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Plans for business health exchange change direction

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The state has scrapped plans to build a new online health exchange for small businesses and will instead build on a system it already has in place for employers.

The board that makes decisions on how the exchange will operate voted on the change in direction during a meeting Tuesday at the suggestion of Audacious Inquiry, consultants it hired to analyze the best option.

Building on the existing system would cost $1 million to $3 million as opposed to building a whole new system, which would cost $10 million to $20 million.

During the meeting, Chairman Joshua M. Sharfstein, who is also the state health secretary, also noted changes the health exchange board would make regarding closed-door sessions after state open meetings compliance officials ruled it had violated aspects of open meetings laws.

Members of the board — which also oversees the exchange that sells health insurance policies to individuals — also voted to spend no more than $2.8 million over four years to lease a building in Elkridge to house hardware and some exchange workers. The board voted to spend $1.2 million to hire KPMG to develop security requirements for the health exchange and milestones that show progress, among other things.

The exchange for small businesses would use brokers and third-party administrators to manage buying of the insurance and to run electronic marketplaces.

The current system is paper-based and offers insurance options from just one carrier. Under the scenario presented by Audacious Inquiry, the new system would ramp up slowly and when completed in 2016 be fully automated and offer employees many insurance choices.

The state had started building a business site, but halted work in February after it discontinued its contract with prime contractor Noridian Healthcare Solutions. Noridian also built the exchange for the uninsured individuals, which was plagued with technical problems since its launch in October. The state dumped its software in favor of technology used by the Connecticut exchange.

Sharfstein read excerpts from the decision by the Open Meetings Compliance Board. Craig O'Donnell, a reporter with the Kent County News, filed a complaint in March alleging that the exchange board held improper emergency meetings and failed to disclose why some meetings were closed to the public. He also complained about access to the minutes of the meetings and other information.

The health exchange board made voluntary changes before the compliance board's decision, such as making meeting minutes more readily available online. But the open meetings board noted that the exchange didn't adequately publicize at least one meeting and didn't properly explain why it was holding closed sessions. Sharfstein said the board would give more detailed explanations of meetings not open to the public.

Despite the criticisms, Sharfstein said the board had been a "model" for involving the public.

Reporter O'Donnell disagreed. He called it a mixed bag and said "they played very fast and very loose with their legal obligations."

Also during the meeting, Isabel Fitzgerald, the head of technology for the exchange, said work was on track to adopt Connecticut's technology.

"I am very confident that we are in the window that we had planned to be," she said.

Baltimore Sun reporter Meredith Cohn contributed to this article.

andrea.walker@baltsun.com

Twitter.com/ankwalker

Copyright © 2014, The Baltimore Sun
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