Pricing issue jeopardizes federal exchange opening

As the insurance and benefits industries brace for Oct. 1, the Wall Street Journal is reporting that the price determination technology for the federally-run exchanges isn’t consistent. “Government officials and insurers were scrambling to iron out the pricing quirks quickly,” accordingly to the Sept. 19 article.

A total of 36 states are relying on the federal government for some or all of their exchange technology to comply with the Affordable Care Act. The WSJ estimates that 32 million uninsured live within those states and could be affected by the pricing issue if it’s not corrected before exchange opening, though not all are expected to sign up immediately. The other 14 states were able to pass the legislation and create the infrastructure necessary to establish their own exchanges, autonomous of the federal one and essentially separate from its technology.

According to the WSJ, several people closely familiar with the pricing software are saying that it is generating incorrect subsidy amounts for a person enrolling on the exchange. In other words, the premiums are being quoted incorrectly. Tests on this crucial component only began this week, the report also states, though they were supposed to have started months ago.

Just last week Cheryl Campbell, a senior vice president of CGI General, the government contractor tasked with calculating subsidies, testified at a House Energy & Commerce health subcommittee hearing on Capitol, suggesting that her company would be ready for Oct. 1. As EBA reported, Campbell was one of four contractors on Sept. 10 who responded to direct questioning by Rep. Frank Pallone (D-N.J.), stating that her company would be prepared for the deadline. The other three government contractors are working on different elements of the exchanges, including the processing of applications, verification of applicant data and creation of a hub to route information between exchanges and other sources. 

But even some of the states that were able to create exchanges separate from the feds are having issues. In mid-August, Oregon announced that only brokers and navigators would be able to enroll people on Cover Oregon, its state exchange, for at least the first two weeks after Oct. 1. The exchange said the measure was taken to ensure that it can work out the kinks before people can apply directly

Industry consultants and analysts are predicting that there could also be many flaws, come Oct. 1. At the same Hill hearing Brett Graham, partner and managing director of Leavitt Partners’ Center for Exchange Intelligence, gave the following testimony: “While baseline functionality of state-based exchanges will be up and running on Oct. 1, it can be expected that most, if not all, exchanges will experience a rocky enrollment period as they work to overcome both known and unknown challenges.”

He added that “not a single state appears to be completely ready for open enrollment” and his Washington-based think tank’s evaluation is that “there will be technical issues that will impede a consumer’s ability to enroll in a seamless and timely manner.”

The WSJ reports that “CGI has won more than $88 million in government contracts to build the exchanges through next March.”