Connector retains IT vendor, reduces contract
CGI Group Inc., the embattled information technology vendor for the Hawaii Health Connector, will continue its contract with the state’s health insurance exchange for at least another year.
However, the online marketplace created by the Affordable Care Act, also known as Obamacare, has reduced the scope and price of its contract with Montreal-based CGI, which originally built the faulty federal exchange.
The Connector said it has cut CGI’s maintenance contract down to $1 million from $2.6 million through Sept. 30. CGI’s primary job is to integrate about 40 different computer systems both internally and outside the exchange, including those of insurance companies and federal and state agencies such as the Internal Revenue Service and Medicaid to verify identity and financial information.
The Connector put out a bid for a new IT vendor this summer.
Optum, an affiliate of UnitedHealth Group Inc., the nation’s largest medical insurer, bid on the contract but ultimately couldn’t reach an agreement with the nonprofit insurance exchange.
Optum was hired to fix the federal healthcare.gov website, which was built by CGI, and has salvaged exchanges for several different states, including Maryland, Massachusetts and Minnesota.
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"When you’re in trouble, one of the things you do is look around to see if anybody can get you out of trouble," said Jeff Kissel, the Connector’s executive director. "But when you’re this close, bringing in more people is often more risky than finishing up what you’ve got. This amendment we recently entered into gave us back money. The simple explanation is they’ve effectively done a lot of work without additional charge rather than us going back and claiming credits on the previous contract. They’ve already actually made major concessions to us."
CGI won contracts worth more than $70 million to build and maintain the Connector, which has been plagued with problems since its inception. It enrolled just 10,800 people after a series of computer glitches and a late start in October 2013, and problems continued after the Nov. 15 start of its second open enrollment period.
"This was an unfortunate situation," Kissel said. "Both parties have worked together to deliver a working system and that’s what we’ve got."
CGI has received about $57 million to date and will get another $1 million more over the next year, Kissel said.
"We’ve limited the existing contract to the cleanup items which we have on our punch list," he said. "We’re finishing the last of testing and programming on the system itself. We’ve got some things we’re chasing down. When you finish your house there’s always a few things the contractor has to come back and do."
The Connector won $204.3 million in federal grants to build and operate the exchange. The Legislature also granted it $1.5 million for operations next year. To date, the Connector still has more than $70 million left of the grants.
"We didn’t spend all the money the federal government gave us and we don’t plan to," Kissel said. "We need to put some enhancements in the system to make it run more smoothly."
Before being hired by the Connector, CGI had trouble with another state contract. CGI previously upset lawmakers after the state paid the company $87.5 million between 1999 and 2011 to modernize the Tax Department’s collection system that officials say has never worked properly. The state is preparing to spend millions more to redo that system from the ground up.
The Obama administration ended its contract with CGI after it built the problematic federal exchange.
"The real problem is that across the country the ACA has got to settle in; we’ve got to get used to it, the way we adjusted to Medicare many years ago," Kissel said. "It’s a price we are paying, but it’s worth it so we can bring good access of affordable care to everyone. I think saving lives is worth millions and millions of dollars."