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Feds: Without New $91.1M Healthcare.gov Contract, 'Entire Healthcare Reform Program Is Jeopardized'

7:07 AM, Jan 17, 2014 • By JERYL BIER
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The Centers for Medicare and Medicaid Services (CMS) recently announced that Accenture Federal Services would be taking over for CGI Federal as the main contractor for Healthcare.gov.  CMS documents reveal that without the new estimated $91.1 million contract, the government could end up making "erroneous payments to providers and insurers" and that "the entire healthcare reform program [will be] jeopardized."

Although a dozen companies were considered for the position, CMS only held meetings with the four companies that it determined could handle the work before awarding the estimated $91.1 million one-year contract to Accenture. Due to time constraints, competitive bids were not used; rather, CMS estimated the costs to be incurred, including up to $2 million in "travel costs" alone.  

The Justification document, required for the no-bid contract, provides the most candid look yet at the fiasco that has marked the first several months of Healthcare.gov. In describing the need for the new contract, CMS says the following about the inadequate work of the previous contractor, apparently referring to CGI Federal, though the company is not named:

CMS reached this conclusion in early December 2013 after the current contractor did not deliver software and services needed to process inbound effectuated enrollments to an Enrollment Data Store (EDS), perform duplicate enrollment checks, support enrollment reconciliation with FFM issuers, and perform payment calculations of Advance Premium Tax Credits (APTC) and Cost Sharing Reductions (CRS) for all Marketplace programs, state and Federal. 

According to CMS, much of the work on Healthcare.gov needs to be completed by mid-March to avoid quite dire consequences, saying that "[i]f this functionality is not complete by mid-March 2014, the Government could make erroneous payments to providers and insurers" and that "the entire healthcare reform program is jeopardized by significantly increasing... risks."  Those risks include:

• Creating erroneous estimates of budgeted and projected payments associated with operating the FFM [Federally Facilitated Marketplace];
• Inaccurate issuance of payments to health plans which could seriously put them at financial risk; potentially leading to their default and disrupting continued services and coverage to consumers;
• Inaccurate forecasting of Risk Adjustment, Reinsurance, and Risk Corridor; potentially putting the entire health insurance industry at risk; and
• Failing to support the end of the year reconciliation with IRS; leading to greater program costs for workarounds.

Accenture has its work cut out for it with a laundry list of vital "core" functions that must be in place within two months, including the back-end "Financial Management Platform."  That platform:

  • tracks eligibility and enrollment transactions;
  • accounts for subsidy payments to insurance plans;
  • integrates with existing CMS Financial Management system (i.e.HIGLAS);
  • provides stable and predictable financial accounting and outlook for the entire program through administration of Risk Adjustment,Reinsurance, and Risk Corridors; and
  • Oversees the program’s operational performance and integrity to support the reconciliation calculation and validation with IRS.

Accenture must also be able to "enhance existing FFM functionality that was limited in scope due to defect resolution" by providing:

• Notice Generations to include Account Transfer and multiple other notice types that were deferred due to inability for the current contractor to deliver Eligibility Support Worker functionality
• Call Center Representative functionality
• Direct Enrollment integrations
• 834 generation re-processing
• Plan Management (PM) module enhancements to include Application Administrative access for CMS personnel, resolution of defects in Plan Preview tool, re-designing of PM templates
• Completing Edge Server deployment and operations (including automated maintenance and updates)

The government intends the Accenture contract as an interim measure as it spends the next year soliciting competitive bids for a permanent contractor for Healthcare.gov. 

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