Financial system for lags

abstract image of money

Back in January, CMS warned that the absence of a financial management platform puts the entire health care reform policy at risk because of the potential for inaccurate payments to carriers that could lead plans to default, as well as the higher costs of administering workarounds.

Since then, CMS has put in place workarounds to keep money moving between the Treasury and carriers. The contracting document, "includes timeframes that are no longer an accurate assessment," said CMS spokesperson Patti Unruh in an emailed statement. "We have collaborated with stakeholders to put in place successful, interim solutions to carry out critical functions. CMS's business and technical contract teams are continuing the work to complete the back-end systems for the Marketplace as quickly as possible," she said.

In terms of complexity, the financial system is a much taller order than the initial portal, says Stephen Parente, a health care policy and finance professor at the University of Minnesota, who has been critical of the administration's overall health care policy.

"Can it be built? Yes. But this is an IT infrastructure project that has no parallel both in terms of money and integration," he said. "It's a big deal if Accenture cannot get their act together to move the money."

For example, calculating risk corridors requires the state claims data to be anonymized and routed through CMS to get a sense of what spending is like on each individual plan in every state. That information is compared against actuarial benchmarks to see if carriers are owed money for taking on excess risk. The subsidy payment function requires routing money from Treasury systems to carriers based on their number of enrollments.

The contracting documents praised Accenture for its experience in building and running California's online exchange, and the firm's experience with online financial transaction systems. Accenture has deep ties to the insurance industry, going back to its previous incarnation as Arthur Anderson. The Treasury has experience handling direct payments to insurers through its role in the Federal Employees Health Benefits Plan. Accenture declined to comment for this article, referring questions to CMS.

The news that the financial management platform was still unbuilt was revealed by CMS Deputy CIO Henry Chao at a November hearing of the House Energy and Commerce Committee. As government pushed on its "tech surge" to fix the failing, work on the financial system was deferred. At that time, the administration had planned on having the system ready in January 2014, as the first round of payments were being made to insurance companies.

It's not clear precisely what workarounds are in place to route funds to participating carriers. Parente speculated that some carriers might be able to cover the initial costs in part with additional revenue coming from the uptick in Medicaid enrollment. However, that would apply only to carriers that offer Medicaid plans in states that have opted into the expansion of that program.

"Their anxiety is high," Parente said about the insurance carriers. "They're about at the outer limit of how far they can run on spec," he said.

About the Author

Adam Mazmanian is executive editor of FCW.

Before joining the editing team, Mazmanian was an FCW staff writer covering Congress, government-wide technology policy, health IT and the Department of Veterans Affairs. Prior to joining FCW, Mr. Mazmanian was technology correspondent for National Journal and served in a variety of editorial at B2B news service SmartBrief. Mazmanian started his career as an arts reporter and critic, and has contributed reviews and articles to the Washington Post, the Washington City Paper, Newsday, Architect magazine, and other publications. He was an editorial assistant and staff writer at the now-defunct New York Press and arts editor at the online network in the 1990s, and was a weekly contributor of music and film reviews to the Washington Times from 2007 to 2014.

Click here for previous articles by Mazmanian. Connect with him on Twitter at @thisismaz.

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Fri, Apr 11, 2014

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