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In a letter a few weeks ago, the man who manages health care benefits for state employees and their families listed the many ways a major Oregon-based health insurance company was failing them.
The employee group “has identified numerous systemic issues related to this situation that need to be addressed and resolved,” Oregon’s Public Employees’ Benefit Board director Ali Hassoun wrote in the Feb. 26 letter to Providence Health Plan, which WW obtained via a public records request.
Hassoun’s letter came after Providence, which for years ran a health benefits plan for tens of thousands of state employees and their families, had just outsourced its work to tech company Collective Health. After the Jan. 1 launch, matters quickly fell into disarray, disrupting health care for many people and causing massive bureaucratic headaches and stress for numerous patients and providers.
Through PEBB alone, about 87,000 people are on the “Providence Health Plan Powered by Collective Health,” according to the Oregon Health Authority. But this was not the only cohort affected. Many Portland Public Schools employees are on the plan. Same for Intel. The list goes on. But the state employee benefits group’s size and public processes make it a window into what went wrong.
Hassoun’s letter is essentially a notice that Providence Health Plan had fallen out of compliance with a contract to manage the health benefits for PEBB members. Its details dovetail with prior reporting on the issue: members not receiving cards, providers leaving the network altogether, in-network providers being processed as out of network, care being delayed. But it also specifies in new ways the glitches that went wrong on the back end.
These issues were, according to some, quite predictable. Two former Providence Health Plan staffers who spoke on condition of anonymity say they and colleagues warned that the Collective Health subcontracting arrangement was rushed and would cause problems. “It was pretty obvious that this was going to be interesting to say the least,” one says. WW reviewed an email a former staffer sent to Providence Health Plan’s chief compliance and risk officer well before the Jan. 1 launch, expressing concerns that Collective Health was not up to the task.
Against this backdrop, Hassoun’s letter—summarizing the problem nearly two months after the troubled launch—bolsters the case that Providence Health Plan and its contractor failed to adequately prepare for the transition they devised.
One early red flag, for example, was that Collective Health’s system was not integrating well with preexisting ones.
Once Collective Health took over, according to Hassoun, health plan members couldn’t see prior authorizations that were approved before the new year—when Providence itself ran the plan.
Also, the letter adds, plan members had lost access “to their historical health plan and medical record information, which may be a violation under HIPAA”—a federal law governing the flow of health care information.
Moreover, under the new system, Providence Health Plan stopped uploading information to PEBB’s data warehousing vendor, Hassoun alleged.
This is all wonky inside-baseball stuff, but that is exactly the point: It’s supposed to stay that way. Instead, these and other issues burst onto the user side of the system—and, according to Hassoun, in many cases, it actively undermined health care.
“Many providers were unable to verify eligibility and thus required members to pay for services up front or denied members service,” he wrote. Amid all this, he added, providers were leaving the network—another dynamic that made it harder to get care.
Using acronyms for the various players, Hassoun adds, “when PEBB members and PHP network providers called CH, they experienced long hold times, up to 3 hours at times.”
In the health care space, moving vendors can be complex, and some sloppy tumult is unfortunate but not abnormal. Still, Karen Handorf of Georgetown University’s Center on Health Insurance Reforms notes that Providence Health Plan had control of all the records it was transferring over, which ought to have helped.
“Preauthorization approvals and records of employees are pretty important things to have access to,” Handorf says. “It seems to me they should have made some effort to make sure that it was going to go smoothly.”
She adds: “You do have a duty to figure out not just how much it’s going to cost you, but whether it’s worth the cost of using a vendor, and whether they are equipped to do the job that you need them to do. And so the question is: ‘Did they do that? And how did they do that?’”
Neither Providence nor Collective Health responded to specific questions for this story, but both have said the transition was more difficult than they expected, and have said they are working hard—and have made headway—to improve the quality of their services.
Hassoun’s letter requested a series of reports tied to various metrics—such as claims processing times. He wrote that PEBB expected Providence would resolve the systemic issues no later than Monday, March 30.
On Monday, a Providence Health Plan spokesperson told WW: “We will be responding to the notice directly to PEBB this afternoon. You are welcome to review the information included when that becomes publicly available.”
