The Centers for Medicare and Medicaid Services (or, CMS) lost faith in CGI’s ability to create a fully functioning website and marketplace for health insurance in mid-December, a federal document states. The document, prepared by CMS, the Department of Health and Human Services (or, HHS) and the Office of Acquisition and Grants Management, explains why a new contractor is necessary for the development of the federal exchange and Healthcare.gov. As it outlines the case for awarding a contract to Accenture Federal Services, it highlights the shortcomings of the original contractor, CGI.
To award Accenture the $91.1 million dollar, 1-year contract, the case needs to be made that the circumstances call for a process other than full and open competition. The federal agencies explain that there are certain tasks that must be finished prior to March 31, and the CGI will be unable to complete them.
Further, if the regular rules applied, by the time a contract was awarded, the needed work would not be completed until September 2014. It is important the March 31 deadline be met, because that is when open enrollment for federal marketplace insurance ends. After that, people without insurance can be subjected to a penalty.
CMS says it urgently needs the Financial Management Platform for the exchanges to be built. Under this subheading are tasks which need to be completed. Items that need to be developed include the ability to: track eligibility and enrollment; account for subsidies in plans; oversee operational performance; and provide stable financial accounting, and outlook. Of a less urgent nature, are programs which need to be bolstered, the documents states. The generation, and reprocessing of 834s for example, needs to be enhanced. Errors in the 834 forms have been a cause of speculation for months.
In early December, CMS spokesperson Julie Bataille said the major problem with the 834s was Social Security numbers not being sent to insurers, and it had been fixed. At the time, White House Press Secretary Jay Carney gave assurances most 834 problems had been resolved as well. “The majority of fixes to the 834 forms have been made, including significant ones over the weekend,” Carney said.
After enumerating the items which need to be completed if the website, and exchange, is to function properly, the document again made the case for urgency. “There is insufficient time to allow for normal competitive processes to solicit offers, negotiate and award a contract for these services described above,” the document says. “If this functionality is not complete by mid-March 2014, the Government could make erroneous payments to providers and insurers.”
Specifically, lacking a functioning Financial Management platform, ”the entire healthcare reform program is jeopardized.” The threat occurs because certain risks become magnified when enrollments and costs are not accounted for, or the existing CMS program is not implemented. As a result, “erroneous estimates of budgeted and projected payments,” may be created, or it could cause improper “forecasting of Risk Adjustment, Reinsurance, and Risk Corridor; potentially putting the entire health insurance industry at risk.”
Consumers, could also be exposed to unnecessary charges. “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,” the document states. The Financial Management platform is directly involved in providing subsidies. The most recent enrollment data released by HHS indicates that so far, 80 percent of federal marketplace enrollees are receiving federal assistance.
CMS states that after reviewing dozens of companies, it settled on Accenture, partially based on its experience creating California’s state-based marketplace. “Their depth and breadth of resources available immediately to begin work make them uniquely qualified to perform this work,” CMS explained. Accenture “is furthermore uniquely qualified due to their vast experience building online transaction systems that determine eligibility and are in a secure environment.”