Federal law raises questions about who can bid on IT projects supported by health Exchange

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Federal law raises questions about who can bid on IT projects supported by health Exchange

Tue, 10/14/2014 - 4:50am -- tim

by Morgan True vtdigger.org A provision of the Affordable Care Act precluding health insurers or companies in the “same controlled group of corporations” as a health insurer from holding exchange contracts raises questions about Optum working on Vermont Health Connect. Concerns regarding Optum were raised at the federal level by Senators Orrin Hatch, R-Utah, and Chuck Grassley, R-Iowa, the ranking members of the Finance and Judiciary committees respectively.

optum_logo2xVermont Health Connect featureA state senator raised concerns that the same provision may interfere with Hewlett-Packard’s plan to hire Blue Cross Blue Shield of Vermont as a subcontractor on a state health IT project.
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Hatch and Grassley sent a letter in June to Marilyn Tavenner, administrator of the Centers for Medicare and Medicaid Services, spelling out their concerns about Optum’s involvement with federal and state exchanges.


Optum is a division of United Health Group, which also owns health insurance giant United Healthcare. United Healthcare sells insurance through exchanges in at least 10 states, but not Vermont.

As a result of Optum’s “key technical advisor position” to the federal healthcare.gov exchange and its similar role in several state exchanges, the company has access to a “significant amount of highly sensitive data” including payment calculations for reinsurance, risk adjustment and risk corridors and the data collected to support those functions, according to the senators.

“We would like to make sure all potential conflicts of interest mitigated,” they wrote in the letter, which requests that the Senate Finance Committee be provided with a trove of information about Optum’s hiring.

Days after the senators sent their letter to CMS, Optum CEO Andy Slavitt left the company to become Tavenner’s deputy at CMS.

A CMS spokesman said the agency “follows federal contracting guidelines, which require us to evaluate all contracts to ensure that they do not have any conflicts of interest before making an award.”

Optum has an “informational firewall” to ensure “organizational and physical separation,” said Aaron Albright, a CMS spokesman, in an email.

The company has a policy whereby no employee with access to nonpublic information assigned to an exchange project will later be involved in the development of health coverage at United Healthcare, Albright added.

Optum currently has a $15 million contract to play a leading role in fixing the underperforming Vermont Health Connect exchange.

Optum has also placed bids for the state’s Integrated Eligibility (IE) system and the customer call center portion of its Medicaid Managed Information System (MMIS), both of which directly support Vermont Health Connect. Both projects are heavily federally subsidized.

The MMIS and IE contracts are worth a combined $139 million. The MMIS contract is valued at $86 million, but it’s unclear what the contract for just the call center would be worth.

The current MMIS call center, operated by Maximus, is the customer service line for Vermont Health Connect and the state’s Medicaid program. State officials have consistently counted people who discovered that they were Medicaid-eligible through Vermont Health Connect in its count of ACA enrollees.


The same ACA provision could also scuttle Hewlett Packard’s plan to subcontract with Blue Cross Blue Shield of Vermont as part of its bid to remain the state’s MMIS contractor.

Two sources with knowledge of Hewlett Packard’s bid told VTDigger that it includes Blue Cross as a subcontractor to operate the call center. The sources asked to remain anonymous because the bids are sealed until a contract is awarded as part of the state’s competitive bidding process. The contract is expected to be awarded in December.

Officials from Blue Cross and HP would not confirm if Blue Cross is part of HP’s bid for the MMIS contract, citing the ongoing procurement process.

State officials said they could not confirm Blue Cross’ involvement either citing similar reasons.

“The terms of the (request for proposals), the bids are subject to public records requests after the successful bidder has executed a contract, not before. Prior to contract selection the respective bids are considered confidential and proprietary in order to keep the process fair,” said Mark Larson, commissioner of the Department of Vermont Health Access.

State officials declined to address directly whether Optum or Blue Cross should be able to hold MMIS or IE contracts.

Lawrence Miller, chief of Health Care Reform, said Optum’s current contract meets “all relevant federal standards.”

“We would review any bid for any of the related IT or services contracts that are contemplated for the Health and Human Services Enterprise with the same considerations,” he added.

The Human Services Enterprise is the state’s name for the combined IT overhaul of human services that includes Vermont Health Connect, IE and MMIS.

At a recent legislative oversight meeting, Sen. Jane Kitchel, D-Caledonia, said she had heard “Hewlett Packard might want to partner with Blue Cross Blue Shield” on its bid for the contract.

“Is the collateral impact that you perhaps excluded a Vermont entity, an insurer, from working in partnership with another entity to bid, simply because there’s a federal law that would preclude their involvement, because of that contract?” Kitchel asked Agency of Human Services Harry Chen. “Do you understand what I mean?”

“I understand what you’re asking, I don’t have an answer,” Chen responded.