99% of Obamacare applications hit a wall
It's a batting average that won't land the federal marketplace for Obamacare into the Healthcare Hall of Fame.
As few as 1 in 100 applications on the federal exchange contains enough information to enroll the applicant in a plan, several insurance industry sources told CNBC on Friday. Some of the problems involve how the exchange's software collects and verifies an applicant's data.
"It is extraordinary that these systems weren't ready," said Sumit Nijhawan, CEO of Infogix, which handles data integrity issues for major insurers including WellPoint and Cigna, as well as multiple Blue Cross Blue Shield affiliates.
Experts said that if Healthcare.gov's success rate doesn't improve within the next month or so, federal officials could face a situation in January in which relatively large numbers of people believe they have coverage starting that month, but whose enrollment applications are have not been processed.
"It could be public relations nightmare," said Nijhawan. Insurers have told his company that just "1 in 100" enrollment applicants being sent from the federal marketplace have provided sufficient, verified information.
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One insurer reported a better, but still stunningly low, rate of enrollment applications containing enough data to process for coverage.
"It's about half of what we've received," a source at that insurer said.
"We're getting incomplete data—about half of the applications we haven't been able to process," said the source, who used the term "corrupted" to describe the batch of applications received.
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That means the people in every batch who haven't provided enough or correct information must be contacted for additional data to ensure they qualify for the insurance they want to buy, experts said. The federal exchange itself may have to seek that data from enrollees.
And that extra work could significantly burden a system already bogged down by high numbers of people trying to view prices and enrollment forms on Healthcare.gov.
A spokeswoman for the Department of Health and Human Services declined to comment directly on the revelations Friday afternoon.
However, in a press release, HHS said it that "traffic on the website and at the call center continues to be high" with 8.6 million unique web visitors since Tuesday, and that "two-thirds" of those visitors "accessed the marketplace to begin their application and shop for plans."
"To make further improvements to the system, we will be taking down the application part of the website for scheduled maintenance during off-peak hours over the weekend," the release said. "The enhancements we are making will enable more simultaneous users to successfully create an account and move through the application and plan shopping process."
Infogix Chief Product Officer Bobby Koritala and others said Friday that the problem appears to be limited to Healthcare.gov, which is handling plans for people in 36 states, not the exchanges being operated individually by the 14 other states and the District of Columbia.
"One hundred people submit their application, one of them goes all the way through the processing ... a big chunk of them are being held," Koritala said. "They need to get more clarifying information."
He blamed the exchange's software, which is allowing too many people to finish the process online without making sure they provide answers needed by the insurers processing the applications.
Koritala said his team has been told by insurers that "some issues are around data quality issues, such as specific IDs associated with enrollees [and] address issues such as state name abbreviations."
'Not a traffic issue'
"It doesn't surprise me—I've heard similar numbers," said Dan Mendelson, CEO of consulting firm Avalere Health, when asked about the 1-in-100 rate that Infogix cited.
"This is not a traffic issue," Mendelson said. "Right now, the systems aren't working."
Mendelson and Koritala were both optimistic that the federal marketplace could make software adjustments to reduce the number of deficient applications being transmitted to insurers, and reduce the time and effort expended getting back to applicants.
Beating the wave
But, Mendelson warned, "I'm going to say they have one month to get their act together on the IT" to reduce the lag in verifying and finalizing applications. If that doesn't happen, the government could "potentially increase the length of the enrollment period."
People have until Dec. 15 to enroll and pay for a plan to be effective Jan. 1. The enrollment deadline for 2014 is March 31.
Mendelson's one-month time frame reflects a wave of enrollment expected in late November as people try to beat the cutoff.
"If we continue to see these issues through the next three or four weeks there's a lot of concern about how many people will have effective coverage by Jan. 1," said Dan Schuyler, director of the consultancy Leavitt Partners.
Though he had not heard about the specific problem of insurers' getting large numbers of applications with missing or questionable data, he said that right up until Tuesday's launch of the exchanges, he heard about difficulties with test transmissions to insurers.
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Specifically, Schuyler said, insurers selling plans on the exchange were not receiving data about all individuals supposedly enrolling in those plans during the tests being conducted.
In its press release Friday, HHS said, "Experts are working around the clock to make the site better able to meet the volume created by consumers' overwhelming interest in their new health coverage options."
"There have been sustained improvements to the consumer experience and that trend is expected to continue."
Experts said that if the lag in processing enrollments continues on a large scale, insurers expect the federal government to tell them that they must provide benefits to people even as applications are still being processed.
"In talking to some of the insurers, they pretty much assume that even if there are issues, the feds will say, 'You know what, it's your problem, they've signed up,' " said Koritala.
—By CNBC's Dan Mangan. Follow him on Twitter @_DanMangan.