Audit of health insurance exchange contractor nets mostly failing grades; penalties urged

An audit of the state’s health insurance exchange contractor gave mostly failing grades.

The report, given Thursday to the board of the Silver State Health Insurance Exchange, also recommended penalties against contractor Xerox for its poor performance in building Nevada Health Link, the online marketplace through which Nevadans can buy health coverage to comply with the Affordable Care Act.

Health Claim Auditors conducted the review to determine whether Xerox is handling enrollments accurately and within a reasonable time. The verdict? Thumbs down.

In 13 areas that measure website performance and customer response, Xerox mostly earned failing marks. It fell short on website up time and down time. It missed the mark on hold times and abandoned calls.

William Carr of Health Care Auditors told the board the exchange could set damages at a monthly maximum of $25,000 a month, or 5 percent of the administrative cost of monthly billing — whichever is greater. It would be the first time the board charged damages for Xerox’s poor performance.

The audit also checked 500 randomly chosen enrollment files, and 40 files selected by the exchange for “unusual properties or problem claims.”

Of the 540 files reviewed, 203, or 37.6 percent, had one or more “exception incidents,” or enrollment problems. Nearly a quarter had multiple accounts. Also, 1,063 January premium invoices were missing their federal tax credit. More than 14 percent of files stated an inaccurate subsidy based on applicant age. And premiums listed on Nevada Health Link were sometimes different from premiums shown on the state Division of Insurance’s website.

Other glitches included accounts with no names, partial verification of applicant data and missing details on cost-sharing reductions, which lower the amount members pay out of pocket for care.

The audit did not look into complaints of consumers who say they’ve paid premiums but do not yet have an insurance card or verification of coverage. Carr said that would have required a “dramatically time-consuming” audit of the exchange’s four insurers.

The report included responses from Xerox representatives.

Xerox Vice President Greg Vitiello told the board the company is reviewing files in the report.

“In some of these issues, we have changes that were made to the system which would prevent errors going forward,” Vitiello said. “We’re looking at each case individually, and going through to correct each of them in situations where there’s truly an issue.”

Board members have grown increasingly restless with Xerox.

The board approved Xerox’s $72 million contract to build Nevada Health Link in June 2012. But Xerox missed multiple deadlines, and by March — five months after the Oct. 1 launch — the company still hadn’t completed the part of the system where premium invoices are created and enrollment details get sent to insurers.

The website was so incomplete that the exchange had paid Xerox only $10 million of its contract by March. And just 25,899 people out of a forecasted 118,000 bought and paid for plans by the end of open enrollment on March 31.

Board member Leslie Johnstone blasted Xerox officials at Thursday’s meeting after they said they would need to check details and get back to the board to answer questions about their follow-up to the audit.

“It does not appear to me that Xerox is taking this report seriously, and the magnitude of these errors, and the number of these errors,” Johnstone said. “To be at this meeting and not have information pertaining to each of these issues and what the action plan is with timelines is just not responsible. And it tells me Xerox is not taking it seriously, and they should.”

Vitiello responded that Xerox is taking the audit “very seriously.”

“Based on information and feedback we see from (Health Care Auditors) and the exchange, we have been working to resolve each of the findings,” he said.

A report from another contractor, Deloitte Consulting, on how to help Xerox fix Nevada Health Link’s flaws is due in late April.

Contact reporter Jennifer Robison at jrobison@reviewjournal.com or 702-380-4512. Follow @J_Robison1 on Twitter.