Health Insurance ExchangeOutsourcing and subcontracting potential for           IT service providers                2013-2...
Table of Contents1.      Executive Summary ..................................................................................
1. Executive SummaryHIX or the Health Insurance Exchange is emerging as the point of activity across the USlandscape with ...
2. States’ decisions for establishing exchangesThe deadline for deciding on establishment of health exchanges within the s...
3. Contract PotentialThe contract potential for the exchanges runs into USD 2 Billion. The federal government has allocate...
Exchange Planning              Exchange Establishment                                 Grant Amount                     Gra...
State            Contract details           Worth         Stage                        Notes                      Subcontr...
Of the 33 states not opting for an in-house exchange, grant information is publicly available for 16 statesfor which USD 2...
Figure 3: Exchange Establishment                                                                                          ...
6. References[1] http://www.idahoreporter.com/2012/kpmg-idaho-health-insurance-exchange-would-cost-77-million-to-implement...
About the AuthorHarmanjit Singh, B.E. (Information Technology), M.B.A. (Information Technology and Strategy)Presently work...
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IT outsourcing and subcontracting potential for Healthcare Insurance Exchanges

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This industry report tracks the outsourcing and subcontracting potential for setting up Healthcare Insurance Exchanges mandated by the Affordable Care Act or the ACA in 2012.

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IT outsourcing and subcontracting potential for Healthcare Insurance Exchanges

  1. 1. Health Insurance ExchangeOutsourcing and subcontracting potential for IT service providers 2013-2014 November 1, 2012 Authored by Harmanjit Singh
  2. 2. Table of Contents1. Executive Summary ............................................................................................................................... 22. States’ decisions for establishing exchanges ........................................................................................ 33. Contract Potential ................................................................................................................................. 44. Contracts awarded to IT consulting/Service organizations .................................................................. 55. Opportunities ........................................................................................................................................ 6 5.1 Contract size:....................................................................................................................................... 76. References ................................................................................................................................................ 9About the Author ........................................................................................................................................ 10ACA outsourcing potential 2013-14 Harmanjit Singh Page 1
  3. 3. 1. Executive SummaryHIX or the Health Insurance Exchange is emerging as the point of activity across the USlandscape with both the federal and most state governments participating in establishing publicexchanges wherein insurance policies can be compared and purchased online. The ACA or theAffordable Care Act sets up the framework for setting up and running the exchanges post whichthe states have the option of either:  Setting up and running their own exchanges (Active purchaser) Partnering with the federal government to establish/run the exchange (Clearing house)  Have the federal government establish and run the exchange for the statesThis document refers to the outsourcing and subcontracting potential that exists for IT consultingand service organizations and how they can participate in the huge contracts up for grabs overthe next 2-5 years, i.e. from 2012-2014 and beyond when exchanges are required to beoperational. Federal grants for conducting feasibility and establishment of the exchangesexceed USD 2 Billion. As of November 2012, the following is the status of the exchanges for thestates in the US [2]:  18 states would act as active purchasers  6 would be partnering with the federal government  15 would have the federal government run the exchange for the states  11 undecidedContracts worth USD 800 Million have already been awarded to IT service and consultingorganizations as of Q3 2012.States with undecided status have until Dec 14, 2012 to submit their exchange plans to thefederal government for certification post which they would default to a federally run exchange.The exchanges are supposed to operationally running by Jan. 1, 2014.Note: The information contained in this document is as of 16th November 2012 and is subject to change post lawspassed within each state. The document does not cover a background of the ACA or the HIX. The reader is advisedto check numerous online resources detailing the same. Part of this report has not been uploaded for copyrightreasons. You may contact the author for full access to the report.ACA outsourcing potential 2013-14 Harmanjit Singh Page 2
  4. 4. 2. States’ decisions for establishing exchangesThe deadline for deciding on establishment of health exchanges within the state has been extended toDecember 14 2012. 18 states have already confirmed their willingness to run their own exchanges and afew have already extended RFPs and selected contractors. The following details the state status in theUS as of November 2012: [2] Figure 1: Current Exchange StatusACA outsourcing potential 2013-14 Harmanjit Singh Page 3
  5. 5. 3. Contract PotentialThe contract potential for the exchanges runs into USD 2 Billion. The federal government has allocatedfunds to be utilized by states to undertake feasibility studies for establishing the exchanges as well assetting up/running the same. Some states have already made use of the funds to build their exchanges.The following table lists the contract potential for each state. Exchange Planning Exchange Establishment Grant Amount Grant AmountUnited States $45,008,109 $1,881,290,492 Alabama $1,180,312 $8,592,139 Alaska NA NA Arizona $999,670 $29,877,427 Arkansas $1,200,928 $26,260,555 California $529,894 $235,901,012 Colorado $1,247,599 $61,437,747 Connecticut $996,848 $115,568,109 Delaware $999,999 $3,400,096District of Columbia $999,999 $81,186,049 Florida NA2 NA Georgia $1,000,000 NA Hawaii $1,000,000 $76,255,636 Idaho $998,220 $20,376,556 Illinois $1,071,784 $37,917,831 Indiana $965,415 $6,895,126 Iowa $1,000,000 $34,376,665 Kansas $1,000,000 NA Kentucky $469,088 $69,990,613 Louisiana $29,3914 NA Maine $1,000,000 NA5 Maryland $999,226 $150,235,442 Massachusetts $1,000,000 $53,324,443 Michigan $999,772 $9,849,305 Minnesota $1,000,000 $70,525,8926 Mississippi $670,125 $20,143,618 Missouri $1,000,000 $20,865,716 Montana $1,000,000 NA Nebraska $895,075 $5,481,838 Nevada $1,000,000 $123,770,297 New Hampshire $334,0007 NA New Jersey $1,223,186 $7,674,130 New Mexico $1,000,000 $34,279,483 New York $1,000,000 $154,746,207 North Carolina $999,999 $12,396,019 North Dakota $1,000,000 NA Ohio $1,000,000 NA Oklahoma $1,000,000 NA Oregon $1,000,000 $15,652,301 Pennsylvania $1,000,000 $33,832,212 Rhode Island $1,000,000 $63,756,539 South Carolina $304,996 NA South Dakota $1,000,000 $5,879,569 Tennessee $1,000,000 $8,110,165 Texas $96,4259 NA Utah $1,000,000 NAACA outsourcing potential 2013-14 Harmanjit Singh Page 4
  6. 6. Exchange Planning Exchange Establishment Grant Amount Grant Amount Vermont $1,000,000 $122,269,334 Virginia $1,000,000 NA Washington $996,285 $150,794,727 West Virginia $1,000,000 $9,667,694 Wisconsin $999,873 NA Wyoming $800,000 NA Table 1: Contract potential 4. Contracts awarded to IT consulting/Service organizationsOf the 17 states deciding to establish their own exchanges, the following lists the contract detailsincluding amount, contractor and stage of development. State Contract details Worth Stage NotesAlaska N/A ( Federal) N/AArkansas Partnership exchnge [5]California Accenture $360M+ Contract running over 4 yearsColorado CGI Group $78M Stage I HIE360 software to be usedConnecticut Deloitte Consulting $100MDelaware N/A ( Federal) N/ADistrict of Accenture/Orion $82M PlanningColumbia Health $1m eachFlorida N/A* ( Federal) *Possibility to create a state run exchangeGeorgiaHawaii PCG ( Public $500K Planning Consulting Group) [1]Idaho KPMG led study $70M Still decidingIllinois Infosys, CGI, N/A RFP review Reviewing proposals Deloitte, XeroxIndiana Studying OptionsIowa Studying Options [6] [6]Kansas N/A Federal N/AKentucky Contract not $70M awarded [8]Louisiana N/A (Federal) N/A [7]Maine N/A (Federal) N/A [9]Maryland IBM, ANGARAI $136M Including operational costsMassachusetts Cognosante $17M* *Phase I [10]Michigan Federal Partnership N/A [11]Minnesota Maximus, IBM ( $41MACA outsourcing potential 2013-14 Harmanjit Singh Page 5
  7. 7. State Contract details Worth Stage Notes Subcontractor) [12]Mississippi eHealthinsurance N/A Phase I Services, Inc.Missouri N/A (Federal) N/AMontana Studying OptionsNebraska N/A (Federal) N/A [13]Nevada Xerox $72MNew Hampshire N/A (Federal) N/ANew Jersey Studying Options N/A [14]New Mexico State Run $34M [16]Rhode Island Quasi public $58M Phase 2 Table 2: Current state contract status 5. OpportunitiesThe following graph identifies the opportunities that lie in the establishment of the state exchanges: Figure 2 Percentage of states running each type of exchangeThus with 64% states not opting for a state based exchange at present, there is still tremendouspotential for IT companies to eventually bid for the contracts when the states do decide to set upexchanges in-house. Running an exchange in-house gives the state the advantage to negotiate andpurchase policies with the private insurance companies. If state run exchanges gain traction, we mightsee quite a few states moving from a federal involvement to complete state participation.ACA outsourcing potential 2013-14 Harmanjit Singh Page 6
  8. 8. Of the 33 states not opting for an in-house exchange, grant information is publicly available for 16 statesfor which USD 250 Million are up on offer. Operationally the exchanges would be built to be self-sufficient in a few years’ time, either by charging the insurance companies or by levying user fees. 5.1 Contract size: The following lists the break-up of the potential contract size for the 16 states: Figure 3: Contract sizeThe statistics from the data are reflective of political standings. The following display state exchangedecisions from senate control: Of the 16 states not opting for a state based exchange ( Active or clearing house), 15 are republican Of the 6 states opting for a clearing house structure, 2 are Democrat while 4 are Republican Of the 11 states with undecided status, only 2 are democratACA outsourcing potential 2013-14 Harmanjit Singh Page 7
  9. 9. Figure 3: Exchange Establishment Democrat RepublicanThus, with a change of guard in the states or a shift in policy by the GOP, there is potential for newexchanges to be set up in the Republican controlled states and an opportunity for IT organizations to bidfor the same. Apart from the public exchanges there are also private exchanges being set up in themarket which can increase the scope for organizations with in-house cloud based health exchangeproducts even more. Watch the space.ACA outsourcing potential 2013-14 Harmanjit Singh Page 8
  10. 10. 6. References[1] http://www.idahoreporter.com/2012/kpmg-idaho-health-insurance-exchange-would-cost-77-million-to-implement-10-million-annually-to-operate/[2] http://www.statehealthfacts.org/comparemaptable.jsp?ind=962&cat=17&sub=205&rgnhl=3[4] http://www.statehealthfacts.org/comparetable.jsp?ind=964&cat=17[5] http://articles.latimes.com/2012/jun/01/business/la-fi-health-insure-exchange-20120601[6] http://www.kansas.com/2012/11/19/2571203/kansas-views-on-wichita-voting.html[7] http://articles.latimes.com/2012/nov/16/nation/la-na-health-care-20121117[8] http://articles.latimes.com/2012/nov/16/nation/la-na-health-care-20121117[9] http://www.eweek.com/enterprise-apps/ibm-smarter-cities-targets-maryland-for-health-insurance-system/[10] http://www.mckennalong.com/publications-advisories-3061.html[11] http://www.istockanalyst.com/finance/story/5945394/maximus-mms-gets-minnesota-health-insurance-exchange-contract[12] http://ohsonline.com/articles/2012/09/01/stepping-up-the-pace.aspx[13] http://news.xerox.com/pr/xerox/Xerox-Awarded-HIX-Contract-with-Nevada.aspx[14] http://lubbockonline.com/filed-online/2012-11-15/new-mexico-will-establish-state-run-health-insurance-exchange#.UKpI3uS094Y[15] http://www.beckersasc.com/asc-turnarounds-ideas-to-improve-performance/state-by-state-decisions-on-health-insurance-exchanges-50-statistics-on-plans-for-2014.html[16] http://www.governing.com/blogs/view/rhode-Island-health-insurance-exchange-case-study.htmlACA outsourcing potential 2013-14 Harmanjit Singh Page 9
  11. 11. About the AuthorHarmanjit Singh, B.E. (Information Technology), M.B.A. (Information Technology and Strategy)Presently working as an IT consultant in the healthcare sphere, I have over 5 years’ experience withFortune 500 organizations. I have been involved in implementing large scale enterprise systemsincluding building one of the world’s largest online transactional systems for a Fortune 100 retailpharmacy company in the US.Experienced in the healthcare and the insurance industries in the US and the APAC region, I have anactive interest in tracking events in the healthcare space.I can be reached at Harmanjit.singh@outlook.com for any comments or feedback.ACA outsourcing potential 2013-14 Harmanjit Singh Page 10

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