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Federal Exchange Woes May Take Center Stage as Hill Threat to Health Law Fades

By John Reichard, CQ HealthBeat Editor

October 16, 2013 -- Irony of ironies. Having survived months of attacks from Republicans on Capitol Hill unscathed, is the health law, or at least a big part of it, about to grind to a halt anyway because of technical trouble with the federal exchange?

That marketplace was supposed to begin serving Americans in 36 states when it launched 15 days ago. But many of its would-be customers can't push through its virtual front doors.

Federal officials have offered vague assurances that the troubles are temporary. But they haven't detailed what they think the problems are—beyond saying the healthcare.gov site that's the entry to the marketplace hasn't been able to handle the unexpected crush of customers. Officials don't talk a lot about specific design fixes or software patches. That fuels the speculation that they don't know exactly what's wrong. They've offered no predictions about when people will be able to easily navigate the site to shop for plans and enroll in them. And there's no obvious go-to person heading up the effort to fix things.

Increasingly, there's talk that federal officials will have to shut down the marketplace for some period of time and relaunch it.

David Brailer, who served as the federal health information technology coordinator in the Bush administration said it's "a coin flip" whether the current approach of making small fixes is going to get things functioning smoothly. He said he knows the option of temporarily shuttering the federal exchange is "on the table" in administration discussions of the problems.

"I know the option's being discussed. I don't know what they're going to do. Honestly I'm not even sure that they know what they're going to do,'' he said. "If they can't find some easy fixes they'll have to shut it down soon."

But a Health and Human Services (HHS) official denied the administration has plans to take down the site. "We are not planning to shut down the exchange," the official said in an email last week. "We are taking the application function off line at night for a few hours from time to time for maintenance work though."

Brailer, now the head of Health Evolution Partners, a San Francisco-based investment firm, says it's almost "self-evident" that a temporary shutdown is being contemplated. He asserts that there are fundamental architecture and design problems with the federal exchange, and that "any techie knows that if the architecture is wrong, you're not going to be able to tweak it.

"You can't just fix little pieces of it,''he explained "They've tried that. That's already been done. They've been working 24 by 7 to do that with no effect. They have a more fundamental problem. The whole way it's designed is wrong. This is a building where the elevators don't work and you're not going to fix it by washing the windows."

Brailer added that if the HHS has to redesign the architecture of the site they won't be able to relaunch it quickly, "It's not a short period of time."

When asked whether HHS is getting a handle on things, insurance industry consultant Robert Laszewski said: "They are not. As of yesterday, when I did my weekly review of carriers, the report was that enrollments are still trickling in at the same rate they were in the first week—like 20 to 50 new contracts per major market share carriers per state per week. Extrapolating those conversations, I'm very confident the 36 [federal exchange] states enrolled about 5,000 covered lives the first week and the second for a total of 10,000 covered lives in 14 days."

According to a Sept. 6 internal HHS memo to Kathleen Sebelius—obtained by the Associated Press—federal officials estimated that in the first month of open enrollment nearly 500,000 people would sign up for health coverage.

According to the AP, the memo included a state-by-state breakdown. For example, the AP says, California reported processing 16,300 applications as of Oct. 5. The HHS memo projected 91,000 people would enroll in the state by the end of the month. Maryland reported 566 applications processed as of Oct. 6, compared with 10,500 projected for the month by the memo.

At least two states have already exceeded the memo's projections, according to the AP. Kentucky reported 18,351 applications processed as of Oct. 9. That exceeds the memo's projection of 15,400 for the month.

And Washington state reported 24,949 applications processed last week, a little more than the memo's October projection of 23,800.

Many Major Issues Need Fixing

Laszewski said that the Centers for Medicare and Medicaid Services (CMS) is saying that cleaning up "834" transmissions—the transfer of enrollment files from exchanges to insurers—is their highest priority. "My problem with that is that they must have a dozen 'highest priorities' given the mess they are facing.

"Trying to fix this mess on the run is like trying to fix an engine while driving down the road," Laszewski said. "If they would just fess up, shut it down, and get it brought back online when it works they would be better off. Sure they would take a hit from Republicans. But that would last a couple of news cycles. Now they are dying by a thousand cuts."

Laszewski also said, "My belief is that all of the secrecy we have suffered with from CMS over the last three years continues. If they had been open in the first place a lot of this might have been avoided as carriers and IT experts called them out on what they were going. The secrecy continues."

Such criticisms might seem unfair in an environment when Republicans have seized on every implementation hiccup and used it as an argument to halt the health law. However, neither Brailer nor Laszewski have a particularly partisan reputation.

Former CMS Administrator Mark McClellan said it's difficult to tell whether CMS is getting a handle on things. "It's one of those things that's hard to tell while the fixing is going on," he said. "There's not one thing you can do and 'boom, the problem is fixed.' It's a whole series of fixes that are necessary. For the whole experience to work each of the pieces has to work.

"It's still just the middle of October," McClellan added. "I don't think people are going to be focusing on this until November. There's still a bit of time left."

McClellan said it's difficult to know whether CMS will be able to get the website fixed quickly enough to get large numbers of people enrolled early on. "I'm sure the staff is working really hard," he said. "There are always work-arounds. The ultimate work-around is paper enrollment or enrollment directly through health plans and there are a lot of health plans and organizations that are committed to finding ways to get people who want coverage enrolled. The bigger challenge is making this easy for everyone who might want coverage not just those who are enthusiastic about signing up right away."

John Gorman, a former CMS official who now heads the Gorman Health Group consulting firm, said "I suspect the administration's not talking about these things to avoid giving [Tea Party supporters] a talking point when they're about to get rolled on the Hill. There is a ton of fix and workaround activity going on though, so we hear."

Keith Fontenot, who recently left his post at the top health budget official in the White House Office of Management and Budget, said "I would imagine all the people that can are working flat out to improve the system. In a big complex enterprise like this, and at this early stage, I don't see an alternative to taking the issues in segments, diagnosing the problem, developing a fix, testing it, and implementing it.

"I heard a surgeon say once, 'there is nothing surgery can't make worse.' I think the same might be said about computer code; they have to be fast, but they also have to be deliberate lest they create more problems."

For his part, Brailer wasn't predicting the exchange or the health law (PL 111-148, PL 111-152) would fail despite the serious problems he sees now with the federal exchange. "My prediction is in two years no one will remember this," he said.

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