By Alex Nussbaum & Shannon Pettypiece for Bloomberg
The heads of WellPoint Inc. (WLP), Aetna Inc. and at least 10 other insurers met with the Obama administration to discuss correcting flaws in how data from the U.S. health-care marketplaces is transferred to the companies.
“Alpha teams” of technology workers at the insurance companies and in the government “are working side-by-side to correct challenges,” the White House said today in a statement. The administration didn’t provide additional details about the meeting, which included Health and Human Services Secretary Kathleen Sebelius and White House Chief of StaffDenis McDonough.
“The CEOs were able to provide an on-the-ground perspective of how open enrollment is proceeding,” said Robert Zirkelbach, a spokesman for the insurance lobbying group America’s Health Insurance Plans, whose chief executive officer attended the meeting. “The participants discussed the ongoing technical challenges in the federal marketplace and what needs to be done.”
The online exchanges, where people can buy private health plans with government subsidies, represent a potential windfall for insurance companies of $205 billion a year in added sales by 2021, according to a PricewaterhouseCoopers LLP reportlast year. Insurers, though, have raised alarms about faulty data from the federal website since it opened Oct. 1 as part of the Patient Protection and Affordable Care Act of 2010.
“We have a common goal of increasing access and affordability for health care,” WellPoint CEO Joseph Swedish told analysts on a conference call prior to today’s White House meeting. While the exchanges have had a “choppy” opening, WellPoint “remains optimistic” about the long-term.
Swedish, who runs the second-largest U.S. health plan attended the meeting, as did Mark Bertolini, the CEO of No. 3 insurer Aetna Inc. (AET), according to the White House. The chief executive officers of Humana Inc. (HUM), Health Net Inc., Centene Corp. and Kaiser Permanente also were listed as having attended.
The exchange website’s flaws have made it harder for people to enroll in health plans, marring its debut and giving critics ammunition to undercut the law called Obamacare by detractors and supporters alike. The failures may discourage young, healthy, web-savvy consumers whose participation is critical to offset the risk of insuring older, sicker people and to keep the program sustainable.
WellPoint, which covers 35.5 million people, fell 3.3 percent to close at $85.48, and other carriers slipped as well. Swedish declined to give specific enrollment figures for the exchanges or a profit forecast for 2014, said Thomas Carroll, a Stifel Nicolaus & Co. analyst in Baltimore.
“Companies are being just ultraconservative with respect to assumptions on exchange enrollment, the composition of that enrollment and what kind of Medicaid expansion we’ll see,” Carroll said in a telephone interview.
WellPoint raised its profit forecast for 2013, citing lower medical costs and changes from the health law. The stock had jumped 45 percent for the year through yesterday.
Obama yesterday drafted his soon-to-be top economic adviser, Jeffrey Zients, to help fix the flawed federal website, healthcare.gov, which serves 36 states. Fourteen state-run exchanges, including those in California and New York, have performed better.
U.S. Senator Jeanne Shaheen, a New Hampshire Democrat, asked Obama in a letter yesterday to extend open enrollment beyond the March 31 closing date. She said that since some people have tried and failed to enroll, more time is needed to allow consumers additional opportunities to access the site.
Representative Nancy Pelosi, the California Democrat who was House speaker when the health law was passed by the then-Democratically controlled Congress, said she doesn’t support Shaheen’s request.
“We should try to fix what we have, move forward with the deadline,” Pelosi said at a briefing today with reporters. “While there are glitches, there are solutions as well.”
Republicans, whose opposition to the law led to a partial government shutdown, are scheduled to hold two congressional hearings on the website over the next week. The administration has already changed the direction of its rescue work on the site, creating a hit list of upgrades it seeks to check off in the coming weeks while bringing in Zients and other advisers.
Swedish, on his call, said “there are some challenges going through the application and enrollment process. We knew there would be choppiness going in.”
Each night, healthcare.gov is supposed to send a batch of new enrollments to the insurers. Called “834 files,” the data have long been an industry standard in the private sector.
Some of the electronic files are being transferred with missing data or are corrupted to the point where they can’t be opened, according to Bob Laszewski, an insurance-industry consultant based in Arlington, Virginia, and Dan Schuyler, a director at Salt Lake City-based health-care consultant Leavitt Partners.
To fix the files, insurers have to go through them by hand. When thousands of people sign up, as the U.S. is hoping will happen before mid-December, it may create a large backup, the two consultants said in telephone interviews earlier this month.
The White House said today’s meeting addressed problems with the “834” forms and direct enrollment.
“To that end, we have worked with the insurers and the ‘alpha teams’ we jointly established made up of insurers’ technology experts and CMS technology experts, to iron out kinks in both the 834 forms and in direct enrollment,” the White House said in its statement.
In addition to Sebelius, the meeting was attended by Valerie Jarrett, a senior adviser to Obama, and Marilyn Tavenner, the administrator for the Centers for Medicare and Medicaid Services.
Public interest in the new coverage still “appears robust,” Swedish said. WellPoint got 35,000 calls at its service center during the first week after the exchanges opened, double its usual volume, the CEO said. Some 45,000 calls came in the second week.
WellPoint has enrolled customers through the federal exchange, he said, declining to give specific numbers.
Centene, which sells exchange plans in nine states, said yesterday that some of the problems may be clearing up. While some issues remain, the St. Louis-based insurer is “not seeing enormous problems right now” with data quality, K. Rone Baldwin, an executive vice president, said on a conference call with analysts.
Centene (CNC) has adjusted its expectations for early enrollment, seeing “more of a slow ramp as opposed to a big bang,” Baldwin said.
“There is still lots of time,” he said. Still, “as we get into November, it becomes a little bit more concerning.”