Love ‘Em or Hate ‘Em, There’s IT Gold in Those FFEs

The policy debate that has been raised by the Obama administration’s healthcare reform program continues to smolder — and even break into heated rhetoric when political supporters and critics of “Obamacare” get into the fray. However, in the three years or so that the program has been under way, its information technology gears have been turning right along.

Recently the value of IT has been documented for a key component of the system: the health insurance exchanges that will function as a central market mechanism for providing healthcare. For IT vendors, the health insurance exchange system has proven to be a major revenue source.

Through March 2013, providers of IT and related services have shared US$394 million in funds spent by the government to establish federally facilitated health insurance exchanges, or FFEs, according to a General Accountability Office report issued in early June. The majority of these obligations — about $248 million, or 63 percent of the total — were incurred in fiscal year 2012.

FFEs are health insurance exchanges that will be set up by the federal government in states that have declined to operate the exchanges themselves. Currently 34 states have taken the FFE option, although 15 of those states said they would offer assistance to the federal government to implement the program.

The target “open for business” date for the FFEs is Oct. 1. At that time, the system should be available to eligible persons seeking to enroll in a health insurance plan, with the full system launch set for January 2014.

However, GAO determined that a significant amount of implementation work still needed to be achieved to meet the target operation dates — and the question then arose as to how much additional spending on IT would be needed.

“More investment will no doubt need to be made, especially for a couple of critical functions,” John Dicken, GAO director for healthcare, told the E-Commerce Times.

The purpose of the GAO study precluded any specific funding projections, except to report that at least $25 million had already been obligated for fiscal 2013 by the Department of Health and Human Services for the FFE program. The Centers for Medicare & Medicaid Services, a unit within HHS, is managing the program.

A Broad Range of IT Requirements

The highest volume of spending to date has been directed toward “the development of information technology systems for the FFEs,” GAO said. The top 10 providers in terms of contract value included CGI Federal at $87.9 million; Quality Software Services, $55 million; Booz Allen Hamilton, $37.7 million; National Government Services, $31.5 million; Mitre, $22 million; Logistics Management Institute, $19 million; DEDE, $16 million; Terremark Federal, $15.5 million; IDL Solutions, $9.3 million, and Navigant Consulting, $8.9 million.

About 77 percent of federal spending for the FFEs was allocated to the top 10 providers, with 45 other vendors sharing the rest of the business.

The range of IT capabilities required to set up the health insurance exchanges is reflected in the top categories for spending on the program, which was authorized by the “Patient Protection and Affordable Care Act of 2010,” frequently referenced as the Affordable Care Act, or ACA.

The major functions and amounts spent so far for the FFE program include information technology, $84.2 million; technical assistance and support, $27.5 million; building a central data hub, $24.7 million; consumer call center activities, $21.9 million; the Small Business Health Options Program; and employer support, $17.1 million, according to the GAO report.

Among other priority spending functions: data architecture requirements support, $13.9 million; state grants, technical assistance and oversight, $13.9 million; enterprise management operations, $13.2 million; website portal development and support, $13 million; and management, support and integration, $12.7 million.

Short-Term Challenge

The GAO report reflects a sense of urgency in achieving system readiness over the next several months. “Whether CMS’s contingency planning will assure the timely and smooth implementation of the exchanges by October 2013 cannot yet be determined,” the GAO report says.

“The two major challenges we found were making sure the data hub operation was sufficient, as well as the adequacy of the consumer assistance components,” said Dicken.

The heart of the program is the data hub that is supposed to integrate information related to an insurance applicant’s financial status, eligibility for enrollment, calculations of potential subsidies for insurance coverage, the status of qualified health providers, records retention, and many other components.

Hurdles remain regarding the hubs, GAO’s Dicken noted, including interoperability issues.

“From an IT preparedness view, technologically it’s theoretically possible that the deadlines can be achieved — but the cooperative elements in terms of data sharing for the hubs is still an issue, among other implementation factors,” Jennifer Covich Bordernick, CEO of the eHealth Initiative, told the E-Commerce Times.

“The situation is like laying railroad track ahead of an oncoming train. Ultimately, the system will be workable, but I don’t think anyone is nave enough to think there won’t be glitches and bumps in the road,” she added.

“I do expect glitches, but I also expect that the October deadline will be met, in the sense that there will be some functionality available on Oct. 1, with more being added between then and Jan. 1 of next year,” Timothy Jost, a health policy specialist and professor of law at the Washington and Lee University Law School, told the E-Commerce Times.

GAO specifically noted some outstanding loose ends in the consumer assistance component of the program related to call centers; enhancing the federal website; media outreach and public education; and tracking consumer complaints.

A cadre of navigators to assist consumers through the system also need to be hired and trained — with much of the training to be conducted online. CMS still needs to complete work on providing computer matchups among agencies, implementing data use agreements among participating parties, and defining technical requirements related to testing and implementation, GAO said.

HHS Is Confident on Exchanges

On a somewhat smaller scale, following its January 2006 launch, the federal prescription drug program, Medicare Part D, went through a shakedown period during which startup glitches received much attention in the media before the system settled down.

“There are some parallels here to Part D, but there are some unique aspects of the FFE program as well that need to be addressed,” Dicken said.

In response to the report, HHS issued a statement to GAO through assistant secretary for legislation Jim Esquea: “We are in the final stages of finalizing and testing the IT infrastructure that will support the application and enrollment process. HHS is extremely confident that on October 1 the marketplace will open on schedule and that millions of Americans will have access to affordable, quality health insurance.”

The large number of private sector IT contractors involved in building the system may indicate the government’s need to maximize the capabilities and innovative technologies available from vendors.

“I can’t speak directly about this program, but in our experience with healthcare IT in general, this administration has been very interested in accepting the suggestions of the private sector,” eHealth Initiative’s Bordernick said.

As to future IT spending for the FFE system, the GAO report provides only a general clue, noting that the administration requested a total of $2 billion for operating and managing the program in its proposed 2014 budget.

While fulfillment of existing IT contracts is far along, “I expect more opportunities will open in the future,” Jost noted, “particularly as more states set up their own state based exchanges.”

John K. Higgins is a career business writer, with broad experience for a major publisher in a wide range of topics including energy, finance, environment and government policy. In his current freelance role, he reports mainly on government information technology issues for ECT News Network.

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