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Obamacare exchange readiness going down to the wire

Tuesday, 20 Aug 2013 | 12:08 PM ET
Onur Kocamaz | E+ | Getty Images

Covered California has a clock on its website, counting down to the Jan. 1 start of insurance coverage under the Affordable Care Act. But it's the countdown to Oct. 1, the deadline to get things up and running for open enrollment, which has officials working overtime.

"The open enrollment period is meaningful," Covered California Executive Director Peter Lee told an audience at a town hall meeting in San Francisco earlier this month.

Lee has been headlining information sessions across the state, getting the word out about enrolling for so-called Obamacare. He is holding off on a media campaign until closer to the start of enrollment in October. The state is hoping to enroll more than 1.5 million people for coverage by 2015, and is hiring personnel to man call centers and training so-called navigators, who will assist with in-person sign-up for insurance.

With six weeks left until the launch of open enrollment, he expressed confidence that the Golden State's online marketplace will be ready on time for people to begin signing up in October.

(Read more: Obamacare: A new opportunity for fraud?)

"We're testing every week new elements," Lee explained after the San Francisco event, assuring that Covered California will be ready. "We're testing not only what we do, but how do we relate to the federal hub. And the tests are going well."

The federal hub is the central data clearing house, which will connect state exchanges like California's and the federally built exchanges to data at the Internal Revenue Service and the Centers for Medicare and Medicaid Services (CMS).

The hub will play a key role in income verification and determining eligibility for insurance subsidies, and for providing payment to insurers. Its readiness is also a key issue, because of very tight deadlines for testing the system.

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In early August, a report from the Department of Health and Human Services' Office Of Inspector General raised concerns that security testing and authorization for the hub was scheduled to go down to the wire. The final sign-off on certification is slated for Sept. 30, one day before the start of open enrollment.

The report's findings were based on late spring calculations. CMS officials contend there has been progress since then, and the system will be ready by Oct. 1.

"We are on track to complete systems testing with states, issuers and other federal partners by the end of August," said CMS spokesperson Brian Cook, adding "end-to-end testing will be completed by the beginning of open enrollment."

(Read more: America's Self-Employed Caught in Obamacare Gaps)

While the scale of the 50-state exchange system under Obamacare is unprecedented, Cook notes that creating and maintaining secure infrastructure is not new for the agency.

"CMS has extensive experience building and operating information technology systems that handle sensitive data," he said, "from many years administering the Medicare, Medicaid and Children's Health Insurance Program."

Yet at least one state has admitted its exchange build out has run into a snag, and it won't make the tight deadline. Cover Oregon exchange officials say they will not be able to launch online enrollment Oct. 1. Oregonians will have to sign up with insurance agents and certified assistants until sometime later in the month.

"I suspect some other states will start to acknowledge that their digital pieces are not quite ready yet," said Ceci Connolly, managing director of PwC's Health Research Institute.

"We also know from talking to players across the country—health insurance plans, states, a number of advocacy groups—they all are putting in place contingency plans for paper enrollment," she said.

Paper enrollment would dramatically slow down the enrollment and verification process, especially if the federally run exchanges were to delay online enrollment.

It's a possibility the federal hub won't get certified on Sept. 30, as scheduled, said Christopher Rasmussen, policy analyst at the Center for Democracy & Technology. "It's cutting the margin close," he said. "If Oct. 1 comes and that data hub is not open that will be a problem for enrollment."

(Read more: Planning for long-term care can have a big payout)

Covered California's Lee maintains that security measures on his state's exchange are rock solid, but being able to assure the safety of sensitive data from end to end is critical to winning trust.

"We're very concerned in making sure that consumers know that if we have information, they can rely on that information being held and kept secure," he said. "We will not go live if we can't assure security information."

Analysts say even if the exchanges are up and running on time, it may pay to wait to enroll until after they've worked out whatever issues occur with the launch on Oct. 1.

"There's no reason to go racing in there," said PwC's Connolly. "Take some time to look at your options, get educated, ask the questions you need, and then maybe in mid-October, early November try to make your choice and sign up," she suggested.

—By Bertha Coombs. Follow her on Twitter: @berthacoombs.

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