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Watchdogs catalog HHS PPACA exchange contracts

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The Centers for Medicare & Medicaid Services (CMS) had already spent $499 million on public health insurance exchange technology contracts by February, and it had incurred obligations to spend a total of $1.4 billion on exchange IT contracts.

Investigators at the U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) gave CMS’ exchange IT spending totals in a newly released catalog of CMS exchange IT contracts. CMS is helping its parent, the U.S. Department of Health and Human Services (HHS), run the Patient Protection and Affordable Care Act (PPACA) exchanges in 36 states, and it’s helping HHS oversee the state-based exchanges in 15 states and the District of Columbia. 

The HHS-run exchanges had received qualified health plan (QHP) enrollment information for 5.4 million people as of April 19. The PPACA exchange system as a whole reported that it had received enrollment information for 8 million people.

Investigators from HHS OIG — an agency that monitors HHS activities — could not always separate CMS spending on systems created specifically for the HHS-run PPACA exchanges from spending on systems that serve all PPACA exchanges. By February, CMS had spent an average of about $92 per HHS exchange QHP enrollee, and about $62 for each exchange QHP enrollee, on exchange IT systems.

Twenty of the contracts awarded started before 2012, with 22 in 2012, 17 in 2013, and one in 2014. If the early CMS IT spending were treated as if it were spent over about 24 months, the start-up per-member-per-month IT spending would be about $3.80 per HHS exchange QHP enrollees and about $2.60 per PPACA exchange QHP enrollee.

HHS OIG said CMS was legally obligated to spend $799 million by February, or about $148 per HHS exchange QHP enrollee and about $100 per PPACA exchange QHP enrollee.

Spending on IT contracts with firm fixed prices accounted for just $85 million of the actual spending, and contracts with only variable pay accounted for $39 million in spending. The other contracts included a combination of fixed payments with variable or performance-based payments.

The top CMS exchange IT spending recipient was CGI Federal. As of February, the company had received $220 million in payments in connection with five contracts on the HHS OIG list.

Quality Software Services Inc., a unit of UnitedHealth (NYSE:UNH), had received about $100 million through four contracts on the list.


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