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.

Vermonters for Health Care Freedom Newsletter #50

Vermonters For Health Care Freedom is a reliable source of candid and insightful critiques of Vermont’s health care reform efforts. Through research and our own network of experts, VHCF regularly updates Vermonters on the state’s latest health care reform efforts. VHCF is proud to have played a significant role in exposing the pitfalls of a government-run single payer health care system, which fortunately met its demise at the end of 2014. In 2015, we focus on the impacts of the Shumlin administration’s continued push for a government-run health care system. We keep our readers informed about the facts that even the Shumlin administration would prefer not to reveal. No other Vermont organization is dedicated solely to this work.

Brian Williams

Damaging Emails Reveal How Deficient VHC Really Is

Quotes of the Week:

"BCBSVT would like some sense that the $9 million 2015 receivable can be accounted for across all of the above buckets."
Blue Cross to Vermont Health Connect on March 5, 2015

"Understanding that a renewal notice may be sent to us weeks (or maybe longer) after customers receive an updated invoice, we would like to know what scripting your call center staff will be using to explain the situation to customers (i.e., why do I have an updated bill, but BCBSVT does not have (my) enrollment? When will Blue Cross be sent my enrollment?"
Blue Cross to Vermont Health Connect on March 5, 2015

"Barely half the documents processed by some of the temporary staff passed quality checks."
State Auditor Doug Hoffer, on the change of circumstances backlog work by Optum customer service reps billed at $38/hr.


This is Part 1 of a two-part series. Part 2 will follow on Wednesday, 4/29.

VHCF Uncovers Internal VHC/Blue Cross Emails

Vermonters for Health Care Freedom (VHCF) has obtained copies of internal letters and emails between Vermont Health Connect (VHC) and Blue Cross and Blue Shield of Vermont (BCBSVT). The letters cover the period December 2, 2014 – March 12, 2015; the emails cover from March 3rd through March 27th, 2015. Although DHVA has only partially complied with our public records request, we are reporting on what we have so far.

The communications confirm State Auditor Doug Hoffer’s VHC audit findings, and go deeper to show the inner workings of a foundering VHC. VHC rushes to put out fires in nearly every aspect of the exchange operations - and yet is unable keep up. Work is either too little, too late, or not done at all. VHC has a myriad of vendors performing critical functions, yet it lacks the time, resources and/or expertise to manage them. Exchange vendors apparently do not have sufficient committed resources to do two things at once and have to stop working on one function to attend to another. VHC cannot deliver accurate enrollment info to BCBSVT, and they have no inner controls to make that happen.

The correspondence also shows a consistent pattern of Blue Cross taking the lead to manage VHC, rather than VHC managing the exchange. This is eerily reminiscent of 2014 Berry Dunn report finding that vendor CGI was managing VHC instead of the other way around. VHC appears once again unable to manage the exchange. As Auditor Hoffer points out, VHC has up changed up players and management structures multiple times over the past 1 ½ years and the exchange still cannot function.

In the following letters, Blue Cross as VHC’s major insurer exerts their influence to try to determine which Vermonters they are covering, and to get paid for providing that coverage. Excerpts from the communications (some italics/caps/underlines ours):

December 2, 2014: BCBSVT President and CEO Don George to VHC Health Care Chief Lawrence Miller:

"As of the end of October, BCBSVT’s accounts receivable (A/R) balance due from VHC was $6.7M, with $1.3M past due 90 days. At present BCBSVT is not confident that its VHC customer A/R balances are accurate and/or collectible; and as such, has recorded an A/R doubtful reserve of $2.6M.

Meanwhile, BCBSVT must close out its corporate books as of 12/31/14 and cannot do so without accurate data from VHC. BCBSVT tells VHC that it must have, by dates certain, “a reliable, week-by-week schedule, along with final completion date by which its backlog of “in-process” 2014 changes in circumstance (CoC) will be fully retired, and changes transmitted to BCBSVT."

BCBSVT also asks that "VHC provide a date by which an accurate number of backlogged change of circumstance, not currently in process, will be known. This population reflects changes which Optum did not complete by 11/15, and as we understand, must be individually reviewed by VHC to determine whether or not processing is actually required."

VHC must also, "provide a complete and accurate list of BCBSVT customers whose 'withdrawn' account contains a past-due balance which VHC has not been reporting to BCBSVT as past due, nor including the past due balance. . ." BCBSVT ends by listing certain control enhancements that VHC needs to perform at a minimum by early January 2015.

December 15, 2014: VHC Skowronski to BCBSVT Don George: VHC does not respond to BCBSVT’s December 2 concerns, but admits there is a backlog of "approximately 5,000 2014 CoC requests that have not been processed." There is an additional backlog of approximately 2,500 2014 CoCs awaiting process. The State is finalizing its testing of a 2014 workaround. VHC states, "Given resource constraints and a continuing review of outstanding CoC requests, it is not possible to provide a week-by-week schedule at this time."

VHC is so busy catching up that they can’t take the time to plan – even a few weeks ahead. Instead of fixing problems, panicky workarounds are the norm, consuming time and resources needed to do the necessary work. 

December 19, 2014: BCBSVT George to VHC Miller: George tells VHC that just over the past month, the 2014 amounts VHC owes BCBSVT have increased from $6.7m to $8.5m, and the past due over 90 days has increased from $1.3m to $1.6m. George says the increasing balances are due to the following:

  • Customers are not being properly billed for premiums
  • Payments are not being posted correctly to customer accounts (by VHC) and/or
  • remitted fully to health plans
  • VHC's underlying enrollment information, which drives monthly billing, is not accurate and/or not communicated to BCBSVT, resulting in inconsistencies between our two systems."

George states, "None of these situations is sustainable and customer impacts will continue to grow until effective and reliable business processes, such as those outlined in my December 2 letter, have been implemented."

January 23, 2015: BCBSVT George to VHC Miller: George tells Miller that "since, to date, a monthly reconciliation of VHC data, billing vendor data and health plan data has not been incorporated into (VHC’s) routine processing and controls," George believes that BCBSVT must perform their own audit to assess VHC's controls over enrollment, billing and payment processes. BCBSVT formally requests a 2014 audit by KPMG which BCBSVT will fund, and asks for a reply no later than February 2.

February 2, 2015: VHC Miller to BCBSVT George: VHC declines BCBSVT’s audit request but reveals that several other audits are being performed on VHC’s systems that focus on the same areas. These include the State Auditor’s audit, the Federal Office of the Inspector General (OIG) audit covering the control environment and a CMS external audit. Miller says that the CMS auditor is required to assess “whether (VHC’s system) controls will provide reasonable assurance of achieving effective and efficient operations” and “reliable financial and performance reporting”.

Auditor Hoffer has confirmed that these two audits are underway. The OIG audit was contractually due on April 20, 2015. VHCF requested a copy and was told that the results will not be released for at least two weeks after the due date. This delay may result in the legislature leaving before they see the report.

February 6, 2015: Letter BCBSVT George to VHC Miller: George reiterates VHC's failures: ". . .throughout 2014 customers received bills which did not reflect their intended coverage, coverage changes were significantly delayed and/or not communicated to health plans, processing errors were not recognized nor fixed promptly, delinquency records were incomplete, or in some cases inaccurate, and customers were not consistently billed for amounts owed for their coverage."

George continues, "On behalf of our customers, these customer impacts cannot continue. . ." He reminds VHC that, "As you know, per 45 CFR ss155.400(d) (federal law), VHC is actually required to conduct such reconciliations (of enrollment and premium payments) no less than monthly, however, none has occurred since the VHC launch in January 2014. "

George says that, "BCBSVT has serious concerns that many of these aging customer balances have become uncollectable, since past due amounts have not been consistently billed to customers, and many customers did not even know their true 2014 monthly premiums (due to VHC's inability to timely or accurately process enrollment and subsidy eligibility determinations.)." George states that BCBSVT will not try to collect these past due premiums from customers and instead, "intends to invoice VHC for these past due amounts."

In closing, George says, "Further, as VHC discloses its future plans, we hope it will be fully transparent as to the status and significant downstream impacts of the current-state Exchange, which are clearly unsustainable for all involved, including customers, health plans, and VHC itself."

March 5, 2015: BCBSVT George to VHC Miller: Apparently no satisfactory response from VHC. “We are following up on our February 6 letter to express heightened concern regarding the downstream customer and financial impacts of (VHC’s) renewal. George goes on to say that as of March 5, fewer than 5% of customers who either changed their health plan or had a change of circumstance since January 1, 2015, had been processed by VHC.”

George says, “In all, more than 12,000 customer households have a 2015 change pending….” “In the meantime, affected Vermonters do not have the coverage they expect, nor are they being billed for the coverage they selected.” George says that many customers had not received an invoice since November 2014, which created anxiety and left them wondering if they had even coverage – particularly when being told by VHC service reps to make no payments until they received an invoice.

BCBSVT says it will bill VHC some $3-$5 million of 2014 past due and uncollectable premiums as of 3/31/15. Further, George continues, "By comparison, as of today, accumulative, past due 2015 premiums amount to $9 million, and continue to grow."

BCBSVT said they would not cancel members' coverage, but that payment must be made and gave VHC several payment options.

March 10, 2015: VHC Miller to BCBSVT George: Miller reports that the 2014 backlog (and BCBSVT’s financial exposure) is lessening because VHC can now devote the necessary Optum resources to work through them. The 2014 enrollment processing took a back seat to working on the 2015 open enrollment. Now VHC can shift those resources back to the processing of 2014 change of circumstances.

It is clear that VHC cannot perform the work of the exchange with current vendor resources. Optum’s customer service reps who bill out at a minimum of $38/hr. are pulled off one assignment to do another when a crisis arises. Given the huge cost of VHC’s many vendor contracts - and the fact that from 2015 forward Vermont must foot the annual cost of running the exchange - does the legislature have the appetite to pump any more taxpayer dollars into trying to make this exchange work? No business can operate effectively the way VHC is operating now.

BCBSVT/VHC Emails: Internal emails of weekly meetings show that things were looking a little more hairy on the ground. Due to length, we provide a sampling of key points:

March 5 Meeting: Discussion of the $9m in 2015 premium that VHC owes BCBSVT

BCBSVT:

  • When will you (VHC) know the number and $$ of 2015 payments at Bennaisance? Count = 2,958 customers; $757k.
  • Other items contributing to BCBSVT premium shortfall:
    • Unallocated 2015 checks
    • CoC changes in process (1,800) – customers have been billed for new amount but enrollment change hasn’t been sent to BCBSVT. BCBSVT asks for a list of these
    • Customers not yet invoiced (by March 2015 for January 2015)
    • "BCBSVT would like some sense that the $9 million 2015 receivable can be accounted for across all of the above buckets."
  • BCBSVT: Customers with 2015 past due amounts that are not being invoiced need to start receiving regular past due statements, and appear on dunning report. How soon can this start?
  • VHC: VHC does not have resources to work on this item, without stopping work on 2014 statements.

March 13 Meeting: BCBSVT asks for the same updates again. A new issue emerges: Customers not yet invoiced: the number is higher than expected, says BCBSVT.

March 18 Meeting: BCBSVT pushes VHC to "send a notification to subscribers who are having their 2014 coverage ended retroactively." "As you (VHC) know from the call on Friday, you have no way to know if the termination was at the request of the subscriber or if it is due to lack of payment. In either event it is important that subscribers are notified and you agreed to send notification as soon as possible."

Now that Optum contracted staff is no longer doing open enrollment, VHC is working down the 2014 enrollment and premium backlog. BCBSVT urges VHC to send notices to customers impacted by the backlog asap. BCBSVT wants to re-start the dunning process for 2015, saying "since the status of accounts is still very much unclear due to the (2015) backlogs at VHC, we suggest the dunning begin again for April."

March 27, 2015 Meeting: The 2014 backlog is finally worked through. No further information has been provided by DVHA on whether customers have received explanatory letters, the status of the current 2015 backlog or of the $9m owed to BCBSVT.

In Summary:
The legislature needs to quickly decide the future of Vermont Health Connect. After 1 ½ years it is not looking good for Vermont to continue its state-run exchange. The IT issues appear insurmountable. Moving to a federal exchange or federal partnership would allow Vermont to use the federal IT system.

VHC has multiple IT vendors performing separate but essential exchange functions. Benaissance handles premium payments, Maximus handles enrollment, etc. Efficient management and coordination of these vendors is critical for successful end-to-end processing of customer health plan coverage. Due to its dysfunction, VHC cannot perform monthly reconciliations or financial reporting.

There is a consistent pattern of VHC’s business partners (first CGI, now Blue Cross) taking the lead to manage VHC, rather than VHC managing the exchange. VHC has restructured itself multiple times over the past 1 ½ years, but the problem persists.

Two Federal audits are now in process on VHC’s systems and controls: the Federal Office of the Inspector General (OIG) and a CMS external audit. The audit results may not be favorable. The OIG audit was has been delayed by at least two weeks. The delay may result in the legislature leaving before the report is issued.

There is a real question of whether VHC is running out of cash. By one estimate, VHC has only about $29m left of the $198.7m provided by the Feds. VHC owes Blue Cross $9m for 2015 alone, plus back money for 2014. VHC has said it may not be able to afford the next two exchange updates.


 

"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.