[T]he Shumlin administration has placed a partial dollar amount on state staff costs stemming from manual processes and workarounds associated with Vermont Health Connect’s messy open enrollment period earlier this year.
The amount? $800,000 per month. That’s for the costs incurred for “staff augmentation” needed to process renewals manually “this winter and spring,” according to Vermont Health Connect spokesman Sean Sheehan.
The renewal and open enrollment period was from November 2014 to March 2015, which would mean the state paid at least $4 million to work around the incomplete IT system.
Lawrence Miller, Shumlin’s chief of Health Care Reform, said in an interview that the $800,000 per month figure does not capture the total amount of state spending on the system’s shortcomings. He described the monthly spending rate as one “direct attributable cost.”
Vermont Health Connect has been supported by manual processes that have required additional staff and resources since its launch in October 2013.
Miller said the state hasn’t calculated the total cost of manual workarounds and other expenses related to the exchange’s problems. Once Vermont Health Connect stabilizes and the state is able to establish a baseline budget for operating the exchange, Miller said the state can determine how much the problematic rollout actually cost.
The fiscal year 2016 budget for Vermont Health Connect is $48 million in state and federal funds. During the legislative session, Miller provided an estimated “sustainability budget” of $42 million. Total Vermont Health Connect costs in fiscal years 2014 and 2015 aren’t immediately available, because the administration didn’t publish budgets that aggregated exchange-related expenses across all departments.
The total cost of the exchange for 2016 is unclear at this point, due to cost overruns in several other areas.
Miller is hopeful additional money won’t be needed during this year’s budget adjustment process. The Department of Vermont Health Access, which runs the exchange, and the Agency of Human Services will work within existing budgets to absorb unexpected expenditures, Miller said.
The state owes Blue Cross Blue Shield of Vermont $1.6 million from issues related to retroactively canceled 2014 policies.
The two are still working out what Blue Cross is owed in premiums and claims for canceled 2015 policies. A March letter from Blue Cross to the state suggested the amount could be as high as $9 million, but both sides say they now expect it to be much lower.
The state also incurred $2.7 million in additional costs this year because a new contract with Optum wasn’t provided to the feds with appropriate lead time for approvals. Optum, an IT subsidiary of United Health Group, a large health insurance company based in Minnesota, took over management of the Vermont Health Connect website functionality last year after the original vendor, CGI, a Canadian company, failed to make sufficient improvements to the website after the dysfunctional rollout in October 2013.
The Centers for Medicaid and Medicare Services requires contracts to be submitted 60 days prior to execution in order for state-based exchanges to receive an enhanced 90 percent to 10 percent match.
Because the revised Optum contract, wasn’t submitted in a timely manner, the feds matched costs over a two-month period at 55 percent — resulting in the $2.7 million tab for the state.
Delaying the contract revision would have delayed the implementation of the automated change function that allows VHC workers to update customer information more quickly. Shumlin had publicly promised the capability would be rolled out by May 31.
If the state had waited to move ahead with the Optum contract in order to keep the enhanced match in place, Shumlin’s October deadline for the automated renewal process would have been at greater risk, Sheehan said, making the possibility of a $3.5 million contingency plan to enroll people manually this fall more likely.
Miller said the state has applied to have the enhanced match retroactively reinstated.
Website function improving, but exchange is still cumbersome, high risk
Stakeholders told lawmakers at the Wednesday hearing that since the May technology release allowing automated changes, things are going more smoothly for the exchange.
There is still no firm date for when customers will be able to make their own changes online. State officials say they want to be cautious that doing so won’t create additional unanticipated problems.
At a Tuesday press conference, Shumlin touted a reduced backlog of change requests from more than 10,000 in May to less than 4,500 this week. Stakeholders agreed there is some improvement, but raised lingering concerns about Vermont Health Connect’s ability to process more complex cases.
“We are definitely seeing an improvement with VHC. There are still a lot of problems related to … old change of circumstance issues that are still pending,” said Trinka Kerr, lead attorney with the Office of the Health Care Advocate, a consumer protection project of Legal Aid.
The new automated change function is helping workers process the less complicated cases in the backlog, but it’s still not capable of processing many types of changes that are normal in the course of administering health plans.
“Their system isn’t yet capable of handling some of the nuance,” said Dawn Schneiderman, Blue Cross director of audit and anti-fraud programs, who is working closely with Vermont Health Connect.
She provided lawmakers with a chart of change requests that are automated, and those for which automation is still being tested (see slide 8). The exchange is now capable of sending bulk files of seven of 12 common changes, but has not completed testing for two others and has not begun testing for three more.
For instance, Vermont Health Connect can send automated terminations, reinstatements and changes to benefits and subsidies, but it cannot do the same for people adding a newborn or make multiple changes for the same customer.
In the bulk data files Vermont Health Connect sends to insurers, the companies can’t determine if the changes are current or part of the backlog. It’s likely, however, that the remaining 4,500 cases in the backlog are the most complex, because those still can only be processed manually.
Testing of the new automated change function was only 40 percent complete in May for information exchanges with Northeast Delta Dental, the only dental insurer on the exchange, according to William Lambrukos, its senior vice president for operations.
“We were uncomfortable moving forward, but clearly the decision had been made,” he said. There continue to be errors in the transfer of bulk data files, and testing is still ongoing, he said. Both Blue Cross and MVP Health Care affirmed they are still seeing errors in bulk data transfers, but they’re reduced from higher levels in June.
Northeast Delta Dental offers a stand-alone dental plan on exchanges in Maine, New Hampshire and Vermont. In Maine and New Hampshire, which are using the federal exchange, there are no similar issues, Lambrukos said.
His company uses a third-party vendor to help administer exchange plans. Lambrukos said an executive at that company told him, “We support seven states on the federal exchange, it would be safe to say that Vermont Health Connect takes as much of our time, if not more, than all the other federal exchange states.”
Lambrukos said he would like to see Vermont transition to the federal exchange, but acknowledged that doing so would be immensely complicated.
That’s largely because Vermont chose to make its exchange also function as its Medicaid portal. Sixty-six percent, or roughly 140,000 of the 215,000, people covered through the exchange are covered by Medicaid. That’s nearly twice the number covered by Blue Cross and MVP combined.
Other states that built their own exchanges did not try to incorporate Medicaid, making it difficult to compare the cost of Vermont’s exchange to other state-run exchanges. Decoupling the state’s exchange from its Medicaid program would be expensive, and may not be practical nearly two years into its operation.
It’s not clear to what extent a hybrid state/federal exchange, which is considered the most likely contingency should Vermont Health Connect not find its rhythm, would be able to support Medicaid users.
Miller and other state officials have made clear that Vermont Health Connect will continue to support Medicaid regardless of whether the rest of the exchange is ultimately transitioned to a version of the federal exchange.
That is why he and the governor have said repeatedly, a working Vermont Health Connect is the state’s best option.
