Vermonters for Health Care Freedom is a 501 (c) (4) organization of individuals and businesses who are deeply concerned about health care reforms being implemented by Governor Shumlin, and seek patient-centered reforms that protect the traditional doctor-patient relationship.

Health Care Reform Newsletter #39

Vermonters for Health Care Freedom continues our newsletter series on Vermont’s health care reform efforts. We aim to provide useful information to our client businesses and newsletter recipients; to inform our readers about Vermont’s efforts toward a “single payer” health care system and the problems inherent in such a system; and to address related health care matters at the federal and state levels.

More Evidence of State’s Failed Leadership
The Optum Report Is In

The state’s most recently hired health exchange contractor, Optum, has issued a highly critical report, citing a near total lack of leadership by the state as the cause of the failed health insurance exchange. The 116-page Optum report, issued last week, reads like a bad report card for the Shumlin administration.

From the Governor’s erroneous decision to use political appointees to build the exchange instead of hiring competent professionals, to the failure of those individuals to manage the project or hold the contractor CGI accountable, the picture painted by Optum is one of major incompetence by state officials and a runaway vendor CGI, that racked up millions of dollars in charges with little or no oversight by the Shumlin administration or the legislature.

The Optum report shows that essentially, prior to the release of last week’s report, no one in the Shumlin administration or the legislature knew who was running Vermont Health Connect, who was responsible or accountable, what had been done or not done, what the project budget was, how much VHC was really costing, what functionality had been delivered, when the missing functionality would be delivered, or what CGI was actually doing during the past year.

CGI repeatedly missed deadlines and failed to deliver critical functionality. Yet, as a parting gesture, the Shumlin administration signed a termination agreement with CGI, on behalf of Vermonters, promising not to sue or recoup any of the $67 million paid for missing system functionality, lack of work documentation, non-delivery of status reports, and lack of a project budget.

So after a year of misery and $67 million later, the state has agreed to waive all rights to sue CGI for any failures or any breaches of the system – and has agreed that neither party will assume fault for disastrous performance of Vermont Health Connect. In other words, the administration has struck a deal with a private contractor to withhold the details of its’ greatest management failure.

As you read Optum's findings, consider whether you would have promised not to sue CGI.

Among the report’s findings:

  • “Neither (the state) nor CGI believe they are accountable for project outcomes”, the report reads, nearly a year after the launch of the exchange. “The project’s program management structure and processes contributed to the State of Vermont’s (SOV) lack of project ownership and CGI’s lack of accountability”.
  • However, the project management plan (PMP) was “prepared by CGI and signed-off by SOV”. “Ownership of the project and its outcomes by SOV is limited at best. CGI took control of the project and the SOV ceded ownership”. 
  • “As CGI disregarded processes in the (PMP), the project’s lack of control and ownership impacted the ability of project teams to meet the project’s original and/or revised milestones”.
  • “Key governance principals (sic) for establishing/maintaining SOV ownership and control…were not applied”.
  • “The project’s aggressive schedule necessitated increased collaboration and rigorous processes. Instead, CGI proceeded with project activities without the appropriate SOV participation…”
  • “A project-specific cost/budget management plan does not exist. Because of this, the overall costs are very difficult to define and manage”.

Optum also found that, “….nine months after the implementation of Vermont Health Connect (VHC), several critical functional requirements including Change of Circumstance, Renewals, and SHOP, and over 2,500 non-functional requirements specified in the (CGI) contract, have not been met.”

“Additionally, there is no agreed-upon plan for delivering the missing functional or non-functional requirements”.

“Each of the following Project Management processes….is a ‘High’ risk – Immediate corrective action is required”

  • Schedule Management - a current comprehensive program schedule does not exist. CGI has not fulfilled their contractual commitment with regard to this portion of the contract.
  • Cost ManagementA cost/budget management plan for the project does not exist.
  • Quality Management – “Of 48 deliverables, 17 are ‘approved…..This highlights both a quality and process problem.
  • Scope Management – Approximately 130 (project) Change Requests (CR) are not approved, while 10 are approved. There’s no agreement on pricing with CGI, which does not allow for appropriate cost estimation for each CR”.

In addition:

  •  Staffing Management – “A detailed Staffing Management Plan is described in the (project management plan) yet not followed” “The staffing management plan does not include SOV resources”.
    CGI was responsible for providing a staffing plan and updating it monthly for VHC. No updates have occurred since the end of 2013.
  • Communications Management – CGI’s “report communicates project activity, but not the status in context to the plan. There are risk indicators flagged “red” without corrective actions noted”.
  • Risk Management – “Risk management does not appear to be effective”.
  • Performance Management – “A deliverable tracking process is described in the Plan but not followed. A Performance Management plan is specified but not followed”.
  • “Examples of CGI commitments not met include" – (monthly progress tracking reports); (performance of tasks against the schedule); (task progress reported to SOV through weekly updates).

“Each week CGI will update the percent complete on tasks”. “Review of these commitments with CGI’s leadership team indicated that they were not familiar with them”.

Optum found that the project’s management plan, prepared by CGI, does not provide a sufficient method for controlling the project. It does not distinguish CGI’s accountability for performing activities, from the state’s project ownership responsibility. The project lacks the appropriate state oversight. Yet VHC signed off on those contract terms.

The report states, “The majority of the required documents to be produced by CGI are incomplete or not approved by SOV”. “KPIs (key performance indicators) have not been defined nor reported by CGI. Without these KPIs the real status of VHC is not fully known”.

The Optum report shows that either VHC was totally unaware of CGI’s many performance failures throughout the entire work period, or worse yet, they were not telling anyone. If VHC management was telling the Governor, then the Governor significantly mislead both Vermonters and the legislature over a long period of time. It has become clear that the Vermont legislature was kept out of the loop.

If VHC management was not disclosing CGI’s failures because they did not know, which appears to be the case, then they have failed miserably to do their jobs, and should be replaced immediately.

Adverse Impact on Vermonters

The Optum report says that the “change of circumstance” (CoC) functionality of VHC has yet to be enabled. These circumstances include a job/salary change, marriage, a new baby, or divorce. Any of those situations can lead to a change in the premium tax credit that Vermonters receive though VHC. Most Vermonters using the exchange have qualified for a premium tax credit or subsidy. This in turn can mean that a person receives too much of a tax credit and will have to pay it back come tax filing time. The lack of a functional CoC system makes it difficult, if not impossible for Vermonters to report alterations in their circumstances that would help them avoid getting too much or too little in tax credits.

Right now change reporting has to be done manually on the phone with VHC staff. It has been widely reported that many Vermonters are spending hours on the phone, getting incorrect premium statements or double premium statements, not getting an insurance card, getting duplicate insurance cards, showing up at the doctor’s office and finding they have no insurance, and on and on.

By contrast, here is how it works for states that use the federal exchange. On the HealthCare.gov website you log into your account, click on the link for your existing application, and choose “Report income or life changes”, and make the change. That is how simple it is for our neighbors in New Hampshire who chose the federal exchange.

The Shumlin administration now says that much of the CoC backlog has been cleared up by Optum. But what happens to Vermonters whose change of circumstance happened months ago? The IRS says that when you file your income taxes next year, you will have to subtract any advance payments you received during 2014 from the amount of the credit calculated on your tax return. If you received more than you were eligible for because of an inability to make a change of circumstance timely, it will result in an increase in the taxes you owe. There were approximately 13,000 CoC’s just in the backlog as of June 2014. Clearly there were more to start with.

The change of circumstance issue won’t be fixed even by year-end, according to VHC Chief Lawrence Miller. That means Vermonters will still be unable to update their policies online to avoid an unpleasant tax surprise that could come early next year. None of the remaining website functions will be fixed before the end of the open enrollment in February 2015, either, says Miller. These include automated coverage renewals, and allowing small businesses and their employees to enroll through the website.

The Optum report found that, “The SOV’s decision to communicate (premium assistance amounts) as the member portion of the premium…results in scenarios where carriers will interpret an incremental payment as a partial payment and mark the consumer as delinquent”. “Missing enrollment reconciliation is not occurring”.

Miller also said that the exchange when completed will meet federal standards, but might not end up with all the design and automated features that Vermonters would like. That, after two years and $171 million dollars spent, is a travesty.

In Closing

While the Shumlin administration was woefully unprepared to take on the creation of Vermont Health Connect, it bears remembering that the Governor refused to consider the simpler alternative of joining the federal exchange, which would have saved taxpayers nearly $171m.

New Hampshire has spent a mere $8m with none of the headaches that thousands of Vermonters have had to endure. New Hampshire has also increased the number of carriers who are selling insurance though their exchange, enhancing competition and leading to lower premiums, while Vermont’s choices have dwindled down from 18 to 2, due to VHC’s incompetence.

The Governor and the Vermont legislature insisted on building a state exchange so they could turn it into a theoretical single payer system in 2017. It does not appear that in making this decision, they placed the interests of Vermonters ahead of their own political ambitions.

It should also be noted that while the administration did release the Optum report, many areas were blacked out by the state prior to the release. Most notably, under “Security Review and Assessment”, the first “High risk” finding by Optum is blacked out. This is of great concern. What is the risk? Why is it blacked out?  

"It amazes me to hear politicians say the present Vermont health care system is completely "broken" when by most national measures Vermont's health and healthcare always come out at the very top of the 50 states. Having served nearly thirty years in a solo orthopedic surgical practice involving call every night and 7 day a week coverage for Gifford Medical Center I proudly treated every patient whether they could pay or not - some even at home. My colleagues, nurses and staff at Gifford Medical Center equally serve their fellow Vermonters 24/7 without regard to ability to pay. It denigrates us all when our efforts are so callously categorized for political advantage in pursuit of the Holy Grail of a single payer which may or may not help solve the problems of health care funding."

Dr. William E. Minsigner

  • Employers pay 40% of the healthcare costs – and were never consulted.
  • An appointed board will determine benefits, coverage, funding, deductibles, co-pays, premiums, technology, provider payments, etc.
  • Under this law, you will not be allowed to purchase insurance outside of the Vermont Health Benefit Exchange.