Questions Raised About IT Contractor Building Health Plan Exchange

Concerns are being raised about a potential conflict of interest involving a contractor selected to complete IT work for a federally run health insurance exchange, The Hill's "Healthwatch" reports (Bolton, "Healthwatch," The Hill, 11/3).


Under the federal health reform law, states by January 2014 must create state-based health insurance exchanges to provide coverage options for individuals and small businesses.  The insurance exchanges will rely on a solid IT foundation to connect with advanced eligibility systems for Medicaid and other state-administered health programs (iHealthBeat, 9/19).

According to "Healthwatch," experts predict that as few as 15 states will establish their own health insurance exchanges by the 2014 deadline. Therefore, many states will rely on the federally operated insurance exchange.

Contract Details

UnitedHealth Group recently acquired Quality Software Services -- or QSSI -- which in January received a large contract to build a federal data services hub that would be used to operate the federal health insurance exchange.

Although QSSI's contract is not publicly available, a draft statement of work used during the bidding process suggests that the contractor will finalize technical requirements for creating and delivering plan management services, including:

  • Certifying and decertifying health plans offered through the federally run health insurance exchange; and
  • Monitoring agreements with health plans to verify compliance with federal requirements.

Concerns About Conflict of Interest

UnitedHealth Group's acquisition of QSSI was not disclosed to the Securities and Exchange Commission, spurring concerns that UnitedHealth Group's insurance subsidiary, UnitedHealthcare, might benefit from the transaction.

For example, the federally run health insurance exchange will allow consumers to input personal information to determine their eligibility for federal subsidies and options for private coverage. If insurance companies had access to such demographic details, they could use the data to decide which markets to enter, "Healthwatch" reports.

In addition, insurance companies will need to meet certain federal requirements to be included in the federally run insurance exchange. If an insurer could influence the IT infrastructure used to run the exchange, it could:

  • Have an unfair advantage in designing plans to meet the standards; or
  • Make it difficult for competitors to be listed in the exchange.

Sen. Orrin Hatch (R-Utah), recently sent a letter to HHS Secretary Kathleen Sebelius expressing concern about UnitedHealth Group's purchase of QSSI and seeking details about the contractors selected to help build the federally run exchange. Sebelius has yet to respond to Hatch's letter.

Response to Concerns

Erin Shields Britt, an HHS spokesperson, said CMS "evaluates contracts to ensure there are no conflicts of interest."

Don Nathan -- chief communications officer for UnitedHealth Group -- said QSSI would not have regulatory authority over the federal exchange. He said, "What QSSI does is connect and integrate systems. Policy determinations, regulatory oversight comes from CMS" ("Healthwatch," The Hill, 11/3).
Barbara Duck
Just more pain in the neck insurance contracts..I wonder too how this will work..

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