MONTPELIER — The Shumlin administration is working with the state’s health insurance carriers to reconcile millions of dollars in billing discrepancies resulting from Vermont Health Connect’s lack of key functions.
The reconciliation process has been ongoing for about three weeks, according to Lawrence Miller, Gov. Peter Shumlin’s chief of health care reform. Because automated functions on the state’s online insurance exchange are not working, the state’s carriers — Blue Cross Blue Shield and MVP Health Care — have billed out millions in premiums that have not been paid.
“It’s all because the automated change of circumstance functionality isn’t working,” Miller said.
The state worked with carriers to create contingency plans and develop manual processes to ensure people received coverage when the exchange launched in October 2013 with the automated functions in place. But the nature of those processes did not allow information to be easily shared between the state and the carriers.
Miller said the state focused its attention on signing people up for health plans and manually processing so-called change of circumstance requests for those who needed personal information change in order to receive benefits. Left at the back of the line were requests that would have resulted in the termination of coverage.
“They were not necessarily processing terminations or cancellations as a very high priority,” Miller said.
As a result, the insurance carriers in many cases were not informed by the state that they should stop billing customers. That left the carriers with gaping holes on their own ledgers that must be addressed through a laborious process of comparing records with the state. They are now working with the state and its contractors to determine if they are really owed money for the unpaid premiums on their books.
There is also a pool of money collected by Benaissance, a health care benefits administration firm the state uses to process payments, that has not been distributed. The money is the result of premium payments sent in by customers but without enough information to apply the credit to an account. There are at least “a few hundred checks” in that category, according to Miller.
All sides are hesitant to definitively state how much money is at stake. But Miller said at one point BCBS thought it could be as high as $4 million.
“I hesitate to quantify it until they’ve actually gone through the work,” Miller said. “It represents maximum exposure because if there are claims in there where people were covered and they do actually owe money, then we’ll go ahead and work with them to collect that.”
Cory Gustafson director of government and public relations for BCBS, said the company does not have a clear idea of how large the discrepancy is.
“It continues to change and the reconciliation process changes that even further,” he said. “I wouldn’t use that math. I know that that number has been up and done and all over the place.”
Miller said about 70 percent of the cases that have been resolved are the result of customers terminating their policy without the carriers knowing. If that percentage were to hold for all of the cases in question, the carriers could still be owed a significant amount of money.
“There is a chance,” Gustafson admitted.
The amount of money in question is significantly higher for BCBS than it is for MVP. BCBS sells more insurance plans in Vermont, but it also had a policy of keeping those plans on the books rather than risk mistakenly terminating them.
Miller said BCBS was more willing to take on risk to avoid creating unintended coverage gaps for customers. MVP, meanwhile, canceled policies more freely to avoid such a risk.
“They didn’t want that exposure. We had a bunch of people that we had to intervene with — hundreds — where MVP didn’t check with Vermont Health Connect,” Miller said. “They just did it.”
Gustafson said BCBS was looking to ensure the smoothest transactions possible for its customers, and therefore did not terminate policies unless there was very clear reason to do so.
“From our perspective, it’s all about the members,” he said. “Every choice we’ve made, every contingency, has been with the perspective that it will be better for the people that are buying plans on Vermont Health Connect. How we feel about it is irrelevant,” Gustafson said.
Still, he said clearing up the discrepancies remains a priority for BCBS. And he said the company is counting on the Shumlin administration to deliver on its promise to complete work on the automated systems the exchange now lacks to avoid a continuation of the existing problems.
“Any time there’s accounts receivable Blue Cross Blue Shield takes it seriously,” Gustafson said. “To us, our accounts receivable balance really symbolizes how important it is for the governor’s plan to be implemented to get to a fully functional exchange. The exchange isn’t going anywhere.”
The administration has said those automated functions will be in place by the end of May. If not, the administration has said it will abandon the state exchange and transition to one managed by the federal government.
Miller said the next release of the website is expected by May 30, at which time he expects all of the 2014 billing issues to be resolved, as well as any new ones created this year.
“It all has to be wrapped up before go live,” he said. “We want a clean and stable data set.”
For now, the carriers and the state are working together to resolve the issue. Both the state and the insurance carriers said they were aware that issues were likely when the exchange launched in October 2013 without all of the automated functions working.
“We all knew we were going to have to go through the reconciliation process and we all knew it would be a bear the first year. The automated reconciliation stuff isn’t set up yet and we have all these manual processes,” Miller said. “This is not a dispute between the state and Blue Cross right now, or MVP.”
Some “differences of opinion” could emerge once the reconciliation process is completed if the carriers’ books are not balanced, Miller said.
“If there is some bad debt at the end of that process it’s going to be a question of what’s the expected rate of bad debt accumulation at a carrier,” Miller said. “We shouldn’t cover what’s normal.”
MVP spokeswoman Jacqueline Marciniak issued a brief statement Tuesday,
“MVP Health Care is committed to working with exchange officials to reconcile discrepancies and develop a solution that is mutually beneficial to our members and to the state of Vermont,” she wrote in an email.