Two online health calculators designed by federal officials to help states and employers comply with Obamacare mandates are riddled with so many flaws that users are abandoning them, The Washington Examiner has learned.
Users say the calculators - one used by state officials, the other by private employers - too often are confusing, produce contradictory results, do not reflect real world conditions, and use old data.
The problem is so acute that several states are weighing whether or not to create their own calculators. The Obamacare program is supposed to be fully implemented and functioning on Jan. 1, 2014.
The employer calculator particularly baffles those who offer health insurance plans and are struggling to comply with the law.
Under Obamacare, states sponsoring health insurance exchanges must use the federal calculator to evaluate their standardized plans for individuals and small groups. Each plan must offer services in 10 medical categories.
Federal health care officials can use the results produced by the calculators to force states to change premium prices and out-of-pocket expenses for consumers. The plans are supposed to go into effect October 1 in the phased implementation of Obamacare nationwide.
Employers use the second calculator to report line-by-line benefits and employee costs. A failing calculator number can force employers to pay stiff fines.
The Centers for Medicare and Medicaid Services in the U.S. Department of Health and Human Services designed both calculators. A CMS spokesman declined to comment for this story.
States and insurance companies are supposed to use an "Actuarial Value" calculator. The actuarial value measures benchmarks for the four state standardized plans.
An AV value of 60 means the state plan covers 60% of the costs and enrollees pay 40%. The four plans range from 60% to 90% coverage.
Employers are to use a "Minimum Value" calculator, which assesses whether an employee health plan meets minimal federal criteria.
CMS released "beta" versions of the calculators in November 2012 and a "final" calculator this February.
The most glaring problem, according to users, is that the calculators do not reflect real world conditions.
Paul Hencoski, a lead partner at KPMG, the audit and accounting firm, said the AV calculator does not always reflect the true value of a proposed policy. His firm represents 19 states trying to set up health care exchanges.
"There's been some question around the results they've been getting. And whether they represent the true actuarial value of what was being offered, Hencoski told The Washington Examiner.
Julie Peper, a senior consulting actuary at Wakely Associates in Denver, CO whose firm is advising Oregon, Vermont and Massachusetts agrees. "There are some things that are different in the AV calculator than what will be in practice," she said.
Mark Jamilkowski, director of KPMG's actuarial services practice told The Washington Examiner the situation is so acute "There are some states we know of that are interested in launching their own calculator." KPMG would not identify the states.
Insurance brokers who assist employers say the MV calculator contains flaws too. Susan Rider, an account executive with the Indianapolis brokerage firm of Gregory & Appel told The Washington Examiner, "they don't ask the right questions. There are a lot of things missing from it that I as a broker look for in a plan."
Rich Stover, a partner with New Jersey-based Bucks Consulting, an actuarial firm, says the MV calculator is so rigid it cannot accept special features in large employer plans.
"Unfortunately many large employer designs, there is some nuance or tweak in the design that won't fit the model. And that's a problem."
Jessica Waltman, a Senior Vice President for the National Association of Health Underwriters concurs. "Anything non-standard doesn't give me the option," she told The Washington Examiner.
CMS has permitted states and employers to opt out of the calculator, but then must hire expensive actuaries to certify the plans meet federal standards.
Opting out costs money. "That's frustrating for employers because it means you've got to incur additional costs and effort just to have the minimum value determined," says Stover.
There also is frustration the "beta" and "final" AV calculators deliver different results.
Peter Van Loon, the Connecticut Exchange's chief operating officer said three of its plans accepted by the November calculator were rejected in February.
"We put the plan that passed the muster in the November Actuarial Value calculator into the new one in February and lo and behold, we were out of compliance," he explained.
Another complaint is that CMS is using old data. Rider says, "They're using 2009 data." Waltman agrees. "One of the concerns we had was that the data is old."
CMS has acknowledges it received many complaints. "Many commenters noted a variety of potential technical issues in the proposed AV Calculator" it stated in the February 25, 2013 federal register.
Richard Pollock is a member of The Washington Examiner Watchdog investigative reporting team. He can be reached at rpollock@washingtonexaminer.com.
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