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Nevada Pulls the Plug on Failing State Obamacare Exchange

The Silver State Health Insurance Exchange Board voted on Tuesday to scrap the beleaguered Nevada Health Link, the state’s version of the health insurance exchange created under the Affordable Care Act or “Obamacare.” The board terminated the contract of Xerox, which had built the exchange and had been the subject of severe criticism and a class-action lawsuit.

Nevadans will enroll through the federal exchange, which has suffered from its own share of problems, during the next open enrollment period, beginning in November. The state could select from a few different options for subsequent open enrollment periods.

In place of Xerox, the exchange will adopt the federal Healthcare.gov exchange’s eligibility and enrollment functions for the sign-up period that begins Nov. 15, though it will keep its status and funding as a state-controlled system. The exchange will also issue a request for proposals to evaluate replacement systems in coming years. A new platform could come from a state with a functional marketplace, or from a vendor with a similar, proven program.

As with the final vote, reaction to the board’s decision was uniform.

Insurance brokers, insurers, lawmakers and policymakers all praised the move, which the board considered since February.

The state of Nevada had awarded a contract of more than $70 million to Xerox to build and operate the exchange. After a troubled rollout, the Silver State Health Insurance Exchange board hired Deloitte Consulting for about $1.2 million to assist Xerox in identifying and correcting problems with Nevada Health Link.

It won’t be clear until 2015 just how much it will cost to bring in a new system. Vendors will have to bid on a contract to serve the exchange…Exchange spokesman CJ Bawden said the state will pay Xerox as the company finishes parts of the website and continues to care for current enrollees through November. But he said the final payout “will be well south of $15 million.”

Nevada’s original target of 118,000 enrollments in private health insurance plans was reduced by more than half, to 50,000. As of May 10, about three-fourths of the way through an extended open enrollment period, just 35,034 Nevadans had enrolled and paid for policies through Nevada Health Link.

In addition to the low enrollment figures, the exchange has been plagued by numerous other problems. Xerox is the defendant in a class-action lawsuit alleging thousands of Nevadans have paid for coverage through Nevada Health Link but are still uninsured. In one case, a man who had enrolled and paid for insurance through Nevada Health Link racked up over $400,000 in medical bills but problems with Nevada Health Link left him uncovered.

In a related problem, agents and brokers who assisted people in enrolling for coverage have yet to be paid for their work.

According to sources familiar with the exchange, Nevada Health Link is the only one of the federal and numerous state exchanges that collected premium payments from enrollees and disbursed premium payments to insurers and commissions to brokers and agents. All other exchanges notified the selected insurer, who then was responsible for collecting premium payments and disbursing commissions.

Though the intention of the designers of Nevada Health Link was to be able to process these payments, the system was unable to properly handle them, resulting in enrollees without coverage and those who assisted them in signing up remaining unpaid.

Michael Chamberlain

Michael Chamberlain is the Editor of Watchdog Wire - Nevada. Please contact him at Nevada@watchdogwire.com for story ideas or to get involved in citizen journalism in Nevada. Follow Michael on Twitter: @michaelpchamber

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Categories: Budget and Finance, Healthcare, Must Read, News, Regulation, Waste, Fraud and Abuse
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