by Dave Berg
Management Policies Explain Cover Oregon’s Problem
There is a story about Cover Oregon that just isn’t making the news. It provides insight into the core problems and business practices of the exchange we call Cover Oregon. In April I testified before their board of directors to notify them of the frustration in getting paid. It was an enlightening experience and the board took action which lead to key executives leaving the organization.
This decision began to deal with the consistent negligence of prior Cover Oregon management. It was obvious the board had no idea that their “agent partners” weren’t getting paid and they couldn’t explain why such a situation would exist; despite the fact it had been the norm for many months. The reason why has proved to be very insightful. Cover Oregon is directly paid by the insurance carriers and they then pay the agencies responsible for advising Oregonians who purchased their own Qualified Health Plans (QHP). These are the plans where clients actually pay for their coverage versus Medicaid which is entirely paid by us (the taxpayers).
Agents had worked for eight months to ensure clients obtained health insurance. Unfortunately the Cover Oregon system was so poorly managed it required 5-10 times the effort as compared to the private market. Oregonians became completely confused by the Cover Oregon process, their requirements, and why they couldn’t choose their own plan online. They then sought out certified agents to advise them upon realizing Cover Oregon just didn’t have the expertise. Overall agents performed an exemplary role, without which, many Oregonians would have lost their health insurance or bought inferior coverage. Yet the agents’ role simply was not valued enough by Cover Oregon management to ensure adequate payment.
Why? Oregon is a Medicaid state where the priority continues to be enrolling Medicaid applicants over private health plans paid for by Oregon residents. This is supported by both the outcomes and ultimately the failure of the Cover Oregon exchange. Some 52,000 QHP policies covering 73,000 lives were purchased by Oregonians. Yet this was dwarfed by the 190,000+ Medicaid enrollments. The large number of enrollments often quoted fails to recognize who is actually paying for the newly enrolled.
The bias in the system became clear to agents as they answered a multitude of questions from clients and then waited for payment. Agents experienced the impact of this bias by not being paid adequately throughout all of 2014. When a small fraction of what was owed arrived late, agents contacted Cover Oregon. They were silent and provided no response to emails, phone calls, or faxes. It was a deafening silence and agents actually began showing up at Cover Oregon’s headquarters requesting payment! Nothing happened over many months despite agents begging for their commissions.
I was invited in April by the newly hired turnaround firm, at the request of the Cover Oregon Board, to reconcile our statements. What I was told was both enlightening and deeply disturbing. It turns out Cover Oregon never really had a robust system in place to pay agents. I was specifically informed that the former management expressly instructed staff not to respond to agent payment inquiries. Why? It’s clear they were negligent in their business practices and their contracting with agents. How? They contracted agents knowing they couldn’t pay agents on time or adequately determine which agencies should be paid for which client policies.
Hearing that staff were instructed not to respond, despite knowing the problem, was completely inappropriate and unethical. It made a clear statement on past management practices at Cover Oregon and was disappointing given my experience in executive service. It’s important to mention that this policy only came to light with Cover Oregon’s Board asking management to leave the organization.
The new management seems to be doing all they can to try to get agents paid, but it just isn’t coming fast enough. Why? Many agents are in dire straits having bet their business on working for the new exchange with a recent study reporting nearly half of all brokers are leaving the market because of the ACA. That’s without the Cover Oregon non-payment issue!
I have worked with Cover Oregon’s new management and their board because in the end, despite partisan politics, the key objective here is to make sure more Oregonians obtain coverage. We all benefit by citizens paying for their health insurance, at a reasonable cost, in an “open” market.
Yet agents have been told it will be a year from the early enrollment process, before we get paid accurately, by Cover Oregon. That just doesn’t wash with anyone understanding common business practices. The change in management may have made a difference but it’s likely too late for many agents who believe they will never see their compensation after Cover Oregon goes to the federal exchange. There is a lack of trust in this organization that will not be easily overcome.
It’s one thing to make mistakes in a complex system, but an entirely different situation when you withhold material facts like you are incapable of accurately paying for services you agreed to under contract. That fact shed light to me on the core problems with Cover Oregon. I will leave it to the reader to make up their own mind on what term you use for this behavior.
What is particularly bothersome to many agents is that Cover Oregon employees, including the former management, are receiving large bonuses, salaries, and retention incentives, while we are waiting to get paid properly when our work was completed more than nine months ago. That behavior mirrors the problem and what many believe has been the culture of the organization after a $300 million investment in taxpayer funds.
In the end this may be just one part of the cost of failure for the new exchange. QHP enrollments were never the priority of the ACA in Oregon. Let’s see if the new management changes the culture, resolves the payment problem, and gets the system aligned. I will provide another update and constructive suggestions on how the new management can resolve these issues.
Dave Berg is a 23-year resident of Lake Oswego, a board member of COLA LO, elected multiple times as a PCP, served in executive/management with the state of Oregon, received a gubernatorial appointment by John Kitzhaber, and is Chair of the Legislative Committee of the Clackamas County Republican Party.