To Avoid 'Severe Consequences' From Delays, HHS Awards No-Bid Contract for Marketplace

    In August, the U.S. Department of Health and Human Services' Centers for Medicare and Medicaid Services (HHS/CMS) quietly awarded a $11.6 million contract (maximum) to Novitas Solutions of Camp Hill, PA, already a CMS contractor, for financial management services related to the agency's implementation of the new Health Insurance Marketplace, due to open on October 1.
    The contract was awarded without competition to the firm as "an interim, transitory solution to meet the Agency's immediate and urgent need" because development and testing of the financial management services system "is already minimally two months overdue."  The documents accompanying the contract award notice state the reasons for the no-bid contract in rather dire terms [emphasis added]:

With the impending and mandated October 1, 2013, Marketplace enrollment and January 1, 2014 go-live deadlines nearing, CMS' need for contractor-provided financial management services has reached an unusual and compelling level of urgency. The prospect of a delay in implementing the Marketplace by the operational date of January 1, 2014, even for a few days, would result in severe consequences, financial and other. The effect of those consequences would most importantly be measured by the impact to the estimated millions of Americans and small businesses that have no health care today or access to affordable health care. Furthermore, if payments are not made and debts are not collected, with critical consideration given to timeliness, accuracy and integrity, the Agency's implementation and operation of the Marketplace and the Affordable Care Act will certainly be jeopardized.

    HHS explains in the Justification and Approval document that CMS recently realized that "specialized financial management services and expertise are needed beyond what was initially anticipated and beyond CMS' currently available resources."  The description of the services required include:

• accounting
• printing and mailing
• tracking of accounts receivable and accounts payable
• documenting funds collected by CMS
• data validation
• activity reporting
• debt management functions
• application of receipts to appropriate transactions
• referral of debt to the Department of the Treasury
• specified batch payment functions in HIGLAS [Healthcare Integrated General Ledger Accounting System]
• systems interface testing and support for HIGLAS functionality.

    The agency said the awarding of this contract is a temporary measure and stated its intention for "full and open competition and to award a resulting contract no later than July 2014."  The paperwork approving the awarding of the emergency interim contract was signed by several HHS employees in the chain of command, up to and including CMS Chief Operating Officer A. Michelle Snyder.
    With more than three years having passed since the Affordable Care Act was signed into law, it is unclear why HHS did not recognize this need until less than two months before the launch of the Marketplace.


Note: A version of this article first appeared at The Weekly Standard.