Vermont Health Connect costs could hit $200 million

The backlog of requested coverage changes at Vermont Health Connect has ballooned to more than 11,000 and completing the exchange is now projected to hit $200 million, according to state officials.

Change requests range from updating an address to reporting new income, new dependents or even just terminating a plan after gaining health insurance through an employer. The exchange has carried a backlog since it launched and reached a high of 15,000 in August. That number was reduced to a manageable figure prior to this year’s open enrollment, but is now close to 11,200, officials said.

Lawrence Miller, chief of health care reform. Photo by Morgan True

Lawrence Miller, chief of health care reform. Photo by Morgan True

The underlying problem is the manual process the state relies upon to make the requested changes, which is cumbersome and introduces the potential for human error.

A rash of contingencies that relied heavily on the two participating insurers has largely prevented anyone from losing coverage or experiencing a gap, but many are still dissatisfied with the service.

Vermont is the only state to require individuals to purchase insurance through its exchange, though some lawmakers are hoping to change that, and the Speaker of the House has said time is running out for VHC to fix its problems.

Optum, the exchange’s primary IT contractor, inked a revised contract Feb. 22 to “normalize” the change backlog by May 15 and deliver an automated change function by May 30. The revision brings the value of Optum’s contract to $57.3 million.

Lawrence Miller, chief of Health Care Reform, said he’s confident Optum will deliver, but added there are no guarantees. Once complete, the function will be rolled out in stages, with state workers testing it before customers can use it.

The current spike in change requests is at least partially by design, Miller said. VHC shifted resources to automatically enroll close to 30,000 people who did not need to make changes in 2015. Those numbers cover Medicaid participants and the private health plans sold through the exchange. There are only 133 no-change renewals left, according to Miller, down from 2,400 a month ago.

Now that open enrollment is over, with a caveat for people who didn’t know there was a federal penalty for being uninsured, VHC is focused on the backlog, Miller said.

There are close to 5,000 change requests associated with renewing coverage. Those customers have not received an invoice in 2015. An additional 6,200 change requests not associated with a renewal are also waiting to be processed. The total backlog is a moving target as requests are resolved and new ones logged each day. One customer can make multiple change requests, so the 11,200 total doesn’t represent the number individuals seeking changes.

But the unprocessed changes are gumming up the works, leaving customers confused and frustrated, while creating mountains of paperwork for VHC employees and contractors. It’s also having a downstream impact on payment processing.

Changes need to be reflected in the electronic files that transmit a customer’s information from Vermont Health Connect to the IRS, its payment processor, Benaissance, and eventually to the insurance carriers. The files themselves were riddled with technical errors, which continue to be problematic for VHC.

That creates a “pinch point,” Miller said, where backlogs can bottleneck. Processing those bulk files falls to the “Lion’s Den,” a team of Optum, Benaissance and state employees who work closely with the carriers to straighten out errors and make sure changes are reflected in the IRS, VHC and Benaissance systems.

As a result of the backlogs and billing issues, there are 900 to 1,000 “unallocated checks” in the VHC system, meaning a customer has sent in a premium payment that hasn’t been processed by the insurance carrier, according to Miller.

Blue Cross Blue Shield of Vermont, which has more than 90 percent of the exchange market, recently told WCAX that the value of those unpaid bills is in the millions, but did not give a precise figure.

In a statement Monday, BCBS told VTDigger that their accounts receivable balances due “reflect the ongoing problems with Vermont Health Connect, which continues to lack basic functionality.”

But the state’s largest insurer, which has a book of business that dwarfs the exchange premiums its owed, kept the focus on its customers, adding that the situation is creating “anxiety and uncertainty” for thousands of Vermonters “who are unable to confirm that they are enrolled in the health care coverage they selected for their families.”

Miller said he understands the havoc this creates for VHC users and their families, and he urged people not receiving an invoice to budget for the back payments. Those worried about overpayments should know their accounts will be credited, he added.

Trinka Kerr, the chief health care advocate for Vermont Legal Aid, said close to half of the calls to her office are related to Vermont Health Connect, and the total number of calls has increased in the first two months of the year. It’s on pace to do so again in March, she added.

“We’ve got a few people that are giving up, they’re so fed up, they tell us they’re going to go without insurance,” she said. Kerr said she hopes those people are only voicing frustration, and will stick it out to get covered.

Things aren’t likely to improve until there is an automated change-of-circumstance function, she said.

Cost estimates increased

Total spending on developing the incomplete exchange as of Dec. 31, 2014, was $126.7 million in federal money. The projected cost of completing the exchange is $72 million, which is also the exact amount of remaining federal grant money, according to state officials. That would bring the total cost of implementing VHC to nearly $200 million.

That’s an increase from the $171 million in federal grants to develop and implement VHC that Vermont was originally awarded by the feds.

Vermont is still required to build a system that works for small businesses, which currently go through the carriers. The state is seeking federal permission to put that off until later this year or possibly next year. The small business portion is not covered by Optum’s contract, and would need to be covered by the remaining $72 million or be paid for by the state.

The $200 million does not include the maintenance and operation of the exchange, which became fully the state’s responsibility Jan. 1. The governor’s proposed fiscal year 2016 budget allocates $27.7 million from the general fund to run VHC in fiscal year 2016. The state was also forced to use $3.5 million from the general fund during budget adjustment to shore up overages in the current fiscal year.

Morgan True

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  • Peter Yankowski

    Why should anyone believe this latest number of $200 million?

    Larry Miller, for all of his tough talk, is not getting the job done.

    There is no, not a single, reason to believe that the Shumlin team has any idea of what they are doing.

    • Mr. Yankowski:

      I e-mailed Mr. Miller personally regarding my enrollment challenges with VHC and he promptly responded and had staff on it very quickly.

      Mr. Miller surely didn’t create this mess and in my view doesn’t deserve to be “labeled” simply because he works for the present administration.

      Best wishes,

      Thomas Joseph

      • Ann Meade

        I’m happy for you. So should everyone that is having a problem email Mr. Miller directly? I can’t imagine that Mr. Miller ran Otter Creek Brewing like he does this program. No responsible business person would.

        • Dear Ms. Meade:

          Certainly, being a proactive consumer is always a good thing.

          Best wishes,

          Thomas Joseph

  • Linda Baird-White

    “The revision brings the value of Optum’s contract to $57.3 million.” – The contract with OPTUM started out at $9.5 million just a few short months ago.

    “The small business portion is not covered by Optum’s contract, and would need to be covered by the remaining $72 million or be paid for by the state.” WHAT????

    “We’ve got a few people that are giving up, they’re so fed up they tell us they’re going to go without insurance,” she said. Kerr said she hopes those people are only voicing frustration, and will stick it out to get covered.”

    You will find there are M A N Y who have taken tjat stamce. They feel this administration doesn’t know what ta’ He- – it’s doing and they’re absolutely RIGHT………………..!

  • Dave Bellini

    Dear Democratic lawmakers,

    Is it possible that this “hog on ice” is part of your budget problem?

  • Craig Powers

    What a complete fiasco and boondoggle. VT should be ashamed of itself for allowing this travesty to continue one more day.

    How embarrassing. Shut it off…call it a day…move on…stop wasting money…and our time!

  • Randy Brock, Dan Feliciano and VHCF have repeatedly said VHC would not work. Vermonters deserve better and should not be mandated to buy through VHC. VHC will continue to fail. It’s time for the legislature to cut off the funding.

  • Michael Ponte

    In retrospect, it looks like my decision to go without insurance after my Catamount plan was cancelled at the end of March last year was a wise choice. They really just need to scrap VHC before the ship sinks any further.

  • Chuck Finberg

    I strongly suspect that these changes are the result of errors by Vermont Health Connect, and errors that compound their own errors. That is what is happened to me, and to others with whom I have spoken, over the course of the last year and a half. It is a complete fiasco. To blame this on the insureds whose pre-VHC insurance was canceled by legal mandate, and who were required to obtain insurance through VHC, is outrageous.

  • nick spencer

    1000 Vermonters with accounting skills, hired at $50,000 a year, hired old-school to answer the phones and run this program would cost Vermont 50 million dollars a year.

    Appalling misuse of our limited resources.

    • Wendy Wilton

      Good point.

  • Glenn Thompson

    From the article,

    “Total spending on developing the incomplete exchange as of Dec. 31, 2014, was $126.7 million in federal money. The projected cost of completing the exchange is $72 million, which is also the exact amount of remaining federal grant money, according to state officials. That would bring the total cost of implementing VHC to nearly $200 million.”

    What happens when this fiasco exceeds $200 million and the Feds tell Vermont…they will no longer pour more money down this ‘rat hole’?

    $200 Million in a state with a population of 625,000. Awesome ‘bang for the buck’! (sarcasm)

  • Tom Waddle

    No guarantees on a $57.3 million contract? That is a big part of the reason we are where we are, millions in the hole. Ask Gruber. He had a sweetheart contract too. Where is the outrage about all these millions and no contract oversight? Oh yeah. Just take another deposit from the bank of state employees or turn the heat off of some elderly Vermonter. Just keep those shareholders happy.

  • Rob Roy Macgregor

    It seems to me that Vermont could have proposed a “health exchange” design contest with a prize of about $1-$10 million dollars or so offered to various college and university public health and policy departments and come up with a much more workable system for a lot less money.

    The level of confusion and/or incompetence in the current system is just mind-boggling. I’m figuring that I’ve spent almost 50 hours to date on the phone to VHC or otherwise fussing with the non-functional website trying to get a couple most basic clerical errors / issues sorted out. Not a month has gone by that I haven’t had to call about something, or mail payments with a page long note, essentially doing VHC’s job for them.

    I had high hopes for Optum when they took over, but it seems that they’re not a lot better organized than CGI was.

    And yet, if SCOTUS scraps the federal exchange subsidies, I guess we’ll be glad we have a state exchange, FUBAR-ed or not.

    • Linda Baird-White

      “I guess we’ll be glad we have a state exchange, FUBAR-ed or not.”

      Of what use is an outrageously pricey “FUBAR-ed” exchange….? They haven’t even factored in developing the site to handle insurance for Small Businesses yet. Add to the price another $100M or so.

      You seriously believe VT should callously throw more money at it? Don’t think we’ll be seeing any more Federal funds beyond the $172M previously granted/allocated. Vermont’s allowance has already been cut off.

  • Walter Carpenter

    “What happens when this fiasco exceeds $200 million and the Feds tell Vermont…they will no longer pour more money down this ‘rat hole’?”

    Maybe, then, we’ll finally get single-payer. Maybe it will be nationwide, since all these accursed exchanges are a mess and there is no way to make them work — federal or state.

    • John McClaughry

      Ah yes, the people who have colossally bungled VHC will make single payer run smoothly and efficiently! Free health care for all!

    • Glenn Thompson

      Walter Carpenter,

      “Maybe, then, we’ll finally get single-payer. Maybe it will be nationwide, since all these accursed exchanges are a mess and there is no way to make them work — federal or state.”

      ……And where will the money come from to ‘blindly’ attempt another Social Experiment? You really believe the same bunch who brought you this fiasco is capable of making a Single Payer System work? I don’t!

  • Seems like the time has come to give Larry Miller and VHC the boot ! Vermont could have provided a whole lot of healthcare for the $200,000,000.00 blown on a website that some college IT students probably could have built for fifty grand.

  • Chet Greenwood

    Doug Hoffer and Bill Sorrell where are you?

    This is gross incompetence, stupidity, or both but it is a misuse of public money.

    Make it stop before all the money is gone and we still don’t have insurance.

    And to think we had to fire most all the knowledgeable insurance workers/companies because they were GOUGING taxpayers!

    • Mr. Greenwood:

      Please note the State Auditor already has acknowledged his office will be reviewing aspects of VHC.

      Also, State Auditor Hoffer has been proactively referring matters (Gruber) to the AGs office as he is not a member of law enforcement.

      Best wishes,

      Thomas Joseph

  • Wendy Wilton

    Earth to VT legislature: shut down VHC and allow consumers to purchase in the Fed Exchange or off exchange.

    BCBS is owed millions, and with continued payment problems for the foreseeable future it will cost ALL purchasers of insurance more to carry the cash flow burden of the VHC non-payment! Get a clue!

  • Bruce Wilkie

    “The revision brings the value of Optum’s contract to $57.3 million.

    Lawrence Miller, chief of Health Care Reform, said he’s confident Optum will deliver, but added there are no guarantees.”
    Really, for $57 million there are no guarantees?
    Who else amongst us would enter into such a huge contract with no guarantee?
    Is there no “non-performance ” clause?
    Even a simpleton would know better.

    This is malfeasance at its worst.
    Peter Shumlin, this debacle is just the latest example of your dereliction of duty.

  • Bruce Wilkie

    Vermont is bankrupt.

    • J. Scott Cameron

      Economically, morally or spiritually?

      • Linda Baird-White

        All of the above

  • JPCook

    Mr. Miller’s comments speak for themselves: $200 million and going up, yet Optum will deliver but no guarantees????

    Morgan True wrote: “Lawrence Miller, chief of Health Care Reform, said he’s confident Optum will deliver, but added there are no guarantees. Once complete, the function will be rolled out in stages, with state workers testing it before customers can use it.”

    Interesting that state workers are not customers as the rest of us, but a special entity. The comment speaks of the cavalier attitude that our Governor and his administration have. After all, what’s a couple hundred million here or there; taxpayers will pony up. Get fined for not having health insurance, hold back money from family needs to ‘pay back premiums’ that may or may not mean coverage, and ignore the incompetence.

    Spending $200,000 (not on delivering health care services but on processing) is beyond belief of what we will accept as Vermonters (a.k.a ‘thrifty Yankees).

  • Bill Dunnington

    Doug Hoffer ought to have a field day with his audit – if the Administration tells the truth and doesn’t hide data….

  • Ralph Colin

    In the real world, what do you think would happen to a CEO and his senior execs if they ran a business – be it public or private – like the Shumlin administration has done in this instance?

    So how long must we wait for this disaster to be terminated along with its proponents?

  • Stephen Saltonstall

    The folks who have been running Vermont Health Connect have proven themselves to be clueless and incompetent. Ultimately this is the Governor’s problem and the Governor’s fault. He needs to step up here, right now, or his administration will lose what little credibility remains. As H.L. Mencken once said in a slightly different context, this state, under this administration, is well on its way to becoming a Boobocracy.

  • Duncan Kilmartin

    Assuming 619,000 Vermonters into $200,000,000=$323.10 per citizen.

    $200,000,000 divided by 10,000 participants=$20,000 per participant!!!!!

    Oh, but who cares…its only taxpayer money, and federal tax money at that.

  • Linda Baird-White

    Who’s on first, What’s on second, I Don’t Know is on third…

    It’s difficult to tell who’s on what(‘s) side these days.

    The Federal Government has a vested interest and has an obligation to monitor federal funds, particularly more so if foul play is suspect.

    Here’s hoping Feds are ensconced, will pull the cord and finally put an END to this Grave Injustice against the State of Vermont and the United States Government.

  • Be sure to send a thank you to Governor Shumloin for all the hard work he did on this. He pushed this(un-workable)plan until after the election.

  • Mark Keefe

    Walter – you might want to take a look at CT’s exchange. It cost less to develop than we have spent already here in VT, they have larger enrollment numbers, annual operating costs are about the same, and it has been functional for some time now.

  • Annette Smith

    Where is all the money going?

    Vermont has an example of a working website with the legislature’s new website: legislature.vermont.gov. How much did that cost?

    I guess we’re all a bunch of chumps. No contract caps, no accountability, paying people $500 an hour…for a system that can’t send out bills or process payments.

    Meanwhile I’m still paying off my $1000+ lab bill for a routine fecal exam that would have cost $75 at the veterinarian, and the other day I got a collection notice for a bill I never received on services rendered a year ago. My response to all this “I’m never going to the doctor again.”

    Yep, great health care system we have. Howard Dean is awfully quiet, I guess it’s because of that deal the past governors have not to criticize current governors.

    • Kathy Callaghan

      “Meanwhile I’m still paying off my $1000+ lab bill for a routine fecal exam that would have cost $75 at the veterinarian..”

      Annette, not to be funny, but I think you should send that bill to Lawrence Miller!

  • Jim Christiansen

    Let’s not ever forget the ineptitude of Mr. Mark Larson and his obfuscation of facts regarding the implementation and effectiveness of VT Health Connect.

    If his actions and leadership weren’t so inept, they might be viewed as criminal.

  • Michael Taub

    This whole thing is beyond crazy. For $200 Million, they could have staffed some clinics, hired some docs, opened the doors, and started taking care of people. How can anyone condone spending this amount of money, and not having any of it go to patient care?

    • Kathy Callaghan

      “How can anyone condone spending this amount of money, and not having any of it go to patient care?”

      Worse yet, and not even achieve affordable health care?

  • Gail Graham

    I happen to know that some employees, with experience, in that dept. have not been adequately utilized.

  • Rick Cowan

    It all began with the administration’s insane decision to hire the same company that screwed up both the Federal and Massachusetts websites. Here’s how Newseek reported on CGI’s firing last fall:

    “Call it the Revenge of Obamacare. Vermont, a bellwether for healthcare reform, has fired the main technology contractor behind its bungled health insurance website, dealing the latest blow to CGI Federal, the company that was axed over its disastrous jobs in making the federal healthcare exchange website and a similarly troubled site for Massachusetts.

    With Vermont still lacking a fully functioning health website more than 10 months after its glitch-plagued debut last October, Vermont officials said late Monday that they were pulling the plug on CGI’s CGI Technologies and Solutions’ contract. CGI’s Fairfax, Virg.-based subsidiary had stood to make at least $83 million from its work for Vermont but will now make just $66.7 million, a figure that incorporates a $5.1 million penalty levied by the state for shoddy work.

    Vermont will replace the CGI unit with Optum, a health-care technology company based in Eden Prairie, Minn., that is owned by UnitedHealthGroup, the nation’s largest health insurer. Vermont officials announced plans in recent months to hire Optum under an emergency, no-bid contract aimed at fixing major problems with Vermont Health Connect, the online insurance exchange built by the CGI unit that is the cornerstone of the state’s compliance with the Affordable Care Act.”

    • Linda Baird-White

      There’s more to the story.

      Ingenix Inc was rebranded as OPTUM Inc.
      Massive Fraud – Litigation with other states.

      “All of this begs the question: Did the Shumlin administration know about Optum’s troubled background and, despite it, allow Vermont to enter into a multi-million dollar no-bid contract with a company that paid hundreds of millions of dollars to settle accusations of a massive fraud? Or worse, were officials completely unaware of the company’s troubled history at all?”

      http://vtdigger.wpengine.com/2014/08/06/randy-brock-frying-pan/

  • Craig Majoros

    Someone’s wallet is fatter.. Vermonters wallets are much much thinner… audit audit..
    It would have been cheaper to put “health Care” as a product on Amazon.com.. heads should roll, but none will.

  • J. Scott Cameron

    Sheer and utter incompetence. In the words of Robin Lunge, “This operations stuff is way harder than policy!”

  • Anne Blake

    So why are all Vermonters just sitting back and letting this happen? This affects EVERYONE in the state because we are the ones who will have to pay for this. I would like to help organize a March on Montpelier and protest what is being done and demand change. (like people in other countries do) Or are we going to sit at home and write comments on web sites or write letters to the editors. Those interested in helping to organize this should contact each other by e-mail.

  • Michael Stahler

    Unreal. This is going to bankrupt the State.

  • Coleman Dunnar

    Vermont Constitution and Impeachment
    Chapter II, Sec. 14 of the Vermont Constitution gives the House of Representatives the power to impeach “state criminals.” Chapter II, Section 57 states that the House can order impeachments by a two-thirds vote of its members. Section 58 states that “[e]very officer of State, whether judicial or executive, shall be liable to be impeached” and that the “Senate shall have the sole power of trying and deciding upon all impeachments.” A vote to convict requires two-thirds of the Senate members present.

    https://www.sec.state.vt.us/archives-records/state-archives/government-history/continuing-issues/impeachment/vermont-constitution-and-impeachment.aspx

  • Amazingly, everyone has the ability TODAY to impact the need for transparency in our state. Sen. Leahy’s recommendation of Attorney Eric Miller to be U.S. Attorney is exactly where the focus should be. Should any of these state contractors run afoul with state or federal enforcement authorities the new U.S. Attorney would have to take a lead in the pursuit of such matters. Mr. Miller would have an immediate conflict as his wife Elizabeth Miller is Gov. Shumlin’s Chief of Staff. Worse, Mr. Miller has spent the last decade working for his healthcare provider clients in a defense firm with no discernable record of being tough on fraud.

    How can Vermonters now say they don’t have a chance to avert yet another disaster? Call up Sen. Leahy’s Office, the White House and anyone you can and let them know Mr. Miller is the wrong candidate for these times.

    Vermont desperately needs transparency and the recommended candidate by Sen. Leahy to be U.S. Attorney should garner huge opposition from the people of our great state.

  • This is the present day Shumlin formula for getting a raise=spend more money, get terrible results, spend more money………
    It’s about time to hold some of the Governor’s friends accountable for their dismal performance.

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