President Barack Obama's administration has found a short-term fix to pay insurance companies for plans selected on HealthCare.gov, the not-yet-complete government website used to shop for insurance required under Obama's healthcare program.
The Centers for Medicare and Medicaid Services (CMS) has not yet finished building the part of the website that would transfer billions of dollars in subsidies for plan premiums and cost-sharing payments to insurance companies.
It is part of a long technical to-do list that has so far focused on fixing the errors and lag times in the part of the website used by consumers.
The administration recently overhauled HealthCare.gov after its botched launch two months ago. The fixes are now expected to allow millions of Americans to shop for insurance.
The heathcare program faces a critical test to enroll hundreds of thousands of people by Dec. 23, the deadline for people who need insurance coverage starting on Jan. 1, 2014.
Julie Bataille, a spokeswoman for CMS, said the government will make the payments to insurers for premium tax credits and cost sharing on time.
"We are committed to making sure they get paid in January and we will continue to work with them on that process," she told reporters.
The administration is planning a "workaround" for payments, said Daniel Durham, vice president for policy and regulatory affairs at America's Health Insurance Plans.
Health plans will estimate how much they are owed, and submit that estimate to the government. Once the system is built, the government and insurers can reconcile the payments made with the plan data to "true up" payments, he said.
"The intent is to make sure plans get paid on time, which is a good thing," Durham told Reuters.
The fix puts an additional "burden" on insurance companies, already taxed by having to double-check faulty enrollment data from the HealthCare.gov system.
Now, companies need to quickly put together financial management systems to make the payment estimates, so they can be paid beginning in January, he said.
"They have to recognize that plans are already quite stressed and introducing this at the last minute just adds substantial burden for plans to deal with," Durham said.
Paying insurers on time and accurately is critical for the long-term competitiveness of Obamacare marketplaces, said Kevin Lucia, senior research fellow at Georgetown University's Health Policy Institute.
"I'm pretty deeply concerned about this," Lucia said at a forum organized by the university and law firm Arent Fox.
Some large insurance carriers could "cushion" delayed payments for a short period of time, said Lucia, a former CMS official. But that's not the case for a group of co-ops and smaller insurance providers.
About two-dozen co-ops will start up with their first customers on Jan. 1 and have said they are concerned about how enrollment delays are affecting their finances during the first quarter.
Small insurers also have a lot at stake as these new anticipated members are expected to make up a bigger portion of their total revenue. The individual business is only a small part of revenues at large insurers, which focus on employer-based coverage and private Medicare.
"They cannot survive if they don't get paid. And even the larger carriers, it can only go on for so long," Lucia said. "The last thing we need is for a carrier, especially a large carrier, to walk away from this." (Editing by Christopher Wilson)
© 2014 Thomson/Reuters. All rights reserved.