California awards $359m health exchange contract

Two of the biggest states in the union – California and Florida are moving forward with plans to build health care exchanges. California has chosen Accenture to build out its health exchange – CalHEERS, the biggest system and biggest contract award of its type in the country. Florida is choosing Xerox for its efforts.

The California Health Benefit Exchange, in collaboration with the Department of Health Care Services (DHCS) and the Managed Risk Medical Insurance Board (MRMIB), has awarded a contract to Accenture LLC to develop a new consumer friendly web portal and eligibility and enrollment system to simplify and streamline how millions of Californians get health coverage. This contract is part of the Exchange’s implementation of the Affordable Care Act in California by designing and building a new web-based California Healthcare Eligibility, Enrollment and Retention System (“CalHEERS”).

The new system will start enrolling individuals as early as next year. The web portal will allow users to shop and compare plans and pricing. Phase 2 of the project will also give users the ability to see if they are eligible for subsidized care plans.

The contract includes about $183 million for the initial development and implementation of the system. Another $176 million will be paid out over the remainder of the three year contract for later phases of the build out. The state estimates that approximately 4.4 million residents will have been helped through the project by 2016.

In Florida, Florida Health Choices, a corporation established by the state to improve access to health care, has selected Xerox (NYSE: XRX) to administer its Insurance Marketplace. The nine-year contract is valued at $68 million.

The company will also be building an online portal for consumers with partner CHOICE Administrators Exchange Solutions. The solution preserves the benefits of employer-sponsored insurance and eases the administrative burden for small businesses. Xerox will also provide eligibility determination and enrollment management services for the program, and operate a customer contact center to share information on marketplace offerings.

Beyond their size, the awards are notable as a signal that states are likely to continue to move forward on some of the bigger reforms passed through the Affordable Care Act (ACA), despite a current Supreme Court challenge. The Court is set to rule tomorrow on whether all or parts of the bill will be overturned. The challenge is brought by 26 states claiming federal overreach into areas that should be regulated by the states themselves.

States have been quiet about what they plan to do if the law is overturned. Many compliance projects like exchanges and new payment schemes for programs like Medicare and Medicaid are already in the works as deployment timelines required completion by 2013. Discussions at the federal level about what to do have been ongoing, although members of Congress and some state observers say that if the law is overturned in total or in part, it will likely create “chaos,” while officials figure out where to go next.

Health care costs in Calfornia are on track to take a majority of state budget dollars unless the local system undergoes some serious reforms. As CivSource reported previously, a new study from the Bay Area Council Economic Institute (BACEI), shows that if allowed to stand, health care reform will create tens of thousands of jobs for the state in addition to helping contain costs.

Florida is one of the 26 states bringing the challenge in the Supreme Court and originally sent back federal funding provided to help the state comply with health care reform legislation. Governor Scott has since reversed some of those positions in order to maintain some health and human services in the state. The award signals that the state is also looking at ways to provide more health care options to local residents despite its own opposition to the bill.

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