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.

CBO: Uninsured Under Obamacare Never Falls Below 30 Million

    On Monday, CNBC reported on a new survey that found that two-thirds of Americans currently without health insurance don't know if they will purchase coverage by the deadline, the first day of 2014.  The survey was released by InsuranceQuotes.com, a company that offers comparison shopping for insurance, similar to the "marketplaces" envisioned by the Affordable Care Act (ACA).  The results of the survey surprised Laura Adams, senior insurance analyst at the company:

"I was really shocked that 64 percent [of uninsured adults] said they haven't decided if they will purchase insurance by the Jan. 1 deadline," Adams said. "I was definitely surprised by the high number of people who really have no clue what they're going to do next year." 

"We don't want these consumers to miss this key deadline," she said, adding that new heath-care exchanges under Obamacare will begin accepting applications for insurance in less than four months. "They're going to potentially go without health care for the entire year."

    However, for those who have kept up with Congressional Budget Office (CBO) projections on the implementation and progress of ObamaCare over the next decade, the results will not be all that surprising.  On the contrary, the most recent report issued by the CBO in May appears pessimistic by comparison.  Of the 55 million "Uninsured Nonelderly People" the report lists for 2013, only 11 million, or 20%, are projected to obtain insurance during 2014; the number of uninsured falls only to 44 million next year according to the CBO.  This leaves a full 80% uninsured, significantly more than the 67% found by the survey.
    In fact, the CBO projects that under the ACA over the next decade, the number of uninsured will never fall below 30 million.  Here are the year by year projections from the report:

2013 - 55,000,000
2014 - 44,000,000
2015 - 37,000,000
2016 - 31,000,000
2017 - 30,000,000
2018 - 30,000,000
2019 - 30,000,000
2020 - 30,000,000
2021 - 31,000,000
2022 - 31,000,000
2023 - 31,000,000

     Despite the ACA's mix of requirements, mandates, subsidies and penalties, the CBO projects that the law will never be able to decrease the number of uninsured below 11% of the population.  During the decade projected by the CBO, the percentage of uninsured nonelderly persons decreases from 20% in 2013 to 11% by 2016, but then remains there for the rest of the ten year period.  Not everything in the CBO report is similarly static, however.  The "Average Exchange Subsidy per Subsidized Enrollee" increases 50% over the same time period, rising from $5,290 in 2014 to $7,900 in 2023.


Note: This article first appeared at The Weekly Standard.