WASHINGTON – States can apply for a second round of grant funding to help implement health insurance exchanges mandated under the Affordable Care Act, Health and Human Services (HHS) Secretary Kathleen Sebelius announced on Thursday.

The exchanges, which are slated  to be operational by 2014, are aimed at providing individuals and small businesses with a "one-stop shop" to find and compare affordable, high-quality health insurance options.

Last July HHS released $51 million in grant funding to states for health insurance exchanges. In the first round of funding, up to $1 million was available for each state and the District of Columbia to conduct research and planning needed for their exchanges and determine how they would be operated and governed.

Sebelius said the new grants recognize that states are making progress toward establishing exchanges but are doing so at different paces. The dollar amount of the grant funding was not released.

The second round of grant funding allows states that are moving ahead at a faster pace to apply for multi-year funding. States that are making progress in establishing their exchange through a step-by-step approach can apply for funding for each project year. Moving forward, states will have multiple opportunities to apply for funding as they progress through exchange establishment. This process gives states maximum flexibility and ensures that states can move forward on their own timetables as they work to build an exchange, said officials.

Level one establishment grants provide up to one year of funding to states that have made some progress under their exchange planning grant. States may plan to reapply for a second year of funding under the level one establishment grants if necessary to meet the criteria to apply for level two establishment grants.

Level two establishment grants are designed to provide funding through Dec. 31, 2014, to applicants that are further along in the establishment of an exchange. In applying for level two establishment grants, states must meet specific eligibility criteria, including that the state has:

• Legal authority to establish and operate an exchange that complies with federal requirements available at the time of the application;
• A governance structure for the exchange;
• A budget and initial plan for financial sustainability by 2015;                              
• A plan outlining steps to prevent fraud, waste and abuse; and
• A plan describing how consumer assistance capacity in the state will be created, continued, and/or expanded, including provision for a call center.

States can use the exchange establishment grants for a number of activities including conducting background research, consulting with stakeholders, making legislative and regulatory changes, governing the exchange, establishing information technology systems, conducting financial management and performing oversight and ensuring program integrity.

"States are moving forward, implementing the Affordable Care Act and making reform a reality," said Sebelius. "These grants will help ensure states have the resources they need to establish exchanges and ensure Americans are no longer on their own when shopping for insurance."