Frequently Asked Questions on Allowable Uses of Section 1311 Funding for States in a State Partnership Marketplace or in States with a Federally-Facilitated Marketplace
Below are a number of Frequently Asked Questions (FAQs) about grant funding available to states in which the federal government will operate a Federally-facilitated Marketplace (FFM), including a State Partnership Marketplace (SPM), under Affordable Care Act Section 1311(a). These FAQs are applicable to the amended Funding Opportunity Announcement (FOA) released on November 30, 2012, (“Cooperative Agreement to Support Establishment of Affordable Care Act’s Health Insurance Exchanges1”), and related 1311 funding, which can be found at www.grants.gov, under Catalog of Federal Domestic Assistance number 93.525.
These FAQs are considered general guidance only and are in no way guaranteeing approval of funding requests. All requests for funding are reviewed for allowability, allocability, and reasonableness and other requirements set forth in the funding announcement.
Q1: In a state in which the federal government will operate an FFM, including an SPM, what types of activities are allowable uses of 1311 funding?
A1: The list in the table below outlines generally allowable activities for the use of 1311 funds. This list is not exhaustive, but provides examples of potential activities. States are encouraged to consult with HHS regarding the use of 1311 funds for these and other activities associated with enabling a successful FFM.
|Operational Area||State Activities|
|Consumer and Stakeholder Engagement and Support|
|Risk Adjustment and Reinsurance|
|Small Business Health Options Program (SHOP)|
|Oversight, Monitoring & Reporting|
Q2: If a state has acknowledged interest in performing plan management activities, what types of activities are allowable uses of 1311 funds?
A2: For states that have acknowledged interest in performing plan management activities, the list in the table below outlines generally allowable activities for the use of 1311 funds. This list is not exhaustive, but provides examples of potential activities. States must consult with HHS regarding the use of 1311 funds for these and other activities.
|Operational Area||State Activities|
|Legal Authority and Governance|
|Eligibility & Enrollment|
|Oversight, Monitoring & Reporting|
Q3: Does 1311 funding cover Marketplace costs for preparing to transition from a FFM model to an SPM or SBM?
A3: Yes, the November 30, 2012 FOA clarifies that §1311(a) grant funds allow states the flexibility to transition between Marketplace models over time. Per the FOA and the Blueprint for Approval of State-Based and State Partnership Insurance Exchanges2 (http://cms.gov/cciio/resources/factsheets/hie-blueprint-states.html), published November 9, 2012, the state must develop a transition plan with HHS, comply with Marketplace Blueprint requirements, submit a Model Declaration Letter and Marketplace Blueprint Application on applicable timelines, and obtain approval or conditional approval from CCIIO 12 months before the start of the plan year.
Per guidance released October 5, 2012 (“Supplemental Guidance on Cost Allocation for Exchange and Medicaid IT Systems3” http://www.medicaid.gov/AffordableCareAct/Provisions/Downloads/Key-Cost-Allocation-QAs-10-05-12.pdf), as part of a transition from a FFM to a SBM model, states may apply for funding to invest in long-term creation of a modern eligibility system to be shared between a State-based Marketplace and the state Medicaid/ Children’s Health Insurance Program (CHIP). In this case, states must cost allocate funding appropriately between Medicaid, CHIP, and the Marketplace (see additional information in Q6 below). States may also have to allocate to human service programs if they have an integrated system. Please refer to 2 CFR Part 225, Cost Principles for State, Local, and Indian Tribal Governments (previously OMB Circular A-87) for additional guidance on cost allocation.
Q4: Can Section 1311 funding be used to support activities related to Medicaid/CHIP administrative, policy or systems activities involved in interfacing with an FFM?
A4: Per guidance released October 5, 2012 (“Supplemental Guidance on Cost Allocation for Exchange and Medicaid IT Systems4” http://www.medicaid.gov/AffordableCareAct/Provisions/Downloads/Key-Cost-Allocation-QAs-10-05-12.pdf), in a FFM or SPM state that has not declared its intent to transition to a SBM in 2015, SBM, Marketplace funds may not be used to improve systems or processes related to Medicaid/CHIP interfaces with the Federally-Facilitated Marketplace. This includes building systems designed to coordinate with the FFM, to manage applicant account, such as connecting with the hub and augmenting the federal call center.
Q5: What if a state, through modernizing their Medicaid/CHIP eligibility and enrollment system, is not ready to affirm its intent to build a State-Based Marketplace? If the State later opts to establish a State-based Marketplace and therefore request grant funds to make the transformation, does it allocate costs to the Marketplace grant in order to make that transformation?
A5: Yes, if a State opts to establish a State-based Marketplace later, Marketplace establishment funding would be available prospectively to transform systems, subject to approval from CMS, and assuming it is properly represented and characterized in the application for grant funding. However, please note that the availability of Marketplace establishment funding (and therefore ability to readjust cost allocation on a prospective basis taking that funding into account) is subject to certain timelines, and States will need to make decisions about their intention to establish a State Marketplace along that timing in order to receive such funding.
1 This applies to what CMS refers to as the Affordable Care Act’s Health Insurance Marketplaces
2 This applies to what CMS refers to as the Affordable Care Act’s Health Insurance Marketplaces
3 This applies to what CMS refers to as the Affordable Care Act’s Health Insurance Marketplaces
4 This applies to what CMS refers to as the Affordable Care Act’s Health Insurance Marketplaces
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*This document was updated on April 15, 2020, to correct an error in footnote 10 regarding the current end date of the public health emergency related to COVID 19.
- April 13, 2020 Postponement of 2019 Benefit Year HHS-operated Risk Adjustment Data Validation (HHS-RADV)