(Bloomberg) — UnitedHealth Group Inc. (NYSE:UH) sells insurance on only a few public exchanges, but it stands to profit from the exchange program anyway.
The company’s Optum technology unit helped the U.S. Department of Health and Human Services (HHS) fix the glitch-plagued HHS exchange enrollment system, and managers of many state-based exchanges are using the unit to salvage their own enrollment systems.
The open enrollment period for the individual “qualified health plan” (QHP) coverage sold through the Patient Protection and Affordable Care Act (PPACA) exchanges began Oct. 1 and officially ends today.
Over the last four months, as today’s deadline loomed, Optum has worked with Maryland, Massachusetts and Minnesota to strengthen their online marketplaces. While the $31 million in contracts doesn’t mean a lot to UnitedHealth’s annual revenue, Optum is building a reputation that may give the unit an edge in the future in the $1.1 billion social service agency computer system market, analysts and state officials say.
“We went with them because of their successful experience with HealthCare.gov,” Joshua Sharfstein, the Maryland health secretary, said in a telephone interview, referring to the HHS exchange enrollment website.
Since the Maryland exchange began working with Optum, “they’ve been a great partner in keeping our system moving forward, and thinking about the future,” Sharfstein said.
Optum’s role as a go-to company for governments with health-exchange problems has been something of a surprise, given that its parent company — the nation’s largest commercial health insurer — has been wary of embracing the public exchange system.
Five exchanges
UnitedHealth offers QHPs on the PPACA exchanges in just five markets — Colorado, Maryland, Nevada, New York and the District of Columbia.
In comparison, WellPoint Inc. (NYSE:WLP), the second largest U.S. insurer, offers its medical coverage on exchanges in 14 jurisdictions.
UnitedHealth created its Optum unit in 2011 by pulling together several health-services businesses, including divisions that offer consulting services and that administer prescription drug benefits.
In January, UnitedHealth reported that Optum’s earnings from operations surged 43 percent in the quarter compared with a year earlier.
The unit’s PPACA exchange work can be traced back to UnitedHealth’s 2012 purchase of Quality Software Services Inc., a Maryland-based technology company that had an open-ended contract for technological services with the U.S. Centers for Medicare & Medicaid Services (CMS), the HHS agency that oversees all PPACA exchanges and is in charge of managing the 37 HHS-run exchanges.
Data hub
While QSSI lost a bid to be the principal contractor for HealthCare.gov, it won a smaller contract to build a “data hub” needed to allow an easy flow of tax and other personal information about potential customers between the exchange and various other U.S. agencies.
The hub – which attracted most of PPACA exchange information technology skeptics’ attention before Oct. 1 — was one of the few pieces of the exchange enrollment system that actually worked when the exchange opened for business on Oct. 1.
In late October, as flaws with other components of the enrollment system for the HHS-run exchanges became increasingly public, Andrew Slavitt, Optum’s group executive vice president, contacted Marilyn Tavenner, the CMS administrator, to offer his company’s help, he said in a telephone interview.