Today, the Obama administration announced that nearly $220 million in government grants have been awarded to 13 states in order to set up health insurance exchanges by 2014 as laid out in the Patient Protection and Affordable Care Act, commonly known as Obama's Health Care Act. Alabama, Arizona, Delaware, Hawaii, Idaho, Iowa, Maine, Michigan, Nebraska, New Mexico, Rhode Island, Tennessee, and Vermont were awarded the funds in response to their efforts planning their exchanges. Other state governors are awaiting the results of a Supreme Court ruling on the constitutionality of the law before beginning work on their states' exchanges. All states have until June 29th of 2012 to submit applications for the health exchange grants.

Health insurance exchanges are marketplaces offered by each individual state which provide a way for individuals and businesses to comparison shop for health insurance plans based on benefits and cost. All plans within the exchange will be state-regulated. If eligible, low and middle income users of the exchanges will be able to purchase insurance subsidized by a federal government tax credit.

If a state fails to act by the June 29th application deadline, it will lose out in millions of dollars in grants. If a state does not create its health insurance exchange by January 1, 2014, as mandated by the health care act, either due to lack of funds or an unwillingness to due so, the federal government will step in and create the exchange.

The Centers for Medicare and Medicaid Services Innovation, also known as the CMS Innovation Center, and part of the Department of Health and Human Services, announced it will award up $1 billion in government grants via its Health Care Innovation Challenge. Applicants who implement the most compelling new ideas to deliver improved health care and lower costs to Medicare, Medicaid, and Children’s Health Insurance Program recipients will each be awarded between $1 million to $30 million in government grant money.

The primary objective of this government grant is to "engage a broad set of innovation partners to identify and test new care delivery and payment models that originate in the field and that produce better care, better health, and reduced cost through improvement for identified target populations",  to "identify new models of workforce development and deployment and related training and education that support new models either directly or through new infrastructure activities", and to "support innovators who can rapidly deploy care improvement models (within six months of award) through new ventures or expansion of existing efforts to new populations of patients, in conjunction (where possible) with other public and private sector partners."

Health care providers, payers, local governments, public-private partnerships, and multi-payer collaboratives are eligible to apply and must submit a letter of intent by December 19, 2011. The full application must be sent by January 27, 2012 and award recipients will be notified on March 30th. The grant recipients will be monitored to make sure improvements in care and savings are generated.

Find out more about the Health Care Innovation Challenge, including slides, audio, and a transcript of the November 17th webinar, here.