A crucial system for making payments to insurers from the federal Obamacare marketplace, Healthcare.gov, has yet to be built, a senior government IT official admitted Tuesday.
The official, Henry Chao, visibly stunned Rep. Cory Gardner (R-Colo.) when he said under questioning that a significant fraction of that online insurance marketplace has yet to be constructed.
"We still need to build the payments system to make the payments [to insurance companies] in January," Chao said during testimony. That so-called financial management tool was originally supposed to be part of HealthCare.gov when it launched Oct. 1, but officials later suspended its launch as part of their effort to get the consumer interface part of the site ready.
Chao on Tuesday said other areas that need to be built include "the back-office systems, the accounting systems." Overall, Chao said, about 30 percent to 40 percent of the federal Obamacare marketplace has yet to be developed.
Chao is deputy chief information officer of the Centers for Medicare and Medicaid Services, the federal agency that operates HealthCare.gov. He said the consumer part of that website, which enrolls people in Obamacare insurance plans, is totally built. "The online application, verification, documentation, plan compare, generating enrollment, that's 100 percent," Chao said.
But the revelation startled some observers. "That's like setting up an online bank without setting up a way to make deposits," an industry source told CNBC.
"The parts of the marketplace that were essential for consumers to be able to apply for eligibility and select a plan were live on Oct. 1," said Joanne Peters, a spokeswoman for HHS. "The additional functionality that has not been launched has to do with pieces that are not needed until 2014."
HealthCare.gov is comprised of "distinct pieces of functionality that, together, make up the full integrated system—plan management, eligibility and enrollment and financial management," Peters continued.
"As we have said, CMS prioritized essential functionality to be live on Oct. 1 to ensure that consumers would be able to apply for eligibility and select a plan. Other functionality will come online over time. This is a complex project with a short timeline—and as such issues were prioritized to meet the Oct. 1 launch date. As part of this prioritization, back-end tools, including financial management, monthly enrollment reconciliation and risk adjustment, which are not consumer facing and not essential until 2014 will be rolled out in the coming months."
The financial management tool manages the payment processing between marketplaces and issuers. Monthly enrollment reconciliation refers to the tool that makes sure there is agreement between the enrollment numbers maintained by HealthCare.gov and the same numbers maintained by the insurers. And the risk adjustment program gives monetary payments to insurers that disproportionately attract people with chronic conditions, and others whose uses of insurance could end up costing insurers more money than they take in in premiums.
Chao and other Obama administration officials have been lambasted since Oct. 1 for the glitch-laden launch of HealthCare.gov, which with just 27,000 people enrolled in 36 states over one month has grossly underperformed original expectations. The administration had originally estimated that 7 million people would enroll in Obamacare insurance plans by March 31, but that goal remains in peril.
This article originally appeared in CNBC.
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