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Healthcare Business News

States withholding payments from contractors that built exchange sites

By Paul Demko
Posted: December 27, 2013 - 1:30 pm ET

Massachusetts and Vermont are taking steps to financially punish CGI Federal, the contractor they hired to help build their exchange websites.

Vermont has refused to pay $5.1 million in bills and is seeking a refund of some payments already made, according to the Boston Globe. Officials in Massachusetts say they will meet in January to discuss whether to withhold payments to the Canadian company. The exchange websites in both states have been hobbled by significant technological problems that have made signing up for coverage difficult.

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CGI was the lead contractor for, the federal website that was plagued with problems during its first two months of operations. The company has also worked on state exchanges in California, Colorado, Hawaii, Kentucky and New Mexico. California and Kentucky have been among the most successful states in signing up individuals for coverage, while Hawaii's online marketplace continues to have chronic problems.

Other states with malfunctioning websites could take similar actions. Already, Oregon is withholding a nearly $20 million payment to Oracle, its lead contractor. The state has been unable to enroll a single individual through its online marketplace.

Minnesota's online marketplace continues to be plagued by problems related to the information provided to insurers about new enrollees. Larry Jacobs, a political science professor at the University of Minnesota who has tracked the exchange rollout closely, said tough questions should be asked about the performance of Curam Software, a subsidiary of IBM, and other contractors that have received tens of millions of state and federal dollars.

“The frontline people are saying there are thousands of problems, and every time they're solving one problem they're finding others,” Jacobs said. “There needs to be some accountability for that.”

Follow Paul Demko on Twitter: @MHpdemko

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