When Covered California Goes Wrong, Insureds Get the Runaround

When it comes to signing up customers, Covered California has been a success. But when it comes to serving customers, the independent public agency — now in its third year of helping individuals and small businesses get federally subsidized or free health insurance — still has growing pains.

While the insurance marketplace works for most enrollees, a single mistake can set off an avalanche of errors that blocks coverage or generates inaccurate tax forms. When customers try to get problems fixed, some say, they get bounced from Covered California to their health insurer and back again. Even when all three parties get on a call together and come up with a solution, the fix doesn’t get made — or doesn’t stay fixed.

The Chronicle has learned that Covered California will submit a budget proposal to its board on Monday that includes $2 million for a new ombudsman’s office. In April, The Chronicle reported that Covered California lacked an ombudsman or consumer advocate, unlike many other public agencies.

For Elin Larson of Redwood City, Covered California worked just fine in 2014, but when 2015 rolled around, she discovered that the subsidy she had been getting on her Kaiser Permanente policy had disappeared, even though her income and household size had not changed. “I was on the phone with Kaiser and Covered California for almost three hours every week. It was like a little part-time job,” Larson said. “I almost got to the end of my rope on a couple occasions. I was crying.”

2 million calls

The office of state Sen. Jerry Hill, D-San Mateo, helped get her subsidy reinstated in March 2015. But when she got Form 1095-A — a tax document showing her coverage, premiums and subsidies for 2015 — it said she had insurance for only one month last year instead of 12. That started a new odyssey. “I think I have post-traumatic stress disorder from all this,” she said.

Covered California’s customer service department has handled nearly 2 million calls in the past six months, said Peter Lee, the agency’s executive director. “Of those, over 97 percent were handled and resolved without being escalated,” he said. But “when you are dealing with big numbers, even a very small percent can be a lot of people.”

Complaints regarding policies sold through Covered California more than tripled — from 716 in 2014 to 2,273 in 2015, according to new data from the state Department of Managed Heath Care, which regulates almost all private insurers that sell through the exchange. It received an additional 600 complaints over those two years, including eligibility and tax questions, that fell outside its jurisdiction and were forwarded to the insurers or Covered California.

California was the first state to start setting up its own exchange under the Affordable Care Act. Since its inception, Covered California has helped about 2.5 million people get health insurance from private insurers for at least one month — about 90 percent of them with premium subsidies, Lee said. It currently has about 1.3 million people enrolled and has been credited with keeping premium increases lower than many other states.

‘Serious issues’

Nevertheless, in mid-August, the Health Consumer Alliance, a consortium of legal aid groups, wrote a letter to Covered California’s governing board detailing “serious issues faced by Covered California enrollees.” It cited the system’s inability to manually override computer problems and its refusal to correct erroneous 1095-A tax forms. Although Covered California resolved a backlog of complaints outlined in the letter, problems persist, said Jen Flory, senior attorney with the Western Center on Law and Poverty, a member of the alliance.

Ed and Mabel Minamoto of Alameda spent 13 months — and racked up $2,314 in accounting fees — trying to get Covered California to fix a mistake on a 1095-A form. This is the form the federal and state marketplaces send to customers and the Internal Revenue Service showing which members of a household had coverage each month, the premium paid and the federal subsidy received.

Mabel tried to sign up for Covered California in early 2014, but her application was never approved. In March of that year, she became eligible for insurance through her husband’s job, and withdrew the application.

But in February 2015, Mabel got a 1095-A from Covered California showing she had received $4,730 in premium subsidies in 2014, when in fact she had received none. The Minamotos tried unsuccessfully to get a corrected form. Every time they called Covered California, “the right hand could not see what the left hand was doing,” Mabel said.

Tax court

Because of the error, the IRS demanded the Minamotos pay $4,730 or file for a tax court appearance. They chose the latter, and paid a $60 filing fee. Although Covered California never issued a corrected 1095-A, the IRS finally agreed this March that the Minamotos owed no tax.

Hill calls this level of customer service “shameful and embarrassing.” The Legislature set up Covered California as an independent public entity within state government but has limited oversight. It is governed by a five-member board: two are appointed by the governor, two by the Legislature. The fifth is the secretary of the California Health and Human Services Agency, currently Diana Dooley, who declined to comment for this article.

The Legislature oversees most state agencies during the budget process. “That’s when they plead their case and we can get changes that are necessary,” Hill said. But because Covered California gets most of its funding from the federal government, it’s not clear what lawmakers can do to remedy its customer service problems.

Transition points

Consumer advocates say many problems stem from the software system used to sign people up and route them to Covered California or Medi-Cal, depending on their income. Attorney Flory said the system was built too quickly and can’t deal with “out of the box” issues. Covered California continues to upgrade the system, but “it’s like building a plane while flying,” she said.

Agency director Lee said the information technology system is “big and complex,” but the service problems are not the IT system’s fault.

Based on interviews with more than a dozen customers it appears that many glitches crop up at transition points — when one person in a household switches between Covered California and private insurance, Medi-Cal or Medicare.

When George Carewe’s wife turned 65 in January and went on Medicare, he took her off their Kaiser Covered California policy. Carewe, 63, of San Anselmo, received a letter from Kaiser acknowledging the change. He paid his own premiums for January and February, but when he tried to refill his epilepsy drug, was told he no longer had coverage. After a lengthy process, Kaiser reinstated him but refuses to reimburse him for the two months Carewe paid for but did not have insurance.

Berkeley resident Cliff Price’s descent into what he calls a “Byzantine labyrinth of catch-22s” started in August when he dropped his 23-year-old daughter from Covered California after she got a job that provided her with insurance. He maintained coverage for himself, his wife and five other dependent children. But when Price got his 1095-A for 2015, “they show us as having dropped the entire family from coverage in August,” he said.

Price is a certified financial planner who handles employee benefits. Nevertheless, he has been unable to get corrected 1095-A forms since February, and had to file for an extension to complete his tax returns. Price said he feels stuck in one of the “nine circles of hell,” but not limbo, the circle where people don’t suffer. “I’m suffering,” he said.

When Holly and Ron Vetter notified Covered California a year ago that Ron would be switching to Medicare, “they said we don’t know how to do that,” Ron said. After numerous phone calls, the Eureka couple got someone to drop Ron — while erroneously yet briefly moving Holly to Medi-Cal.

Incorrect tax forms

In August, they learned that Ron’s coverage had accidentally been canceled effective April instead of June, making it look for tax purposes like he had no insurance for two months. Five incorrect 1095-A forms later, the problem still hasn’t been corrected.

Holly Vetter said trying to get out of Covered California is like checking out from Hotel California of the Eagles song. “You can never leave,” she said.

Problems also crop up in “mixed households,” in which some members are in Covered California and others in Medi-Cal, the state’s version of Medicaid.

When Robert Bell of San Francisco tried to renew coverage with Anthem for 2016, he went to the Covered California website. “The only information I changed was my income,” he said, but that inexplicably made it look like he was not filing taxes. That somehow threw Bell and his wife, Pascale Leroy, into Medi-Cal, even though they were not eligible. Their 14-year-old daughter, however, has been on Medi-Cal since 2014.

When he tried to make a payment for January to Anthem, it was rejected. Covered California told him it was because “Medi-Cal has a block on your file.” But when he called Medi-Cal, he was told, “We can’t put a hold on your Medi-Cal application because you and your wife have never been covered by Medi-Cal,” Bell said. “At some point in every conversation they say, ‘These mixed households can be a real problem.’” Because of the Medi-Cal mess, he and his wife have yet to get coverage from Anthem this year.

No playbook

Covered California board member Paul Frearer said complaints sometimes reach the board, but that “We are not an operating board. We provide oversight. … We don’t have a direct connection” with customers.

A big problem, he said, is technology. “We have 50 to 100 projects in the queue,” but the completion dates are in “August, September, not today.” In the meantime, “all these people on the phones are trying to figure out solutions.” Frearer said there’s no “playbook” for service agents, and conceded that they are probably “making mistakes.”

Amy Adams, a senior program officer for the nonprofit California HealthCare Foundation in Oakland, said Covered California’s problems may be complex and stem from many sources, but they need to be fixed.

“The question is, who is going to step up and address this problem head on, make it a priority and figure out how all the different organizations can work together in the consumer’s best interest?” she said. “Everyone is trying and has the same intent, which is to get people covered and keep them covered. But there needs to be clarity and clear action.”

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