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Obamacare Contractor Under Fire

May 22, 2014

Taxpayers footed the expensive bill for an Obamacare federal exchange contractor. They should want their money back. On May 12, 2014, KMOV in St. Louis broadcast an alarming report that Serco – a company that the Department of Health and Human Services hired to process paper applications through the federal exchange – is actually paying its employees not to work. An anonymous Serco whistleblower, employed at the company’s Wentzville, Missouri, processing facility, claimed that “there are some weeks that a data entry person would not process an application.” The Wentzville facility, one of three reported sites that process Obamacare applications, employs roughly 600 people.

This outrageous misuse of taxpayer dollars comes as no surprise. In July 2013, CMS signed a $1.2 billion contract with Serco to sort and evaluate exchange applications containing personal financial data. At the time, reports surfaced that Serco was under investigation by British authorities for fraudulently overbilling government contracts. An audit alleged that Serco charged up to £50 million [$84 million] for one prison contract – billing for offenders who had died or left the country. On July 11, 2013, Lord Chancellor Chris Grayling offered a speech in Parliament condemning the Serco scandal as a “wholly indefensible and unacceptable state of affairs” and implied the overbilling could have started nearly 15 years earlier.

Additionally, in May 2012, congressional hearings uncovered that Serco exposed more than 120,000 federal Thrift Savings Plan enrollees to identity theft when personal financial data – including Social Security numbers – were stolen from a compromised computer. This is a track record that any reasonable person would have steered away from. It’s the equivalent of a bad Yelp or Angie’s List rating. While Serco’s work came under fire both in Britain and in Congress, the Obama administration ignored all the red flags. Instead, a CMS spokesman defended the Obamacare contract saying, “Serco is a highly skilled company that has a proven track record in providing cost-effective services to numerous other (U.S.) federal agencies.”   

Yet there were still nagging questions about whether or not Serco could even handle the Obamacare processing job. According to the New York Times in a July 4, 2013, article, the company had “little experience with the Department of Health and Human Services or the insurance marketplaces, known as exchanges, where individuals and small businesses are supposed to be able to shop for insurance.” A Serco spokesman freely admitted the company’s Obamacare work was a “huge undertaking” and that there would be “some tight deadlines to meet.”

So the Obama administration tasked a company, under investigation for fraudulent billing practices and with little to no experience in HHS programs, to verify the accuracy of people’s applications to receive taxpayer subsidies. Here we are, one year later, and the news isn’t good. This week, Senators Roy Blunt and Lamar Alexander sent a letter to CMS Administrator Marilyn Tavenner demanding answers. Here’s hoping the “most transparent administration in history” will provide them.

Health Care Headlines

Los Angeles Times: “Critics call Obama funding plan for health insurer losses a ‘bailout’” The Obama administration has quietly adjusted key provisions of its signature healthcare law to potentially make billions of additional taxpayer dollars available to the insurance industry if companies providing coverage through the Affordable Care Act lose money.

Kaiser Health News: “Employees: No Work At Obamacare Processing Centers, And Bosses Knew” Company and government supervisors knew that employees at the tax-funded Affordable Care Act processing center in Wentzville were being paid to do little or no work, former employees said Thursday. And the Missouri facility wasn’t the only one.

Washington Post: “U.S. subpoenas Oregon insurance website documents” Federal prosecutors have subpoenaed state records for a grand jury investigation of the troubled Cover Oregon health insurance website, the governor’s office said Tuesday.

Las Vegas Review-Journal: “Nevada will dump Xerox as health insurance exchange contractor” The Silver State Health Insurance Exchange board voted unanimously Tuesday to end its relationship with Xerox, the vendor contracted in 2012 to build the exchange’s Nevada Health Link website. In place of Xerox, the exchange will adopt the federal Healthcare.gov exchange’s eligibility and enrollment functions for the sign-up period that begins Nov. 15, though it will keep its status and funding as a state-controlled system.