In an effort to entice states to develop innovative health IT infrastructures for health insurance exchanges, the U.S. Department of Health and Human Services will offer states competitive grants, the agency announced late last week.

The Early Innovators grants strive to encourage states to develop IT systems to be used for HIEs, a health care reform outcome that will enable individuals and small businesses to select, shop for and enroll in private health plans of their choice through IT systems.

The agency did not specify the grant amounts but according to the Funding Opportunity Announcement, the Office of Consumer Information and Insurance Oversight "will look for efficiencies and consider if the proposed budget is sufficient, reasonable and cost effective to support the activities proposed in the state's application."

HHS will award the two-year grants by Feb. 15, 2011 to up to five states or state coalitions that propose efficient and cost-effective health IT models. The agency then hopes for other states to emulate the systems.

"States are focused on implementing the Health Insurance Exchanges because they know the Exchanges will empower their citizens by forcing health insurers to compete," said Kathleen Sebelius, secretary of HHS, in prepared remarks. "Consumer-friendly information technology is the backbone of that effort which is why we are creating an incentive for states that are willing and able to lead the way to do so."

Although states are eligible for the Early Innovators grants as early as next year, the insurance exchanges are not scheduled to launch until 2014.

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