Jan. 13—The Obama administration recently announced it has switched the lead contractor for its troubled federal marketplace enrollment website.

The new contractor, Accenture Federal Services, won a one-year contract to oversee healthcare.gov and to prepare for the 2014 to 2015 open enrollment period, according to a weekend statement from the Centers for Medicare & Medicaid Services (CMS).

The Arlington, Va.-based company is a wholly owned subsidiary of Accenture LLP. It replaced CGI Federal, which oversaw the creation and initial launch of the site, which for weeks after its Oct. 1, 2013, launch was able to process only a tiny fraction of the applications for health insurance coverage through 36 federal marketplaces created by the Affordable Care Act.

Senior administration officials said much of the blame for the failure was the fault of CGI and declined to renew its recently expired, two-year and nearly $100 million contract. A CGI official testified to Congress in the fall of 2013 that the website’s failings were not due to the company’s missteps.

The Accenture contract’s scope included improving the federal website’s 24/7 customer support, its eligibility and enrollment functions, and transmitting the personal data in enrollment forms to insurers—all functions that have experienced major problems. CMS will pay Accenture $45 million for the initial phase of the work and pending discussions will determine the total cost of the one-year contract, according to the company.

Fixes since have resulted in improved performance of HealthCare.gov. At the end of 2013, more than 2 million people had signed up for coverage, with about half enrolling through the federal marketplace, officials said.

The contractor switch also followed the Obama administration’s November decision to delay and extend the next ACA open period.

Plans’ Outlooks Unclear

Meanwhile, a mixed picture of the financial health of the marketplace, or exchange, plans has begun to emerge. For instance, recent research by the Commonwealth Fund found a growing number of applicants are going to the exchange websites as their quality has generally improved and enrollment deadlines approached. 

But the same study—based on telephone interviews—found 60 percent of adults with individual coverage said that their insurance carriers had offered them the option of renewing their plans through 2014, and 82 percent planned to keep their old plan. That decision could keep a relatively healthy block of enrollees out of the new exchange plans and affect the solvency of the new plans, according to insurance experts.

Robert Laszewski, an insurance industry consultant, said on his blog that the apparent problem of marketplace plans enrolling dangerously high proportions of sicker customers will not produce a 2015 “death spiral” for the marketplaces because a $25 billion ACA risk fund will offset those problems. The fund lasts from 2014 through 2016.

Publication Date: Monday, January 13, 2014