Sunday, December 15, 2013

Obamacare 'perfect storm': Feds Reveal 10 Percent Error Rate

From CSBC, December 6, 2013, reprinted by permission

An estimated 10 percent of all enrollments now being made on the federal Obamacare marketplace contain data errors that could delay people from actually getting health coverage, officials disclosed Friday. And that error rate for enrollments submitted via and then sent to insurers before December was an estimated 25 percent, officials revealed. The rate fell in the past week, officials said, because of repair efforts to, particularly the discovery and fix of one particular software problem that was causing an estimated 80 percent of data errors, officials said.

But both past and present error rates are much higher than 1 percent, the rate which insurers considered to be unacceptable when doing business outside the Obamacare exchanges. And they are raising serious questions about whether significant numbers of people will actually be without insurance Jan. 1 despite believing they have enrolled.

A spokeswoman on Friday said the federal government and insurers now are engaged in a "very intensive process" to identify enrollment applications that contain the so-called "834 errors," and to get them fixed so that people will actually have coverage. The errors included forms not being generated, duplicate enrollment forms, and forms with missing or erroneous data. "We are going to get to a very granular level to identify the individuals who have been impacted, so we have the ability to reach out to them directly," said the spokeswoman, Julie Bataille, of the federal Centers for Medicare and Medicaid Services, which operates Bataille, whose agency before Friday had repeatedly refused to release its internal estimates of 834 error rates, also said that federal workers and contractors were laboring to fix the problems that are continuing to cause some 834 errors in current enrollments. She said people who have completed their enrollments online should make sure to make their initial premium payments to insurers — which could flag insurers that there might be a problem with that person's enrollment — or ask their insurer to confirm their enrollment is processed.

To fix the errors, insurers are often having to re-enter data by hand for each individual.

Bataille said the estimates of the error rates are based on sampling of enrollments, and that the variation in the kinds of errors have "made it difficult for us" to precisely quantify the error rate. "We do not have precise numbers," she said. Still, in October and November the error rate "could have been as many as one in four," Bataille said.

With the recent fixes, "we believe nine out of 10 834 transactions are now being successfully transmitted," she said. sells Obamacare insurance to residents of 36 states, and has to date enrolled more than 150,000 people. However, the 15 other Obamacare exchanges being run by 14 other states and the District of Columbia are also experiencing problems from 834 errors. After the botched, software-glitch-ridden Oct. 1 launch of, federal officials had initially denied there were any significant problems with 834 transmissions, despite reporting early on that insurers were seeing error rates as high as 50 percent. But in late October, after being recruited by President Obama to oversee the repair effort on the site, management guru Jeff Zients said 834 errors were at the top of his list of problems to address.

Robert Zirkelbach, a spokesman for industry trade group America's Health Insurance Plans, said, "The new process put in place this week is making a difference. The enrollment files are getting better, but there is more work to do to ensure consumers are covered."

Obamacare website ignites security warnings. Cristine Vogel, an associate director in Navigant's health-care practice, said the disclosure about the 834 error rates are troubling, and further support her belief that the Obamacare insurance program is facing a possible "perfect storm" of low enrollment and bad data. "While this is a measurable improvement, a 10% error rate is still a serious concern for the accuracy of the data, which has implications for insurers, providers and consumers, Vogel said.

"While we can now say that only 1 in 10 consumers is going to have a problem, that's still a lot of people," Vogel said. "As enrollment grows every day, this means we're adding more and more errors to the system. While we are decreasing the error rate, we're increasing the enrollment, which by design is increasing the number of people impacted."

Vogel and other experts told CNBC that the 834 problems and low enrollment could leave insurers facing possible losses from Obamacare policies, and hospitals and other providers facing increased costs.

"I try to be an optimist, it's just harder each day," said Vogel, who previously was special advisor for health-care reform to Connecticut's governor. She said she expects the cumulative effect will eventually hurt people providing and receiving care. "We all knew that it was going to impact the insurance industry, and now it's going to impact the provider and the consumer," she said. "It's difficult for me not to think that perfect storm that we've all been trying to avoid, and not plan for, may be approaching."

Since open enrollment for Obamacare insurance began in October, an estimated 330,000 people nationally have applied for eligibility and selected an insurance plan being sold through the federally run site or the 15 other health exchanges. That is only about 25 percent of the 1.2 million people federal officials originally estimated would have signed up in the first two months of enrollment. People have until Dec. 23 to enroll in Obamacare coverage to have it kick in by Jan. 1.

In addition to the 834 error rate, another persistent technical problem on is preventing it from sending applications for the government-run Medicaid program to the states where the applicants live. Both glitches could lead to unknown numbers of people not having insurance coverage on Jan. 1 as they assumed they would. And if those people get health-care treatment when they are not covered, they could default on charges they incur, Vogel and other experts told

Paul Tiede, executive leader of solutions for SunGard's insurance business, said the low enrollment to date in Obamacare insurance is not, in itself, a threat to the bottom line of most insurers, because it would represent a small fraction of their current business. But Tiede warned "that could change." "The great risk is the healthy 20- and 30-year-olds sit it out," and don't enroll, leaving insurers with a risk pool that is heavily overweighted with an older, sicker group of enrollees who use benefits, Tiede said, referring to a phenomenon known as adverse selection. "That would be serious."

Another expert, Nancy Thompson of CBIZ Benefits & Insurance Services, said "no one had the crystal ball" that predicted just how dire the enrollment levels and data problems in enrollment files would be at this point, more than two months after Obamacare launched.

"Let's face it, with the number of uninsured that we have in the United States, for us to be sitting at less than 400,000 enrolled, that's staggeringly low," said Thompson, senior vice president and sales director at CBIZ. "The bigger concern is, what kind of individuals are enrolling," Thompson said, echoing Tiede's concern about adverse selection. "The low enrollment numbers could absolutely play havoc on the rating structure." Thompson noted that when they designed their plans and set premium prices for 2014 for the Obamacare exchanges, the exchanges had never enrolled anyone, so there was no data to use to predict who would enroll, and what their level of benefit use would look like.

Now, with low enrollment levels overall nationally, and with the assumption that a disproportionate number of people who did enroll were previously uninsurable because of pre-existing health conditions, "there's no doubt that some of the insurers missed the mark when they set rating structures," Thompson said. That in turn could lead to higher premium prices next year, and to some insurers dropping out of the government-run exchanges, she said. But Thompson also said that some insurers who have been reluctant to sell on the exchanges would see an opportunity for business after data comes in from 2014, and then decide to start selling on the exchanges.

Even if enrollment picks up significantly on the exchanges this year, Thompson said, "the back-end technology is not fixed."

"Insurers are absolutely concerned ... because the information they are getting is not accurate," she said. And because that information is not accurate, some people who believed they actually enrolled "are going to experience significant, uncomfortable headaches when they go to utilize their benefits," Thompson said.

Marketing Blunders in the International Marketplace and How to Avoid Them

clip_image003This article was written by John Rau, SCORE Orange County Business Mentor

If in the development of your business marketing plan you have the desire and/or plans to move into the international marketplace, then there is a totally different set of marketing issues that you need to be aware of in your market research efforts. In this situation, your market research efforts will still include the need to address who your target audience is, what the demand is for your product(s), who is your competition (now both U.S. and non-U.S), how their products compare with yours in terms of price, quality and other features, how do you get your product(s) into this new marketplace and, more specifically, how do you “represent yourself” in the context of the different cultures that you will now encounter. Global marketing has its own set of issues that you will need to address.

You will need to be sensitive to not only cultural and emotional values when marketing your products but also language differences. The web contains an extensive collection of international marketing blunders to illustrate this point. Amusing examples from numerous web sites include the following:

  • When Mitsubishi launched its Pajero 4WD product in Spain, they forgot to take into consideration that the word “Pajero” means “jerk” in Spanish.
  • KFC’s slogan “finger-lickin good” was translated in Chinese to mean “eat your fingers off”.
  • GEC and Plesssey had a joint company in France called GPT. When GPT is pronounced in French, it sounds as “Jay-Pay-Tay” which is similar to J’ai pete, which means “I have farted”.
  • Scandinavian vacuum manufacturer Electrolux used the following in an American campaign: “Nothing sucks like an Electrolux.”
  • When Gerber started selling baby food in Africa, they used the same packaging as they did in the U.S., with the beautiful Caucasian baby picture on the label. Later they learned that in Africa, companies routinely put pictures on the label of what’s inside, since most people can’t read.
  • Pepsi’s “Come alive with the Pepsi Generation” when translated into Chinese came out as “Pepsi brings your ancestors back from the grave”.
  • Coors translated its catchy slogan “Turn it Loose” into Spanish. It read as “Suffer from Diarrhea”.
  • Clairol introduced the “Mist Stick” curling iron in Germany. “Mist” is German slang for manure.
  • Expanding to Mexico, the Dairy Association’s hugely successful “Got Milk?” was translated into Spanish with the result being “Are you lactating?”
  • When Schwepps was expanding into the Italian market, “Tonic Water” got translated into “Water from the toilet”.
  • Frank Perdue’s chicken slogan, “It takes a strong man to make a tender chicken” was translated into Spanish as “It takes an aroused man to make a chicken affectionate”.
  • When Puffs tissue started marketing their tissues in Germany, it didn’t do so well. The reason being that “Puff” means “brothel” in Germany.
  • When Hunt-Wesson introduced their Big John products in French Canada as Gros Jos, they forgot to note one thing, “Gros Jos” is slang for “big breasts”.
  • And lastly, the Japanese company Matsushita Electric (Panasonic) was promoting a new Japanese PC for internet users. Panasonic created a new web browser and had received license to use the cartoon character Woody Woodpecker as an interactive internet guide. The day before the huge marketing campaign they realized their pending advertisement error, namely, the new product featured the following slogan: “Touch Woody—The Internet Pecker”.

As pointed out by Karl Livingston in his article “Massive Marketing Blunders: What Were They Thinking?” (see, examples such as cited above show that promotional messages in one country might deliver one message whereas in another country the same message can be conceived as something else. He says that some of the things that need to be taken into consideration when launching a new product or creating a marketing campaign in a foreign country, as illustrated in the above examples, are: language, culture, emotional value and slang languages among many other things.

In his article entitled “Marketing Blunders & Global Culture”, Thomas Metcalf of Demand Media (see suggests what to do to minimize the chance of making global blunders. He says to plan ahead. “Select the countries where you intend to do business, and learn all you can about them. Find a native speaker who can help you with translations and guide you through cultural innuendo. You must familiarize yourself with language, graphics, color and symbolism. As you learn about the culture, examine the attitudes about aging, gender roles and tradition. Explore the economic conditions—not just the current state of affairs, but also how the countries have reacted to economic turmoil in the past. Make sure your name and brands are acceptable overseas. What is acceptable in one country may be insulting in another, and there may be regional differences within countries. With best efforts on your part, you should be able to shrink the barriers and enjoy good business relations.”

Changing Lanes. When Starting from Scratch, Let Organizational Vision Be Your Guidepost

From SUCCESS Magazine, December 2013 edition, reprinted by permission

After successful stints leading sales teams at Yelp and Twitter, Amanda Levy took a year off to travel and volunteer around the world before settling into a position that fit her—vice president of sales at leading online petition site

When taking a new path with a new crew, job No. 1 is to hone a new sense of purpose, she told SUCCESS. As ventures into new territory with its politician-to-constituent forum, for Decision Makers, Levy continues to blaze trails.

Q: What is one of the key areas of understanding when starting at that you needed to reach in order to do your job in the best way possible?

A: I think the most important thing was to understand our users and why they come to Change. For many of them, it is because they feel a strong desire to take action. They support a particular petition and they want to create social change. Our goal then is to connect these users with the great organizations that are supporting each of these different causes. So that means a lot of what I first need to do is meet with people and listen to everyone who will be using our platform.

Q: How did you build your sales teams at Twitter and Yelp, and how have you applied those philosophies and experiences to

A:When it comes to building a sales team, regardless of what company you are in, the process is remarkably similar: You must make sure to hire truly phenomenal personnel, who are in some ways better than you are. Then you train them in such a way that you set them up for success. And then everyone on the sales staff must be totally engaged in building the long-term sustainability of the product we are selling.

How to Negotiate a Lease -- A Beginner's Guide

In the fifth edition of his book Retail in Detail, retail business owner and consultant Ronald L. Bond offers small-business owners an updated, no-nonsense guide to the world of retailing. In this edited excerpt, the author offers expert advice on the ins and outs of leases and how to get just what you want in your retail lease.

Negotiating a lease can be as simple as buying a toothbrush or as complicated as buying a new car. Obviously, it's simpler if you're dealing with an individual owner who's very flexible or a large corporation whose policies allow for no negotiations. But we'll assume you'll be dealing with a leasing agent or shopping center manager and that there will be some room for negotiation, as is usually the case.

Leases for retail space usually have a minimum term of three years. The following are usually included in retail space leases, in various combinations.

  • A basic term. The lessee -- that's you -- is obligated to pay for the space for a specific time period (usually three years), whether or not your business survives that long.
  • A basic rental rate. This is calculated per square foot or as a percentage of gross sales, whichever is greater. Typical rents may range from $.90 to $3 per square foot per month or 6 percent of gross sales.
  • Assignment of maintenance responsibility. The lessee is normally responsible for maintaining all equipment serving the space, including electrical, plumbing, heating, air conditioning, and structural components.
  • Water and sewer. These are usually included in the lease rate, but expect to pay extra for gas, electricity, and trash removal.
  • Triple net. This is a monthly charge, usually for the expense trio of taxes, insurance, and common area maintenance, hence the term "triple net." This charge is designed to allow the lessor to pass on his or her variable costs to you. They can represent an additional 10 percent to 35 percent added to your basic rent.
  • Finish-out allowance. In return for the three-year term, the lessor will usually provide you an allowance to finish out the space to your specifications. This is typically $10 to $30 per square foot, which is sufficient for basic walls, ceiling, lighting, electrical, plumbing, heating, air conditioning, and insulation. It doesn't normally cover wall finishes, carpet and floor tile, signs, and any custom work to suit your specific needs.
  • Prepaid rent. This is typically one to three months.
  • Security deposit. This is usually zero to two months' rent.

As the first step in lease negotiations, contact leasing agents regarding spaces in which you're interested and ask for proposals. After receiving several, you should have an idea of the menu of terms and prices you'll have to deal with in your negotiations. At this point, you may find it desirable to engage a leasing agent to negotiate the lease for you, if you feel overwhelmed by the task or if you're not a particularly good negotiator. You can do it yourself, however, and by following some basic guidelines, you should be able to achieve reasonable terms.

It will help if you can locate at least two spaces that meet your needs, thus ensuring competition for your lease. After you receive the proposals from the leasing agents or center managers, don't let them pressure you into signing a lease prematurely.

You should have an attorney review your lease, but don't let him or her make decisions for you. Attorneys are paid to point out potential risks, and they may be overly cautious to make sure you don't later blame them for failing to warn you properly. Listen to the attorney's advice, but make your own business decisions.

Prepare and submit a counter-offer, in writing, in response to the proposals. Some proposals you might consider including are:

  • Lower basic rates
  • No payment of percentage of sales or a smaller percentage
  • Larger finish-out allowance and coverage of more improvements, such as floor coverings and interior partitions
  • Graduated lease rates, starting low but increasing over the lease term
  • Limits on "triple net" charges
  • Inclusion of some utilities in the base rate
  • Shorter- or longer-lease terms
  • "Escape" clauses to allow you to get out of the lease in certain circumstances
  • Free rent (one to six months, depending on market conditions)
  • Lower prepaid rent and security deposit

Include several or all of these in your proposal. You're unlikely to succeed with them all, but it will establish a good position from which to negotiate and help you evaluate the willingness of the lessors to engage in meaningful negotiations. Make sure the lessors are aware that you're negotiating with other centers.

After you feel you've gotten all the concessions you can get, choose the one that's to your best advantage and finalize the terms.