Colorado Health Benefits Exchange

1. Colorado Health Benefits Exchange IT and Implementation Committee Strategic IT Decisions December 7, 2011

2. Overview • Action items from 11/30 meeting • RFI and “Pulse” of Marketspace • Acquisition Process • Cornerstone elements of RFP • Analysis and Scoring of Proposals • Outline of RFP • Evaluation Committee • Legal resources • Financial Model • Costs Comparison: Asset Acquisition vs. SAAS (ROM and Directional) Engineer’s Estimate as Major Component of COHBE Operating Expense • Impact on COHBE Sustainability Model • Revenue Source to Fund Operational Expenses • “Optimal” Level of “Interoperability” with State Medicaid/CHIP Systems and Business Processes • Storyboard • Areas of Potential Interoperability and Input (IT, Call Center, Plans) • Cost Allocation of Interoperability • Agenda and Affirmations for 12/12 Board Meeting • Review of Gameplan Leading to Start of Formal Acquisition Process

3. Action Items from 11/30 Meeting

4. Action Items from 11/30 Meeting • Action Item: Review State of MO RFI and companion material and determine applicability to COHBE strategy and Acquisition • Gary sent email on 11/30 summarizing RFI process and differences between MO and CO’ • Gary spoke to Dwight Fine (MO Insurance Department) to understand context of their effort and potential synergy; in addition to information provided on 11/30 estimated project cost is $125M for fully integrated eligibility and exchange solution; State portion being funded by foundation(s) not SGF • Action Item: Provide Committee members with list of vendors receiving COHBE RFI • Copy of vendors engaged to-date and on the radar on Slide #7 • Action Item: Review selection criteria from MO • Good content; can leverage; will be developing requirements and leveraging RFPs from WA and MD • Action Item: Identify need for legal resources • Legal resource requirements and timeframes identified on Slide #14 • Action Item: Stay informed on work NAIC is doing to assist carriers to load plans into Exchanges using a standard format • Will monitor NAIC activities through Julie Fritz and report back periodically; do not currently see any impact on RFP; carries should embrace this standardization

5. RFI and “Pulse” of the Marketsplace

6. RFI and “Pulse” of Marketspace • Few states in the Exchange Acquisition process at this stage; many waiting for legislative approval process or determining strategy • Vendors anxious to present solutions, get a foothold and begin implementation for leading states • End-to-end solutions seen to-date range from small gaps to significant gaps which will require design, development and implementation by vendor(s) (i.e. risk) • Many vendors will “team” to provide the three core areas of systems and services needed by COHBE • Still in process of getting additional data points to verify price point ranges and pricing options; cost data presented today is preliminary and non-binding on vendors • Actual cost data will be provided in early-May when proposals are received

7. RFI and “Pulse” of Marketspace Vendors receiving/responding to COHBE RFI

8. Solution Cost Estimate

9. Solution Cost Estimate Key Cost Drivers for SAAS model: • Enrollment • Combination of Wakely/Gruber #’s; • “moderate” Wakely #’s in ’14 & ’15 • Gruber: ultimately 540K – 960K in exchange; used 750K (midpoint) • SaaSPMPM (per member per month) rate • Rate depends on: • 1) Vendor • 2) Breadth of functionality and services, i.e. “thick” vs. “thin” exchange

10. Solution Cost Estimate Slide 17 SaaS model yields annual costs of $20M – $60M at 750K enrollment. Enrollment 550K 650K 720K 750K 760K 770K * Rates remains flat over the years for these scenarios. SaaS – Software-as-a-Service PMPM – per member per month 10

11. Solution Cost Estimate • Key Cost Drivers for acquisition model: • Software license acquisition • Monthly operating costs depends on: • annual maintenance and support (% of license) • application support and hosting (fixed cost/mo) • administrative service (per member per month) rate • Administrative services linked to enrollment and likely to be 10-50x system costs

12. Solution Cost Estimate maintenance/support hosting operations ~$3.00 pmpm Slide 18 $5M Acquisition model estimates by component. Implementation – $2M $30M $25M $20M $15M $10M $5M software – $3M Enrollment (December) 550K 650K 720K 750K 760K 770K 12

13. Solution Cost Estimate Key Cost Drivers of SaaS and acquisition model are administrative and customer services: • Eligibility • MAGI eligibility • SHOP Exchange • Plan Management/Shopping • Interfaces and services for carriers to load approved plans into COHBE • Search criteria, multi-dimensional • Track plan mandate costs • Reimbursement system for exchange enrollees for additional mandated costs • Broker tools for quotes/comparisons • Financial Management • Full A/R disbursement, collections, online presentation & billing customer service • automated billing aggregation for employers, individuals, families, insurance companies, & agents • Online payment service Integration for individuals and employers to include ACH, credit card, • Account management, view, search, adjust • Electronic and paper invoices • Automated notification to manage delinquent, late payments • Support for web advertising • Collect and maintain data to calculate billings determined necessary to compensate • Integrate with general ledger/accounting systems • Cafeteria plan integration for payments • Billing help desk support

14. Solution Cost Estimate Key Cost Drivers of SaaS and acquisition model are administrative and customer services: • Customer Service • Multilingual online system for specified languages • Multilingual help desk/enrollment support for specified languages • Promotion of health management and wellness initiatives • Flexible spending account, health reimbursement account and health saving account support • Sponsorship/assistance for state exchange outreach programs • Simultaneous online access for agent/navigator and consumer from different sites • Wellness Programs enrollment, monitoring and portability • Communications • Classroom and/or online training programs for agents and navigators • Resource library for consumers, agents, brokers, employers and providers • Associated document management to store and access electronic and paper communication • Complete forms library for all plans

15. Solution Cost Estimate Acquisition model results in $14M – $18M annual savings based on the assumptions below. $5 pmpm $17M—$18M/yr; $ 1.88 pmpm Enrollment (December) 550K 650K 720K 750K 760K 770K 15

16. Solution Cost Estimate Cumulative cost savings based on estimate assumptions. $87M $50M Enrollment (December) 550K 650K 720K 750K 760K 770K 16

17. $5.43 $8.82 Solution Cost Estimate Assuming 1.8 members/policy (Wakely), $5—$9 per policy per month required to fund ongoing exchange operations. Enrollment 550K 650K 720K 750K 760K 770K

18. Acquisition Process

19. Acquisition Process

20. Acquisition Process • Key Elements of Acquisition Strategy: • Three core areas (system, hosting/IT ops, administrative services) w/ system acquisition as an option • Teaming OK but single point of accountability, i.e. “prime” contractor • Fixed-price by scope element • Strict adherence to SLAs w/ material penalties for non-performance • At least one team member in healthcare exchange business for five years • Need direction from Committee: • Asset acquisition as an option for COHBE (is this a “must” for bidders, i.e. if they will not agree to license solution will proposal be rejected?) • Three-year operating agreement with five (5) one-year options? • Call center operations (and jobs) shall be located in CO? • Other TBD

21. Acquisition Process • Analysis and Scoring of Proposals • Solution Fit/Coverage and Gaps – single vendor or teaming arrangement must provide required system and services that constitutes entire solution • Experience and Wherewithal of Vendor in Exchange Space and Knowledge of Healthcare Reform • Company Qualifications and Resources (Corporate and Proposed Project Team) • Cost (implementation, 3-Year, Option Years) • Strategic Fit • Partnership Fit • References • Exceptions to Proposed Contract Ts & Cs • Other Factors TBD • Beyond meeting minimum requirements, weighting matters; will propose approach to weighting later, i.e. during evaluation team orientation (mid-Feb)

22. Acquisition Process • Outline of RFP: • Purpose of RFP, Vision, Concept of Operations • COHBE Background • General and Administrative Procurement Information and Timeline • Scope of Implementation and On-going Services • Proposal Response – System, Implementation Services, On-going Operations and Administrative Services: • Solution Proposal (business, technical) • Cost Proposal (cost model will be provided ; line items broken down between implementation and on-going costs to insure ability to accurately compare costs) • Proposed Contract Terms and Conditions • Appendices: • Appendix A – Business Process Models • Appendix B – Business Requirements (functional, technical)Appendix C – Interoperability with State Medicaid Systems and Business Processes • Appendix D – Reporting and Business Intelligence • Appendix E – Technical Architecture • Appendix F – Operations, SLAs, and Continuity of Operations • Appendix G – Interfaces • Appendix H – Conversions • Appendix I – Deliverables • Appendix J – Turnover • Procurements will be: • Well-structured • Efficient • Competitive • Fair • Transparent

23. Acquisition Process • Evaluation Committee • Seeking volunteers to participate in COHBE vendor selection; crucial decision which can only be made once (for several years); leverage experience and perspective of diverse group will lead to better decision • Duties and time commitment: • Review and rank proposals using evaluation sheets provided; note areas of concern, be available to discuss evaluation and proposal rankings (need to be able to review all qualified proposals) • Depending on number of quality proposals received likely 40 hours during first two weeks of March • Demonstrations/orals likely 20 hours in late March • BAFO review and recommendation 16 hours in early April

24. Acquisition Process • Legal services needed to support acquisition process and timeframes services will be required • Develop initial contract for acquisition of Exchange system and services to include in RFP – 01/03 – 01/13 • Review and advise re vendors’ responses/exceptions to proposed contract – 03/03 – 03/09 • Advise on how to ensure information provided during demos/orals/discovery sessions and BAFO becomes binding – 03/19 – 03/24 • Participate in contract negotiations 04/06 – 04/15 • 200 – 300 hours estimated for legal services to support acquisition process

25. “Optimal” Level of “Interoperability” with State Medicaid/CHIP Systems and Business Processes

26. What is the “optimal” level of “interoperability” and coordination with the State’s Medicaid/CHIP systems, business processes and existing customer support services? Interoperability Between COHBE & State Medicaid/ CHIP Systems and Business Processes CBMS/PEAK & Medicaid/CHIP Eligibility & Enrollment Business Processes COHBE Eligibility & Enrollment Systems and Business Processes Extent of “interoperability” (i.e. amount of overlap) between COHBE system and business processes and CBMS/PEAK and associated State eligibility and enrollment business processes increase s complexity and schedule risk but improves some consumer populations’ experience

27. “Optimal” Level of “Interoperability” with State Medicaid/CHIP Systems and Business Processes COHBE Systems State Systems

28. What is the “optimal” level of “interoperability” and coordination with the State’s Medicaid/CHIP systems, business processes and existing customer support services?

29. “Optimal” Level of “Interoperability” with State Medicaid/CHIP Systems and Business Processes • Interoperability System and Business Process Alternatives • Minimum level of systems interoperability (from design principles, guiding principles and best practices): • Single/shared MAGI eligibility process for Private Insurance and Medicaid/CHIP • Single sign-on • Comprehensive MPI (Exchange and Medicaid/CHIP population) • Data only entered once • Request only information needed for determining eligibility for healthcare • Maximize “no touch” eligibility adjudications • Interface from PEAK to MAGI process to support “no wrong door” requirement • Provide links to non-medical eligibility processes and pre-populate with data previously collected during medical eligibility processes • Moderate level of systems interoperability: • Interfaces • To MMIS for automatic enrollment for Family medical and CHIP • To CBMS for eligibility determinations for all other medical programs • Maximum level of systems interoperability: • Shared rules engine • Single entry point (portal)

30. “Optimal” Level of “Interoperability” with State Medicaid/CHIP Systems and Business Processes • Tiered Sets of Requirements

31. “Optimal” Level of “Interoperability” with State Medicaid/CHIP Systems and Business Processes • Use Cases, expected populations and interoperability considerations Eligible for SHOP Coverage What is this population? Eligible for Subsidized Private Coverage CHIP Eligible CHIP Eligible What is this population?

32. “Optimal” Level of “Interoperability” with State Medicaid/CHIP Systems and Business Processes • Storyboard shows moderate level option of interoperability

33. “Optimal” Level of “Interoperability” with State Medicaid/CHIP Systems and Business Processes • Interoperability System and Business Process Alternatives • Shared call center with HCPF • Four types of calls anticipated: • Exchange call center – eligibility, site, information, assistance, billing, etc. • State Medicaid call center (MAXIMUS) – eligibility, claims, etc. • Carrier call center – policy questions, claims, etc. • Division of Insurance – complaints • Should #1 and #2 be combined? (shared /consistent support processes, infrastructure, capacity management flexibility, consumer experience, need for specialization or separation) • Carriers offering plans that bridge private and public healthcare coverage to enable household to be covered by one carrier/similar provider network, etc. • Prevalence of “mixed” household populations being researched, e.g. • Single parent eligible for subsidized private coverage and children eligible for CHIP. • One parent receives subsidized coverage from SHOP employer, spouse eligible for subsidized private coverage and children eligible for CHIP

34. “Optimal” Level of “Interoperability” with State Medicaid/CHIP Systems and Business Processes • Analysis of Alternatives – table showing feasibility against In process

35. “Optimal” Level of “Interoperability” with State Medicaid/CHIP Systems and Business Processes

36. COHBE Implementation and Start-up Timeline Note: Accompanying timeline for required enhancements to PEAK & CBMS not shown

37. Interoperability Decision Criteria

38. Affirmations and Agenda for 12/12 Board Meeting • Scope and Key Elements of Procurement • Acquisition Strategy – prime contract (hosting and administrative services) with option for COHBE to license exchange IT solution • Recommended level of Interoperability w/ State Medical Systems and Business Processes • Acquisition Process and Timeline • RFP Outline and Proposal Evaluation Criteria • Evaluation Committee Participation • Release of RFP Prior to Award of Level 1 Funds

39. Review of Gameplan Leading to Start of Formal Acquisition Process

40. Background Material

41. Draft COHBE Guiding Principles for Systems and Implementation

42. Role of IT and Implementation Committee • Role is to provide guidance to COHBE executive leadership and early input into major strategic decisions such as IT investments, acquisition of services and Acquisition strategy • These initial acquisition decision(s) will likely be in the order of tens of millions of dollars over the first 3 – 5 years • Acquisitions will be structured to be competitive, fair and transparent • Due to the political sensitivities and visibility surrounding the COHBE, it is important that there be no real or apparent conflicts of interest in Acquisitions activities and operational decisions • Meet weekly leading up to the start of the formal acquisition process

43. Three Strategic IT Questions that Need to be Answered over Next 30 – 60 days Should the Exchange use a SAAS model or acquire (borrow/build/buy) the capital IT Exchange assets? What is the “optimal” level of “interoperability” and coordination with the State’s Medicaid/CHIP systems, business processes and existing customer support services? With respect to #2, does the State intend to upgrade or replace CBMS so that near-term investments to modify CBMS and PEAK to meet the requirements of healthcare reform are rationalized against the State’s strategic direction?