By Rebecca Adams and John Reichard, CQ HealthBeat

October 25, 2013 -- Federal officials recently handed over the task of overseeing changes to the federal insurance exchange website to a contractor that was part of the team that developed healthcare.gov. The administration expects the site to work well by the end of November.

Quality Software Services, Inc., (QSSI) is taking over for the Centers for Medicare and Medicaid Services (CMS) as manager of the project. The company is an affiliate of UnitedHealth Group, which also owns one of the nation's largest insurance companies.

The choice of QSSI as the new manager of the project is notable because while the company's work on the federal hub has been widely viewed as one of the few pieces of the IT apparatus that worked, the company also created the registration tool that caused many of the bottleneck problems in the first week.

A QSSI official testified at a House hearing last week that its tool to create secure accounts, along with other components of the registration process by other vendors, was overwhelmed by the high volume of consumers. CMS officials had told QSSI just two weeks before the launch that consumers would have to register for an account before they could window shop. QSSI officials said they had largely fixed the volume problem by Oct. 8.

QSSI officials also had the job of overseeing software code created by another contractor—CGI Federal—and had warned the administration of problems with the code.

The fix-it man that the White House tapped to clean up the massive problems with the website, former Office of Management and Budget acting director Jeff Zients, said that a team of outside experts working over the past week has determined the site is fixable but it will take enormous efforts to fix software bugs, improve the speed of the site and patch other problems.

Speaking slowly and forcefully, Zients said in a conference call with reporters, "There are a lot of problems that need to be addressed. But let me be clear: healthcare.gov is fixable."

Zients said that one of the top priorities on a "punch list" of IT repairs is a change to make sure that insurers are getting accurate information on the people who have enrolled.

At a White House meeting this week, 14 insurance executives expressed concerns about the site. Some insurance industry officials have complained since the launch that they are getting incorrect or duplicate information on enrollees.

Updates Promised

Zients declined to detail which other problems are priorities but said the administration would provide regular updates on improvements.
The launch of the website was problematic from the start. Zients said very few people were initially able to create accounts to start the application process but now 90 percent can do that.

At one point only 3 of every 10 potential applicants were able to complete the application and move on to the next step of choosing a plan if they wanted. Zients did not say how many more people are able to get to that point in the enrollment process now or how many people have actually enrolled.

Zients sought to reassure the public that "there's a clear path forward."

Zients said QSSI, as the general contractor, "will prioritize the needed fixes, and make sure they get done. They'll work around the clock with all the key players, including CMS leadership, senior representatives from each vendor, and each contractor."

He promised "a relentless focus on speed and execution to work through the punch list. Each week the site will get better as we make the necessary fixes. And by the end of November, healthcare.gov will work smoothly for the vast majority of users."

So far, about 700,000 people in state-run exchanges and the federal marketplace have completed insurance applications since the Oct. 1 launch. Federal officials have not said how many of those people have gone on to pick a plan and pay the premium so that they could have coverage on Jan. 1. Officials also have not said whether most of those consumers are from health insurance marketplaces in states that built their own websites.

By Rebecca Adams, CQ HealthBeat Associate Editor

October 22, 2013 -- More information about the crisis management effort to clean up the healthcare.gov website emerged Tuesday as the White House said incoming National Economic Council Director (NEC) Jeff Zients has temporarily joined the administration’s efforts to manage the salvage work.

But given the slow pace of improvements so far, there’s no guarantee the website will be performing flawlessly on Jan. 1, when current NEC director Gene Sperling is scheduled to leave the administration and Zients is supposed to replace him.

The administration is facing increasing pressure to fix the website more rapidly. The House Energy and Commerce will hold a hearing on Thursday with four government contractors who have worked on the launch. Health and Human Services (HHS) Secretary Kathleen Sebelius is expected to testify before the full committee on Oct. 30.

The agency is seeking to reassure frustrated insurers, medical providers, and supporters of the law (PL 111-148, PL 111-152) that it is doing all it can. Zients was called in as part of a team to bolster the force that is repairing the technical side of the administration’s top domestic priority.

Zients is an entrepreneur and former Obama administration budget official who was a top leader of the Advisory Board and the Corporate Executive Board from 1996 through 2004. He later founded the investment firm Portfolio Logic LLC before serving as the Obama administration’s chief performance officer and in short stints as the acting director of the Office and Management and Budget. His most recent posting there ended in April.

“We’ve also brought in additional experts and specialists drawn from within government, our contractors, and industry, including veterans of top Silicon Valley companies,” Sebelius said in a blog post Tuesday. “This new infusion of talent will bring a powerful array of subject matter expertise and skills, including extensive experience scaling major IT systems.”

The team also includes “a handful of Presidential Innovation Fellows,” Sebelius wrote, although HHS officials did not respond to requests to identify them by name. Chief Technology Officer Todd Parks is also working intensely on the effort.

Almost 20 million people have visited the website, President Barack Obama said Monday, but federal officials will not say until mid-November how many have enrolled.

One former Clinton administration OMB official said the personnel additions are a welcome change that could improve coordination, but added that if the technology does not improve and enrollment does not pick up, then the administration may consider adjusting some of the health care law policies — including the penalties for not having insurance.

People have until Feb. 15 to buy coverage without being at risk of having to pay a penalty. The administration has said about 2 percent of the U.S. population would be projected to pay the penalty in the first year for not buying insurance. For an individual, the fines are $95 or 1 percent of income, whichever is greater.

“If the administration is unsuccessful in getting enrollment up, they will start to push back the deadlines on the penalty,” said Dan Mendelson, who runs the health care consulting firm Avalere Health. “That will happen only if they can’t get enrollment on track by the end of November.”

Mendelson suggested that the administration could probably change the penalty by executive order.

Washington and Lee Law School professor Tim Jost has suggested that HHS could adjust the penalty administratively by expanding an existing exemption that the administration allows for people with hardships.

For now, Mendelson said, supporters of the law should do what President Obama did in a speech on Monday: encourage the public to sign up through the toll-free call-in center.

“The call center is really their best play right now,” said Mendelson. “Making that work is the most important thing and should be a central priority so there are no doubts people can sign up without accessing the website.”

Rebecca Adams can be reached at [email protected].

By John Reichard, CQ HealthBeat Editor

October 24, 2013 -- Almost 700,000 people have submitted initial applications for health care coverage on state and federal exchanges, a Centers for Medicare and Medicaid Services (CMS) official said last week.

The official also acknowledged that the agency had not done enough end-to-end testing of the computer system that supports the federal exchange site—healthcare.gov—prior to its Oct. 1 launch, blaming the "compressed time period" prior to the opening of the marketplace.

The comments by Julie Bataille, director of the CMS office of communications, were made in the first of what administration officials say will be regular briefings on the effort to correct malfunctions on the federal exchange that have badly damaged the full rollout of the health care law (PL 111-148, PL 111-152).

Lawmakers heard testimony at a recent House Energy and Commerce Committee hearing that the agency had not done sufficient testing prior to the launch. The witnesses included several of the contractors responsible for healthcare.gov. CMS did not send an official to testify, but Bataille didn't dispute the point in the telephone press briefing.

Asked why she termed the period available for testing "compressed" since the health law was passed in 2010, Bataille said "I think when you look at the complexity of the system and all of the pieces that are interrelated in order to work together, obviously we had to put all of those pieces in place over a period of time. I think it is no surprise to anyone that we're operating under a compressed time frame to get all of that done and in order to do the rigorous testing that was needed."

Bataille said she agreed with an assessment by one of the witnesses at the hearing that the application and enrollment functions would be working well enough to permit people to enroll by a Dec. 15 deadline for coverage that starts Jan. 1.

"We are working at this 24–7 and have a team that is looking at this around the clock," she said. "It is getting better every day."

Bataille added that "we know that we are early on into a full six-month open enrollment process and we are confident that consumers will be able to apply and enroll certainly by Dec. 15 for that first coverage that begins in January and then through the full duration of the open enrollment period."

Bataille said the nearly 700,000 applications shows "tremendous interest" among Americans in finding quality affordable health coverage. She clarified that the term "completed applications" means the applicant has submitted information and received a determination whether he or she is eligible for Medicaid, the Children's Health Insurance Program or a subsidy to buy coverage on an exchange, as well as the amount of any subsidy.

Having completed that process the consumer is then eligible to compare plans and pick one. A completed application does not mean a consumer has actually enrolled in a plan, however. CMS officials say they won't release enrollment totals until mid-November.

Bataille added, however, that technical problems are making the application and plan shopping process difficult to complete, "so we're analyzing healthcare.gov's issues and prioritizing fixes in real time."

Republicans at the hearing peppered witnesses with questions about why a "browse" function was not turned on for the launch that would have permitted visitors to get information on what plans are available and their prices without having to create accounts. A big question was whether the White House made the decision.

Bataille said "CMS obviously as we got closer to October 1st needed to prioritize the ability for us to launch live so that consumers could conduct the full online application process, understand what their eligibility determination was to get a tax credit, and then go on to enroll in a health plan. We made a business decision to prioritize resources so that that functionality would be live and available for consumers on October 1st."

Bataille would not shed light on who the administration has brought in from the outside to help fix the site. Her answer implied that they wouldn't be named so reporters wouldn't bother them. "These people are committed to being part of our 24–7 team and we have really asked them to hunker down and work with us to identify these issues moving forward so that is their current priority and certainly what we've asked them to focus on."

By Rebecca Adams, CQ HealthBeat Associate Editor

October 21, 2013 --The problem of churning—when a person's eligibility for Medicaid changes because of an increase or dip in income—may be mitigated in 30 states where some insurers are offering plans to both individuals who get coverage through the new marketplace and those who qualify for Medicaid.

A new analysis by Avalere Health that was recently released shows that in these 30 states, people who are signing up for coverage will have the opportunity to enroll in a plan offered by an insurer that serves both people in the exchanges and people in Medicaid.

The analysis also shows that people in 22 of those states will have more than one plan to choose from by an insurer that serves both populations.

The benefits in the plans for the two populations would not be identical, Matt Eyles, executive vice president at Avalere Health, said in an interview, but they would be similar. Medicaid enrollees would probably get some additional benefits, such as help with transportation costs or lower cost-sharing, such as co-pays, that aren't available for people who buy plans through the marketplaces.

But a major plus for people in those states whose income might fluctuate is that they would not have to switch to a new insurance company, with new rules, networks of doctors and drug formularies.

"Consumers moving from Medicaid in one year and to exchanges the next will be more likely to stay with the same physicians and access the same medications," said Eyles.

That could lead to better health outcomes for patients because there would be fewer disruptions in service and less of a risk that a doctor who is starting to care for the patient might try treatments that have failed in the past.

The Avalere website contains a map showing which states offer similar plans for both populations.

Some states are considering an idea that would go slightly further. Arkansas is using Medicaid dollars to buy Medicaid beneficiaries the same plans that are available in the marketplaces. The state will then use Medicaid dollars to beef up benefits, such as lowering co-pays, for Medicaid enrollees.

By Emily Ethridge, CQ Roll Call

October 24, 2013 -- The Congressional Budget Office (CBO) said last week that raising the Medicare eligibility age to 67 from 65 would save the government $19 billion over 10 years—less than one-fifth of previously estimated savings.

The significant drop in savings is primarily due to CBO's new assessment that the people whose eligibility would be delayed would not have cost Medicare as much as previously projected because they are in better health or have other insurance coverage. In addition, many would qualify for Medicaid or for enrollment in a health insurance exchange, increasing costs in those programs.

The finding may affect how lawmakers evaluate changes to Medicare, especially as a budget conference committee meets and discusses changes to entitlement programs. House Budget Committee Chairman Paul D. Ryan, R-Wis., has included the concept in his budget proposals, and the idea also surfaced during negotiations over how to avoid the fiscal cliff in late 2012.

President Barack Obama entertained the idea of raising the eligibility age during debt limit negotiations in 2011, but many Democrats have said they would not support it.

In its analysis, CBO looked at raising the eligibility age by two months every year, beginning with people who were born in 1951, until the eligibility age reaches 67 for people born in 1962.

Doing so would reduce the deficit by $19.1 billion between 2016 and 2023, with no effect on the deficit in 2014 and 2015, the CBO found. That represents a net effect of a $23 billion decrease in outlays, and a $4 billion decrease in revenues over that period.

While spending on Medicare benefits would drop, those savings would be offset by increases in federal spending for Medicaid and on subsidies for consumers purchasing insurance through the health care law's (PL 111-148, PL 111-152) insurance exchanges, as well as reduced revenues, the CBO said.

Many people who would have otherwise joined Medicare would instead get coverage through Medicaid or through the health insurance exchanges, which would increase spending for both those programs, the CBO found.

By 2023, spending on Medicare would be about 3 percent less under this option than it would be under current law, the CBO found. Medicare spending would be 4.7 percent of the gross domestic product, rather than 4.9 percent.

"CBO projects that roughly two-thirds of those long-term savings from this option would be offset by the increases in federal spending for Medicaid and exchange subsides and the reduction in revenues described above," the office said.

As recently as January 2012, the CBO estimated that raising the eligibility age to 67 would save $113 billion over 10 years.

The drop came from CBO's new judgment that the would-be beneficiaries—those who would have enrolled at age 65—tend to be in better health and are "substantially less expensive, on average" than beneficiaries who are already in Medicare before turning 65.

In addition, many of those beneficiaries between 65 and 67 continue to have employer-based health insurance on their own or through their spouses, and use Medicare as a second payer for coverage.

"Medicare spends much less on Part A services for those beneficiaries than it does for beneficiaries for whom Medicare is the primary payer, and it does not pay for services covered under Parts B and D," CBO found. Part A is for hospital care, while Part B is for physician services and Part D for prescriptions.

CBO now estimates the net costs of those beneficiaries to Medicare, under current law, is about 60 percent lower than what it previously estimated. That results in a much smaller reduction in Medicare spending than previous estimates, and thus lower savings overall.

The office's estimate of what such a change would do to increase spending for Medicaid and the insurance subsidies has not changed much, however.

Raising the eligibility age also would slightly increase the number of uninsured Americans, the CBO found.

Of the 5.5 million people who would be affected by the age change in 2023, about 50 percent would get insurance through an employer, 15 percent would continue to qualify for Medicare on the basis of disability, 15 percent would buy insurance through the exchanges or the non-group market, 10 percent would get Medicaid coverage and 10 percent would be uninsured, the office said.

By Rebecca Adams, CQ HealthBeat Associate Editor

October 25, 2013 -- South Carolina, a state whose Republican governor has criticized the Obama administration's health care policies frequently, is partnering with the Health and Human Services on a plan to shift elderly and frail people into managed care.

South Carolina is the latest state to get approval for a demonstration affecting people who are enrolled in Medicare and Medicaid. GOP Gov. Nikki Haley has opposed the health law (PL 111-148, PL 111-152) and refused to expand Medicaid.

About 53,600 people who are dually eligible for both programs are scheduled to start enrolling in the managed care plans on July 1. The program will be phased in and if a senior hasn't chosen a plan by Jan. 1, 2015, then the state will select one for the individual. By December 2015, a beneficiary's benefits are supposed to be coordinated.

The people who are enrolled will get behavioral health and support services through one health plan that also provides medical care. State officials hope the new program will delay some patients' move into a nursing facility and prevent avoidable emergency room visits by increasing coordinated care through home health care and community-based services.

"This federal approval marks another significant milestone for showing South Carolina's commitment to delivering quality health care to some of our most vulnerable citizens," South Carolina Department of Health and Human Services Director Tony Keck said in a statement. "Currently, these patients must navigate a fragmented system to find the services they need."

Keck said that the pilot project, known as Healthy Connections Prime, "ensures they have access to the right kind of health care services."

The seniors' group AARP praised the development.

"People who are dually eligible for both Medicare and Medicaid often experience fragmented, uncoordinated care that can drive up cost without adding value," Teresa Arnold, state director of AARP SC, said in a statement. "Assuring access to high-quality coordinated care for dual eligibles and finding ways to control their costs without compromising consumer protections" are a priority for the group, she said.

The state will hold a series of forums in November so medical providers can ask questions about the pilot project. The project is scheduled to run for three years.

• CMS information (PDF)