Health Care

State signs $9.5 million contract expanding role of Optum in health care exchange

Vermont signed a revised contract with the tech firm Optum that expands its role in Vermont Health Connect’s operations.

Optum already had a contract worth $5.6 million for consulting work, and the latest deal, signed Aug. 15, is worth an additional $9.5 million for a total of $15.1 million.

Lawrence Miller, chief of health care reform, said Optum’s contract is “open-to-buy” meaning its scope can broaden as needed.

“We’re pleased with the progress that’s been made, so we’re taking additional steps forward,” Miller added.

In the near-term the company will help the state prepare for open enrollment and make the transition away from CGI, but the two parties could eventually arrive at a “fixed cost” contract for Optum to complete the project, he said.

The contract revision includes a Sept. 30 deadline for bringing backlogs to “normal levels” for customers who need to make changes to their coverage or fix errors with billing or personal information.

At latest count, Optum has helped the state halve its backlog of coverage changes and information errors from a high of more than 14,000 to roughly 7,000. Also, close to 4,000 people are having billing issues with Vermont Health Connect. There is some overlap between the two groups, Miller said.

Optum will create a readiness plan to ensure Vermont Health Connect is prepared for the upcoming open enrollment period Nov. 15, when new users will flood the site and old users will need to renew their coverage.

The firm will also continue to manage and improve the escalation process whereby customers having issues that could impact their ability to fill prescriptions or see their doctor can be resolved more quickly.

Optum will continue its role as a consultant for the customer service call centers, and its 125 call center staff will stay on as well, Miller said.

The company will dedicate a project manager and management team to support the development of uncompleted IT work and “participate in the knowledge transfer from CGI.”

CGI is expected to wrap up its work on the exchange Sept. 20, though it will continue to provide web-hosting services for the exchange.

CGI is expected to receive a total of $67 million out of its original $84 million contract for its work building Vermont Health Connect. That sum will be paid despite the fact that Vermont estimated that CGI’s missed deadlines cost the state as much as $25 million in January.

Optum’s new contract includes oversight of CGI’s “contract compliance” and “invoice approval” of payments to CGI in its final days on the job.

Vermont is the latest feather in Optum’s Obamacare cap, as it has already helped remediate the federal exchange. The firm is also doing remediation work on state-based exchanges in Hawaii, Minnesota, Maryland and Massachusetts. A company official has said they have a presence in virtually every exchange nationwide.

Any Vermont Health Connect contract revisions need to be approved by the Agency of Human Services Central Office, the Department of Information and Innovation and the Agency of Administration.

Revisions that involve additional money being spent must get federal approval, Miller said.

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Morgan True

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  • Wendy wilton

    I still do not understand why our small state is continuing to build its own exchange. We could have defaulted to the federal exchange without this exorbitant cost and headache. We could have allowed people to continue to purchase the insurance they had if we had made participation voluntary, thus avoiding the rate hike all insured Vermonters will see this fall.

    It makes no sense. I wish someone who supported these approaches to reform that Vermont has taken will enlighten me as to why this continued path is best.

    Fifty bucks says that Optum won’t be able to deliver. Any takers?

    • Glenn Thompson

      Wendy Wilton,

      “I still do not understand why our small state is continuing to build its own exchange.”

      Because that is the way Montpelier operates! The mindset there is, “It’s only taxpayer’s money, and if we need more, just increase existing taxes and find something else to tax”! There is absolutely no accountability in that town!

      We all should understand if they attempt to get the flying pig (Single-Payer) off the ground, someone will need to be hired to build that infrastructure. How much is that going to cost? Some here might believe it can be accomplished by waving the magic wand! No it isn’t! Setting up a single payer system will also be complex and expensive! Then, the question becomes, what happens under a different administration and Congress where the decision is made to not ‘waste’ Federal Tax Dollar so Vermont can continue it’s “Social experiment?” Where does the money come from then?

  • Lyle M. Miller, Sr.

    I believe that Vermonters need to know who is making these decisions to continue spending our tax dollars on fool hardy enterprises without first checking out with the Legislature. It seems to me that we have lost some of the checks and balances that need to be in place in order to serve the people of Vermont properly.

  • Carl Marcinkowski

    I am having a difficult time understanding the huge amount of money for consulting and web site development. I just don’t see the value of this compared to old school mailing and phone correspondence or what retailers spend on their internet sites. The lack of successful implementation of the website is also mind boggling. Health care is important but these expenses are not getting anyone more healthy but the vendors and their friendly politician.

  • Keith Stern

    $15.1 million with no one being helped at all with the money. How many people could have been helped with that amount of money under Mark Donka’s plan?
    We need people of vision to lead this country not people blinded by ideology.
    Fortunately we had people of vision to write the most important document in the history of the planet. Can you picture what it would be if we had the clowns in office now attempt to write substantial legislation? That’s right, they did; it’s called the ACA.

    • So $15 million more in taxpayer dollars to Optum for the exchange if anyone is still interested in counting.

      This brings the total to over $85 million spent in Vermont on this incredible, unbelievable and yet unworkable boondoggle.

      As Gov. Shumlin’s health care guru, Robin Lunge so famously said: ” Policy making is easy, executing it is hard”. So at what point does executing policy officially become hard?

      Is it: $25 million? $50 million? $85 million? $100 million, or when the entire US Treasury is emptied by the Shumlin administration’s hold-up artists on the way to single payer nirvana via the health care exchange route.

      The scariest result of this whole mess is that Shumlin will be most likely be re-elected and continue to give the good people of Vermont more of the same.

      • John Greenberg


        “The scariest result of this whole mess is that Shumlin will be most likely be re-elected and continue to give the good people of Vermont more of the same.”

        Given that you’ve made it clear that Shumlin is wrong on every issue and a terrible administrator to boot, I’m curious why you think that he will win re-election? Why do YOU think that the majority of Vermont voters are going to vote for him if they agree with your assessment? Do you think that the majority has a different assessment of the issues than you do, or how do you explain this?

        • John:

          The state has taken a hard turn to the left where there is apparent comfort with Gov. Shumlin’s management style and the results that have followed.

          Despite notable fumbles by the Governor and inaction by the legislature, those on the left who control who is elected to office in Vermont remain silent and apparently satisfied.

          As long as the people of Vermont are willing to accept performance characterized by the health care exchange experience, Gov. Shumlin will be safe and reelected.

          Now the question is: When do the Democrats in the legislature rise above politics and start demanding accountability for the people.

          • John Greenberg


            I’m struggling to understand your reasoning here.

            Why would “the Democrats in the legislature rise above politics and start demanding accountability for the people,” when you’ve just said “the people of Vermont are willing to accept performance characterized by the health care exchange experience.” Isn’t an election (and both Shumlin AND the legislators are up for re-election) “accountability?”

            Isn’t the message then that “the people of Vermont” see all this differently from the way you do, and that they prefer the way things are to the way they would be if opponents were elected?

            In other words, isn’t it YOU who are out of sync with “the people of Vermont” and not “the Democrats in the legislature?”

            Let me be clear. Being out of sync is NOT synonymous with being wrong. I’m completely out of sync with the Republicans in the US Congress on every issue. I therefore ASSUME that their constituents disagree with me.

            I’m asking you to recognize the fact that the same pertains to Vermont. Elected officials ARE doing what their constituents want; that’s how they got elected in the first place, and why they’re likely to be re-elected.

  • Ron Pulcer

    Regarding: “CGI is expected to wrap up its work on the exchange Sept. 20, though it will continue to provide web-hosting services for the exchange.”

    All along with VHC (and ACA), there appears to be two general categories of problems:

    1) Certain system features and functions not working correctly, or not yet available (not fully tested yet), or not developed yet.

    2) Not able to handle peak loads (not enough hosting servers, storage, and/or processing capacity; i.e. load balancing). This problem was seen in the Federal healthcare exchange and many state-run exchanges (not just a VHC challenge).

    It sounds like Optum is being hired to deal with the problems in category 1 (system features and functionality).

    It sounds like CGI will continue providing hosting (problem category 2). IMHO, this is a HUGE RED FLAG! Or it could be, depending on how well CGI is able to handle the next round of open enrollment. With one foot out the door (development contract ending), how well with CGI perform its remaining contract responsibilities (hosting)?

    If you think about October 1, 2013 after many YEARS that MILLIONS of Americans did not have health insurance coverage, there was a HUGE PENT-UP DEMAND for this type of service.

    Either the state and federal agencies, CGI and other contractors should have recognized the pent-up demand (like opening up the floodgates), or they should have done a phased-in approach. The could have started with a “rolling implementation”. Something like, last name letters A-C on the first day, and then monitor systems and throttle it from there. Let the users / customers type in their last name, and then allow in only A, B, C on the first day, and go from there. There could have been a PR / advertising campaign to notify the media and Americans about the phased-in schedule well in advance.

    Almost any major corporate system implementation can have it’s hiccups on Day 1. I have seen it happen in Fortune 500 companies and medium and small companies. Often, the problems are connections to peripheral legacy systems (gotchas and oversights). Eventually the dust settles and things go better and more smoothly. But with ACA healthcare exchange, it was a such a huge and public rollout.

    You have to plan for spikes in web traffic. But given this scenario of once-a-year open enrollment and huge Day 1 traffic, it would have been very expensive to have many, many, many computers at the ready (and not need all of them 3 months later). So an alternative approach could be a phased-in implementation.

    They should have known better (they are the “consultants” after all). They should have better anticipated system hiccups. By doing a phased rollout; last names A-C day 1, then D-F, then G-I, etc, they would have only frustrated a sample of the population on Day 1 with lost requests / applications, etc. Once the loose ends are tied up, then move on to next group of customers. I’m sure that approach would have gotten some people upset. But in the end, it might have been better. If the A-C didn’t fully overwhelm the systems, then they could continue with a more orderly rollout.

    My employer continually monitors all servers and software / hardware services, and we have enough capacity / load balancing to handle peak periods (end of semesters for K12 and colleges). But given a once-a-year open enrollment, plus first ever enrollment period and so much pent-up demand (many more potential customers then we deal with), that is an entirely different capacity challenge (much larger scale).

    I think VHC and Shumlin Admin. needs to ask CGI a lot of questions about “system capacity” at start of enrollment period.

  • rosemarie jackowski

    Seems like the only guys getting rich on this are in the IT business. We want a refund. Tell the AG we want our money back.

    Meantime, we need access to medical care and it is not looking good.

  • Paul Lorenzini

    OPTUM is the only winner in this decision.

  • Stuart Lindberg

    $11.5 Million dollars was spent to build the infrastructure for You Tube. Yes, YOU TUBE, a worldwide website that actually works and makes money. Any wonder Vermonters might be just a little irritated that their hard earned tax dollars are being flushed down the toilet?

  • ray giroux

    It appears no one is excited about this forced centralization of healthcare. We don’t have a choice – either pay or be fined = corporate fascism. It is totally against the Constitution for the Government to provide a product (for profit) and force people to pay.

    Everyone should reject this abortion on wheels. These people CANNOT get this going but insist it will work if we keep shoveling money into it. Well, how is that working out for them?

    What we have here is a bunch of Pols thinking they will achieve greatness for this failed rollout – they could care less how it ends – we will be centralized in every aspect of our lives, they will move on, never having to answer to the boondoggle they have created.

    We are not being heard, we are not being respected. We are cash cows for corporate.

  • Jeff Nichols

    Hey Pete, you’re late! What’s it going to cost?