The 30 Percent of the Obamacare Site That Hasn’t Been Built

Insurance companies’ pay is at stake.

Henry Chao, deputy CIO and deputy director of the Centers for Medicare and Medicaid Services' Office of Information Services, testifies during a hearing before the Oversight and Investigations Subcommittee of the House Energy and Commerce Committee November 19, 2013.
National Journal
Clara Ritger
Nov. 21, 2013, 6:22 a.m.

There are three sys­tems not yet built for the Obama­care web­site which are all re­lated to how the gov­ern­ment pays in­sur­ance com­pan­ies: fin­an­cial man­age­ment, monthly en­roll­ment re­con­cili­ation, and risk ad­just­ment.

These three back-end sys­tems make up the 30 per­cent of Health­Care.gov left un­fin­ished as the gov­ern­ment fo­cuses on fix­ing the front end for con­sumers to en­roll, ac­cord­ing to an of­fi­cial with the Cen­ters for Medi­care and Medi­caid. CMS, the Health and Hu­man Ser­vices agency tasked with the im­ple­ment­a­tion of the fed­er­al ex­change, sticks by its state­ment that the vast ma­jor­ity of users will be able to move through the on­line ap­plic­a­tion pro­cess smoothly by Nov. 30.

Their dead­lines for the in­sur­ance com­pan­ies aren’t far on the ho­ri­zon. The fed­er­al ex­change does not need the three miss­ing sys­tems ready un­til 2014, but fin­an­cial man­age­ment was slated to be ready this month, while monthly en­roll­ment re­con­cili­ation and risk ad­just­ment are sched­uled to be com­pleted in Decem­ber and Janu­ary, re­spect­ively, ac­cord­ing to a CMS spokes­per­son.

“CMS is ab­so­lutely com­mit­ted to mak­ing pay­ments on be­half of con­sumers in Janu­ary,” the spokes­per­son said in an email. “We will work with is­suers to en­sure they re­ceive their premi­um tax cred­its and cost-shar­ing re­duc­tions be­gin­ning in Janu­ary.”

CGI Fed­er­al — the con­tract­or hired to cre­ate the on­line fed­er­al-ex­change in­ter­face and re­spons­ible for cre­at­ing the fi­nal three sys­tems — met with CMS of­fi­cials in late Au­gust to pri­or­it­ize which sys­tems needed to be ready for the Oct. 1 launch, and which ex­change sup­port sys­tems could be cre­ated after the en­roll­ment peri­od began.

Henry Chao, CMS’s deputy chief in­form­a­tion of­ficer, told mem­bers of the House En­ergy and Com­merce Com­mit­tee on Tues­day that roughly 30 to 40 per­cent of the site’s tech­no­logy hasn’t been built, but that all of the front-end sys­tems ne­ces­sary for con­sumers to ap­ply for cov­er­age had been com­pleted. While those sys­tems are un­der­go­ing fixes, oth­er back-end sys­tems are still in de­vel­op­ment, but Chao did not spe­cify which sys­tems were not yet ready.

The first un­built sys­tem fo­cuses on fin­an­cial man­age­ment. Be­cause con­sumers can have their tax sub­sidies ad­vanced to re­duce the cost of their monthly premi­um, HHS makes ad­vance pay­ments to in­sur­ance com­pan­ies to cov­er those costs. Fin­an­cial man­age­ment is the pro­cess of stack­ing up those ad­vance pay­ments with the amount of tax sub­sidies ac­tu­ally owed to the in­sur­ance com­pany to cov­er its con­sumers who are eli­gible for sub­sidies.

The second un­built sys­tem is monthly en­roll­ment re­con­cili­ation. Pri­or to the Af­ford­able Care Act, most con­sumers buy­ing in­sur­ance on the in­di­vidu­al mar­ket were only there for a short peri­od of time, if they were un­em­ployed or between jobs. Monthly en­roll­ment re­con­cili­ation is the pro­cess of veri­fy­ing the num­ber of con­sumers covered by an in­sur­ance com­pany each month and ad­just­ing the gov­ern­ment’s pay­ments to the in­surer ac­cord­ingly. It also helps to veri­fy that con­sumers who think they are en­rolled in cov­er­age ac­tu­ally are.

The third sys­tem to be built — the risk-ad­just­ment pro­gram — reg­u­lates how HHS will is­sue pay­ments to in­sur­ance com­pan­ies when they spend sig­ni­fic­antly more on con­sumers’ health in­sur­ance than they ac­coun­ted for when cre­at­ing premi­ums. The risk-ad­just­ment pro­gram will pro­tect in­surers from heavy losses if they take on too many sick in­di­vidu­als and face costs that ex­ceed their rev­en­ue from premi­ums. It also serves as a con­sumer pro­tec­tion to keep the com­pan­ies from hik­ing premi­ums in fu­ture years.

Con­sumers’ premi­um pay­ments to in­surers are handled out­side of the ex­change and will not be af­fected by the in-pro­gress sys­tems, the CMS spokes­per­son said, but the premi­um as­sist­ance paid by the fed­er­al gov­ern­ment to the in­surer is at stake.

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