Obamacare Contractor Blamed for Slow Medicare Payments to Hospitals

    The contractor building the financial management system for Healthcare.gov is being blamed by a Houston hospital for delayed Medicare reimbursements that have caused the hospital to miss payrolls for weeks. Novitas Solutions is the federal government's new Medicare payment processor for the south-central region of the country hired by the Centers for Medicare and Medicaid Services (CMS), a division of the Department of Health and Human Services (HHS.)  ABC's KTRK in Houston reports:

According to the CEO Jason Leday, more than 150 employees haven't been paid in nearly a month. 

"I understand that they have children and a house payment, bills. Not getting paid is wow," nearby resident Theresa Gutierrez said. 

The hospital is strapped for cash not because its not making money, but because Leday says a new Medicare payment facilitator named Novitas Solutions is taking too way long to pay out Medicare claims to the hospital. 

Leday says he's owed nearly $3 million in payments from Medicare and can't make payroll...

The Texas Medical Association says they are familiar with complaints like this one regarding the medicare payment facilitator- and a representative told us smaller community hospitals like this one are in similar situations. 

    Novitas also runs the south-central region's Medicare website which was launched just two days before the October 1 launch of Healthcare.gov.  As THE WEEKLY STANDARD reported on December 19, that site has experienced problems reminiscent of Healthcare.gov's troubles, and the site will not be fully operational until well into 2014.
    Novitas's direct connection to Healthcare.gov stems from an emergency, no-bid contract for "financial management services" awarded in August and first reported by THE WEEKLY STANDARD in September.  The services required included accounting, tracking of accounts receivable and accounts payable, documenting funds collected by CMS, and data validation, among other things.  CMS justified the no-bid award because 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" and that the services required were "beyond what was initially anticipated and beyond CMS' currently available resources."
     Novitas did not respond to KTRK for its story, and so far has not responded to a request for comment since the story ran.  In the past, Novitas has referred requests for comment to HHS.
    Despite initially promising more information about the August contract, HHS/CMS has ignored repeated requests for clarification about the nature of the work and how it relates to the mission of Healthcare.gov.  HHS has not responded to a request for comment about the reports of slow payments to hospitals either.


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

$50M Obamacare-Fix: 'Literally a Life-or-Death Situation'

    As the full breadth of the Healthcare.gov debacle became apparent, the Department of Health and Human Services (HHS) turned to the architect of the Federal Data Hub to lead the team of contractors to fix the woefully inadequate website that had disastrously launched just weeks before. As announced on October 25, Quality Software Services Inc. (QSSI), whose Data Hub turned out to be one of the better functioning systems of the Obamacare Marketplace, was named as the general contractor for the rescue effort.  According to the Washington Post at the time, "details on the size of the contract were still being worked out."

    Recently, more details on that contract (treated as an extension to a 2007 Enterprise System Development contract) have become available and shed more light on HHS's own assessment of the situation less than one month after the website launch.  The documents paint a devastating picture of stunning incompetence three and a half weeks into the most ambitious domestic policy program in recent memory: 

During Healthcare.gov's first weeks of open enrollment, many Americans attempted to access the Marketplace and enroll in health insurance.  Due to numerous technical issues, such as hundreds of software bugs, inadequate hardware and infrastructure, and a general lack of system monitoring and incident response capabilities, the Marketplace could only support a fraction of all those who tried to register, apply, and enroll in a health plan.

    The estimated value to QSSI of the one-year contract extension is $50 million:

     Since the situation was deemed to be an emergency by HHS, the contract was awarded without the usual competition, as explained by the Justification and Approval document which cited the likelihood of "unacceptable delays."  A process that normally takes three months was accomplished in less than a day. QSSI's previous work with HHS on Healthcare.gov, as well as experience with "problematic program start-ups" such as the Medicare Part-D Prescription Drug program seven years ago.  HHS foresaw dire consequences if Healthcare.gov was not repaired in a timely manner, warning of "literally a life-or-death situation":

Timely availability of the Marketplace is critical for [uninsured] individuals to be able to obtain coverage by January 1st, 2014, as was specified within the [Affordable Care Act] legislation. For many of them, access to affordable healthcare is literally a life-or-death situation. 

    The contract specifies ten tasks to be performed by QSSI, including "Baseline Current Architecture and Code for all FFM [Federal Facilitated Marketplaces] Systems", "Establish Flexible Testing and Performance Testing Environments", and designing, establishing and maintaining a Healthcare.gov "dashboard" as a real-time tool to track the performance of Marketplace systems and subsystems.

    The Justification and Approval document was signed by nine different HHS officials up the chain of command, including the Chief Operating Officer of the Centers for Medicare and Medicaid Services, A. Michelle Snyder.  Snyder was the last to add her signature on December 20, which likely explains why the document was not posted online until December 23.


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

Contractor Supporting Insurgents in Afghanistan Granted Access to Coalition Facilities

    In a November 8 letter to Secretary of Defense Chuck Hagel, the Special Inspector General for Afghanistan Reconstruction (SIGAR) warned that a contractor that had been identified with the insurgency had been granted access to a Coalition facility last November, and that the threat of further access by such contractors remains.  SIGAR uncovered the information while conducting an investigation of the structural defects at the Parwan Justice Center, a new courthouse being jointly constructed by the State and Defense Departments.  The letter reads in part:

Evidence obtained by SIGAR indicates that a contractor identified by the CENTCOM Commander as supporting the insurgency in Afghanistan gained access to a Coalition-controlled facility. This security lapse seems to have been caused by gaps in how contractor information is shared by U.S. government agencies supporting the reconstruction effort. Unless immediate action is taken to correct this matter, this contractor and other supporters of the insurgency could continue to gain access to U.S.- and Coalition-controlled facilities in Afghanistan...

Evidence obtained by SIGAR indicates that for two days in November 2012, employees of ZMTL were given access to the Parwan Justice Center complex.2 However, these individuals should not have had access to a Coalition-controlled facility, because the U.S. government determined as early as April 2012, that the Zurmat Group poses a threat to U.S. and Coalition forces.  

Specifically, on April 27, 2012, the Department of Commerce added the Zurmat Group and ZMTL to its Entity List3 because of their involvement in “networks that provide components used to make improvised explosive devices (IEDs) used against U.S. and coalition troops in Afghanistan.”

     To date, the U.S. Army has rejected all 43 of SIGAR's requests that insurgent-supporting contractors, including Zurmat, be subjected to debarment from future work on coalition projects.  The Army has rejected these requests on concerns that debarment would "violate their due process rights under the U.S. Constitution."  SIGAR believes this is a "flawed approach", and that "until action is taken on all 43 insurgency-related cases SIGAR has referred to the Army for debarment, the safety of our troops could still be at risk and U.S. government funds could be diverted to supporters of the insurgency."


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

WH: Federal Contractor Executive Pay Higher than President Obama's Salary Is 'Excessive,' Wasteful

    On Thursday, the White House's Administrator for Federal Procurement Policy, Joe Jordan, wrote on the White House blog about a legislative initiative that President Obama is sending to Congress next week "to stop excessive payments to Federal contractors."  Jordan continues:

The proposal builds on previous Administration proposals and language included in the President’s Budget, and marks another important step in our ongoing effort to buy smarter and end wasteful, fiscally imprudent contract spending.

Under current law, contractors that are paid based on their incurred costs (which represents about one-third of current contract spending) may demand reimbursement for executive salaries, bonuses and other compensation up to the level of the Nation’s top private sector CEOs and other senior executives. This taxpayer reimbursement level has skyrocketed by more than 300 percent since the law was enacted in the mid-1990s.

    The president believes excessive compensation for executives is unnecessarily driving up costs for the government.  What is excessive?  Apparently, anything more than the president himself makes [emphasis added]:

The Administration’s proposal calls on Congress to abolish the current formula and instead tie the reimbursement cap to the President’s salary and apply it across-the-board to all defense and civilian cost-reimbursement contracts. Tying the cap to the President’s salary provides a reasonable level of compensation for high value Federal contractors while ensuring taxpayers are not saddled with paying excessive compensation costs. 

    The White House is quick to point out that there is no actual cap being instituted for private sector firms:

And to be clear, nothing in the proposal limits the amount contractors pay their executives. The cap only limits how much the government will reimburse the contractors for the services of those executives. 

    Despite the caveat, as the president likes to say, let us be clear.  Firms that pay their executives more than the president makes are "[saddling] taxpayers ... with paying excessive compensation costs."  IN case there was any doubt, Jordan closes with this:

We hope that this Congress, unlike the last one, will heed the urgent call to restore fiscal responsibility before additional taxpayer dollars that could be used to fund critical agency mission work are wasted unnecessarily to pay for costly overhead in the form of excessive contractor compensation.

Note: This article first appeared at The Weekly Standard.