Apparently, Obamacare is in a lot bigger trouble than anyone has let on — or anyone has imagined.
A document given to the contractor who replaced CGI in December shows how truly desperate is the position of the government.
Accenture has been tasked with finishing the construction of the healthcare.gov website — specifically, the back end of the site which will allow the transfer of subsidies directly to insurance companies.
The document makes it clear that the reason CGI was let go was because the government had no confidence that the company could affect the changes necessary to get the payment system up and running in time to avoid disaster.
The document said officials realized in December that the need to bring on Accenture was so urgent that there was no time to go through the “full and open competition process” before awarding them with a $91 million contract.
“There is limited time to build this functionality and failure to deliver…by mid-March 2014 will result in financial harm to the government,” the document says.
“If this functionality is not complete by mid-March 2014, the government could make erroneous payments to providers and insurers,” it continues. “Additionally, without a Financial Management platform that accounts for enrollments and associated program costs that integrates with the existing CMS Accounting platform, the entire healthcare reform program is jeopardized.”
Not completing the job on time may also result in harm to insurance companies:
Many of those who have signed up for ObamaCare are eligible for federal subsidies, which the government pays directly to the insurers. The document says that failure to complete the project by mid-March could result in “inaccurate issuance of payments to health plans which could seriously put them at financial risk; potentially leading to their default and disrupting continued services and coverage to consumers.”
On Thursday, Gary Cohen, the director of Medicare’s Center for Consumer Information and Insurance Oversight, told the House Energy and Commerce Oversight Subcommittee that the government would start paying insurers as soon as next week based on estimates of the federal subsidies owed to them.
Cohen said that “because we don’t have full functionality” of the website that the government was using a workaround, and that the automated payment system would be ready “in the next months.”
While Cohen did not give a timetable for the project, he said that a stopgap system would pay insurers next week based on calculations of what they are owed.
However, the back-end problems extend beyond federal subsidy payments. According to the document, the system is vulnerable to “inaccurate forecasting” of the risk mitigation programs in place to pay insurers who enroll a higher-than-expected number of sick patients with expensive bills, “potentially putting the entire health insurance industry at risk.”
By mid-March, Accenture must build a financial management platform that tracks eligibility and enrollment transactions, accounts for subsidy payments to insurance plans, “provides stable and predictable financial accounting and outlook for the entire program,” and that integrates with existing CMS and IRS systems.
Accenture will also have to clean up some aspects of the project that CGI failed to complete, such as the notorious 834 enrollment transmissions to insurance companies that in October and November were transmitting inaccurate and garbled data.
The government is going to guesstimate subsidies, which may lead to overpayment or underpayment to insurance companies. Apparently, they are going to leave it up to the IRS to determine if insurance companies are owed money, or whether the companies must refund the government.
Sounds like another disaster waiting to happen.
Of more interest is the “drop dead” date for Obamacare. Is it routine for bureaucrats to be overly dramatic in tasking a contractor, exaggerating consequences for failure? I can think of no reason why a procurement document would employ such a tactic, which leaves us with the very real possibility that Obamacare is in deep, deep trouble regardless of who signs up and how many.
I suppose Obama could pull another rabbit out of his hat and extend the deadline — again. Would that give Accenture more breathing room? As with so much of Obamacare, we just don’t know.
Don’t miss: Last Chance to Stop Obamacare in Its Tracks: Prevent Insurance Company Bailout
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