involvement
Public Accountability and Transparency
Financial Accountability

14

An additional key priority of the Exchange is providing effective assistance to individuals and
small businesses.
Determinations by HHS
Title I, Subtitle D of the Affordable Care Act requires HHS to make determinations regarding a
State’s ability to establish an Exchange and the Exchange’s readiness to commence operations.
In order to fund continued grant awards, HHS must find that each State is making
progress towards establishing an Exchange, implementing insurance market reforms, and
meeting such other benchmarks as the Secretary may establish (Sec. 1311(a)(4)(A)). For
example, one critical source of information that will inform the Secretary’s decision will
be data collected by State Consumer Assistance programs and other related ombudsman
services regarding the kinds of health insurance questions and problems consumers
encounter and actions taken by States to resolve them. (Please see Appendix B for a
discussion of milestones for Exchange establishment.)
HHS must make a determination on or before January 1, 2013, that a State will in fact
have an Exchange in operation by 2014 and that the Exchange meets the requirements of
the Affordable Care Act and HHS guidance. If a State or the District of Columbia elects
not to operate an Exchange, or in the case where HHS determines that the State will not
be able to have an Exchange operational by 2014 that meets the law’s requirements,
HHS, shall (directly or through agreements with a not-for-profit entity) establish and
operate such Exchange within the State. (Sec. 1321(c)(1)).
For Exchanges established prior to the passage of the Affordable Care Act, HHS will
provide a process for bringing those Exchanges into compliance with the standards
promulgated under the Affordable Care Act. (Sec. 1321(e)).
5.

Program Requirements

In an effort to build a strong foundation for a certified and sustainable Exchange, this funding
opportunity encourages a step by step approach to the establishment of an Exchange. In order to
promote this approach, we have provided in Appendix B milestones States and Exchanges may
use to develop their Work Plans as they work toward (1) certification by January 1, 2013, (2) the
start of operations and health insurance coverage for enrollees on January 1, 2014, and (3) selfsustainability by 2015. The milestones in BOLD and preceded by two asterisks (**) must be
included in the Work Plan and are expected to be completed in the specified timeframe. HHS
reserves the right to restrict drawdown of funds for activities based on completion of milestones.
A: Exchange Establishment Core Areas
In connection with these Establishment grants, HHS has identified 11 Core Areas in which States
are expected to carry out activities, which can be found in Appendix A. These Core Areas
expand on the nine Core Areas provided under the previous Exchange funding opportunity,
State Planning and Establishment Grants for the Affordable Care Act’s Exchanges. In
carrying out activities related to the Exchange IT Systems components of Exchange
15

establishment, it is expected that States will carry out due diligence in assessing the applicability
of models developed by States (or consortia of States) awarded under the funding
opportunity, Cooperative Agreements to Support Innovative Exchange Information
Technology Systems (this does not apply to the States awarded cooperative agreement
funding under the Innovative Exchange IT Systems funding opportunity).
Eleven Exchange Establishment Core Areas (see Appendix A for descriptions)
1. Background Research
2. Stakeholder Consultation
3. Legislative and Regulatory Action
4. Governance
5. Program Integration
6. Exchange IT Systems
7. Financial Management
8. Oversight and Program Integrity
9. Health Insurance Market Reforms
10. Providing Assistance to Individuals and Small Businesses, Coverage Appeals, and
Complaints
11. Business Operations of the Exchange
B: Demonstrating progress toward milestones
Exchanges will need to be operating for consumers by January 1, 2014. In order to provide
coverage on this date, Exchanges will need to begin certification of qualified health plans in
early 2013, which necessitates that systems to support issuer certification be built and tested in
2012. Also, open enrollment for Exchange coverage may begin as early as mid-2013 in order to
offer consumers a reasonable window of opportunity to enroll. States will need to undertake
numerous tasks in order to ensure they can meet these timeframes.
Each State applying for funding will be required to develop and submit a Work Plan that
includes milestones for each Core Area of Exchange establishment according to the length of the
project period for each award. For example, a State applying for a Level Two Establishment
award will need to provide a Work Plan with milestones through 2014. HHS will work closely
with each State to keep its Work Plan up to date as additional guidance on the Exchanges is
published, and will provide technical assistance as needed to facilitate State progress. State
progress will also be evaluated based on the submission of quarterly progress reports. If the
grantee does not show progress on the required milestones, HHS may restrict funds for those
activities until the milestones are met. More information will be provided on these reports in the
Notice of Grant Award.
Appendix B of this document provides a series of milestones organized under each Core Area
from which States may draw to develop their Work Plans. Each State’s progress under this
Cooperative Agreement will be evaluated against its Work Plan. Each State Exchange must
include each of the milestones in BOLD and preceded by two asterisks (**) in its Work Plan.
The milestones in BOLD and preceded by two asterisks (**) indicate that these tasks must be
completed in the timeframe provided. We encourage States to draw on the example milestones
and tasks that are not in BOLD and not preceded by two asterisks (**) and include these in each
16

Work Plan. The timeframe of these example milestones and tasks, while suggested, is not
required to be met in order to show progress for purposes of receiving additional grant funds.
States are encouraged to include additional milestones at the discretion of the State to meet their
specific needs.
C: Early Deliverables
In an effort to promote the establishment of a consumer-centric Exchange and efficiency in the
use of public dollars, there are certain activities that the State may choose to carry out on an
accelerated time frame. These include but are not limited to: completion of research related to the
insurance markets in the State, creation of an informational website geared toward consumers,
establishment and strengthening of assistance provided to individuals and small businesses,
including establishment of an Exchange call center or hotline, identification of possible
organizations who could serve as Navigators, and public education and outreach to inform
consumers about access to health insurance through the Exchange. Each Exchange will establish
a Navigator program, as required by Section 1311(i) of the Affordable Care Act, under which it
awards grants (funded from the operational funds of the Exchange) to entities that will assist
consumers in navigating their choices in the health insurance marketplace.
In addition, States should ensure they get started early on the necessary coordination of
eligibility determinations with Medicaid, CHIP, and other health and human services programs
with which the State may wish to coordinate eligibility, referral, verification or other functions.
Early coordination should be carried out to ensure alignment with State health information
exchange activities.
D. Providing Assistance to Individuals and Small Businesses, Coverage Appeals, and
Complaints
States may choose to utilize Exchange Establishment cooperative agreement funding to set up
State services to provide assistance to individuals and small businesses within Exchanges or to
transition existing programs currently providing these services into Exchange operations.
Effective capacity to provide these services is an essential element of a well-functioning
Exchange. States have the option of using Exchange Planning grant or Establishment
cooperative agreement funds to build on existing programs within the Exchange or to contract
with another entity to carry them out. Navigators (funded from the operational funds of the
Exchange) will assist consumers to enroll qualified health plans through the Exchange. States
that choose to undertake these activities within the Exchange should provide a description in
their Project Narrative in the Proposal to meet Program Requirements of these activities and
how they will be integrated into Exchange operations.
E: Exchange Certification
The law requires that each State-operated Exchange be certified by HHS no later than January 1,
2013. To achieve certification, Exchanges must demonstrate that the State’s Exchange will be
operational and provide access to health insurance coverage to enrollees by January 1, 2014 with
open enrollment starting as early as mid-2013. HHS intends to use the cooperative agreement
17

process and its evaluation of a State’s progress in completing its Work Plan as the opportunity to
provide hands-on assistance and counseling to States. Our mutual goal is the successful
certification and operation of each State’s Exchange. HHS will provide future guidance on State
Exchange certification in forthcoming regulations.
II.

AWARD INFORMATION

1. Total Funding
In determining grant amounts, HHS will look for efficiencies and consider if the proposed
budget is sufficient, reasonable and cost effective to support the activities proposed in the State’s
application. Grants will only fund costs for implementation activities and functionalities that are
integral to Exchange operations and meeting Exchange requirements, including those defined in
future guidance and regulations issued by HHS.
2. Award Amount
Funds are available to support grants as necessary to fulfill the purpose of this funding
opportunity to the fifty States, District of Columbia, and/or consortia of States. The award
amount will vary based on application category and the specific needs of each State. Additional
funding may be requested by the applicant to support an increased scope of work for all
applicants that apply under this Funding Opportunity Announcement. The applicant will be
required to submit a justification to support the budget request. Both the budget and budget
justification to provide additional funds are subject to approval by the respective program and
grant officials.
3. Anticipated Award Dates
The anticipated award date for both Level One Establishment and Level Two Establishment
awards is approximately 45 days after the application due date.
4. The Period of Performance
The project period for each Cooperative Agreement will vary based on when a State is awarded
an Establishment Cooperative Agreement. Level One Establishment awards will be for up to one
year after the date of award. Level Two Establishment awards will be for up to four years starting
from the date of award and ending December 31, 2014.
5. Number of Awards
The number of awards will be based upon the number of eligible entities. States that
previously received an award under the funding opportunity State Planning and
Establishment Grants for the Affordable Care Act’s Exchanges are eligible to apply. See also
Section III.1.
6. Type of Award
These awards will be structured as Cooperative Agreements. HHS will work closely with each
State to evaluate its progress against its Exchange Work Plan and may condition funding
quarterly based on this progress and adherence to Federal guidance and Exchange requirements.
HHS Project Officers will track State progress and provide technical assistance when needed.

18

III.

ELIGIBILITY INFORMATION

1. Eligible Applicants
This funding opportunity is open to States (to include consortia of States and the District of
Columbia) that received an initial award under the funding opportunity, State Planning
and Establishment Grants for the Affordable Care Act’s Exchanges, No. IE-HBE-10-001
(Exchange Planning Grants).
The Governor of an applicant (the Mayor, if from the District of Columbia) may designate a
governmental agency or quasi-governmental entity to apply for grants on behalf of that State.
Non-profit organizations (private organizations that are non-governmental) are not eligible to
apply. Only one application per State is permitted. Each applicant must submit:
1) A letter from the Governor (or the Mayor, if from the District of Columbia) officially
endorsing the grant application and the proposed Cooperative Agreement. For Level Two
Establishment applicants, this letter must express a commitment by the Governor that the State
will establish a State-operated Exchange.
2) A letter of support from the State Medicaid Director agreeing to collaborate with the
Exchange on developing shared functionalities and ensuring coordinated approaches to shared or
related functions, and briefly describing likely key areas of collaboration. The letter should also
include a statement about avoiding duplication efforts, specifically, not funding Medicaid
and/or CHIP specific functions with Exchange grant funds.
3) A letter from the Commissioner of the State Department of Insurance agreeing to work
with the Exchange on implementation and coordinate efforts as appropriate.
There are two application categories for this funding opportunity:
Level One Establishment is open to States that received Exchange Planning Grants.
States which received funding under Cooperative Agreements to Support
Innovative Exchange Information Technology Systems (Early Innovator
Cooperative Agreements) are also eligible to apply. These cooperative agreements
provide up to one year of funding to States that have made some progress under their
Exchange Planning Grants but are not yet able to meet the eligibility requirements of
Level Two Establishment, defined below.
Level Two Establishment is open to States that received Exchange Planning Grants.
States which received funding under Cooperative Agreements to Support
Innovative Exchange Information Technology Systems (Early Innovator
Cooperative Agreements) are also eligible to apply. Level Two Establishment
awards will provide funding through December 31, 2014. This category is designed to
provide funding to applicants that are further along in the establishment of an
Exchange and that can demonstrate achievement of specific eligibility criteria
outlined below. Level One Establishment grantees are eligible to apply for a Level
Two Establishment cooperative agreement after making sufficient progress in
19

Level One provided grantees are able to meet the Level Two eligibility criteria
defined below:
A. Has the necessary legal authority to establish and operate an Exchange that
complies with Federal requirements available at the time of the application.
B. Has established a governance structure for the Exchange.
C. 1) Submits a complete budget through 2014;
2) Submits an initial plan discussing financial sustainability by 2015; and
3) Submits a plan outlining steps to prevent fraud, waste, and abuse.
D. Submits a plan describing how capacity for providing assistance to individuals and
small businesses in the State will be created, continued, and/or expanded, including
provision for a call center.
Central Contracting Registration (CCR) Requirement: All prime grantees must provide a
DUNS number in order to be able to register in FSRS as a prime grantee user. If your
organization does not have a DUNS number, you will need to obtain one from Dun & Bradstreet.
Call D&B at 866-705-5711 if you do not have a DUNS number. Once you have obtained a
DUNS Number from D&B, you must then register with the Central Contracting Registration
(CCR) at www.ccr.gov. Prime grantees must maintain current registration with Central
Contracting Registration (CCR) database. Prime grantees may make subawards only to entities
that have DUNS numbers. Organization must report executive compensation as part of the
registration profile at www.ccr.gov by the end of the month following the month in which this
award is made, and annually thereafter (based on the reporting requirements of the Federal
Funding Accountability and Transparency Act of 2006 (Pub. L. 109-282), as amended by
section 6202 of Public Law 110-252 and implemented by 2 CFR Part 170)). After you have
completed your CCR registration, you will now be able to register in FSRS as a prime grantee
user.
The Grants Management Specialist assigned to monitor the subaward reports and Executive
Compensation is Iris Grady (divisionofgrantsmanagement@cms.hhs.gov).
2. Cost-Sharing / Matching Medicaid Federal Financial Participation
State Cost-Sharing and Matching payments are not required for this program. Please refer to
Section IV.5.B.vi. for more information about how States must address the cost allocation for
Medicaid, the Children’s Health Insurance Program (CHIP), and other federally financed health
and human services programs in connection with the IT systems developed or modified to
support the Exchange. States may use information available at:
http://frwebgate.access.gpo.gov/cgibin/getdoc.cgi?dbname=2011_register&docid=fr19ap11-6.pdf
For more information on A-87 waivers, please see:
http://www.cms.gov/Medicaid-Information-Technology-MIT/02_TriAgency%20Letter.asp#TopOfPage

20

States should allocate costs associated with eligibility determination between Medicaid, CHIP
and Exchanges, as Exchanges will determine Medicaid and CHIP eligibility for individuals
seeking coverage if they are not already enrolled in Medicaid or CHIP. Eligibility determination
includes costs of intake, verification, adjudication, and resolution, including customer support for
these processes. The Medicaid and CHIP programs will also pay for the costs of transmitting
Medicaid and CHIP cases to those programs once eligibility for those programs is determined.
Other costs may also be shared, depending on the level of integration States choose to pursue.
States should review the cost allocation rules in OMB circular A-87 (see Section IV.5.B.vi. for
more information.) Before submitting a cost allocation plan, States should consult the most
recent guidance issued by HHS regarding cost allocation among Medicaid, Exchanges, and
human services programs for the most up-to-date information and instructions. IT
Guidance 2.0 can be found at:
http://cciio.cms.gov/resources/files/exchange_medicaid_it_guidance_05312011.pdf
For more information on A-87 waivers, please see:
http://www.cms.gov/Medicaid-Information-Technology-MIT/02_TriAgency%20Letter.asp#TopOfPage
States may utilize funds from this announcement to adapt models for Exchange IT systems
developed by ―Early Innovator‖ States, supported by the cooperative agreement awarded in
February 2011, in addition to carrying out the tasks necessary to establish an Exchange that will
begin offering health insurance coverage to enrollees on January 1, 2014.
3. Other
This funding opportunity is open to eligible States, consortia of States, and the District of
Columbia to establish Exchanges.
It is recommended that a Letter of Intent be submitted by 11:59 pm on February 22, 2011. The
Letter of Intent should indicate which category an applicant is applying for and at which due
date. The purpose of the Letter of Intent is to estimate the number of applications. The signed
Letter of Intent must be submitted electronically in PDF format to
Katherine.Bryant@cms.hhs.gov.
4. Pre-Application Conference Call
HHS will hold pre-application conference calls for potential applicants. The conference calls
will provide an overview of this project, budget guidance, review the guidance provided by this
Funding Opportunity Announcement and other available materials, and will include an
opportunity for States to ask questions. The pre-application call information is as follows:
February 3, 2011 – 2:00 PM EST
o Call in number: 877-989-4936; Participant passcode: 3654293
March 3, 2011 – 2:00 PM EST
o Call in number: 877-989-4936; Participant passcode: 3654293
March 24, 2011 – 2:00 PM EST
o Call in number: 877-989-4936; Participant passcode: 3654293
21

June 2, 2011 – 2:00 PM EST
o Call in number: 877-989-4936; Participant passcode: 3654293
September 1, 2011 – 2:00 PM EST
o Call in number: 877-989-4936; Participant passcode: 3654293
December 1, 2011 – 2:00 PM EST
o Call in number: 877-989-4936; Participant passcode: 3654293
March 1, 2012 – 2:00 PM EST
o Call in number: 888-455-8828; Participant passcode: 8918704
May 31, 2012 – 2:00 PM EST
o Call in number: 888-455-8828; Participant passcode: 8918704
A recording and transcript of each call will be on the CCIIO website:
http://cciio.cms.gov/resources/other/index.html#peg.
IV.

APPLICATION AND SUBMISSION INFORMATION

1. Address to Request Application Package
This Funding Opportunity Announcement serves as the application package for this Cooperative
Agreement and contains all the instructions to enable a potential applicant to apply. The
application should be written primarily as a narrative with the addition of standard forms
required by the Federal government for all grants.
It is recommended that a Letter of Intent be submitted by 11:59pm on February 22, 2011. The
Letter of Intent should indicate which category an applicant is applying for and at which due
date. The purpose of the Letter of Intent is to estimate the number of applications. The signed
Letter of Intent must be submitted electronically in PDF format to
Katherine.Bryant@cms.hhs.gov.
Application materials will be available for download at http://www.grants.gov. Please note that
HHS requires applications for all announcements to be submitted electronically through
http://www.grants.gov. For assistance with grants.gov, contact support@grants.gov or call 1800-518-4726. At http://www.grants.gov, applicants will be able to download a copy of the
application packet, complete it off-line, and then upload and submit the application via the
Grants.gov website. The Funding Opportunity Announcement can also be viewed on HHS’s
website at http://www.hhs.gov/.
Specific instructions for applications submitted via http://www.grants.gov:
You can access the electronic application for this project on http://www.grants.gov. You
must search the downloadable application page by the CFDA number 93.525.
At the http://www.grants.gov website, you will find information about submitting an
application electronically through the site, including the hours of operation. HHS strongly
recommends that you do not wait until the application due date to begin the application
process through http://www.grants.gov because of the time delay.
All applicants must have a Dun and Bradstreet (D&B) Data Universal Numbering System
(DUNS) number. The DUNS number is a nine-digit identification number that uniquely
identifies business entities. Obtaining a DUNS number is easy and free. To obtain a DUNS
22

number, access the following website: www.dunandbradstreet.com or call 1-866-705-5711.
This number should be entered in the block with the applicant's name and address on the
cover page of the application (Item 8c on the Form SF 424, Application for Federal
Assistance). The name and address in the application should be exactly as given for the
DUNS number.
The applicant must also register in the Central Contractor Registration (CCR) database in
order to be able to submit the application. Applicants are encouraged to register early. You
should allow a minimum of five days to complete the CCR registration. Information about
CCR is available at http://www.ccr.gov. The central contractor registration process is a
separate process from submitting an application. In some cases, the registration process can
take approximately two weeks to be completed. Therefore, registration should be completed
in sufficient time to ensure that it does not impair your ability to meet required submission
deadlines.
Authorized Organizational Representative: The Authorized Organizational Representative
(AOR) who will officially submit an application on behalf of the organization must register
with Grants.gov for a username and password. AORs must complete a profile with
Grants.gov using their organization’s DUNS Number to obtain their username and password.
http://grants.gov/applicants/get_registered.jsp. AORs must wait one business day after
registration in CCR before entering their profiles in Grants.gov.
When an AOR registers with Grants.gov to submit applications on behalf of an organization,
that organization’s E-Biz POC will receive an email notification. The email address
provided in the profile will be the email used to send the notification from Grants.gov to the
E-Biz POC with the AOR copied on the correspondence.
The E-Biz POC must then login to Grants.gov (using the organization’s DUNS number for
the username and the special password called ―M-PIN‖) and approve the AOR, thereby
providing permission to submit applications.
You must submit all documents electronically in PDF format, including all information
included on the SF 424 and all necessary assurances and certifications, and all other
attachments.
Prior to application submission, Microsoft Vista and Office 2007 users should review the
Grants.gov compatibility information and submission instructions provided at
http://www.grants.gov. Click on ―Vista and Microsoft Office 2007 Compatibility
Information.‖ In addition, users should also review the Grants.gov compatibility
information for software and browsers.
After you electronically submit your application, you will receive an automatic
acknowledgement from http://www.grants.gov that contains a Grants.gov tracking number.
HHS will retrieve your application form from Grants.gov.
After HHS retrieves your application form from Grants.gov, a return receipt will be emailed
to the applicant contact. This will be in addition to the validation number provided by
Grants.gov.
Each year organizations and entities registered to apply for Federal grants through
http://www.grants.gov will need to renew their registration with the Central Contractor
23

Registry (CCR). You can register with the CCR online; registration will take about 30
minutes to complete (http://www.ccr.gov).
Applications cannot be accepted through any email address. Full applications can only be
accepted through http://www.grants.gov. Full applications cannot be received via paper mail,
courier, or delivery service, unless a waiver is granted per the instructions below.
All grant applications must be submitted electronically and be received through
http://www.grants.gov by 11:59 pm Eastern Standard Time on the respective due date.
Level One Establishment: March 30, 2011; June 30, 2011; September 30, 2011; December 30,
2011; March 30, 2012; June 29, 2012
Level Two Establishment: March 30, 2011; June 30, 2011; September 30, 2011; December 30,
2011; March 30, 2012, June 29, 2012
All applications will receive an automatic time stamp upon submission and applicants will
receive an automatic e-mail reply acknowledging the application’s receipt.
The applicant must seek a waiver at least ten days prior to the application deadline if the
applicant wishes to submit a paper application. Applicants that receive a waiver to submit paper
application documents must follow the rules and timelines that are noted below.
In order to be considered for a waiver application, an applicant must: adhere to the timelines for
Central Contractor Registry (CCR) and Grants.gov registration, as well as request timely
assistance with technical problems.
Please be aware of the following:
Search for the application package in Grants.gov by entering the CFDA number. This
number is located on the first page of this announcement.
Paper applications are not the preferred method for submitting applications. However, if you
experience technical challenges while submitting your application electronically, please
contact Grants.gov Support directly at: www.grants.gov/customersupport or (800) 518-4726.
Customer Support is available to address questions 24 hours a day, 7 days a week (except on
Federal holidays).
Upon contacting Grants.gov, obtain a tracking number as proof of contact. The tracking
number is helpful if there are technical issues that cannot be resolved and a waiver from the
agency must be obtained.
If it is determined that a waiver is needed, you must submit a request in writing (emails are
acceptable) to Michelle.Feagins@cms.hhs.gov with a clear justification for the need to
deviate from our standard electronic submission process.
If the waiver is approved, the application should be sent directly to the Division of Grants
Management by the application due date.

24

To be considered timely, applications must be sent on or before the published deadline date.
However, a general extension of a published application deadline that affects all applicants or
only those applicants in a defined geographical area may be authorized by circumstances that
affect the public at large, such as natural disasters (e.g., floods or hurricanes) or disruptions of
electronic (e.g., application receipt services) or other services, such as a prolonged blackout.
2. Content and Form of Application Submission
Each application must include all contents described below, in the order indicated, and in
conformity with the following specifications:
The total size of all uploaded files may not exceed the equivalent of 80 pages when
printed by HHS, or a total file size of 10 MB. This 80-page limit includes the project
abstract, project and budget narratives, attachments, letters of commitment and support,
and other applicable documents. Standard forms are NOT included in the page limit.
The following documents are required for a complete application:
A. Standard Forms
The following forms must be completed with an original signature and enclosed as part of
the application:







SF 424: Official Application for Federal Assistance (see note below)
SF 424A: Budget Information Non-Construction
SF 424B: Assurances-Non-Construction Programs
SF LLL: Disclosure of Lobbying Activities
Project Site Location Form(s)
Lobbying Certification Form (HHS Checklist, 5161)

Note: On SF 424 ―Application for Federal Assistance:‖





Item 15 ―Descriptive Title of Applicant’s Project.‖ Please indicate in this section
the name of this cooperative agreement funding opportunity: Cooperative
Agreement to Support Establishment of State-Operated Health Insurance
Exchanges.
Check box ―C‖ to item 19, as Review by State Executive Order 12372 does not
apply to these grants.
Assure that the total Federal grant funding requested is for the entire period of the
grant (i.e. up to one year for Level One Establishment, from date of award up
through December 31, 2014 for Level Two Establishment).

B. Required Letters of Support
Each applicant must submit a letter from the Governor (or the Mayor, if from the District
of Columbia) officially endorsing the grant application and the proposed Cooperative
Agreement. In addition, Level Two Establishment applicants must submit a letter from the
Governor that expresses a commitment to establish an Exchange.
Each applicant also must submit the following letters of support: (a) a letter of support
from the State Medicaid Director agreeing not to duplicate efforts between the Exchange
and State Medicaid office and to work with the Exchange on developing shared
25

functionalities, and (b) a letter of support from the State Insurance Commissioner
agreeing to work with the Exchange on implementation and to coordinate efforts as
appropriate. States are encouraged, but not required, to submit letters from other
agencies or offices that are responsible for health and human service programs for which
the Exchange – in the short or long run – will facilitate applications or enrollment.
C. Applicant’s Application Cover Letter
A letter from the applicant must identify the:




Project Title
Applicant Name
Principal Investigator/Project Director Name (with email and phone number)

D. Project Abstract
Provide a summary of the application. Because the abstract is often distributed to provide
information to the public and Congress, prepare this so that it is clear, accurate, concise,
and without reference to other parts of the application. It must include a brief description
of the grant proposal, including the needs to be addressed, the proposed projects, and the
population group(s) to be served.
The abstract must be single-spaced and limited to one page in length. Place the following
at the top of the abstract for the application:












Application title
Applicant organization name
Program applying under, including funding opportunity number
Project Director
Address
Congressional district(s) served
Project Director phone numbers (phone and fax)
Email address
Organizational Website address, if applicable
Category of Funding
Projected date(s) for project(s) completion

The abstract narrative should include:





A brief history of the applicant organization;
A brief description of the populations served by the project;
A brief description of the proposed projects and deliverables; and
A brief description of any other relevant information, including the proposed
impact of the funding.

E. Project Narrative
i. Level One Establishment

26

The project narrative must include the following sections:
a. Demonstration of Past Progress in Exchange Planning Core Areas
This section should describe and quantify, where possible, progress the State has
made in Exchange planning activities. This includes but is not limited to the
discussion points highlighted below:
Background Research: Discuss the research conducted, including key findings
and plans that resulted from this research.
Stakeholder Consultation: Discuss partnerships with various stakeholders and
how public input into the Exchange planning process was gained, such as
State HIT Coordinators and the State’s health information exchange program,
State officials, representatives of State Agencies, employers, insurers,
advocacy groups, and consumer groups.
State Legislative/ Regulatory Actions: Discuss the progress made toward the
creation of the necessary legal authority to establish and operate an Exchange
that complies with Federal requirements available at the time of the
application and provides for establishment of governance and Exchange
structure
Governance: Discuss the progress made toward establishing the administrative
structure (State agency, quasi-governmental agency, or non-profit
organization) and governance structure of the Exchange (composition of
governing body, conflict of interest standards, selection process).
Program Integration: Discuss how coordination with the State insurance
regulatory entity (e.g. Department of Insurance), State Medicaid, CHIP, other
State health subsidy programs, and other health and human services programs
as appropriate, has been carried out during the planning process, and
outcomes of these coordination efforts. Include planning activities related to
streamlining eligibility and enrollment, and coordinating with the State
Department of Insurance on issues including the financial stability of
insurance companies, certification of plans, rate review, State licensure,
solvency, and market conduct. Discuss any efforts that have taken place or
may be planned to facilitate coordination with other specific health and human
services programs.
Exchange IT Systems: Discuss steps taken toward the first phase of
development of Exchange IT systems in accordance with the most current
Federal IT guidance. Please reference Appendix D as well including
compliance with the standards adopted by the Secretary under Section 1561 of
the Affordable Care Act. Discuss steps taken to ensure a modular, flexible
approach to systems development, including use of open interfaces and
exposed application programming interfaces; the separation of business rules
from core programming; and the availability of business rules in both human
and machine readable formats.
Financial Management: Describe the financial management infrastructure the
Exchange has established for financial management of the Exchange and
Exchange grants using Planning grant funds (or other funds made available by
the State for this purpose).
27

Program Integrity: Discuss planning activities related to auditing, financial
integrity, oversight, and prevention of fraud, waste and abuse.
Health Insurance Market Reforms: Discuss progress in implementing
Insurance Market Reforms under Subtitles A and C of the Affordable Care
Act.
Providing Assistance to Individuals and Small Businesses, Coverage Appeals,
and Complaints: Discuss planning efforts related to ensuring individuals have
access to assistance services in the State.
Business Operations/ Exchange Functions: Discuss the planning activities
leading to the development of goals, milestones and timeframes for each
function of the Exchange, to the extent that there is sufficient Federal
guidance to do so at the time of the application. This includes:
Certification, recertification, and decertification of qualified health
plans
Call center
Exchange website
Premium tax credit and cost-sharing reduction calculator
Quality rating system
Navigator program
Eligibility determinations for Exchange participation, advance payment
of premium tax credits, cost-sharing reductions, and Medicaid
Seamless eligibility and enrollment process with Medicaid and other
State health subsidy programs
Enrollment process
Applications and notices
Individual responsibility determinations
Administration of premium tax credits and cost-sharing reductions
Adjudication of appeals of eligibility determinations
Notification and appeals of employer liability
Information reporting to IRS and enrollees
Outreach and education
Risk adjustment and transitional reinsurance
SHOP Exchange-specific functions

b. Proposal to Meet Program Requirements
The Project Narrative must include a proposal that explains the approach the
applicant is considering to establish an Exchange. This section should be in alignment
with the Work Plan and may provide a narrative description of the approach to
achieve milestones or tasks outlined in the Work Plan. The applicant should describe
how the Exchange will meet each of the program requirements set forth in this
Funding Opportunity Announcement (see Section I.5). This proposal must include a
description of the approach and the activities the State will undertake under each
Exchange Establishment Core Area in the Work Plan. If a State intends to apply for

28

funds in certain Core Areas and not others, the applicant should provide a description
of the activities it will undertake.
For example, to meet program requirements for performing Stakeholder Consultation,
the proposal to meet program requirements must answer questions such as which
stakeholders are involved in the Exchange establishment process, what roles the
stakeholders have in the process, and how collaboration with stakeholders will
continue throughout the establishment process. To answer questions such as these, the
applicant could describe what forums will be used to engage with stakeholders, how
stakeholder input will be gained and applied to inform the establishment process, and
how the Exchange will identify stakeholders.
Providing assistance to individuals and small businesses is a priority of the Exchange.
Therefore, the proposal must address how the Exchange will work to meet the needs
of consumers and ensure that these services are provided.
In the discussion of the Exchange IT Systems Exchange Establishment Core Area,
applicants must address how the Exchange will carry out due diligence in assessing
the applicability of the system models developed by ―Early Innovator‖ States. If the
applicant does not intend to use these models, this must be justified. (Awardees of
Early Innovator Cooperative Agreements do not have to include this in their
discussion.) States may choose to develop their own systems, which may be done in
many ways, including use of commercial off the shelf products (COTS); or States
may adapt systems developed by other States. Systems must be interoperable and/or
integrated or interface with both the State Medicaid and Children’s Health Insurance
Program (CHIP) programs and be able to interface with HHS in order to verify and
acquire data as needed. Describe if your proposed solution will be an independent
application, an enhancement to existing functionality, or some other solution option.
Outline how tightly coupled your proposed exchange will be with your existing
Medicaid systems. States are encouraged to consider how the Exchange system can
be integrated with other health and human services systems in the state since the
eligibility function the Exchange will perform has significant similarities to eligibility
determinations in other programs. Further, States are encouraged to consider steps
necessary to achieve interoperability with other specific health and human services
programs for purposes of coordinating eligibility determinations, referrals,
verification or other functions.
The proposal to meet program requirements should explain how Exchange
establishment will progress leading to certification in January 2013, operation and
provision of health insurance coverage to enrollees in 2014, and self-sustainability in
2015.
c. Summary of Exchange IT Gap Analysis
The applicant must conduct an Exchange IT Gap Analysis and provide a summary of
the results of this analysis in the Project Narrative. Please refer to Appendix C for an
explanation of the gap analysis that should be conducted.
29

d. Evaluation Plan
The project narrative must include specific measures of how the grantee will evaluate
its progress and measure success in each of the Exchange Establishment Core Areas.
Please provide baseline information or data for each measure. The grantee will be
expected to update information and data for each measure quarterly and provide an
evaluation plan that will assess progress on the overarching goals of the project. The
grantee will also be expected to comply with federal evaluation requirements.
Specifically, applicants should include:
Discussion of key indicators to be measured;
Baseline Data for each indicator;
Methods and their efficacy to monitor progress and evaluate the achievement
of program goals; and
Inclusion of plans for timely interventions when targets are not met or
unexpected obstacles delay plans.
Inclusion of a plan for ongoing evaluation of Exchange functioning once it is
operational.
ii. Level Two Establishment
The project narrative must include the following sections:
a. Demonstration of Past Progress in Exchange Planning Core Areas
This section should describe and quantify, where possible, progress the State made in
Exchange planning activities. This includes but is not limited to the discussion points
highlighted below:
Background Research: Discuss the research conducted, including key findings
and plans that resulted from this research.
Stakeholder Consultation: Discuss partnerships with various stakeholders and
how public input into the Exchange planning process was gained, such as
State HIT Coordinators and the State’s health information exchange program,
State officials, representatives of State Agencies, employers, insurers,
advocacy groups, and consumer groups.
State Legislative/ Regulatory Actions: Discuss the progress made toward the
creation of the necessary legal authority to establish and operate an Exchange
that complies with Federal requirements available at the time of the
application and provides for establishment of Exchange governance and
structure
Governance: Discuss the progress made toward establishing the administrative
structure (State agency, quasi-governmental agency, or non-profit
organization) and governance structure of the Exchange (composition of
governing body, conflict of interest standards, selection process).
Program Integration: Discuss how coordination with the State insurance
regulatory entity (e.g. Department of Insurance), State Medicaid, CHIP, other
State health subsidy programs, and other specific health and human services
programs as appropriate, has been carried out during the planning process, and
outcomes of these coordination efforts. Include planning activities related to
30

streamlining eligibility and enrollment, and coordinating with the State
Department of Insurance on issues including the financial stability of
insurance companies, certification of plans, rate review, State licensure,
solvency, and market conduct.
Exchange IT Systems: Discuss steps taken toward the first phase of
development of Exchange IT systems in accordance with the most current
Federal IT guidance, including compliance with the standards adopted by the
Secretary under Section 1561 of the Affordable Care Act. Please reference
Appendix D as well. Discuss steps taken to ensure a modular, flexible
approach to systems development, including use of open interfaces and
exposed application programming interfaces; the separation of business rules
from core programming; and the availability of business rules in both human
and machine readable formats.
Financial Management: Describe the financial management infrastructure the
Exchange has established using planning grant funds (or other funds made
available by the State for this purpose).
Program Integrity: Discuss planning activities related to auditing, financial
integrity, oversight, and prevention of fraud, waste and abuse.
Health Insurance Market Reforms: Discuss progress in implementing
Insurance Market Reforms under Subtitles A and C of the Affordable Care
Act.
Providing Assistance to Individuals and Small Businesses, Coverage Appeals,
and Complaints: Discuss planning efforts related to ensuring that assistance
services are provided to individuals and small businesses in the State.
Business Operations/ Exchange Functions: Discuss the planning activities
leading to the development of an implementation plan that lays out goals,
milestones and timeframes for each function of the Exchange, to the extent
that there is sufficient Federal guidance to do so at the time of the application.
This includes:
Certification, recertification, and decertification of qualified
health plans
Call center
Exchange website
Premium tax credit and cost-sharing reduction calculator
Quality rating system
Navigator program
Eligibility determinations for Exchange participation, advance
payment of premium tax credits, cost-sharing reductions, and
Medicaid
Seamless eligibility and enrollment process with Medicaid and
other State health subsidy programs
Enrollment process
Applications and notices
Individual responsibility determinations

31

Administration of premium tax credits and cost-sharing
reductions
Adjudication of appeals of eligibility determinations
Notification and appeals of employer liability
Information reporting to IRS and enrollees
Outreach and education
Risk adjustment and transitional reinsurance
SHOP Exchange-specific functions
b. Proposal to Meet Program Requirements
The Project Narrative must include a proposal that explains the approach the
applicant is considering to establish an Exchange. This section should be in alignment
with the Work Plan and may provide a narrative description of the approach to
achieve milestones or tasks outlined in the Work Plan. The proposal should exhibit
the State’s readiness to establish an Exchange and place emphasis on how it has met
the eligibility criteria for a Level Two Establishment award (Section III.1.). The
applicant should describe how the Exchange will meet each of the program
requirements set forth in this Funding Opportunity Announcement (see Section I.5).
This proposal must include a description of the approach and the activities the State
will undertake under each Exchange Establishment Core Area.
For example, to meet program requirements for performing Stakeholder Consultation,
the proposal to meet program requirements should answer questions such as which
stakeholders are involved in the Exchange establishment process, what roles the
stakeholders have in the process, and how collaboration with stakeholders will
continue throughout the establishment process. To answer questions such as these, the
applicant could describe what forums will be used to engage with stakeholders, how
stakeholder input will be gained and applied to inform the establishment process, and
how the Exchange will identify stakeholders.
Providing assistance to individuals is a priority of the Exchange. Therefore, the
proposal must address how the Exchange will work to meet the needs of consumers
and ensure that these services are provided.
In the discussion of the Exchange IT Systems Exchange Establishment Core Area,
applicants must address how the Exchange will carry out due diligence in assessing
the applicability of the system models developed by ―Early Innovator‖ States. If the
applicant does not intend to use these models, this must be justified. (Awardees of
these grants do not have to include this in their discussion.) States may choose to
develop their own systems, which may be done in many ways, including use of
commercial off the shelf products (COTS); or States may adapt systems developed by
other States. Systems must be interoperable and/or integrated or interface with State
Medicaid/Children’s Health Insurance Program (CHIP) programs and be able to
interface with HHS in order to verify and acquire data as needed. Describe if your
proposed solution will be an independent application, an enhancement to existing
functionality, or some other solution option. Outline how tightly coupled your
32

proposed exchange will be with your existing Medicaid systems. States are
encouraged to consider how the Exchange system can be integrated with other
specific health and human services systems in the State since the eligibility function
the Exchange will perform has significant similarities to eligibility determinations in
other programs. Further, States are encouraged to consider steps necessary to achieve
interoperability with other specific health and human services programs for purposes
of coordinating eligibility determinations, referrals, verification or other functions.
The proposal to meet program requirements should explain how Exchange
establishment will progress, leading to certification in January 2013, operation and
provision of health insurance coverage to enrollees in 2014, and self-sustainability in
2015.
c. Summary of Exchange IT Gap Analysis
The applicant must conduct an Exchange IT Gap Analysis and provide a summary of
the results of this analysis in the Project Narrative. Please refer to Appendix C for an
explanation of the gap analysis that should be conducted.
d. Evaluation Plan
The project narrative must include specific measures of how the grantee will evaluate
its progress and measure success in each of the Exchange Establishment Core Areas.
Please provide baseline information or data for each measure. The grantee will be
expected to update information and data for each measure quarterly and provide a
multi-year evaluation plan that will assess progress on the overarching goals of the
project. The grantee will also be expected to comply with federal evaluation
requirements. Specifically, applicants should include:
Discussion of key indicators to be measured;
Baseline Data for each indicator;
Methods and their efficacy to monitor progress and evaluate the achievement
of program goals; and
Inclusion of plans for timely interventions when targets are not met or
unexpected obstacles delay plans.
Inclusion of a plan for ongoing evaluation of Exchange functioning once it is
operational.
F. Work Plan
Each applicant must submit a detailed Work Plan by Exchange Establishment Core Area
and each of the Business Operations of the Exchange.
For Level One Establishment applicants, the Work Plan submitted with the application
should document all tasks the applicant must carry out over the entire project period,
which is up to one year following the date of award. To the extent that the State is able to
include milestones through 2014, we strongly encourage the State to do so. Appendix B
of this document provides a series of example milestones organized under each Core
Area. Each State applicant may include each of these milestones in its Work Plan.
33

Certain milestones are in BOLD and preceded by two asterisks (**) which indicates that
these tasks must be included in the Work Plan and completed in the timeframe provided
in order to receive approval to drawdown on grant funds related to these activities.
For Level Two Establishment applicants, the Work Plan submitted with the application
should document all tasks the applicant must carry out over the entire project period,
which is from the date of award up through December 31, 2014. Level Two Establishment
applicants are expected to exhibit an advanced state of readiness to establish an Exchange
by providing a complete and robust Work Plan through 2014. Appendix B of this
document provides a series of example milestones organized under each Core Area. Each
State Exchange may include each of these milestones in its Work Plan. Each State’s
progress will be evaluated against its completion of these specified milestones. Certain
milestones are in BOLD and preceded by two asterisks (**) which indicates that these
tasks must be included in the Work Plan and completed in the timeframe provided in
order to receive approval to drawdown on grant funds related to these activities.
For Level One Establishment and Level Two Establishment applicants, milestones should
be developed under each Core Area in their Work Plan, including the month and year of
anticipated completion. The incremental steps needed to reach these milestones should
also be identified by the months and years in which they start, are carried out, and are
completed. Time for quality assurance, including independent verification and validation
should be integrated into the Work Plan timeline. Identify by name and title the
individual responsible for accomplishing each goal.
It is imperative that States distinguish between activities funded under other
Exchange funding opportunities, to include Exchange Planning Grants and Early
Innovator Cooperative Agreements, and those establishment activities supported
under this Funding Opportunity in their Work Plans. States may receive multiple
Exchange Establishment Cooperative Agreements and must therefore also
distinguish in their Work Plans among the activities funded under the various
Exchange Establishment awards received.
Applicants are encouraged to use the Systems Development Life Cycle (SDLC)
framework for the IT aspects of Exchange establishment in developing the Work Plan (an
example of an SDLC framework can be found here:
http://www.cms.gov/ILCPhases/01_Overview.asp#TopOfPage). The applicant may
complete an IT work plan separately if preferred, however it is still encouraged that the
applicant follow the SDLC framework.
G. Budget Narrative
The proposed budget should only include costs for activities and functionalities that
are integral to Exchange operations and meeting Exchange requirements. For
information on reimbursement of pre-award costs, please see Section IV.
Application and Submission Information, 5. Funding Restrictions, A.
Reimbursement of Pre-Award Costs of this funding opportunity announcement. For
34

information on prohibited uses of grant funds, please see Section IV. Application
and Submission Information. 5. Funding Restrictions, B. Prohibited Uses of Grant
Funds of this funding opportunity announcement. For additional clarification on
allowable costs, please see the CCIIO website for FOA frequently asked questions.
Each applicant must submit a detailed budget narrative by Exchange Establishment Core
Area and each of the Business Operations of the Exchange, as demonstrated in
Appendices E and F.
Provide a narrative that explains the amounts requested for each line in the budget for the
entire project period. The budget justification should specifically describe how each line
item will support the achievement of proposed objectives in alignment with the Work
Plan. HHS will look for justifications that directly align with the tasks in the Work Plan
and should be able to understand funding needs for each set of tasks the Exchange will
carry out. The Budget Narrative should break down funding needs by quarter to the
extent possible. It should also clearly identify funds that were spent prior to the project
period (up to 90 days prior to the start of the project period).
Include a description that indicates which elements of your proposal you expect will also
benefit your State’s Medicaid/CHIP system(s) and other specific health and human
services programs. Include a description of your proposal for allocating costs between
these sources of funding in line with the cost-sharing/matching requirements in Section
IV.5.B.vi., and an explanation of the methodology used to support the allocation is
required.
Include a description of the State’s capacity to oversee multiple grant funding streams if
the applicant has received other grant funding from HHS. It is the responsibility of the
grantee to ensure that these funding streams are maintained and accounted for separately.
It is imperative that each applicant’s budget clearly distinguishes between activities that
are funded using Establishment Cooperative Agreement funding and activities funded
using other funding sources.
Line item information must be provided to explain the costs entered in the appropriate
form, Application Form SF 424A. The budget justification must clearly describe each
cost element and explain how each cost contributes to meeting the project’s
objectives/goals on a quarterly basis and by core area. Carefully justify each item in
the ―other‖ category. The budget justification MUST be concise. Do NOT use the
justification to expand the project narrative.
The Budget Narrative/Justification should be provided using both the format included in
Appendices E and F, Guidelines for Budget Preparation of this FOA. In addition,
applicants are encouraged to review Appendix G on Federal Procurement Requirements
for Grantees.
More guidance on preparing a budget request can be found in Appendices E and F.

35

States awarded cooperative agreements under this Funding Opportunity
Announcement must clearly identify how the funds provided under this
announcement are supporting tasks that are clearly distinct from those funded by
other Exchange funding opportunities, such as Exchange Planning Grants and
Early Innovator Cooperative Agreements. Under this Funding Opportunity, States
may receive multiple Exchange Establishment Cooperative Agreements. States
must also clearly identify how each Exchange Establishment application, if selected
for award, will support tasks that are clearly distinct from tasks that are supported
under previously awarded Exchange Establishment Cooperative Agreements. States
may use funding from this award to build on the activities established under other
grants/cooperative agreements as they are relevant to the establishment of the Exchange
and do not supplant grant funds.
H. Additional Letters of Agreement and/or Description(s) of Proposed/Existing Project
Provide any documents that describe additional working relationships between the
applicant and agencies and programs cited in the application. Documents that confirm
actual or pending contractual agreements should clearly describe the roles of the
subcontractors and any product. Letters of agreements must be dated and must contain
the following language:
―Under 45 CFR 92.34, HHS retains a royalty-free, nonexclusive, irrevocable license to
reproduce, publish or otherwise use and authorize others to use, for Federal Government
purposes, the copyright in any work developed under the grant, or a subgrant or
subcontract, and in any rights to a copyright purchased with grant support. HHS shall be
provided with a working electronic copy of the software (including object source and
code) with the right to distribute it to others for Federal purposes consistent with and
throughout the execution of the Cooperative Agreement.‖
I. Descriptions for Key Personnel & Organizational Chart
Applicants must present a staffing plan and provide a justification for the plan that
includes education and experience qualifications and rationale for the amount of time
being requested for each staff position. Position descriptions that include the project
specific roles, responsibilities, and qualifications of proposed project staff must be
included as an Attachment. An organizational chart should be included as well. Copies
of biographical sketches for any key employed personnel that will be assigned to work on
the proposed project must be included as an Attachment.
J. Documentation Supporting Eligibility of Applicant (Level Two Establishment Only)
Applicants for Level Two Establishment awards must include documentation that
demonstrates completion of the eligibility criteria defined in Section III.1. Please
provide all documentation of eligibility in one attachment to the application, even if
the documentation may be duplicative of information provided elsewhere in the
application package. This includes documentation of:
36

1. The necessary legal authority to establish and operate an Exchange that complies
with Federal requirements;
2. The established governance structure;
3. a) A complete budget through 2014;
b) An initial plan discussing financial sustainability by 2015; and
c) A plan outlining steps to prevent fraud, waste, and abuse.
4. A plan describing how capacity for providing assistance to individuals and small
businesses in the State will be created, continued, and/or expanded, including
provision for a call center.
3. Submission Dates and Times
All grant applications must be submitted electronically and be received through
http://www.grants.gov by 11:59 pm Eastern Standard Time on the respective due date.
Level One Establishment: March 30, 2011; June 30, 2011; September 30, 2011; December 30,
2011; March 30, 2012; June 29, 2012
Level Two Establishment: March 30, 2011; June 30, 2011; September 30, 2011; December 30,
2011; March 30, 2012, June 29, 2012
4. Intergovernmental Review
Applications for these Cooperative Agreements are not subject to review by States under
Executive Order 12372, ―Intergovernmental Review of Federal Programs‖ (45 CFR 100). Please
check box ―C‖ on item 19 of the SF 424 (Application for Federal Assistance) as Review by State
Executive Order 12372, does not apply to these grants.
5.

Funding Restrictions
A. Reimbursement of Pre-Award Costs
Funds awarded under this Exchange Establishment funding opportunity may be used to
reimburse pre-award costs that are allowable and incurred up to 90 days before grant
award that can’t be covered under existing funding from Exchange Planning Grants,
Early Innovator Cooperative Agreements, and/or previously awarded Exchange
Establishment Cooperative Agreements. If a State does not receive a cooperative
agreement award, HHS is not liable for costs incurred by the applicant.
B. Prohibited Uses of Grant Funds
The Department of Health and Human Services Cooperative Agreement to Support
Establishment of State-Operated Health Insurance Exchanges may not be used for any of
the following:
i.
To cover the costs to provide direct health care services to individuals;
ii.
To meet matching requirements of any other Federal program;
iii. To cover excessive executive compensation;
iv.
To contract with organizations or individuals that have a conflict of interest, such
as individuals or companies that sell insurance or insurance-like products,
including discount plans;
37

v.
vi.

vii.

V.

To promote Federal or State legislative and regulatory modifications;
To improve systems or processes solely related to Medicaid/ CHIP, or any other
State or Federal program’s eligibility:
a.State applicants must allocate the costs of their IT system(s) work and
other applicable costs per OMB Circular A-87, between the Exchange and
other health and human services programs for those activities that will
benefit other health and human services programs. Examples of IT
modules and other activities we anticipate needing to be cost-allocated
include eligibility, enrollment, and verification. Examples where we think
it is unlikely that costs need to be allocated between sources of funding are
Exchange administration and qualified health plan certification and
administration processes. Before submitting a cost allocation plan,
States should consult the most recent guidance issued by HHS
regarding cost allocation among Medicaid, Exchanges, and human
services programs, for the most up-to-date information and
instructions; IT Guidance 2.0 can be found at
http://cciio.cms.gov/resources/files/exchange_medicaid_it_guidance_0
5312011.pdf; For more information on A-87 waivers, please see:
http://www.cms.gov/Medicaid-Information-Technology-MIT/02_TriAgency%20Letter.asp#TopOfPage
b.Following determination of the final awardees, States will need to submit
an Advance Planning Document (APD) to CMS requesting Federal
financial participation (FFP) of the Medicaid/CHIP portion of the
allocated costs, or costs attributable to other Federal programs, Agencies,
or Offices. HHS will work collectively and expeditiously to review grant
solicitations and APD submissions. HHS will provide technical assistance
and leadership throughout this process;
Activities unrelated to Exchange planning and establishment such as:
a. Staff retreats;
b.Promotional giveaways; and
c. To provide services, equipment, or supports that are the legal
responsibility of another party under Federal or State law (e.g.; vocational
rehabilitation or education services) or under any civil rights laws. Such
legal responsibilities include, but are not limited to, modifications of a
workplace or other reasonable accommodations that are a specific
obligation of the employer or other party.

APPLICATION REVIEW AND SELECTION INFORMATION

In order to receive a Cooperative Agreement for establishing a State-operated Exchange, States
must submit an application, in the required format, no later than the deadline dates.
If an applicant does not submit all of the required documents and does not address each of the
topics described below, the applicant risks not being awarded a grant.

38

As indicated in Section IV, Application and Submission Information, all applicants must submit
the following:
1. Standard Forms
2. Three Required Letters of Support (Governor or Mayor (if DC), State Medicaid
agency, State Department of Insurance)
3. Applicant’s Application Cover Letter
4. Project Abstract
5. Project Narrative
6. Work Plan
7. Budget Narrative
8. Letters of Agreement and/or Description(s) of Proposed/Existing Project
9. Descriptions for Key Personnel & Organizational Chart
10. Level Two Establishment ONLY: Applicants for Level Two Establishment awards
must include documentation that demonstrates completion of the eligibility criteria
defined in Section III.1. This includes documentation of:
a) The necessary legal authority to establish and operate an Exchange that complies
with Federal requirements;
b) The established governance structure;
c) i) A complete budget through 2014;
ii) An initial plan discussing financial sustainability by 2015;
iii) A plan outlining steps to prevent fraud, waste, and abuse; and
d) A plan describing how capacity for providing assistance to individuals and small
businesses in the State will be created, continued, and/or expanded, including
provision for a call center.
1.

Criteria

Level One Establishment
The review criteria for Level One Establishment applications are based on a total of 100 points
allocated among the following areas:
A. Project Narrative – 55 points
i.

Demonstration of Progress in Exchange Planning Grant Core Areas (15 points)
The applicant should describe and quantify progress toward carrying out activities in
the Core Areas listed below. Applicants must show progress in each of these
planning Core Areas in order to be determined ready to move to establishment of an
Exchange.
Background Research
o Research started, including market analysis
o Inclusion of discussion of how research will inform Exchange
planning and policy
Stakeholder Consultation
o Stakeholder meetings have been scheduled and/or convened
39

o

Inclusion of a discussion of how input from stakeholders has been
and will be integrated into the planning process
State Legislative/Regulatory Actions
o The necessary legal authority to establish and operate an Exchange
that complies with Federal requirements and provides for
establishment of governance and Exchange structure
Governance
o Governance and Exchange structure have been determined and
drafted
Program Integration
o Coordination has been established with the State Medicaid agency
and the State Department of Insurance, and at the option of the
State, other specific health and human services programs where
applicable.
Exchange IT Systems
o State has begun development of business requirements for
Exchange IT systems, which comply with standards endorsed or
adopted by the Secretary of HHS pursuant to Sections 1104 and
1561 of the Affordable Care Act, HIPAA transaction standards,
and standards to ensure accessibility as well as security and
privacy standards consistent with Federal law.
Financial Management
o Inclusion of a discussion of a plan for ensuring sufficient funding
for ongoing operations after January 1, 2015
Discussion of progress in the remaining Core Areas, listed below:
o Program Integrity
o Health Insurance Market Reforms
o Providing Assistance to Individuals and Small Businesses,
Coverage Appeals, and Complaints
o Business Operations/ Exchange Functions
ii. Proposal to meet Program Requirements (30 points)
This proposal should describe the approach the applicant will take to
Exchange establishment under each Core Area in which the applicant is
applying for funds. This discussion should build upon the progress the
State has made in the above Core Areas under its Exchange Planning
grant and/or previously awarded Exchange Establishment cooperative
agreement(s). If the applicant identifies that it will only undertake
activities in certain Core Areas, the applicant should describe its overall
strategy to eventually comply with all Core Areas to meet the required
Exchange Requirement deadlines of 2014.
This proposal will be reviewed based on:
o How substantively the applicant describes its approach under each
Core Area and the extent to which Exchange IT Systems have been
considered;
o Degree of interoperability with other programs;
40

o The reasonableness of the proposed approach; and
o The extent to which the applicant demonstrates a plan in and for
compliance with any guidance relating to the Exchange from HHS
The applicant should specifically address IT Systems in the Proposal to meet
Program Requirements. This will be reviewed considering the:
o Extent to which the applicant has demonstrated governance and
technical competence in addressing Key Principles and Core Exchange
Functions supported by IT found in Appendix D.
o Completeness of the IT Gap Analysis conducted by the State, provided
in summary form in the Project Narrative (found in Appendix C).
o Extent to which the applicant provides a thorough understanding of the
importance of using IT standards and is committed to their use in the
Exchange. For details on Section 1561 standards, see:
http://healthit.hhs.gov/portal/server.pt?open=512&mode=2&objID=31
61.
o Extent to which the applicant demonstrates a plan for compliance with
any IT guidance relating to the Exchange or Medicaid issued by HHS.
o If applicable (if a State has submitted an APD to CMS for Medicaid,
CHIP, ACF, USDA/FNS, or any other applicable Agency or Office
systems funding in last three years), whether the applicant provides a
summary of any submission(s) and CMS’ response.
iii. Evaluative Measures (10 points)
Inclusion of a detailed impact evaluation plan for the duration of the project
period;
Discussion of key indicators to be measured;
Effectiveness of methods proposed to monitor progress and evaluate the
achievement of proposed program goals;
Inclusion of plans for timely interventions when targets are not met or
unexpected obstacles delay plans; and
Inclusion of baseline data.
Inclusion of a plan for ongoing evaluation of Exchange functioning once it is
operational.
B. Work Plan (25 points)
The Work Plan for this project must include each of the required milestones in BOLD
and preceded by two asterisks (**) found in Appendix B. The Work Plan should be as
detailed as possible, and reflect the processes specific to each State for achievement of
the required milestones as well as those developed by the State throughout the project
period. For example, if the State procurement procedure requires six months to develop a
request for proposal, review applications, and award a contract, these steps and the
associated time it takes to complete them should be taken into account in the lead time to
achieving each milestone affected by procurement. All such processes should be
described in detail throughout the Work Plan and identified in a timeline.

41

The reasonableness and completeness of the specific tasks to be conducted throughout the
project period will be reviewed as well as the adequacy of the projected timeframes. The
Work Plan must indicate what milestones the Exchange plans to meet with associated
timeframes. For each milestone under each Core Area in the Work Plan, the month and
year of anticipated achievement should be included. The incremental steps to achieving
these milestones should also be identified by the months and years in which they start, are
carried out, and are completed. States may wish to do separate Work Plans for different
aspects of Exchange establishment, such as one Work Plan exclusively devoted to IT
systems development.
It is imperative that States distinguish in their Work Plans between activities funded
under other Exchange funding opportunities, to include Exchange Planning Grants
and Early Innovator Cooperative Agreements, and those establishment activities
supported under this Funding Opportunity in their Work Plans. States may receive
multiple Exchange Establishment Cooperative Agreements and must therefore also
distinguish in their Work Plans among the activities funded under the various
Exchange Establishment awards received.
C. Budget Narrative (20 points)
Completeness of the budget and reasonableness of requested funding level
according to the tasks proposed.
Extent to which the applicant exhibits the budgetary resources that are needed
according to its Work Plan. The budget must show the resources needed on a
quarterly basis where the State is able to make these determinations at the
time of application and explain why other costs can’t be distributed quarterly.
The proposed budget should include only costs for activities and
functionalities that are integral to Exchange operations and meeting Exchange
requirements.
Inclusion of a description that indicates which elements of the proposal the
applicant expects to also benefit the State’s Medicaid/CHIP system, and other
specific health and human service programs as applicable. Include a
description of your proposal for allocating costs between these sources of
funding.
Explanation of how the establishment activities funded will be coordinated
with funding previously awarded under Exchange Planning Grants, Early
Innovator Cooperative Agreements, State Consumer Assistance Grants, as
well as previously awarded Exchange Establishment Cooperative
Agreements.
Inclusion of a description of the State’s capacity to manage multiple
grant/cooperative agreement funding streams.
Level Two Establishment
Applicants that apply for Level Two Establishment funding and are not recommended for
funding could revise and resubmit their application for either Level One Establishment or Level
Two Establishment provided that the final application due date has not passed.
42

The review criteria for Level Two Establishment applications are based on a total of 100 points
allocated among the following areas:
A. Project Narrative – 55 points
i.

Demonstration of Progress in Exchange Planning Grant Core Areas (15 points)
The applicant should describe and quantify progress toward carrying out activities in
the Core Areas listed below. Applicants must show steps that have been completed
and provide evidence of the significant progress in each of these planning Core
Areas in order to be determined ready to receive funding through December 31,
2014. This discussion should include a discussion of how the State has met the
eligibility criteria for a Level Two Establishment award.
Background Research
o Research completed, including market analysis
o Inclusion of discussion of how research has informed Exchange
planning and policy
Stakeholder Involvement
o Stakeholder meetings have been convened
o Inclusion of a discussion of how input from stakeholders has been
integrated into the planning process
State Legislative/Regulatory Actions
o The State has the necessary legal authority to establish and operate
an Exchange that complies with Federal requirements and provides
for establishment of governance and Exchange structure
Governance
o Governance and Exchange structure have been determined and
established
Program Integration
o Coordination has been established with the State Medicaid agency
and the State Department of Insurance, and other specific health
and human services programs as applicable.
Exchange IT Systems
o State has begun development of business requirements for
Exchange IT systems, which comply with standards endorsed or
adopted by the Secretary of HHS pursuant to Sections 1104 and
1561 of the Affordable Care Act, HIPAA transaction standards,
and standards to ensure accessibility as well as security and
privacy standards consistent with Federal law.
Financial Management
o Inclusion of a discussion of a plan for ensuring sufficient funding
for ongoing operations after January 1, 2015
Discussion of progress in the remaining Core Areas, listed below:
o Program Integrity
o Health Insurance Market Reforms
43

o
o

Providing Assistance to Individuals and Small Businesses,
Coverage Appeals, and Complaints
Business Operations/ Exchange Functions

ii. Proposal to meet Program Requirements (30 points)
The applicant should describe how the State will achieve progress through
2014 in each of the Core Areas found in the Program Requirements section.
These applicants should demonstrate an advanced state of readiness to
establish an Exchange and receive funding through 2014. This proposal
should describe the approach the applicant will take to Exchange
establishment under each Core Area. This discussion should build upon the
progress the State has made under the above Core Areas.
This proposal will be reviewed based on:
o How substantively the applicant describes its approach under each
Core Area and the extent to which Exchange IT Systems have been
considered;
o Degree of interoperability with other programs;
o The reasonableness of the proposed approach; and
o The extent to which the applicant demonstrates a plan in and for
compliance with any guidance relating to the Exchange from HHS.
The applicant should specifically address IT Systems in the Proposal to meet
Program Requirements. This will be reviewed considering the:
o Extent to which the applicant has demonstrated governance and
technical competence in addressing Key Principles and Core Exchange
Functions supported by IT found in Appendix D.
o Completeness of the IT Gap Analysis conducted by the State, provided
in summary form in the Project Narrative (found in Appendix C).
o Extent to which the applicant provides a thorough understanding of the
importance of using IT standards and is committed to their use in the
Exchange. For details on Section 1561 standards, see:
http://healthit.hhs.gov/portal/server.pt?open=512&mode=2&objID=31
61.
o Extent to which the applicant demonstrates a plan for compliance with
any IT guidance relating to the Exchange or Medicaid issued by HHS.
o If applicable (if a State has submitted an APD to CMS for Medicaid,
CHIP, ACF, USDA/FNS, or any other applicable Agency or Office
systems funding in last three years), whether the applicant provides a
summary of any submission(s) and CMS’ response.
o Extent to which the applicant demonstrates an advanced state of
readiness to engage in early phases of a systems development lifecycle
process (e.g., initiation, concept development, requirements, etc.).
iii. Evaluative Measures (10 points)
Inclusion of a detailed impact evaluation plan for the duration of the project
period; Discussion of key indicators to be measured;

44

Effectiveness of methods proposed to monitor progress and evaluate the
achievement of proposed program goals;
Inclusion of updated plans for timely interventions when targets are not met or
unexpected obstacles delay plans; and
Inclusion of updated baseline data.
Inclusion of a plan for ongoing evaluation of Exchange functioning once it is
operational.
B. Work Plan (25 points)
The Work Plan must demonstrate a sufficient level of planning to justify the award of
funding through 2014 by inclusion of detailed milestones throughout the project period.
The Work Plan for this project must include each of the required milestones in BOLD
and preceded by two asterisks (**) found in Appendix B. The Work Plan should be as
detailed as possible, and reflect the processes specific to each State for achievement of
the required milestones as well as those developed by the State for the entire project
period, from the date of award up through December 31, 2014. For example, if the State
procurement procedure requires six months to develop a request for proposal, review
applications, and award a contract, these steps and the associated time it takes to
complete them should be taken into account in the lead time to achieving each milestone
affected by procurement. All such processes should be described in detail throughout the
Work Plan and identified in a timeline.
The reasonableness and completeness of the specific tasks to be conducted throughout the
project period will be reviewed as well as the adequacy of the projected timeframes. The
Work Plan must indicate what milestones the Exchange plans to meet with associated
timeframes. For each milestone under each Core Area in the Work Plan, the month and
year of anticipated achievement must be included. The incremental steps to achieving
these milestones should also be identified by the months and years in which they start, are
carried out, and are completed. States may wish to do separate Work Plans for different
aspects of Exchange establishment, such as one Work Plan exclusively devoted to IT
systems development.
The Work Plan for Level Two Establishment applicants must demonstrate an advanced
state of readiness by including robust and complete milestones through 2014.
It is imperative that States distinguish in their Work Plans between activities funded
under other Exchange funding opportunities, to include Exchange Planning Grants
and Early Innovator Cooperative Agreements, and those establishment activities
supported under this Funding Opportunity in their Work Plans. States may receive
multiple Exchange Establishment Cooperative Agreements and must therefore also
distinguish in their Work Plans among the activities funded under the various
Exchange Establishment awards received.
C. Budget Narrative (20 points)
The budget narrative justifies the State’s readiness to receive funding through 2014,
including complete explanations and justifications of proposed funding levels.
45

Extent to which the applicant exhibits a sound understanding of the scope of
Exchange functions and the funding needed to carry them out;
Completeness of the budget and reasonableness of requested funding level
according to the tasks proposed;
Extent to which the applicant exhibits the budgetary resources that are needed
according to its Work Plan. The budget must show the resources needed on a
quarterly basis where the State is able to make these determinations at the
time of application and explain why other costs can’t be distributed quarterly.
The proposed budget should include only costs for activities and
functionalities that are integral to Exchange operations and meeting Exchange
requirements;
Inclusion of a description that indicates which elements of the proposal the
applicant expects to also benefit the State’s Medicaid/CHIP system and other
specific health and human services programs as applicable. Include a
description of your proposal for allocating costs between these sources of
funding;
Explanation of how the establishment activities funded will be coordinated
with funding previously awarded under Exchange Planning Grants, Early
Innovator Cooperative Agreements, State Consumer Assistance Grants, as
well as previously awarded Exchange Establishment Cooperative
Agreements.
Inclusion of a description of the State’s capacity to manage multiple
grant/cooperative agreement funding streams.
2. Review and Selection Process
A team consisting of qualified experts will review all applications. The review process will
include the following:
A. Applications will be screened to determine eligibility for further review using the criteria
detailed in Section III, Eligibility Information of this Funding Opportunity
Announcement. Applications that are received late or fail to meet the eligibility
requirements as detailed in this Funding Opportunity Announcement or do not include
the required forms will not be reviewed.
B. Procedures for assessing the technical merit of grant applications have been instituted to
provide for an objective review of applications and to assist the applicant in
understanding the standards against which each application will be judged. Review
criteria are used to review and to rank applications. Critical indicators have been
developed for each review criterion to assist the applicant in presenting pertinent
information related to that criterion and to provide the reviewer with a standard for
evaluation. Review criteria, according to which all applications will be evaluated, are
outlined above with specific detail and scoring points. Applications will be evaluated by
an objective review committee. Applicants should pay strict attention to addressing all
these criteria, as they are the basis upon which the reviewers will evaluate their
applications.

46

C. Final award decisions will be made by an HHS program official. In making these
decisions, the HHS program official will take into consideration: recommendations of the
review panel; reviews for programmatic and grants management compliance; the
reasonableness of the estimated cost to the government and anticipated results; and the
likelihood that the proposed project will result in the benefits expected.
The Department reserves the right to conduct pre-award Budget Negotiations with
potential awardees. If the applicant applies for Level Two Establishment and is found to
not meet the review criteria, the applicant may reapply for a Level One Establishment
award provided that the final application due date has not passed.
3. Anticipated Announcement and Award Date
The anticipated dates of award for Cooperative Agreement to Support Establishment of Stateoperated Health Insurance Exchanges are 45 days after each application due date for Level One
Establishment and Level Two Establishment.
VI.

AWARD ADMINISTRATION INFORMATION

1. Award Notices
Successful applicants will receive a Notice of Grant Award signed and dated by an HHS Grants
Management Officer. The Notice of Grant Award is the document authorizing the grant award
and will be sent through electronic mail to the State as listed on the SF 424. Any communication
between HHS and applicants prior to issuance of the Notice of Grant Award is not an
authorization to begin performance of a project. Unsuccessful applicants are notified within 30
days of the final funding decision and will receive a disapproval letter via U.S. Postal Service or
electronic mail.
Federal Funding Accountability and Transparency (FFATA) subaward Reporting
Requirement: New awards issued under this funding opportunity announcement are
subject to the reporting requirements of the Federal Funding Accountability and
Transparency Act of 2006 (Pub. L. 109–282), as amended by section 6202 of Public Law
110–252 and implemented by 2 CFR Part 170. Grant and cooperative agreement recipients
must report information for each first-tier subaward of $25,000 or more in Federal funds
and executive total compensation for the recipient’s and subrecipient’s five most highly
compensated executives as outlined in Appendix A to 2 CFR Part 170 (available online at
www.fsrs.gov).
2. Administrative and National Policy Requirements
The following standard requirements apply to applications and awards under this FOA:
A. Specific administrative requirements, as outlined in 2 CFR Part 225 and 45 CFR Part 92,
apply to cooperative agreements awarded under this announcement.
B. All States receiving awards under this grant project must comply with all applicable
Federal statutes relating to nondiscrimination including, but not limited to:
i.
Title VI of the Civil Rights Act of 1964,
ii.
Section 504 of the Rehabilitation Act of 1973,
47

iii.
iv.
v.

The Age Discrimination Act of 1975,
Hill-Burton Community Service nondiscrimination provisions, and
Title II Subtitle A of the Americans with Disabilities Act of 1990,

C. All equipment, staff, other budgeted resources, and expenses must be used exclusively
for the project identified in this application or agreed upon subsequently with HHS, and
may not be used for any prohibited uses.
D. Consumers and other stakeholders must have meaningful input into the planning,
implementation, and evaluation of the project. All cooperative agreement budgets must
include some funding to facilitate participation on the part of individuals who have a
disability or long-term illness and their families. Appropriate budget justification to
support the request for these funds must be included.
3. Terms and Conditions
Cooperative agreements issued under this FOA are subject to the Health and Human Services
Grants Policy Statement (HHS GPS) at http://www.hhs.gov/grantsnet/adminis/gpd/. Standard
terms and special terms of award will accompany the Notice of Grant Award. Potential
applicants should be aware that special requirements could apply to grant awards based on the
particular circumstances of the effort to be supported and/or deficiencies identified in the
application by the HHS review panel. The general terms and conditions that are outlined in
Section II of the HHS GPS will apply as indicated unless there are statutory, regulatory, or
award-specific requirements to the contrary (as specified in the Notice of Grant Award).
Subaward Reporting and Executive Compensation: New awards issued under this funding
opportunity announcement are subject to the reporting requirements of the Federal
Funding Accountability and Transparency Act of 2006 (Pub. L. 109–282), as amended by
section 6202 of Public Law 110–252 and implemented by 2 CFR Part 170. Grant and
cooperative agreement recipients must report information for each first-tier subaward of
$25,000 or more in Federal funds and executive total compensation for the recipient’s and
subrecipient’s five most highly compensated executives as outlined in Appendix A to 2 CFR
Part 170 (available online at www.fsrs.gov).
All prime grantees will be required to provide a DUNS number in order to be able to register in
FSRS as a prime grantee user. If your organization does not have a DUNS number, you will need
to obtain one from Dun & Bradstreet. Call D&B at 866-705-5711 if you do not have a DUNS
number. Once you have obtained a DUNS Number from D&B, you must then register with the
Central Contracting Registration (CCR) at www.ccr.gov. Organizations must report executive
compensation as part of the registration profile at www.ccr.gov by the end of the month
following the month in which this award is made, and annually thereafter (based on the
reporting requirements of the Federal Funding Accountability and Transparency Act of
2006 (Pub. L. 109-282), as amended by section 6202 of Public Law 110-252 and
implemented by 2 CFR Part 170)). After you have completed your CCR registration, you will
be able to register in FSRS as a prime grantee user.

48

4. Cooperative Agreement Terms and Conditions of Award
The following special terms of award are in addition to, and not in lieu of, otherwise applicable
OMB administrative guidelines, HHS grant administration regulations at 2 CFR Part 225 and 45
CFR Part 92 (Part 92 is applicable when State and local Governments are eligible to apply), and
other HHS and PHS grant administration policies.
The administrative and funding instrument used for this program will be a Cooperative
Agreement, an assistance mechanism in which substantial HHS programmatic involvement with
the recipient is anticipated during the performance of the activities. Under each Cooperative
Agreement, HHS’ purpose is to support and stimulate the recipient's activities by involvement in
and otherwise working jointly with the award recipient in a partnership role. To facilitate
appropriate involvement during the period of this Cooperative Agreement, HHS and the recipient
will be in contact monthly and more frequently when appropriate.
Cooperative Agreement Roles and Responsibilities are as follows:
Department of Health and Human Services
HHS will have substantial involvement in program awards, as outlined below:
Technical Assistance – HHS will provide technical assistance in accordance with
requirements to be established by the Secretary through the rulemaking process and
guidance issued by HHS.
Collaboration – To facilitate compliance with the terms of the Cooperative
Agreement and to more effectively support recipients, HHS will actively coordinate
with certain critical stakeholders, such as:
o State-Designated Entities
o State HIT Coordinators and Health Insurance Exchange Leads
o Other relevant Federal Agencies including but not limited to the U.S. Office
of Personnel Management, the Indian Health Service, the Health Resources
and Services Administration, the Internal Revenue Service, the Department of
Homeland Security, the Administration for Children and Families, and the
Social Security Administration.
Program Evaluation – HHS will work with recipients to implement lessons learned to
continuously improve this program and the nation-wide implementation of the Health
Insurance Exchanges.
Progress against the Exchange Work Plan – HHS will evaluate grant performance and
progress against the grantee’s Work Plan and will allow access to funding in
alignment with State progress.
Project Officers and Monitoring – HHS will assign specific Project Officers to each
Cooperative Agreement award to support and monitor recipients throughout the
period of performance. HHS Grants Management Officers and Project Officers will
monitor, on a regular basis, progress of each recipient. This monitoring may be by
phone, document review, on-site visit, other meeting and by other appropriate means,
such as reviewing program progress reports and Federal Financial Reports (SF425).
This monitoring will be to determine compliance with programmatic and financial
requirements.
49

Conference and Training Opportunities – HHS will host opportunities for training
and/or networking, including conference calls and other vehicles.
Recipients
Recipients and assigned points of contact retain the primary responsibility and dominant
role for planning, directing and executing the proposed project as outlined in the terms
and conditions of the Cooperative Agreement and with substantial HHS involvement.
Recipient shall:
Requirements – comply with all current and future requirements of the establishment
of an Exchange, including those issued through rulemaking and guidance specified
and approved by the Secretary of HHS.
Collaboration – collaborate with the critical stakeholders listed in this funding
opportunity and the HHS team, including the assigned Project Officer. Recipients are
also required to collaborate with their State Medicaid Directors, State Insurance
Commissioners, and other key State stakeholders such as the HIT Coordinators.
Reporting – comply with all reporting requirements outlined in this funding
opportunity and the terms and conditions of the Cooperative Agreement to ensure the
timely release of funds.
Program Evaluation – cooperate with HHS-directed national program evaluations.
Intellectual Property
As a term and condition of a grant award, under 45 CFR 92.34, the Federal awarding
agency will retain a royalty-free, nonexclusive, irrevocable license to reproduce, publish
or otherwise use and authorize others to use, for Federal Government purposes, the
copyright in any work developed under the grant, or a subgrant or subcontract, and in any
rights to a copyright purchased with grant support.
State grantees under this Cooperative Agreement shall not enter in to any contracts
supporting the Exchange systems where Federal grant funds are used for the acquisition
or purchase of software licenses and ownership of the licenses are not held or retained by
either the State or Federal government, under the terms described above.
5. Reporting
All successful applicants under this announcement must comply with the following reporting and
review activities:
A. Quarterly Progress Reports
Grantees must provide HHS with information such as, but not limited to, project status,
implementation activities initiated, accomplishments, barriers, and lessons learned in
order to ensure that funds are used for authorized purposes. Such performance includes
submission of the State’s progress toward the milestones identified in its Work Plan.
Appendix B of this document provides a series of example milestones organized under
each Core Area. Each State Exchange should draw from these milestones in the
development of its Work Plan. Certain milestones are in BOLD and preceded by two
asterisks (**) which indicates that these tasks are required for Exchanges and should be
completed in the timeframe provided. HHS reserves the right to restrict funds for
50

activities related to milestones not met. Tasks that are not bold and preceded by two
asterisks (**) will need to be included in each Work Plan but the timeframe, while
suggested, is not required. More details of the report will be outlined in the Notice of
Grant Award. The report could include, but will not be limited to:
Progress on the required milestones (in BOLD and preceded by two asterisks (**) in
Appendix B)
Progress on State determined goals, milestones, and activities
Changes in work plan components
Lessons learned
B. Work Plan Updates
Each State will be required to periodically submit an updated Work Plan in order to
exhibit progress toward identified milestones contained in the Work Plan. HHS Project
Officers will track State progress using these updated Work Plans and progress made
towards milestones.
C. Public Report
Grantees will be required to prominently post specific information about establishment
grants on their respective Internet websites to ensure that the public has information on
the use of funds. More details will be outlined in the Notice of Grant Award.
D. Performance Review
HHS is interested in enhancing the performance of its funded programs within
communities and States. As part of this agency-wide effort, grantees will be required to
participate, where appropriate, in an on-site performance review of their HHS-funded
project(s) by a review team. The timing of the performance review is at the discretion of
HHS. States may also be subject to site visits to enable HHS to conduct evaluations of
Exchange progress as needed to support the determinations HHS must make related to
Exchange certification, explained in Section I.5 of this announcement.
E. Federal Financial Report (FFR)
The FFR SF425 was designed to replace the Financial Status Report SF269 and the
Federal Cash Transactions Report SF272 with one comprehensive financial reporting
form. Grantees are required to submit the FFR SF425 on a quarterly basis. More details
will be outlined in the Notice of Grant Award.
F. Transparency Act Reporting Requirements
New awards issued under this funding opportunity announcement are subject to the
reporting requirements of the Federal Funding Accountability and Transparency Act of
2006 (Pub. L. 109–282), as amended by section 6202 of Public Law 110–252 and
implemented by 2 CFR Part 170. Grant and cooperative agreement recipients must report
information for each first-tier subaward of $25,000 or more in Federal funds and
executive total compensation for the recipient’s and subrecipient’s five most highly
compensated executives as outlined in Appendix A to 2 CFR Part 170 (available online at

51

www.fsrs.gov). Competing Continuation awardees may be subject to this requirement
and will be so notified in the Notice of Award.
G. Audit Requirements
Grantees must comply with audit requirements of Office of Management and Budget
(OMB) Circular A-133. Information on the scope, frequency, and other aspects of the
audits can be found on the Internet at www.whitehouse.gov/omb/circulars.
H. Payment Management Requirements
Grantees must submit a quarterly electronic SF 425 via the Payment Management
System. The report identifies cash expenditures against the authorized funds for the
grant. Failure to submit the report may result in the inability to access grant funds. The
SF 425 Certification page should be faxed to the PMS contact at the fax number listed on
the SF 425, or it may be submitted to:
Division of Payment Management
HHS/ASAM/PSC/FMS/DPM
PO Box 6021
Rockville, MD 20852
Telephone: (877) 614-5533

VII. AGENCY CONTACTS
For questions and concerns regarding this cooperative agreement, please contact:
Grants Management Official/Business
Administration
Michelle Feagins
Office of Acquisition and Grants Management
Centers for Medicare & Medicaid Services
Department of Health and Human Services
(301) 492-4312
Michelle.Feagins@cms.hhs.gov

Program Official/Programmatic
Management
Katherine Bryant
Center for Consumer Information and
Insurance Oversight
Centers for Medicare & Medicaid Services
Department of Health and Human Services
(301) 492-4446
Katherine.Bryant@cms.hhs.gov

52

VIII. APPENDICES
A.

Appendix A: Description of the Eleven Exchange Establishment Core Areas

Although it is emphasized in program integrity and financial management, one of the key
principles that will inform federal funding and technical support for State establishment of
Exchanges is public accountability and transparency. Accountability requires transparency.
Section 1311(d)(7) requires public reports on Exchange activities, and Section 1311(e)(3)
requires additional reporting, which should include standardized data reporting on price,
quality, benefits, consumer choice and other factors that will help measure and evaluate
performance. Successful Exchanges must ensure public accountability in areas such as
objective information on the performance of plans; availability of automated comparison
functions to inform consumer choice; fair and impartial treatment of consumers, plans and
other partners; and prohibitions on conflict of interest.
For more information on the initial guidance provided to States on the Principles and priorities
of Exchanges, please go to:
http://www.healthcare.gov/center/regulations/guidance_to_states_on_exchanges.html
Further information on each of these Exchange Establishment Core Areas will be provided in
future guidance and regulations.
1. Background Research
As part of their planning activities, many States are currently undertaking studies and other
research to determine the best approach for supporting an Exchange. In some States, this
research includes evaluating whether or not the State should establish an Exchange, and if so,
where it should be housed, how it should be governed, and what approach it will take. For Level
One Establishment and Level Two Establishment applicants, background research will only be
considered as a Core Area under previous Exchange grants and will not need to be carried
forward under the Establishment Cooperative Agreement except to the extent that the State
determines more research is needed.
2. Stakeholder Consultation
Section 1311(d)(6) of the Affordable Care Act requires that each Exchange consult with a variety
of key stakeholders in the planning, establishment and ongoing operation of Exchanges. For
example, Stakeholder input should be considered in the development of legislative options and
drafts of enabling legislation, Exchange design and approach, and Exchange operational issues,
among numerous other topics, including coordination with State health information exchanges.
Successful Exchanges will undertake multi-faceted outreach to inform the public of their services
and coverage options and will work closely with a variety of stakeholders including, but not
limited to advocates for consumers, patients, employees, unemployed individuals, self employed
individuals, and other consumers likely to be Exchange enrollees as well as consumers likely to
be eligible for premium tax credits and cost-sharing reductions, representatives of small
53

businesses, health insurance issuers, State HIT Coordinators, State Medicaid offices, State
human services agency, and health care providers.
In the spirit of Executive Order 13175 the Secretary is anticipating requiring each State that has
one or more federally recognized Tribe(s) located within its borders to provide documentation
that it has (1) established a process of consultation with such Tribe(s) regarding the start up and
ongoing operation of the Exchanges; (2) implemented that process; and (3) assurance that it will
continue to conduct and document such Tribal consultations for Exchange matters. Further
guidance will be provided on this and other Tribal specific issues. States are encouraged to
review and adapt to procedures for State Medicaid consultation. States have the option to
subcontract with Tribes for activities related to their grant. Please clearly identify funding set
aside for such consultation in the budget narrative.
3. Legislative and Regulatory Action
Section 1321(b)(1) of the Affordable Care Act requires that by January 1, 2014, a State that
elects to establish an Exchange must adopt and have in effect the Federal standards for
Exchanges that will be issued by HHS or that the State have in effect a State law, regulation, or
other legal mechanism, that implements these standards. Each State should ensure that it
provides its Exchange with the authority necessary to meet all the Exchange requirements of the
Affordable Care Act. The State must determine all the necessary steps it must take to have the
necessary legal authority to establish and operate an Exchange that complies with Federal
requirements. Each State will have its own milestones under this Core Area that correspond to its
legislative calendar and the political environment of the State. We provide examples of basic
milestones to guide the timeline for this process.
4. Governance
Each Exchange must have in place a governance structure that conforms to the requirements of
the Affordable Care Act and the regulations to be issued by HHS. Section 1311(d)(1) provides
States with the option of establishing an Exchange within an existing State agency, within a new
or existing quasi-governmental entity, or as a separate non-profit. In addition, a State could
choose to partner with one or more other States to establish a regional Exchange or to create
more than one subsidiary Exchange within the State. Regardless of its organizational form, the
Exchange must be publicly accountable, transparent, and have technically competent leadership,
adhering to States’ conflict of interest requirements, with the capacity and authority to take all
actions necessary to meet Federal standards, including the discretion to determine whether health
plans offered through the Exchange are in the interests of qualified individuals and qualified
employers.
5. Program Integration
As required by Section 1413 of the Affordable Care Act, the Exchange will need to work closely
with Medicaid, CHIP, and other health programs in order to ensure seamless eligibility
verification and enrollment processes. To reach this goal, the Exchange and the State Medicaid
agency will need to closely partner on systems development and operational procedures. States
54

are encouraged to consider how the Exchange system can be integrated with other health and
human services systems in the State since the eligibility function the Exchange will perform has
significant similarities to eligibility determinations in other programs. States are encouraged to
consider steps to achieve interoperability with other specific health and human services programs
for purposes of coordinating eligibility determinations, referrals, verification, or other functions.
Each Exchange will also need to work closely with the State Department of Insurance in order to
successfully carry out the activities of the Exchange. The State Department of Insurance will
oversee the regulation and licensure of health insurance issuers, including those that offer
qualified health plan coverage through the Exchange. In addition, the State Department of
Insurance may be the State entity that processes consumer coverage appeals and complaints.
Working with the State Department of Insurance will be essential in ensuring the financial
stability of insurance companies, certification of plans, rate review, State licensure, solvency,
and market conduct. Key issues, such as adverse selection, related to the functioning of the
individual and small group markets inside and outside the Exchange will be important to
Exchange success. To the extent Exchanges are not one of these entities, they should get started
early in working with these other departments as well as legislators to determine the best
approach to mitigating these issues.
6. Exchange IT Systems
Information technology will be a component of many business functions of the Exchange,
including those set forth in Section 1311(d)(4) as well as the requirements in Sections 1411,
1412 and 1413 related to eligibility and enrollment. This Core Area encompasses the
performance of the Exchange in planning for and establishing these systems in these various
functional areas. When planning or developing Exchange IT systems, the State should take steps
to ensure a modular, flexible approach to systems development, including use of open interfaces
and exposed application programming interfaces; the separation of business rules from core
programming; and the availability of business rules in both human and machine readable
formats. Milestones related to information technology for establishment of an Exchange will be
located under each of the Exchange business functions. Exchanges will be required to follow all
applicable Federal IT guidance. In addition, States are encouraged to leverage the expertise of
the State health information exchange program (HIE). HIE is defined as the mobilization of
healthcare information electronically across organizations within a region, community or
hospital system. HIE provides the capability to electronically move clinical information among
disparate health care information systems while maintaining the meaning of the information
being exchanged. The goal of HIE is to facilitate access to and retrieval of clinical data to
provide safer, more timely, efficient, effective, equitable, patient-centered care. HIE is also
useful to Public Health authorities to assist in analyses of the health of the population.

7. Financial Management
As required by Section 1313, each Exchange will establish a financial management structure and
accounting system that adheres to applicable provisions of generally accepted accounting
requirements and ensures sound financial management of Exchange funds. We have provided
55

some milestones that should be included in the Exchange Work Plan related to establishing these
functions. Applicants should create additional milestones that are tailored to their Exchanges’
particular management structure and that will ensure the Exchanges are in compliance with State
and Federal regulations.
8. Oversight and Program Integrity
Also required by Section 1313, each Exchange will need to ensure program integrity related to
Federal and State funds utilized to start-up and operate the Exchange. Exchanges will need to
ensure that they take steps to prevent waste, fraud, and abuse. The Financial Management core
area includes the infrastructure the Exchange must establish for financial management while this
core area includes the oversight and program integrity activities the Exchange undertakes to
ensure compliance with Federal and State requirements, including annual audits.
9. Health Insurance Market Reforms
In Sections 1311(a)(4)(A)(ii) and 1321(c)(1)(B)(ii)(II), the Affordable Care Act requires each
State to show progress implementing the health insurance market reforms that are set forth in
Subtitles A and C of the Affordable Care Act as a condition of receiving establishment grants
and for certification of the State’s Exchange. Making progress on implementation would include
passing State legislation or issuing appropriate regulations implementing these reforms as well as
other activities, including stakeholder consultation on these issues and development of a plan to
implement these reforms. These activities will be carried out by the State. HHS will release
guidance on how States demonstrate progress in implementing these reforms. States must also
demonstrate they are enforcing Affordable Care Act consumer protections to be certified as
eligible to operate an Exchange.
10. Providing Assistance to Individuals and Small Businesses, Coverage Appeals, and
Complaints
Exchanges are required to provide certain services for State residents, including responding to
requests for informational assistance, providing a toll free telephone hotline, and helping
individuals learn whether they are eligible for Medicaid, CHIP and applicable State health
subsidy programs and facilitate the enrollment process, where applicable. Exchanges also must
offer assistance to individuals and provide for coverage appeals. These requirements are set forth
in Sections 1311(d)(4) and 1413 as well as other Sections. Exchanges also must offer assistance
through navigators, as required by Section 1311(i) of the Affordable Care Act (funded from the
operational funds of the Exchange), to individuals and provide for coverage appeals.
An Exchange may provide these services directly, or through contracts or by referral
arrangements to entities or other state agencies that provide such assistance services. Many
States already have assistance programs that help residents resolve problems, answer questions,
file complaints as well as appeals, and enroll in health insurance plans. When an Exchange
provides this assistance through contracting entities or interagency agreements, it must ensure
the outside entity has capacity to provide assistance that consumers need. Building sufficient
capacity for providing assistance to State residents is a core activity of Exchange planning and
establishment. For these reasons, a State must ensure robust capacity for providing such
56

assistance for all of its residents and must ensure that the Exchange reinforces and strengthens
this assistance capacity. The Exchange should collaborate closely with other entities within the
State who are carrying out these activities and develop a plan to facilitate this ongoing
collaboration.
11. Business Operations of the Exchange
Exchanges must carry out several functions required by the Affordable Care Act. More detailed
information will be provided on the requirements for each function in future guidance. Each of
the minimum functions of an Exchange are listed below and explained in greater detail below.
These requirements are mainly set forth in Sections 1311(d)(4), 1341, 1343, and 1411-1413.
Minimum functions of an Exchange:



















Certification, recertification, and decertification of qualified health plans
Call center
Exchange website
Premium tax credit and cost-sharing reduction calculator
Quality rating system
Navigator program
Eligibility determinations for Exchange participation, advance payment of
premium tax credits, cost-sharing reductions, and Medicaid
Seamless eligibility and enrollment process with Medicaid and other State
health subsidy programs
Enrollment process
Applications and notices
Individual responsibility determinations
Administration of premium tax credits and cost-sharing reductions
Adjudication of appeals of eligibility determinations
Notification and appeals of employer liability
Information reporting to IRS and enrollees
Outreach and education
Risk adjustment and transitional reinsurance
SHOP Exchange-specific functions

Certification, Recertification, and Decertification of Qualified Health Plans
Each Exchange, whether for the small group or individual market, must have a process in
place to certify, recertify, and decertify qualified health plans. States must begin defining
their process and approach to these activities with health plans in the early planning and
establishment phases of an Exchange. There are many steps in this process, and we have
provided milestones as a framework for carrying out these activities. However, States may be
on slightly different timelines and we encourage States to develop timeframes for these
activities that are achievable yet ensure they can be ready for open enrollment in mid to late
2013. In order to meet this deadline, Exchanges must begin the process of selection and
certification of qualified health plans in 2012.
57

Call Center
As part of its plan to provide meaningful assistance to individuals and small businesses, each
Exchange must operate a toll-free hotline to respond to requests for assistance from
consumers. HHS will provide future guidance containing more specific information about the
requirements for Exchange call centers. Each Exchange should aim to have a call center
ready before open enrollment, but States may set up these services earlier to facilitate
outreach to consumers and to answer consumer questions about how the Affordable Care Act
may affect individual access to health insurance. In addition, a State could explore partnering
with its State Consumer Assistance Program or Health Ombudsman program to jointly
contract for or to operate a call center as these activities will be very closely related.
Exchange Website and Premium Tax Credit and Cost-sharing Reduction Calculator
Each Exchange will maintain a website through which applicants and enrollees may obtain
standardized comparative information on qualified health plans, apply for coverage, and
enroll online. Exchange websites will also need to post required transparency information.
Exchanges may choose to provide many more services on their websites. In addition, each
Exchange website must provide access to an electronic calculator that allows individuals to
view an estimated cost of their coverage once premium tax credits have been applied to their
premiums, and the impact of cost-sharing reductions, if they are eligible. HealthCare.gov can
be used as a source of content for Exchange websites.
Quality Rating System
Each Exchange will need to assign a quality rating to each plan in accordance with the
quality rating system that will be issued by HHS. Also, certification of qualified health plans
should include consideration of quality data.
Navigator Program
Each Exchange will establish a Navigator program, as required by Section 1311(i) of the
Affordable Care Act, under which it awards grants (funded from the operational funds of the
Exchange) to entities that will assist consumers in navigating their choices in the health
insurance marketplace. This includes facilitating enrollment in qualified health plans.
Eligibility determinations for Exchange participation, advance payment of premium tax
credits, cost-sharing reductions, and Medicaid
Key operations of the Exchange will be verification and determination of eligibility for
qualified health plans. The Affordable Care Act includes requirements for these functions
that will be spelled out in greater detail in future HHS guidance. Key functions within this
area include:
 Eligibility determinations for:
o Advance payment of premium tax credits;
o Cost-sharing reductions;
o Other applicable State health subsidy programs, including Medicaid and
CHIP; and
58



Appeals of eligibility determinations for enrollment in a qualified health plan and
premium tax credits and cost-sharing reductions.

Seamless eligibility and enrollment process with Medicaid and applicable State health
subsidy programs
There are numerous milestones that Exchanges will need to accomplish between now and
2014 to create seamless eligibility and enrollment between the Exchange and other State
health subsidy programs. The Exchange must determine an individual’s eligibility for
Medicaid, CHIP, and other applicable State health subsidy programs and the State must
ensure that such individuals are seamlessly enrolled in the program for which they are
eligible without need for further determination by the other program. States are encouraged
to consider how the Exchange eligibility system can be integrated – in the short or longer
term - with other health and human services systems in the State since the eligibility function
the Exchange will perform has significant similarities to eligibility determinations in other
programs. States are encouraged to consider steps necessary to achieve interoperability with
other specific health and human services programs for purposes of coordinating eligibility
determinations, referrals, verification, or other functions.
Each State’s situation will be different and milestones will need to be tailored to the specific
scenarios. In addition, many of the steps needed to achieve streamlined eligibility and
enrollment in Exchanges and other applicable State health subsidy programs will be carried
out through the development of information technology systems in close partnership with
State Medicaid programs. We will work closely to help States with the process. States should
refer to Guidance for Exchange and Medicaid Information Technology (IT) Systems, Version
2.0 or the most current version, the standards adopted by the Secretary pursuant to the
Affordable Care Act, and future guidance for additional guidance related to the effort to
bring together eligibility and enrollment processes across these programs.
Enrollment process
The Exchange will need to facilitate plan selection for an individual who is eligible to enroll
in a qualified health plan. This includes providing information about available qualified
health plans that is customized according to an individual’s preferences, receiving an
individual’s choice of plan, and providing enrollment transactions to qualified health plan
issuers using applicable standards that will be set forth in future HHS guidance.
Applications and notices
The Exchange must implement all requirements for applications and notices consistent with
Federal requirements, including facilitating the use of a single, streamlined application.
Applications and notices include mechanisms for consumers to carry out enrollment steps
(screening, enrollment forms, verifications) both in person or online. Applications and
notices will facilitate the application, eligibility determination process, and enrollment of
individuals into qualified health plans as well as notices that the Exchange will issue to
facilitate program operations and communication with enrollees. For example, the Exchange
59

will have to notify individuals upon determination of eligibility for enrollment in a qualified
health plan through the Exchange.
Individual responsibility determinations
The Exchange must have in place a process to receive and adjudicate requests from
individuals for exemptions from the individual responsibility requirements of the Affordable
Care Act, and to communicate information on such requests to HHS for transmission to IRS.
This is a required function of Exchanges under the Affordable Care Act.
Administration of advance premium tax credits and cost-sharing reductions
The Exchange must perform administrative activities related to premium tax credits and costsharing reductions. For example, an Exchange will need to communicate with HHS in
situations when a person would like to report a change in income level, which will trigger
redetermination of eligibility for advance payment of the credits. Exchanges are the first
point of contact for prospective enrollees who will be interested in learning more about
premium tax credits and for seeking assistance when needed.
Adjudication of appeals of eligibility determinations
Individuals may seek to contest the eligibility determinations made by the Exchange for
premium subsidies and Exchange participation, and therefore the Exchange will need to
implement a process for processing appeals, and this process will coordinate with Medicaid
and CHIP.
Notification and appeals of employer liability
The Exchange must notify employers when one or more of their employees is determined to
be eligible for advance payment of a premium tax credit because the employer does not offer
minimum essential coverage or the coverage is not affordable or does not meet the minimum
value requirement. Further, the Exchange must offer the employer an opportunity to appeal.
Information reporting to IRS and enrollees
The Exchange must report to the IRS and enrollees each year certain information regarding
the enrollee’s coverage provided through the Exchange.
Outreach and education
Each State will need to have in place a robust education and outreach program to inform
health care consumers about the Exchange and the new coverage options available to them.
The Exchanges must also educate consumers about the benefits of purchasing health
insurance coverage through the Exchange, including access to health plans that meet State
and Federal certification standards and access to assistance with paying their premiums and
cost-sharing. Each Exchange may determine a unique strategy for conducting outreach and
education activities and timelines may vary depending on the investment Exchanges choose
to make in these activities as well as the size and diversity of the populations each Exchange
serves.
60

Risk adjustment and Transitional Reinsurance
Pursuant to the Affordable Care Act, each State must implement a risk adjustment program
and a transitional reinsurance program in accordance with Federal standards. Funding under
the Establishment grants may be used to support risk adjustment and transitional reinsurance.
States will need to plan for necessary data collection to support risk adjustment, including
demographic, diagnostic, and prescription drug data. Qualified health plans may be required
to submit encounter data, and therefore, States need to develop data and other systems to
support risk adjustment. HHS is working with insurance plans and experts so that each State
does not have to develop a risk adjustment model independently. We will release more
guidance in the future, including information on a risk adjustment model that States may use
and the Federal standards for data collection and operations.
SHOP Exchange-specific functions
The Affordable Care Act requires each State that elects to operate an Exchange to establish a
Small Business Health Options Program (SHOP) Exchange. States may choose to merge the
operations of their SHOP Exchange with their individual market Exchange. The SHOP
Exchange will facilitate the purchase of coverage in qualified health plans for the employees
of small businesses that choose to purchase coverage through the Exchange. Starting on
January 1, 2014, small employers can only qualify for Small Business Health Care Tax
Credits if they purchase coverage for their employees inside the Exchange or SHOP
Exchange. For purposes of this funding opportunity, we have identified SHOP Exchangespecific functions to aid States in their operational planning efforts related to the SHOP
Exchange.

61

B.

Appendix B: Example Milestones for Exchange Establishment

This appendix provides a series of example milestones in each Core Area that will lead States
through establishment of an Exchange. Each Exchange should include milestones drawn from
these examples in its Work Plan to be submitted with its application, according to the project
period of the grant for which the State applies. A State applying for a Level One Establishment
award will need to provide milestones for the duration of the project period, which is up to one
year from the date of award. A State applying for a Level Two Establishment award will need to
provide a Work Plan with milestones from the date of award up through calendar year 2014.
Each State’s progress throughout the grant project period will be evaluated against its Work
Plan. Certain milestones in the table below are in BOLD and preceded by two asterisks (**)
which indicates that these tasks are required and should be completed in the timeframe provided.
We consider these milestones to be critical to Exchange success. Many of these critical
milestones are related to the building and testing of Exchange IT systems, which impacts the
successful establishment of Exchanges. HHS may restrict funds for activities if certain
milestones are not met. States should work with their Project Officers on these issues and alert
the PROJECT Officer so technical assistance may be provided early. We may also determine
that additional milestones are considered comparable to those provided in BOLD and preceded
by two asterisks (**) below and will communicate this to States.
The State should also draw from the milestones in the table that are not in bold and preceded by
two asterisks (**) in the development of its Work Plan, but the timeframes provided are
suggested and not required. We suggest States use these targeted timeframes in their Work Plans,
but we will not condition the release of additional grant funds on meeting these milestones in the
timeframes provided. We have provided milestones below that we believe are important to the
establishment of Exchanges. States will likely need to include numerous additional milestones
that are tailored to their specific needs and the progress they have already made toward
Exchange establishment. If a State is already ahead of these timeframes, we encourage the State
to continue making progress on an accelerated schedule. The timeframes in the table are
structured according to the calendar year. For example, Quarter One of 2011 is from January
2011 through March 2011.

62

Core Area

2011

Background
Research

Conduct analysis of State insurance
market and develop
recommendations for Exchange
structure based on this analysis.
Analysis must include:
 Number of uninsured in the State
 Size of the current individual and
small group markets
 Number of carriers in each market
and market shares for the ten
largest carriers

Stakeholder
Consultation

 Establish a stakeholder advisory
committee with the support of the
Governor and State legislature to
solicit input on Exchange design
and function by stakeholder
groups.
 Complete stakeholder meetings
that cover all regions of the State.
 **In addition to general
stakeholder consultation,
establish, implement, and
document a process for
consultation with federally
recognized Indian Tribal
governments to solicit their input
on the establishment and ongoing
operation of the Exchange.

2012

 Provide to HHS publicly-available
minutes from completed open
stakeholder meetings.
 **In addition to stakeholder
consultation, continue to
implement and document its
Tribal consultations to solicit
Tribal input on the ongoing
operation of the Exchange.

63

2013

 Complete stakeholder meetings
and provide publically-available
minutes related to the open
enrollment process and outreach
materials.
 **In addition to stakeholder
consultation, continue to
implement and document its
Tribal consultations to solicit
Tribal input on the ongoing
operation of the Exchange.

2014

 Post evidence of regular
consultation with required
stakeholders and other groups and
holds regular public meetings to
solicit public input on the
Exchange website.
 **In addition to stakeholder
consultation, continue to
implement and document its
Tribal consultations to solicit
Tribal input on the ongoing
operation of the Exchange.

Core Area

2011

2012

Legislative/
Regulatory
Action

 Draft enabling legislation,
implementing regulations, or
other mechanism that provides
the legal authority to establish and
operate an Exchange that
complies with Federal
requirements.
 Introduce Exchange enabling
legislation.
 Hold public hearings on Exchange
enabling legislation.

Q2: Has the necessary legal authority
to establish and operate an
Exchange that complies with Federal
requirements and provides for
establishment of governance and
Exchange structure

Governance

 **Develop a governance model
by working with stakeholders to
answer key questions about the
governance structure of the
Exchange:
 Will the State pursue a
Regional Exchange?
 Will the Exchange be
housed in a State agency,
quasi-governmental
agency, or non-profit?
 How will the governing
body be structured?
 Determine standards for the
Exchange governing body that will
ensure:
 Public accountability
 Transparency
 Prevention of conflict of
interest

 Q2: **Establish governance
structure.
 Appoint a governing board (if
applicable) and a management
team sufficient to oversee the
operations of the Exchange.
 Develop a formal operating
charter or by-laws that are
consistent with State and Federal
requirements including public
accountability, transparency, and
conflicts of interest.

64

2013

2014

Core Area

2011

2012

2013

2014

Exchange IT
Systems

Q1: **Conduct a gap analysis of its
existing systems and the end goal
for systems development by 2014.
Q1: **Complete the review of
product feasibility, viability, and
alignment with Exchange program
goals and objectives.
Q2: **Complete Preliminary
business requirements and develop
an IT architectural and integration
framework.
Q2: **Complete Systems
Development Life Cycle (SDLC)
implementation plan.
Q3: **Complete security risk
assessment and release plan.
Q3: ** Complete Preliminary
detailed design and system
requirements documentation (e.g.
technical, design, etc.).
Q4: **Finalize IT and integration
architecture. Complete Final
business requirements and Interim
detailed design and system
requirements documentations (e.g.
technical, design, etc.).

Q1: **Complete Final requirements
documentation (including System
Design, Interface Control, Data
Management, & Database Design).
Q1/Q2: **Complete Preliminary
and Interim development of
baseline system and review and
ensure compliance with business
and design requirements.
Q3: **Complete Final development
of baseline system including
software, hardware, interfaces,
code reviews, and unit-level testing.
Q4: **Complete testing of all
system components including data,
interfaces, performance, security,
and infrastructure.

Q3: **Complete final user testing –
including testing of all interfaces.
Q3 or pre-open enrollment: **
Complete pre-operational readiness
review to validate readiness of all
system components. Complete endto-end testing and security control
validations.
As early as mid-2013: **Prepare
and deploy all system components
to production environment. Obtain
security accreditation.

**Support business operations and
maintenance of all systems
components.

(Note: Use
iterative system
development
process to capture
updates and
changes to
business and
system
requirements,
development,
testing, and
implementation of
Exchange IT
Systems)

65

Core Area

2011

Program
Integration

 Q2**Perform detailed business
process documentation to reflect
current State business processes,
and include future State process
changes to support proposed
Exchange operational
requirements
 **Initiate communication with
the State HIT Coordinators, State
Department of Insurance and the
State Medicaid agency, and the
State Human Services agency as
appropriate, and hold regular
collaborative meetings to develop
work plans for collaboration.
 **Execute an agreement with the
State Department of Insurance
that includes:

2012
Collaborate on procurement and
development of Exchange and
Medicaid IT systems needed to
facilitate “no wrong door” for
eligibility determinations.

66

2013
 Collaborate on testing of
Exchange and other applicable
State health subsidy programs
(OASHSPs) systems.
 Coordinate launch of Exchange
open enrollment period with
eligibility determinations for
Medicaid and OASHSPs

2014

Core Area

2011

2012

 Determination of the roles
and responsibilities of the
Exchange and the State DOI
as they relate to qualified
health plans offered inside
and outside the Exchange.
 Devise a strategy for limiting
adverse selection between
the Exchange and the outside
market, possibly including
legislative changes to level
the playing field.
 **Execute an agreement with the
State Medicaid agency, any other
applicable State health subsidy
program, and other specific
health and human services
programs as appropriate, that
includes:
 Determination of the roles
and responsibilities related to
eligibility determination,
verification, and enrollment
 Identification of challenges in
the program integration
process, strategies for
mitigating those issues, and
timelines for completion.
 Strategies for compliance
with the “no wrong door”
policy.
 Standard operating
procedures for interactions
between the Exchange and

67

2013

2014

Core Area

2011

2012

2013

2014

OASHSPs.
Cost allocation between the
Exchange grants, Medicaid
Federal Financial
Participation (FFP), and other
fund streams as appropriate.

Financial
Management

 **Adhere to HHS financial
monitoring activities carried out
for the Exchange Planning Grants,
Early Innovator Cooperative
Agreements, and Exchange
Establishment Cooperative
Agreements.
 Begin defining financial
management structure and the
scope of activities required to
comply with requirements.
 **Establish a financial
management structure and
commit to hiring experienced
accountants to support financial
management activities of the
Exchange, which include
responding to audit requests and
inquiries of the Secretary and the
Government Accountability Office
as needed.

 Develop a plan to ensure sufficient
resources to support ongoing
operations and determine if
legislation is necessary to assess
user fees.
 Assess adequacy of accounting
and financial reporting systems.
 Conduct a third party objective
review of all systems of internal
control.

68

Demonstrate capability to manage
the finances of the Exchange
soundly, including the ability to
publish all expenses, receivables,
and expenditures consistent with
Federal requirements.

 Post information related to
Exchange financial management
on its website and has identified
other means to make financial
activities associated with the
management of the Exchange
transparent.
 Submit the required annual
accounting report to HHS.

Core Area

2011

2012

2013

2014

Oversight &
Program
Integrity

 **Ensure the prevention of
waste, fraud, and abuse related
to the expenditure of Exchange
Planning Grants, Early Innovator
Cooperative Agreements, and
Exchange Establishment
Cooperative Agreements funding.
 Continue planning process and
hire staff for oversight and
program integrity functions.
 Coordinate with existing
organizations in the State if
applicable; and assure that the
following services are available
and sufficient to meet State
residents’ need for assistance: (i)
help individuals determine
eligibility for private and public
coverage and enroll in such
coverage; (ii) help file grievances
and appeals; (iii) provide
information about consumer
protections; and (iv) collect data
on inquiries and problems and
how they are resolved.
 **Analyze data collected by
consumer assistance programs
and report on plans for use of
information to strengthen
qualified health plan
accountability and functioning of
Exchanges.

Establish procedures for external
audit by a qualified auditing entity to
perform an independent external
financial audit of the Exchange.

 Establish fraud detection
procedures.
 Develop procedures for reporting
to HHS on efforts to prevent fraud,
waste, and abuse.

Comply with HHS reporting
requirements related to auditing and
prevention of fraud, waste, and
abuse.

 **If the State chooses to operate
these functions within the
Exchange, establish protocols for
appeals of coverage
determinations including review
standards and timelines and
provision of help to consumers
during the appeals process.
 **Draft scope of work for building
capacity to handle coverage
appeals functions.
 **Analyze data collected by
consumer assistance programs
and report on plans for use of
information to strengthen
qualified health plan
accountability and functioning of
Exchanges.

 Establish a process for reviewing
consumer complaint information
collected by the State Consumer
Assistance program when
certifying qualified health plans.
 Establish process for referrals to
consumer assistance programs if
available in another entity.

Ensure any consumer complaints or
coverage appeal requests are
referred directly to the State
program that is designated to
process these calls.

Providing
Assistance to
Individuals and
Small
Businesses,
Coverage
Appeals, and
Complaints

69

Core Area

2011

2012

2013

2014

Certification of
Qualified
Health Plans

Q3: Begin developing standards that
will be required for certification of a
qualified health plan.
Q4: Develop a clear certification
policy including a timeline for
application submission, evaluation,
and selection of qualified health
plans.
Q4: Actively engage stakeholders in
the development of the solicitation
for proposals, through meetings,
conferences, webinars, and other
forums designed to gather
stakeholder input.

Q1: Develop a strategy and timeline
for the integration of staff and IT
systems needed to receive
applications, evaluate data from
insurers, and notify insurers of the
result of the solicitations for
applications for qualified health
plans.
Q2: Make significant progress on the
development of an RFP for
certification of a qualified health
plan.
Q2: Draft applicable certification
documents (notices/solicitations,
applications, agreements, etc.) that
will be used in connection with the
certification of qualified health plans.
Such documents must address
Exchange policies relating to the
minimum qualifications of a qualified

Q1: Collect submissions from the
solicitation and begin evaluating
proposals.
Q1: Solicit premium quotes from
health plan issuers who responded
to the solicitation.
Q1: **Launch plan management
and bid evaluation system to allow
upload of qualified health plan bids
and other required information.
Q2: Complete the certification of
qualified health plans, complete any
negotiations and execute contracts
to health plan issuers who applied
for qualified health plan issuer
status.
Q2: Issue an announcement on the
selection of qualified health plans to
the public.

Q1: Begin collecting user fees if the
Exchange is utilizing this funding
mechanism.
Q1: Demonstrate capability for the
Exchange and/or for the State
insurance regulatory body to
monitor the practices and conduct,
as well as the pricing and benefits, of
health insurers offering products in
the Exchange with regard to their
products inside and outside the
Exchange.

70

Core Area

2011

2012
health plan including any user fees,
the length of the initial certification,
recertification, and terms that may
lead to decertification.
Q2: Complete a solicitation for
proposals for qualified health plans.
Q3: Provide evidence of staff
resources (or contracts) to support
the plan certification evaluation.
Q3: Release the solicitation for the
certification of qualified health
plans, conduct bidders conference,
respond to bidder questions on
solicitation.
Q4: Begin training health plan issuers
to become qualified health plans.

Call Center

Collaborate with the State Consumer
Assistance Program or Health
Ombudsman program if applicable,
to determine if call center
functionalities can be shared.

2013
2013 Q3 or before open enrollment:
Conduct plan readiness
reviews/activities (e.g., test
enrollment interfaces with plans,
reviews member materials, test
financial reconciliation, crossfunctional implementation sessions
with plans, etc).

Q2: Complete call center procurement
process and select a vendor to
operate the call center.
Q2: Develop call center customer
service representative protocols and
scripts to respond to likely requests
from health care consumers in the
State.
Q2: Develop protocols for
accommodating the hearing impaired
and those with other disabilities and
foreign language and translation
services.
Q2: Train call center representatives
on eligibility verification and
enrollment process, and other

71

2014

Core Area

Exchange
Website and
Calculator

Quality Rating
System

2011

Q1: **Begin developing
requirements for systems and
program operations, including:
 Requirements related to online
comparison of qualified health
plans.
 Requirements related to online
application and selection of
qualified health plans.
 Premium tax credit and costsharing reduction calculator
functionality.
 Requests for assistance.
 Linkages to other State health
subsidy programs and other
health and human services
programs as appropriate.
Utilize the Federal quality rating
system developed by HHS in
development of draft contract for
qualified health plans.

2012

Q1: **Begin systems development.
Q3: **Submit content for
informational website to HHS for
comment.
Q4: **Complete systems
development and final user testing
of informational website.

 Include quality rating functionality
in system business requirements
for the Exchange website.
 Complete system development of
quality rating functionality.
 Complete testing and validation of
quality rating functionality.

72

2013

2014

applicable areas, so they can facilitate
enrollment of individuals over the
phone.
Q3: **Launch call center functionality
and publicize 1-800 number.
Prominently post information on the
Exchange website related to
contacting the call center for
assistance.
Q1: **Launch information website.
Q1: **Collect and verify plan data for
comparison tool.
Q3: **Test comparison tool with
consumers and stakeholders.
Before open enrollment: **Launch
comparison tool with pricing
information but without online
enrollment function.
As early as mid-2013: **Launch fully
functioning comparison tool with
pricing information and online
enrollment functionality on the first
day of open enrollment.

Before open enrollment: Post quality
rating system information on the
Exchange website.

Continually update quality rating
information on the Exchange
website and for call center
representatives so they have the
most up to date information on
qualified health plans.

Core Area

2011

2012

2013

Navigator
Program

Conduct preliminary planning
activities related to the Navigator
program including developing high
level milestones and timeframes for
establishment of the program.

Determine targeted organizations in
the State who would qualify to
function as Navigators.

Eligibility
Determinations

Q1: Begin coordination with
agencies administering other
Applicable State Health Subsidy
Programs (OASHSPs), including
Medicaid and CHIP agencies and
other health agencies as
appropriate, and create institutional
structure to support future work.
Q1: Begin coordination with the
State Department of Insurance on
Exchange planning efforts.
Q1: **Begin developing
requirements, including
requirements on the Exchange side
and in OASHSPs (and other program
agencies as appropriate), including:
 Integrating or interfacing with
OASHSPs to support enrollment
transactions and eligibility
referrals
 Coordinating appeals
 Coordinating applications and
notices
 Managing transitions
 Communicating the enrollment
status of individuals

Q1: **Begin system development,
including any systems development
needed by OASHSPs (and other
programs as appropriate).
Q4: **Complete system
development and prepare for final
user testing, including testing of any
systems within OASHSPs (and other
programs as appropriate).

 Q2: **Determine Navigator
grantee organizations and award
contracts or grants (funded from the
operational funds of the Exchange)
 Q2: Train Navigators
 1 quarter before open enrollment:
Begin operations of Navigators.
Q1: **Begin final user testing,
including testing of all interfaces.
2013 Q3 or before open enrollment:
**Complete user testing, including
full end-to-end integration testing
with all other components.
As early as mid-2013: **Begin
conducting eligibility determinations
for OASHSPs, coordinating all
relevant business functions, and
receiving referrals from OASHSPs for
eligibility determination.

73

2014

Core Area

2011

2012

Enrollment
Process

Q1: **Begin developing
requirements for systems and
program operations, including:
 Providing customized plan
information to individuals
based on eligibility and QHP
data.
 Submitting enrollment
transactions to QHP issuers.
 Receiving acknowledgements
of enrollment transactions from
QHP issuers.
 Submitting relevant data to
HHS.
Review Federal requirements for
applications and notices, begin
customizing Federal applications and
notices as allowable and begin
developing requirements for
Exchange-created applications and
notices.

Q1: **Begin systems development.
Q4: **Complete systems
development and prepare for final
user testing.

Applications
and Notices

2013
Q1: **Begin final user testing,
including testing of all interfaces.
2013 Q3 or before open enrollment:
**Complete user testing, including
full end-to-end integration testing
with all other components.
As early as mid-2013: **Begin
enrollment into qualified health
plans.

2013 Q3 or before open enrollment:
Finalize all applications and notices
including stakeholder review, testing,
translation of content, etc. prior to
open enrollment.
As early as mid-2013: **Begin
utilizing applications and notices to
support eligibility and enrollment
process.

74

2014

Core Area

2011

2012

2013
Q1: **Begin final user testing,
including testing all interfaces.
2013 Q3 or before open enrollment:
**Complete user testing, including
full end-to-end integration testing
with other components.
As early as mid-2013: **Begin
processing exemptions from
individual responsibility
requirements and payment and
reporting to HHS on outcome of
determinations.
Q1: **Begin final user testing,
including testing all interfaces.
2013 Q3 or before open enrollment:
**Complete user testing, including
full end-to-end integration testing
with other components.
As early as mid-2013: **Begin
submitting tax credit and cost-sharing
reduction information to QHP issuers
and HHS.
2013 Q3 or before open enrollment:
Initiate communication with HHS on
process for referring appeals to the
Federal appeals process.

Exemptions
from Individual
Responsibility
Requirement
and Payment

Q1: **Begin developing
requirements for systems and
program operations, including:
 Accepting requests for
exemptions.
 Reviewing and adjudicating
requests.
 Exchanging relevant
information with HHS.

Q1: **Begin systems development.
Q4: **Complete systems
development and prepare for final
user testing.

Premium Tax
Credit and Costsharing
Reduction
Administration

Q1: **Begin developing
requirements for systems and
program operations, including
providing relevant information to
QHP issuers and HHS to start, stop,
or change the level of premium tax
credits and cost-sharing reductions.

Q2: **Begin systems development.
Q4: **Complete systems
development and prepare for final
user testing.

Adjudication of
Appeals of
Eligibility
Determinations

Q2: Begin developing business
processes and operational plan for
appeals functions.
Q4: Establish resources to handle
appeals of eligibility determinations
including training on eligibility
requirements.

75

2014

As early as mid-2013: **Begin
receiving and adjudicating requests

Core Area

2011

Notification and Q1 ** Begin developing
requirements for systems and
appeals of
program operations including:
employer
 Coordination of employer
liability for the
appeals with appeals of
employer
individual eligibility.

Submission of relevant data to
responsibility
HHS.
payment
Information
reporting to IRS
and enrollee

Q1** Begin developing
requirements for systems and
program operations, including:
 Capturing data used in
enrollment process.
 Submitting relevant data to HHS
for later use in information
reporting.
 Capacity to generate
information reports to
enrollees.

2012

2013

 Q1 ** Begin systems
development.
 Q3 ** Complete systems
development and prepare for
final user testing.

 Q1 ** Begin final user testing
including testing all interfaces.
 Q3 ** Complete user testing,
including full end-to-end
integration testing with all other
components.
 As early as mid-2013 ** Begin
notifying employers in coordination
with eligibility determinations.

 Q1 ** Begin systems

 Q1 ** Begin final user testing

development.

 Q3 ** Complete systems
development and prepare for
final user testing.

76

including testing all interfaces.

 Q3 ** Complete user testing,
including full end-to-end
integration testing with all other
components.

2014

Confirm that systems are prepared
to generate information reports to
enrollees.

Core Area

2011

2012

2013

Outreach and
Education

 Perform market
analysis/environmental scan to
assess outreach/education needs
to determine geographic and
demographic-based target areas
and vulnerable populations for
outreach efforts.
 Develop outreach and education
plan to include key milestones and
contracting strategy.
 Distribute outreach and education
plan to stakeholders and HHS for
input and refinement.

 Q1: Launch outreach and education
strategy and continue to refine
messaging based on response and
feedback from consumers.

SHOP-specific
Functions

 Research the design and approach
of the SHOP Exchange and
whether it will be merged with the
individual market Exchange.
 Q1: **Begin developing
requirements for systems and
program operations.

 Develop a “toolkit” for outreach to
include educational materials and
information.
 Develop performance metrics and
evaluation plan.
 Design a media strategy and other
information dissemination tools.
 Submit final outreach and
education plan (to include
performance metrics and
evaluation plan) to HHS.
 Focus test materials with key
stakeholders and consumers and
make refinements based on input.
Q1: **Begin systems development.
Q4: **Complete systems
development and prepare for final
user testing.

77

Q1: **Begin final user testing,
including testing all interfaces.
2013 Q3 or before open enrollment:
**Complete user testing, including
full end-to-end integration testing
with other components.
As early as mid-2013: **Begin
enrolling employees of small
employers into qualified health
plans.

2014

C.

Appendix C: IT Gap Analysis for Project Narrative

The applicant is required to perform an IT Gap Analysis on the following criteria and provide a
summary of this analysis in its Project Narrative in this application. Please critically evaluate
your state of readiness to implement Exchange IT systems for each criterion. The following
set of topics shall be addressed as the applicant conducts the analysis. In addition, provide a
summary of conclusions regarding your readiness.
1. Technical Architecture
o The applicant shall provide specific details regarding its current systems and how it
expects the Exchange environment to differ from the As-Is environment.
 Identify all current/legacy software
 Identify all current/legacy hardware
 Identify all target system software
 Identify all target system hardware
 Provide a mapping of the ―as is‖ environment with proposed ―to be‖ solution
option(s) so that you demonstrate that the proposed solution(s) meets the
Exchange IT system requirements
o For those applicants that are participating in the ―Cooperative Agreement to Support
Innovative Exchange IT Systems,‖ provide details regarding their progress from the
Readiness Review Assessment that was completed as part of their application and
validate previously identified target system software and hardware.
2. Applicable Standards (The following standards do not represent an exhaustive list by which a
State must consider in planning the target environment in which to maximize the use of
standards.)
o Affordable Care Act Section 1561 Recommendations
 Per statutory requirement, ONC has developed a set of specific
recommendations that pertain to standards and protocols that facilitate
enrollment of individuals in Health and Human Services programs. For details
on Section 1561, see:
http://healthit.hhs.gov/portal/server.pt?open=512&mode=2&objID=3161.
Recommendation 1.1 recommends that States collaborate by using the NIEM
(National Information Exchange Model) framework. This framework will
allow for use of common data between multiple users and facilitate many
aspects of enrollment.
How is the applicant incorporating NIEM into its processes?
What implications will this have from a data management standpoint?
Recommendation 3.1 recommends that States express business rules
using a consistent, technology-neutral standard format separate from
core programming or transactional systems.
How will the Applicant ensure consistent expression of business rules
outside core programming or transactional systems?
78

Recommendation 4.1 recommends using existing HIPAA standards to
facilitate transfer of consumer eligibility, enrollment, and
disenrollment information between programs.
How will the applicant use x12n HIPAA 834 enrollment and 270/271
eligibility transactions.
o HIPAA
 The HIPAA Privacy and Security Rules provide Federal protections for
personal health information held by covered entities and give patients an array
of rights with respect to that information. At the same time, the Privacy Rule
is balanced so that it permits the disclosure of personal health information
needed for patient care and other important purposes.
How will the administrative, physical and technical requirements of
HIPAA relate to future Exchange operations?
Is the applicant prepared to adhere to these rules as it develops new
Exchange interfaces?
o Accessibility for individuals with disabilities
Enrollment and eligibility systems should be designed to meet the
diverse needs of users (e.g., consumers, State personnel, other third
party assisters) without barriers or diminished function or quality,
using legal requirements under Section 508 (for the Federal
government), Section 504 (for recipients of Federal financial
assistance), and Title II of the Americans with Disabilities Act (for
State and local governments). Therefore, electronic eligibility and
enrollment systems shall include usability features or functions that
accommodate the needs of persons with disabilities, including those
who use assistive technology. To meet these standards and to meet the
needs of diverse users, applications should address how they will
comply with the latest 508 guidelines issues by the US Access Board
or standards that provide greater accessibility for individuals with
disabilities.
How is the applicant poised to adapt to these standards?
o Security
 The applicant shall address Fair Information Practices (FIP) in new and
existing eligibility and enrollment systems to safeguard consumer
information. The following are best practices the applicant can consider for
implementing FIPs in the State systems:
Collection Limitation: State systems shall be designed to collect the
minimum data necessary for an eligibility and enrollment
determination. This shall be balanced with the desire to reuse
information for multiple eligibility decisions.
Data Integrity & Quality: States shall establish a minimum threshold
level for data matches, adopting a glide-path towards achieving
advanced probabilistic matching.
79

Openness & Transparency: Clear, transparent policies about
authorizing access and use of data shall be provided to the applicant in
the Privacy Notice.
Purpose Specification
Use Limitation
Security Safeguards and Controls
Individual Participation and Control
Accountability and Oversight
 The applicant shall address Taxpayer Privacy and Safeguard standards which
apply to any tax return information that the exchanges may handle as part of
the eligibility determination process. For more information, see IRS
Publication 1075 - Tax Information Security Guidelines For Federal, State and
Local Agencies (http://www.irs.gov/pub/irs-pdf/p1075.pdf)
o Federal Information Processing Standards (FIPS)
 Under the Information Technology Management Reform Act (ITMRA),
Division E, National Defense Authorization Act for FY 1996 (P. L. 104-106),
the Secretary of Commerce approves standards and guidelines that are
developed by the National Institute of Standards and Technology (NIST) for
Federal computer systems. These standards and guidelines are issued by
NIST as Federal Information Processing Standards (FIPS) for use
government-wide. NIST develops FIPS when there are compelling Federal
government requirements such as for security and interoperability and there
are no acceptable industry standards or solutions. See Recommendation 5.3 in
Section 1561 recommendations for more details:
http://healthit.hhs.gov/portal/server.pt?open=512&mode=2&objID=3161.
How is the applicant poised to adapt to these standards?

80

D.

Appendix D: Exchange Information Technology

Key Principles of Exchange IT capabilities
The organization governing the design, development, and implementation of the core
capabilities must follow standard industry Systems Development Life Cycle (SDLC)
frameworks including the use of iterative and incremental development methodologies.
The governing body must also be able to produce requirement specifications, analysis,
design, code, and testing that can be easily shared with other interested and authorized
stakeholders (i.e., other States, consortia of States, or any entity that is responsible for
establishing an Exchange).
The design must take advantage of a Web Services Architecture (using XML, SOAP and
WSDL or REST) and Service Oriented Architecture approach for design and
development leveraging the concepts of a shared pool of configurable computing
resources (e.g., Cloud Computing).
The services description/definition, services interfaces, policies and business rules must
be published in a web services registry to support both internal and external service
requests that are public and private, and be able to manage role-based access to
underlying data.
Per Section 1561 of the Affordable Care Act, all designs must follow the standards that
are currently outlined in the recommendations published by the Office of the National
Coordinator (ONC). For details on Section 1561 Standards, see:
http://healthit.hhs.gov/portal/server.pt?open=512&mode=2&objID=3161.
Per National Institute of Standards and Technology (NIST) publications, the design and
implementation must take into account security standards and controls. (For details on
NIST publications, see: http://csrc.nist.gov/publications/PubsSPs.html).
HHS will closely monitor, assess, and guide grantees to ensure the highest quality results are
attained. Grantees will be required to complete certain planning tasks that are pursuant to
Systems Development Life Cycle (SDLC) practices. The applicant shall follow the SDLC
framework for its planning activities (an example of an SDLC framework can be found here:
http://www.cms.gov/ILCPhases/01_Overview.asp#TopOfPage.) The list of required activities
and due dates are as follows:
Core Exchange Functions supported by IT
To ensure the Exchange IT systems are comprehensive and reusable by other States, the key
modules shall include, but not be limited to:
1) Eligibility
2) Enrollment
3) Premium tax credits administration
4) Cost-sharing assistance administration
5) Health plan management to support Qualified Health Plan certification
81

Systems must also be interoperable and integrated with State Medicaid/Children’s Health
Insurance Program (CHIP) programs and be able to interface with HHS and other data sources in
order to verify and acquire data as needed. States are encouraged to achieve interoperability with
other health and human services programs for purposes of coordinating eligibility
determinations, referrals, verification or other functions. Examples of additional core Exchange
functions that could be added, initially or eventually, include Exchange administration, and
qualified health plan administration (including data and certification management).
To meet milestones and assure alignment with other critical State and Federal programs, it will
be desirable for Exchanges to leverage and re-use services or capabilities available in the State,
including those offered by the State health information exchange program such as for provider
and patient identity services (eMPI, ID resolution and authentication).
Exchange IT SDLC Reviews
Listed below are the suggested lifecycle reviews, products that will accompany each stage and a
table containing delivery dates for each review (some of these steps will include HHS
consultation with CMS and other Federal agencies as warranted):
Project Startup Review (PSR)
Deliverables: Acquisition Strategy, Concept of Operations, Risk Analysis, Alternatives Analysis,
Scope Definition, Performance Measures, briefings/presentations to HHS
Architecture Review (AR)
Products: Business Process Models, Requirements Document, Architectural diagrams,
briefings/presentations to HHS
Project Baseline Review (PBR)
Products: Project Process Agreement (Charter), Information Security Risk Assessment,
Information Security Risk Assessment, Project Management Plan, Project Schedule, Release
Plan, briefings/presentations to HHS
Preliminary Design Review (PDR)
Products: System Security Plan, Test Plan(s) and Traceability Matrix, Logical Data Model, Data
Use Agreement(s), Technical Architecture Diagrams (Software/Hardware Architectures,
Network, Overall Infrastructure, Security, etc.), briefings/presentations to HHS
Detailed Design Review (DDR)
Products: System Design Document, Interface Control Document, Database Design
Document(s), Physical Data Model, Data Management Plan, Data Conversion Plan, Automated
Code Review Results briefings/presentations to HHS
Final Detailed Design Review (FDDR)
Products: See DDR products
82

Pre-Operational Readiness Review (PORR)
Products: Contingency Plan, Inter/Intra-agency Agreement(s) (IAs), Test Case Specification,
Implementation Plan, User Manuals, Operations & Maintenance Manual, Training Plan,
Integration Testing, End-to-End Testing, Test Summary Report, Defect Reports, Security Testing
Results, briefings/presentations to HHS
Operational Readiness Review (ORR)
Products: See PORR products
For an explanation of each product, please reference the following CMS ILC framework:
https://www.cms.gov/ILCReviews/01_Overview.asp
For examples of product templates, please refer to the following:
http://www3.cms.gov/SystemLifecycleFramework/Tmpl/list.asp#TopOfPage

Exchange IT SDLC Review Timeline (dates are approximate)

Architecture
Review
Beginning of
Q3 2011

Project
Startup
Review

Project
Baseline
Review

Preliminary
design
Review

Detailed
Design
Review

Final
Detailed
Design
Review

PreOperational
Readiness
Review

Operational
Readiness
Review

IT Project
Dashboard
Reports

TBD

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q4 2012

Q2 2013

TBD

The Project Startup Review (PSR) may be combined with Architecture Review (AR) to kick-off
the project, but PSRs may also be required depending on how many ―phases‖ there are in the
overall project. Products coming out of the SDLC process will be available to States that partner
with each other either as consortia or are sharing designs, code, etc.

83

E.

Appendix E: Guidance for Preparing a Budget Request and Narrative in Response
to SF 424A

INTRODUCTION
This guidance is offered for the preparation of a budget request. Following this guidance will
facilitate the review and approval of a requested budget by ensuring that the required or needed
information is provided. This is to be for done for each 12 month period of the cooperative
agreement project period. Applicants should be careful to only request funding for activities
that will be funded by the Exchange Establishment Cooperative Agreements. Any other
grant funding provided by HHS, including Exchange Planning Grants and Early Innovator
Cooperative Agreements, should not be supplanted by Exchange Establishment funding.
States may apply for and receive multiple Exchange Establishment cooperative agreement
awards. As part of each application for Exchange Establishment funding, States must only
request funding for activities not already funded/supported by a previous Exchange
Establishment award. Each award made under this funding opportunity should support
separate activities and new funding should not be supplanted by prior Exchange
Establishment funding. In the budget request, States should distinguish between activities that
will be funded under this Cooperative Agreement application and activities funded with other
sources. Other funding sources include: Early Innovator Cooperative Agreements, Exchange
Planning Grants, previously awarded Exchange Establishment Cooperative Agreements,
other HHS grant programs, and other funding sources as applicable.
Note that OMB Circular A-87 REQUIRES states to allocate all costs to programs that benefit
from a particular good or service. In the case of Exchanges, the state Medicaid program is a
direct beneficiary of many of the activities of the Exchange, particularly IT systems and related
systems and staffing involved with determining an applicant’s eligibility for the Medicaid and
CHIP programs. Consequently, the costs associated with these activities MUST be paid through
a separate funding request to the Centers for Medicare & Medicaid Services. The funding
request is in the form of an Advance Planning Document (APD) that specifically requests
funding for each of these activities that benefit Medicaid and applies the appropriate Federal
Financial Participation (FFP) rate of 50, 75 or 90 percent. CCIIO Grant funds cannot be used to
pay for Medicaid and/or CHIP costs, nor can they be used to pay the State share of the Medicaid
allocated costs.
The goods and services that are to be allocated to, and paid for by, the state Medicaid program
are of two types: direct and indirect and are handled differently. Direct expenses are those that
benefit Medicaid and/or CHIP exclusively. These direct expenses are allocated 100%.to the
Medicaid and/or CHIP program and matched at the appropriate FFP rate. Indirect expenses are
those that benefit Medicaid/CHIP AND other programs, including the Exchange itself. One such
example would be staffing salaries for those individuals who serve both Medicaid’s needs as
well as the Exchanges’. These indirect expenses are allocated to the benefiting programs in
proportion to Medicaid/non-Medicaid anticipated numbers of clients served by the Exchange.
Having allocated the Medicaid share, the resultant figures are then matched at the appropriate
FFP rate.
84

State Cost-Sharing and Matching payments are not required for this program. Please refer
to Section IV.5.B.vi. for more information about how States must address the cost
allocation for Medicaid, the Children’s Health Insurance Program (CHIP), and other
federally financed health and human services programs in connection with the IT systems
developed or modified to support the Exchange. States may use information available at:
http://frwebgate.access.gpo.gov/cgibin/getdoc.cgi?dbname=2011_register&docid=fr19ap11-6.pdf
States should allocate costs associated with eligibility determination between Medicaid,
CHIP and Exchanges, as Exchanges will determine Medicaid and CHIP eligibility for
individuals seeking coverage if they are not already enrolled in Medicaid or CHIP.
Eligibility determination includes costs of intake, verification, adjudication, and resolution,
including customer support for these processes. The Medicaid and CHIP programs will
also pay for the costs of transmitting Medicaid and CHIP cases to those programs once
eligibility for those programs is determined. Other costs may also be shared, depending on
the level of integration States choose to pursue. States should review the cost allocation
rules in OMB circular A-87 (see Section IV.5.B.vi. for more information.) Before
submitting a cost allocation plan, States should consult the most recent guidance issued by
HHS regarding cost allocation among Medicaid, Exchanges, and human services programs,
for the most up-to-date information and instructions. IT Guidance 2.0 can be found at
http://cciio.cms.gov/resources/files/exchange_medicaid_it_guidance_05312011.pdf
For further information on cost allocation relative to Medicaid and CHIP cost allocation, please
contact: Richard H. Friedman, Director, Division of State Systems, Centers for Medicare and
Medicaid Services, Baltimore, MD 21244, or via e-mail at Richard.Friedman@cms.hhs.gov and
put ―CCIIO Establishment Grant Cost Allocation Issue‖ in the subject line. For further
information on cost allocation requirements re OMB Circular A-87, please see:
http://www.whitehouse.gov/sites/default/files/omb/circulars/a087/a87_2004.pdf
For more information on A-87 waivers, please see:
http://www.cms.gov/Medicaid-Information-Technology-MIT/02_TriAgency%20Letter.asp#TopOfPage

A.

Salaries and Wages
For each requested position, provide the following information: name of staff member
occupying the position, if available; annual salary; percentage of time budgeted for this
program; total months of salary budgeted; and total salary requested. Also, provide a
justification and describe the scope of responsibility for each position, relating it to the
accomplishment of program objectives.
85

Sample budget
Personnel
Total $______
Exchange Establishment Grant $______
Funding other than Establishment Grant $______
Sources of Funding
Position Title and Name
Project Coordinator
Susan Taylor
Finance Administrator
John Johnson
Outreach Supervisor
(Vacant*)

Annual Time
$45,000 100%

Months
12 months

Amount Requested
$45,000

$28,500

50%

12 months

$14,250

$27,000

100%

12 months

$27,000

Sample Justification
The format may vary, but the description of responsibilities should be directly related to
specific program objectives.
Job Description: Project Coordinator - (Name)
This position directs the overall operation of the project; responsible for overseeing the
implementation of project activities, coordination with other agencies, development of
materials, provisions of in service and training, conducting meetings; designs and directs
the gathering, tabulating and interpreting of required data, responsible for overall
program evaluation and for staff performance evaluation; and is the responsible
authority for ensuring necessary reports/documentation are submitted to HHS. This
position relates to all program objectives.
B.

Fringe Benefits
Fringe benefits are usually applicable to direct salaries and wages. Provide information
on the rate of fringe benefits used and the basis for their calculation. If a fringe benefit
rate is not used, itemize how the fringe benefit amount is computed.
Sample Budget
Fringe Benefits
Total $______
Exchange Establishment Grant $______
Funding other than Establishment Grant $______
Sources of Funding
25% of Total salaries = Fringe Benefits
If fringe benefits are not computed by using a percentage of salaries, itemize how the
amount is determined.
86

Example: Project Coordinator — Salary $45,000
Retirement 5% of $45,000
FICA 7.65% of $45,000
Insurance
Workers’ Compensation

C.

=
$2,250
=
3,443
=
2,000
=
______
Total:

Consultant Costs
This category is appropriate when hiring an individual to give professional advice or
services (e.g., training, expert consultant, etc.) for a fee but not as an employee of the
grantee organization. Hiring a consultant requires submission of the following information
to HHS (see Required Reporting Information for Consultant Hiring later in this
Appendix):
1.
2.
3.
4.
5.
6.

Name of Consultant;
Organizational Affiliation (if applicable);
Nature of Services to be Rendered;
Relevance of Service to the Project;
The Number of Days of Consultation (basis for fee); and
The Expected Rate of Compensation (travel, per diem, other related expenses)—list
a subtotal for each consultant in this category.

If the above information is unknown for any consultant at the time the application is
submitted, the information may be submitted at a later date as a revision to the budget. In
the body of the budget request, a summary should be provided of the proposed consultants
and amounts for each.
D.

Equipment
Provide justification for the use of each item and relate it to specific program objectives.
Maintenance or rental fees for equipment should be shown in the ―Other‖ category All IT
equipment should be uniquely identified. As an example, we should not see a single line
item for ―software‖. Show the unit cost of each item, number needed, and total amount.
Sample Budget
Equipment
Total $______
Exchange Establishment Grant $______
Funding other than Establishment Grant $______
Sources of Funding
Item Requested
Computer Workstation

How Many
2 ea.
87

Unit Cost Amount
$2,500
$5,000

Fax Machine

1 ea.

600
600
Total $5,600

Sample Justification
Provide complete justification for all requested equipment, including a description of how
it will be used in the program. For equipment and tools which are shared among
programs, please cost allocate as appropriate. States should provide a list of hardware,
software and IT equipment which will be required to complete this effort. Additionally,
they should provide a list of non-IT equipment which will be required to complete this
effort.
E.

Supplies
Individually list each item requested. Show the unit cost of each item, number needed, and
total amount. Provide justification for each item and relate it to specific program
objectives. If appropriate, General Office Supplies may be shown by an estimated amount
per month times the number of months in the budget category.
Sample Budget
Supplies
Total $______
Exchange Establishment Grant $______
Funding other than Establishment Grant $______
Sources of Funding
General office supplies (pens, pencils, paper, etc.)
12 months x $240/year x 10 staff
Educational Pamphlets (3,000 copies @) $1 each)
Educational Videos (10 copies @ $150 each)
Word Processing Software (@ $400—specify type)

=

=
$2,400
$3,000
=
$1,500
=
$ 400

Sample Justification
General office supplies will be used by staff members to carry out daily activities of the
program. The education pamphlets and videos will be purchased from XXX and used to
illustrate and promote safe and healthy activities. Word Processing Software will be used
to document program activities, process progress reports, etc.
F.

Travel
Dollars requested in the travel category should be for staff travel only. Travel for
consultants should be shown in the consultant category. Travel for other participants,
advisory committees, review panel, etc. should be itemized in the same way specified
below and placed in the “Other” category.
In-State Travel—Provide a narrative justification describing the travel staff members will
perform. List where travel will be undertaken, number of trips planned, who will be
making the trip, and approximate dates. If mileage is to be paid, provide the number of
88

miles and the cost per mile. If travel is by air, provide the estimated cost of airfare. If
per diem/lodging is to be paid, indicate the number of days and amount of daily per diem
as well as the number of nights and estimated cost of lodging. Include the cost of ground
transportation when applicable.
Out-of-State Travel—Provide a narrative justification describing the same information
requested above. Include HHS meetings, conferences, and workshops, if required by HHS.
Itemize out-of-state travel in the format described above.
Sample Budget
Travel (in-State and out-of-State)
Total $______
Exchange Establishment Grant $______
Funding other than Establishment Grant $______
Sources of Funding
In-State Travel:
1 trip x 2 people x 500 miles r/t x .27/mile
2 days per diem x $37/day x 2 people
1 nights lodging x $67/night x 2 people
25 trips x 1 person x 300 miles avg. x .27/mile

=
=
=
=

Total

$

270
148
134
2,025
_____
$ 2,577

Sample Justification
The Project Coordinator and the Outreach Supervisor will travel to (location) to attend an
eligibility conference. The Project Coordinator will make an estimated 25 trips to local
outreach sites to monitor program implementation.
Sample Budget
Out-of-State Travel:
1 trip x 1 person x $500 r/t airfare
3 days per diem x $45/day x 1 person
1 night’s lodging x $88/night x 1 person
Ground transportation 1 person
Total

= $500
= 135
=
88
=
50
______
$773

Sample Justification
The Project Coordinator will travel to HHS, in Atlanta, GA, to attend the HHS
Conference.
G.

Other
This category contains items not included in the previous budget categories. Individually
list each item requested and provide appropriate justification related to the program
objectives.
89

Sample Budget
Other
Total $______
Exchange Establishment Grant $______
Funding other than Establishment Grant $______
Sources of Funding
Telephone
($
per month x
months x #staff)
Postage
($
per month x
months x #staff)
Printing
($
per x
documents)
Equipment Rental (describe)
($
per month x
months)
Internet Provider Service
($___ per month x ___ months)

= $ Subtotal
= $ Subtotal
= $ Subtotal
= $ Subtotal
= $ Subtotal

Sample Justification
Some items are self-explanatory (telephone, postage, rent) unless the unit rate or total
amount requested is excessive. If not, include additional justification. For printing costs,
identify the types and number of copies of documents to be printed (e.g., procedure
manuals, annual reports, materials for media campaign).
H.

Contractual Costs
Cooperative Agreement recipients must submit to HHS the required information
establishing a third-party contract to perform program activities (see Required
Information for Contract Approval later in this Appendix).
1.
2.
3.
4.
5.
6.

Name of Contractor;
Method of Selection;
Period of Performance;
Scope of Work;
Method of Accountability; and
Itemized Budget and Justification.

If the above information is unknown for any contractor at the time the application is
submitted, the information may be submitted at a later date as a revision to the budget.
Copies of the actual contracts should not be sent to HHS, unless specifically requested. In
the body of the budget request, a summary should be provided of the proposed contracts
and amounts for each.
I.

Total Direct Costs
$________
Show total direct costs by listing totals of each category.

J.

Indirect Costs $________

90

To claim indirect costs, the applicant organization must have a current approved indirect
cost rate agreement established with the cognizant Federal agency. A copy of the most
recent indirect cost rate agreement must be provided with the application.
Sample Budget
The rate is ___% and is computed on the following direct cost base of $__________.
Personnel
Fringe
Travel
Supplies
Other $____________
Total
$

$
$
$
$
x ___% = Total Indirect Costs

If the applicant organization does not have an approved indirect cost rate agreement, costs
normally identified as indirect costs (overhead costs) can be budgeted and identified as
direct costs.
REQUIRED REPORTING INFORMATION FOR CONSULTANT HIRING
This category is appropriate when hiring an individual who gives professional advice or provides
services for a fee and who is not an employee of the grantee organization. Submit the following
required information for consultants:
1.
2.
3.

4.
5.
6.

7.

Name of Consultant: Identify the name of the consultant and describe his or her
qualifications.
Organizational Affiliation: Identify the organization affiliation of the consultant, if
applicable.
Nature of Services to be Rendered: Describe in outcome terms the consultation to be
provided including the specific tasks to be completed and specific deliverables. A
copy of the actual consultant agreement should not be sent to HHS.
Relevance of Service to the Project: Describe how the consultant services relate to
the accomplishment of specific program objectives.
Number of Days of Consultation: Specify the total number of days of consultation.
Expected Rate of Compensation: Specify the rate of compensation for the consultant
(e.g., rate per hour, rate per day). Include a budget showing other costs such as travel,
per diem, and supplies.
Method of Accountability: Describe how the progress and performance of the
consultant will be monitored. Identify who is responsible for supervising the
consultant agreement.

91

REQUIRED INFORMATION FOR CONTRACT APPROVAL
All contracts require reporting the following information to HHS.
1.
2.

3.
4.

5.

6.

Name of Contractor: Who is the contractor? Identify the name of the proposed
contractor and indicate whether the contract is with an institution or organization.
Method of Selection: How was the contractor selected? State whether the contract is
sole source or competitive bid. If an organization is the sole source for the contract,
include an explanation as to why this institution is the only one able to perform
contract services.
Period of Performance: How long is the contract period? Specify the beginning and
ending dates of the contract.
Scope of Work: What will the contractor do? Describe in outcome terms, the specific
services/tasks to be performed by the contractor as related to the accomplishment of
program objectives. Deliverables should be clearly defined.
Method of Accountability: How will the contractor be monitored? Describe how the
progress and performance of the contractor will be monitored during and on close of
the contract period. Identify who will be responsible for supervising the contract.
Itemized Budget and Justification: Provide an itemized budget with appropriate
justification. If applicable, include any indirect cost paid under the contract and the
indirect cost rate used.

92

F.

Appendix F: Guidance for Preparing Budget Request By Core Area

INTRODUCTION
Applicants are required to identify cost by Core Area. Following this guidance will facilitate the
review and approval of a requested budget by insuring that the required or needed information is
provided Applicants should be careful to only request funding for activities that will be
funded by the Exchange Establishment Cooperative Agreements. Any other grant funding
provided by HHS, including Exchange Planning Grants and Early Innovator Cooperative
Agreements, should not be supplanted by Exchange Establishment funding. States may
apply for and receive multiple Exchange Establishment cooperative agreement awards. As
part of each application for Exchange Establishment funding, States must only request
funding for activities not already funded/supported by a previous Exchange Establishment
award. Each award made under this funding opportunity should support separate
activities and new funding should not be supplanted by prior Exchange Establishment
funding.
The following are the Core Areas and Business Functions that need to be identified by cost, if the
applicant wishes to receive funding.
1. Background Research:
2. Stakeholder Involvement:
3. Governance
4. Program Integration
5. Exchange IT Systems:
6. Financial Management
7. Program Integrity
8. Health Insurance Market Reforms
9. Providing Assistance to Individuals and Small Businesses, Coverage Appeals, and
Complaints
10. Business Operations/ Exchange Functions. This includes:
Certification, recertification, and decertification of qualified health plans
Call center
Exchange website
Premium tax credit and cost-sharing reduction calculator
Quality rating system
Navigator program
Eligibility determinations for Exchange participation, advance payment of
premium tax credits, cost-sharing reductions, and Medicaid
Seamless eligibility and enrollment process with Medicaid and other State health
subsidy programs
Enrollment process
Applications and notices
Individual responsibility determinations
Administration of premium tax credits and cost-sharing reductions
Adjudication of appeals of eligibility determinations
Notification and appeals of employer liability

93

Information reporting to IRS and enrollees
Outreach and education
Risk adjustment and transitional reinsurance
SHOP Exchange-specific functions
For each core area and business function above, please include the following information:
1. Total Cost
2. Percent of cost that is fixed and/or variable (explain)
3. Amount of Cost by Object Class Code (OCC) (Personnel, contractual, equipment, travel,
other, etc)-If contractual, include % by OCC of those costs).
4. Amount of costs being requested by Exchange Establishment Grant
5. Amount of cost being requested by another source (indicate that source(s))
6. Assumptions or other narrative
Sample:
Core Area: Stakeholder Involvement
1. Total Cost: $25,000
2. Amount of cost that is fixed and/or variable: 60% fixed; 40% variable (based on numbers of
meetings)
3. Amount of Cost by Object Class Code (OCC) (Personnel, contractual, equipment, travel,
other, etc)-If contractual, include % by OCC of those costs).
Dollar amount of personnel
Dollar amount contractual (90% personnel; 10% space)
Dollar amount travel
Dollar amount other (supplies, flyers, etc)
4. Percent of costs being requested by Exchange Establishment Grant; 100%
5. Identify the percentage of costs being requested by another source (indicate that source(s)): 0
6. Assumptions or other narrative; Assume 10 meetings a quarter.

94

G.

Appendix G: Federal Procurement Requirements for Grantees

A grantee may acquire a variety of commercially available goods or services in connection with
a grant-supported project or program. Grantees can use their own procurement procedures that
reflect applicable State and local laws and regulations, as long as those procedures conform
to the following applicable U.S. Department of Health and Human Services (HHS) regulations:
HHS regulations at 45 CFR Part 92, Procurement Requirements for State, Local and
Tribal Governments http://www.hhs.gov/opa/grants/toolsdocs/45cfr92.html.
States must follow the requirements at Title 45 CFR Part 92.36(a). Generally, States
must follow the same policies and procedures they use for procurements from nonFederal funds http://www.hhs.gov/opa/grants/toolsdocs/45cfr92.html.
Note: Regardless of the portion of the project that is supported by Federal funds, the applicant
will be required to follow the Federal procurement requirements for all contracts related to the
project.
Responsibility
The grantee is responsible for the settlement and satisfaction of all contractual and administrative
issues related to contracts entered into in support of an award. This includes disputes, claims,
protests of award, source evaluation, or other matters of a contractual nature.
Simplified Acquisition
Simplified Acquisition Procedures shall be used to the maximum extent practicable for all
purchase of supplies or services not exceeding the simplified acquisition threshold. The
threshold for purchases utilizing the Simplified Acquisition Procedures cannot exceed $100,000.
Procurement actions may not be split to avoid competition thresholds. The simplified acquisition
procedures were not developed to eliminate competition but to reduce administrative costs,
improve opportunities for small, small disadvantaged, and women-owned small business
concerns, promote efficiency and economy in contracting, and avoid unnecessary burdens.
Avoiding Conflicts of Interest
Grantees shall avoid real or apparent organizational conflicts of interests and non-competitive
practices in connection with procurements supported by Federal funds. Procurement shall be
conducted in a manner to provide, to the maximum extent practical, open and free competition.
In order to ensure objective contractor performance and eliminate unfair competitive advantage,
contractors that develop or draft grant applications, or contract specifications, requirements,
statements of work, invitations for bids, and/or requests for proposals shall be excluded from
competing for such procurements.
Contracts Pre-existing to the Grant Award
When a grantee enters into a service-type contract in which the term is not concurrent with the
budget period of the award, the grantee may charge the costs of the contract to the budget period
in which the contract is executed if:
The awarding office has been made aware of this situation either at the time of
application or through post-award notification.

95

The contract was solicited and secured in accordance with Federal procurement
standards.
The recipient has a legal commitment to continue the contract for its full term.
Contract costs will be allowable only to the extent that they are for services provided during the
grant’s period of performance. The grantee will be responsible for contract costs that continue
after the end of the grant budget period. Modifying existing, open contracts is generally
unallowable.
Factors that should be considered when selecting a contractor are:
Contractor integrity;
Compliance with public policy;
Record of past performance;
Financial and technical resources;
Responsive bid; and
Excluded Parties Listing (Debarred Contractors https://www.epls.gov/).
Contracts will be normally competitively bid unless:
The item is available only from a single source;
After solicitation of a number of sources, competition is determined inadequate; or
Meets the requirements of simplified acquisition.

96

H.

Appendix H: Application Check-Off List

REQUIRED CONTENTS
A complete application consists of the following materials organized in the sequence below.
Please ensure that the project narrative is page-numbered. The sequence is:





Forms/Mandatory Documents (Grants.gov) (with an electronic signature)








SF 424: Application for Federal Assistance
SF-424A: Budget Information
SF-424B: Assurances-Non-Construction Programs
SF-LLL: Disclosure of Lobbying Activities
Project Site Location Form(s)
Lobbying Certification Form (HHS Checklist, 5161)

Required Letters of Support (Governor and State Medicaid Director, State
Insurance Commissioner)



Applicant’s Application Cover Letter



Project Abstract



Project Narrative



Work Plan and Timeline



Budget Narrative



Required Appendices




Organizational Chart & Job Descriptions for Key Personnel
Letters of Agreement and/or Description(s) of Proposed/Existing Project

97