The firm that provided the technology for the federal small-business health insurance exchange used by Arkansas and more than 30 other states was hired Wednesday to supply the technology for an Arkansas-based version.
In a 7-2 vote, the Arkansas Health Insurance Marketplace's board of directors hired Reston, Va.-based hCentive to supply the technology for an Arkansas-based exchange and operate it through February 2018 for a total of just under $7.2 million.
The price was reduced from an $8.9 million proposal the company presented at a Jan. 23 board meeting and its original offer of more than $9.9 million.
The other finalist for the contract, Mountain View, Calif.,-based Get Insured, also known as Vimo Inc., withdrew its bid Monday after the marketplace staff began investigating a report that two people had attempted to improperly contact a board member about the contract.
Get Insured had asked for $16.5 million, a reduction from the $25.1 million proposal the company presented at the earlier meeting. The company's original bid totaled $34.9 million.
"We're euphoric," Peter McCann, chief business development officer for hCentive, said after the board's vote.
The board's vote came after Tracey Dennis, the marketplace's staff attorney, gave a report on her inquiry into various attempted communication with board members that she said may have violated the board's procurement rules.
She said she did not verify whether those attempts were directed by any company or violated the rules. But concerning one instance, she said a board member's comments to the Arkansas Democrat-Gazette about hCentive "most likely" violated a rule limiting communication about a contract while bids are being evaluated.
Board member Fred Bean, president of a benefits consulting firm, was quoted in Tuesday's newspaper as saying that his firm found it difficult and time-consuming to enroll a company in coverage through the federal small-business exchange but that hCentive could make Arkansas' exchange more user-friendly if it won the contract.
The procurement rule prohibits "vendors, their attorneys, representatives or others promoting their position" from communicating with marketplace board or staff members outside the procurement process about bids that are being evaluated.
"Any attempt to influence any employees, officers, consultants, advisers or Board members with respect to a procurement, whether such attempt is oral or written, formal or informal, is strictly prohibited and will result in disqualification," the rule says.
Bean said after the meeting that he didn't intend to violate the procurement rules.
After the vote, at the request of board member Mike Castleberry of Little Rock, the board met for an hour in executive session to discuss an undisclosed personnel matter. The board did not take any action on the matter after the closed session.
In addition to building the technology for the federal small-business exchange, which is accessible through healthcare.gov, hCentive also provided the technology for the small-business and individual exchanges for Colorado, New York and Kentucky.
The company's proposal includes 30,000 hours of software development time to adapt the software for Arkansas and make modifications.
The marketplace board "absolutely will be able to enhance it and make modifications as they see fit," McCann said.
Created by the Legislature in 2013, the marketplace is working to build insurance exchanges that would replace the ones set up for the state by the federal government under the 2010 Patient Protection and Affordable Care Act. Supporters of Arkansas-based exchanges say they could be tailored to better fit the state's needs.
The U.S. Department of Health and Human Services' Centers for Medicare and Medicaid Services has awarded the marketplace $99.9 million to establish the exchanges and operate each one for a year. After the initial year, the exchanges would be supported by user fees.
Enrollment in Arkansas' planned small-business exchange, which would be part of the federal Small Business Health Options Program, is scheduled to start in October for coverage that would start in 2016.
For individual consumers, enrollment would begin in 2016 for coverage that would start in 2017.
Board member Jerry Jones of Cabot, who voted against awarding the contract to hCentive, said it didn't appear that the fees generated by the small-business exchange would be able to support the exchange's operations.
As of mid-January, 156 Arkansans were covered by plans offered through the state's federally operated small-business exchange, a spokesman for Arkansas Blue Cross and Blue Shield said.
Cheryl Smith, the marketplace's executive director, said fees generated by the state's individual exchange could be used to support both the individual and small-business exchanges.
If both exchanges prove unsustainable, the state could go back to using federally operated exchanges, she said.
Castleberry, who also voted against awarding the contract, said he was concerned that the board was left with only one candidate after Get Insured dropped out and that hCentive has never before been the main company in charge of establishing a state-based exchange.
"I've seen so many implementations go really bad and fail miserably, and having not had the experience to be a primary just gives me a level of concern," Castleberry said.
HCentive chief executive Sanjay Singh said at the board's Jan. 23 meeting that the company has fulfilled all the duties of a primary vendor on exchange projects even though it didn't have that title. The company has been the primary vendor on projects for private insurance companies, he said.
According to the company, all the exchanges for which it supplied the technology launched on time, with no major malfunctions.
Get Insured's withdrawal came after board member John Denery reported to Smith that two people had tried to contact him about the company's bid on Jan. 29.
During her inquiry, Dennis said another board member reported being told to "expect a call about Get Insured's pricing."
A third board member reported that "a person contacted them to vote for Get Insured," Dennis said. A fourth board member received a phone call from a state legislator "expressing concerns about the procurement process, in particular that Get Insured had an advantage in the process," Dennis said.
Dennis declined to name the board members or legislator.
Sen. Bruce Maloch, D-Magnolia, said in a phone interview after the meeting that he contacted a "personal acquaintance" who serves on the board and told him that he had heard a concern from someone else about communication that may have violated the board's procurement rules.
"I just wanted to make sure it was a fair and level playing field," Maloch said. He declined to name the board member or person who had expressed concern. He said that person did not have a financial interest in the contract or represent either bidder.
Metro on 02/12/2015