By John Reichard, CQ HealthBeat Editor
October 1, 2013 -- Coping with the glitches that crop up during the first open enrollment of the health care law exchanges is going to be a matter of focusing and fixing them—something the staff at the Centers for Medicare and Medicaid Services (CMS) has the experience and determination to do, say top Bush administration officials who implemented the Medicare drug benefit.
Mark McClellan, Larry Kocot, and Keith Fontenot talked to CQ HealthBeat last week about the opening of the health care law exchanges, contrasting this launch with the startup of Medicare part D. McClellan was CMS administrator at the time, in 2005 and 2006. Kocot, a career CMS employee, was his top lieutenant. Fontenot was a senior official at the White House Office of Management and Budget. Also a career employee, Fontenot went on to become the top health budget official at OMB during the Obama administration.
The trio said there are many parallels between the kinds of problems they faced with Part D—and solved—and those the Obama administration now faces.
Moving ahead with implementation will allow problems that can't be anticipated to be identified and addressed, said Kocot and Fontenot. Also, a dedicated CMS staff and its good working relationship with insurers will make it easier to overcome challenges, they said.
But none of them disputed the idea that gearing up enrollment under the health law (PL 111-148, PL 111-152) is a far more complex undertaking than the 2006 start of the Medicare drug benefit. And the three weren't unanimously predicting that the health law launch would ultimately be successful.
McClellan noted that many in the individual market may find themselves paying higher premiums under the health law. Kocot said there are many questions about the affordability of plans offered on the exchanges, questions that the Obama administration can't answer by just saying premiums are lower than predicted. For example, will a "young invincible" that signs up for coverage in January keep up his premium payments when he takes on new car payments in June?
But they also noted numerous similarities between the questions raised now about whether or not the health law will ultimately succeed, and the doubts expressed about the start of the drug benefit, which is now popular and widely viewed as a major success.
Better to Get Started
Starting open enrollment now gives CMS more time to find and fix problems said Fontenot. With coverage starting on Jan. 1, there's time to do that, he said, likening the current period to a beta test. It's a longer open enrollment than when Part D started. Beneficiaries had from Nov. 15 to Jan. 1 to sign up.
"The sooner this starts actually the better for when you get to January," Fontenot said. "So getting it going now and starting to iron these things out is critical. It's more the beta test phase than the live phase. There are a lot of reasons for that."
With all the early reports of glitches in the exchange launch, there's sure to be criticism that the Obama administration should have gotten a much earlier start in order to debug the systems before going live. But Kocot said Part D implementation taught him the limits of what you can know ahead of time.
"The epiphany that we had was you don't know what you don't know until you know it," Kocot said. "And you don't find out these things until you're actually in the process of administering the details of a very complex undertaking."
Kocot said it's unlikely many people will sign up right away. They need time to absorb information about the different plans and to settle on a choice. That didn't happen quickly with Part D, he said, recalling that the Bush administration made a big push to make Thanksgiving "a day of conversation" when families could discuss senior drug coverage and move ahead with decision making.
There were other challenges too, and plenty of doubts: Would there be enough plans? Would plans be affordable? Was the enrollment process too complex? Was the CMS web site too frustrating and would enough people have internet access to get to the site? Would enough people sign up?
Even if there was not the same level of criticism leveled at Part D as the health law, there was still plenty to go around. Kocot recalls hearing criticism from "everywhere."
There were external events too. Maybe not a shutdown, but big challenges nonetheless.
"We were getting ready for open enrollment and all of a sudden Katrina hit," Kocot recalls. "Personally I was dealing with getting drugs to people in the Astrodome and all sorts of sheltering that was going on and other things in addition to planning for the eligibility system."
Among the challenges in the fall of 2005 was testing the system to determine whether people were eligible for coverage. "One of the things that became very clear was in early December there wasn't nearly the enrollment data in system that we needed to test the system," he said.
"There was a massive effort to call plans" and get them to submit the enrollment data and lags developed in getting people processed into plans. There's likely to be some of that same problem going into 2014, Kocot said. "Remember, no enrollment is effectuated until the premium is paid."
Kocot emphasized that in the current atmosphere of intense criticism it's going to be critical for CMS and health plans to work together closely to fix problems—and said he thinks that kind of working relationship exists.
"From what I've seen," there is that spirit of working together. "I know that the career staff at CMS are incredibly dedicated. A lot of them have just a massive amount of experience from Part D, and they'll bring that to bear, and I know the plans are committed to this. Some of the exchanges are new to this business, and there may be a learning curve for them, but a lot of them have hired people with experience."
CMS is going to be working around the clock to fix problems and has acquired a lot of experience working with the insurance industry, Fontenot said. Implementing the drug benefit and changes in the Medicare Advantage program under the 2003 Medicare overhaul law gave the agency that experience, he added.
Kocot noted other difficulties with the drug benefit launch.
In a number of cases the wrong premium amounts were withheld from Social Security checks to pay prescription drug plans anywhere from a few dollars to 60 dollars. "The premium withhold was a big problem and it's analogous to if they get the subsidies wrong," under the health law he said.
"Congress wasn't happy when we withheld too little obviously we then had to go collect it, but they obviously weren't happy when we withheld too much because we when we had to go collect the beneficiary wasn't happy. "We did eventually work that out. But it wasn't without a lot of pain and congressional hearings. I visited both houses of Congress on this very issue."
But other comments by Kocot showed the huge complexities involved in implementing the health law and the many unanswered questions that remain about affordability of plans.
"You have to get those subsidies right," he said. If an insurance applicant submits a premium payment for what the insurer considers to be the wrong rate, the insurer has to send it back to the exchange to get adjudicated, he said. "Invariably there are going to be problems with this determination, regardless of whether it's automated or manual. And it's going to take time."
"Affordability is an interesting question because all of the debate" has been about has been about how projected rates compare with existing rates. " It says nothing to the individual circumstances of the beneficiary in terms of what can they afford," Kocot said." For example a young invincible, what happens when they want to buy a car in June? Will they stay with this, is that going to be part of their budget? Or the very poor who are just subsidy eligible with four kids who have to make a choice between food and clothes. This is a big experiment in that respect."
McClellan said that the enrollment process under the health law will be gradual compared to Part D, when most of those eligible the first year signed up. And enrollment will vary by state. But "it is going to get off the ground," McClellan said. "There are going to be millions of people who will be using coverage, glitches notwithstanding starting in early 2014." But he added that there will "still be a lot of important questions about how the program is going to sort out."