Update, 7/15/13, "Obamacare contractor under investigation in Britain," Washington Post, Sarah Kliff
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7/4/13, "British Company Is Awarded Contract to Administer Health Rollout," NY Times, Robert Pear
"Racing to meet an October deadline, Obama administration officials said Thursday that they had awarded a contract worth as much as $1.2 billion to a British company to help them sift applications for health insurance and tax credits under the new health care law.
The company, Serco, has extensive
experience as a government contractor with the Defense Department and
intelligence agencies, and it also manages air traffic control towers in
11 states and reviews visa applications for the State Department. But
it has little experience with the Department of Health and Human
Services or the insurance marketplaces, known as exchanges, where
individuals and small businesses are supposed to be able to shop for
insurance.
Serco will help the Obama administration and states determine who is
eligible for insurance subsidies, in the form of tax credits, and who
might qualify for Medicaid. Tasks include “intake, routing, review and
troubleshooting of applications,” according to the contract.
“This is a huge undertaking,” said Alan Hill, a spokesman for Serco’s
American unit, in Reston, Va. “We have some tight deadlines to meet.”
The exchanges are supposed to be in operation in every state by Oct. 1.
Under the contract, Mr. Hill said, Serco and its subcontractors will
immediately begin hiring 1,500 people.
Since the government first invited proposals, the importance of the
exchanges has grown for several reasons. Many states have decided not to
expand Medicaid, and the White House announced this week
that it would delay, until 2015, a requirement for larger employers to
offer coverage to employees. In addition, many states have decided not
to set up exchanges, leaving the task to the federal government.
Several insurance and health policy experts said they were surprised at
the selection of Serco because it did not have experience with the
exchanges. But that may have helped the company win the contract. In the
last six months, federal health officials expressed concern that
companies already working with exchanges could have an unfair
competitive advantage because they had access to nonpublic information
about how the government was setting up its eligibility and enrollment
system.
Serco will also help the administration decide who is entitled to exemptions from the tax penalties that can be imposed on people who go without health insurance starting next year.
White House officials say that in many cases federal and state computers
will be able to verify a consumer’s income and citizenship status and
determine eligibility in a matter of minutes. But contract documents
indicate that federal officials still expect that one-third of the 19
million applications in the first year will be filed on paper.
One of Serco’s biggest tasks will be to run a giant mail room, where it
will receive paper applications, supporting documentation, and
correspondence from individuals requesting coverage and from employers
and employees seeking insurance. Serco is supposed to make digital
copies of the documents and then destroy most of the originals.
Under the contract, the company is also supposed to help consumers and
the Obama administration resolve “complex eligibility issues.”
Contract documents say that Serco must be ready for an increase in the
volume of work, as some states planning to run their own exchanges may
need extra help from the federal government.
The government said it could expand and extend the initial 12-month contract, bringing its potential value to $1.2 billion over five years. Mr. Hill said the contract could be “one of the largest we’ve won” in the United States, where Serco has 8,000 employees and more than $1.2 billion in annual revenue.
Even as the Defense Department and other agencies face across-the-board
budget cuts, the health law has been a boon to contractors. It would be
virtually impossible for the administration to carry out the law without
contractors to run a call center, a “data services hub” and a
public-relations campaign.
The Government Accountability Office found that the administration had
spent $394 million on contracts to establish federal insurance
exchanges. More than three-fourths of the money went to 10 companies.
They include CGI Federal, a subsidiary of a Canadian company, the CGI
Group ($88 million); Quality Software Services Inc. ($55 million); and
Booz Allen Hamilton ($38 million). " via Free Republic
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