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Government Remains Silent on Emergency, No-Bid Obamacare Financial Management Contract

12:40 PM, Nov 21, 2013 • By JERYL BIER
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Even before the October 1 launch, concerns were mounting over the ability of the government to handle the implementation of the Affordable Care Act, or Obamacare. Though many expressed those concerns publicly, insiders at the White House, Health and Human Services, and the contractors hired to design and run the site and its programs were largely silent about potential pitfalls, or at least they downplayed them  However, some internal memos and reports have since come to light as the "glitches" mounted.  But at least one red flag is hiding in plain sight, and the impacts of the serious concerns expressed in an HHS document first reported on by THE WEEKLY STANDARD on September 16 are still looming against a fast-approaching January 1 deadline.

In testimony before Congress on Tuesday, Deputy Chief Information Officer Henry Chao for the Centers for Medicare and Medicaid Services addressed a heretofore largely overlooked element of the federal government's role in Obamacare's ongoing functions: what happens beginning in 2014. The website roll out problems have obscured the larger issue of the ongoing responsibilities of CMS. But, as Politico reports, Chao spoke to some of those issues on Tuesday:

Financial management tools remain unfinished, he said, particularly the process that will deliver payments to insurers... 

The functions need to operate correctly so insurers can enroll the right people in the right plans. That process, called reconciliation, has to work so people can get the care they seek starting as early as Jan. 1. 

...“back office” functions, including accounting and payment systems, were not yet complete.

Last Thursday, President Obama said that the problems of healthcare.gov stem from the fact that it is "very complicated. The website itself is doing a lot of stuff." While there may be room for debate about whether healthcare.gov rivals Amazon or Travelocity in complexity, arguably the real work of Obamacare still lies ahead: the financial management of Obamacare functions over the long haul, to which Chao referred. While the current functions of the website may be complex, the financial management functions that CMS needs to have in place by January 1 are far more involved. Details of these functions and the concerns CMS expressed about its readiness and ability to carry them out are contained in a Justification and Approval that accompanied the awarding of a no-bid, emergency contract to Novitas Solutions, Inc. in early August of this year.

In September TWS reported the $11.6 million contract award, noting that in early August CMS had recognized that the "specialized financial management services and expertise are needed beyond what was initially anticipated and beyond CMS' currently available resources," and that development and testing, at that point less than two months from the October 1 launch and less than five months from the January 1 effective date of new coverage, were "already minimally two months overdue."

The document is remarkable both for its dire warnings and its candor. CMS disclosed that the need had "reached an unusual and compelling level of urgency. The prospect of a delay in implementing the Marketplace by the operational date of January 1, 2014, even for a few days, would result in severe consequences, financial and other" and "if payments are not made and debts are not collected, with critical consideration given to timeliness, accuracy and integrity, the Agency's implementation and operation of the Marketplace and the Affordable Care Act will certainly be jeopardized." These statements are part of a rather lengthy narrative describing the tenuous position in which CMS finds itself, and it is worth an extended look to appreciate the magnitude of the task and the level of CMS's concerns regarding the dire circumstances that would likely result from any further delay [emphasis added]:

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