WASHINGTON Aug 26 Three firms involved in the
troubled Obamacare website HealthCare.gov have seen their
contract values exceed initial estimates by more than a
quarter-billion dollars, including the lead IT contractor at the
time of the site's botched rollout, government data shows.
A report released on Tuesday by the U.S. Department of the
Health and Human Services (HHS) Office of Inspector General
(OIG) estimates the original value of 60 information technology
(IT) contracts related to the Obamacare federal marketplace at
But obligations made under 20 contracts had exceeded their
initial estimates by March 2014, with seven contracts more than
doubling in value, according to the report.
The OIG report did not specify a total dollar value. But its
data shows the combined value of the 20 contracts rising more
than $280 million from their original estimates, with over 90
percent going to former lead contractor CGI Federal,
Verizon Communications Inc's Terremark unit and Quality
Software Services Inc (QSSI).
The OIG cautioned that not all the contracts it examined
were awarded solely for HealthCare.gov and its federal
marketplace. Some contracts also cover services to state-run
marketplaces and other federal healthcare programs.
The amount of money actually obligated for the federal
marketplace totalled about $800 million as of February.
The findings are likely to draw fire in Congress about the
escalating cost of the federal marketplace that provides private
insurance to consumers in 36 states.
The Centers for Medicare and Medicaid Services (CMS), the
HHS agency mainly responsible for implementing Obamacare,
responded to Tuesday's OIG report with a statement saying it has
moved aggressively to reform contracting practices to better
monitor contractors and reward performance.
The OIG report follows an investigation by the watchdog
Government Accountability Office that blamed contractor cost
overruns on lax oversight, the complexity of the federal
Obamacare marketplace and the need to rework technology after
the launch of HealthCare.gov.
HealthCare.gov crashed during its Oct. 1 launch after being
overcome by technical glitches that paralyzed the operation and
plunged President Barack Obama's healthcare reform law into
months of political crisis. An emergency rescue operation later
revived the site, enabling more than 5 million people to enroll
for coverage in the federal marketplace alone.
CGI, which U.S. officials blamed in internal HHS emails for
repeated delays and cost overruns, saw the biggest single
windfall with four contracts increasing more than $180 million
in combined value as a result of options and other
modifications, according to data in the report.
Earlier this year, HHS jettisoned CGI as lead contractor for
HealthCare.gov and replaced it with Accenture PLC.
Terremark, HealthCare.gov's host, saw its contract value
rise $50 million, while three QSSI contracts increased $22
million, the data shows.
Eight other contractors also saw increases.
QSSI is a subsidiary of UnitedHealth Group Inc,
which sells insurance in the federal marketplace. Andrew
Slavitt, former UnitedHealth executive who helped fix
HealthCare.gov, was appointed this year as CMS principal deputy
(Reporting by David Morgan; Editing by Ken Wills)