Three companies will compete as finalists for the contract to monitor the implementation of an Arkansas-based health insurance exchange for small businesses, a committee decided Friday.
At a meeting in Little Rock, the Arkansas Health Insurance Marketplace board of directors' information technology committee selected the finalists from a list of six companies that submitted proposals for the contract to provide the monitoring services, known as independent verification and validation.
The winning bidder, which will be selected by the full board, will evaluate the work performed by Reston, Va.-based hCentive, which the board hired earlier this month to build the exchange and operate it through February 2018 for just under $7.2 million.
A marketplace request for proposals calls for the monitoring company to assess whether the small-business exchange meets federal requirements and is "on track" to begin enrollment this fall for coverage that will start in 2016.
Marketplace Executive Director Cheryl Smith Gardner told committee members that the contract will be a small but important "part of the overall contracting that we'll do."
"So many states that failed, failed because they either didn't have a good IV and V [independent verification and validation] vendor or they didn't listen to their IV and V vendor," Gardner said.
Arkansas is among 37 states that use a federal exchange for individual consumers and 34 using a federally operated small-business exchange.
The remaining states and the District of Columbia are operating their own exchanges. Oregon and Nevada set up their own exchanges that suffered from widespread technical failures after their start in October 2013. Both states switched to the federal system after being unable to fix the problems.
Created under the 2010 Patient Protection and Affordable Care Act, the exchanges allow consumers and small businesses to shop for coverage and apply for subsidies to help pay for it.
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 Arkansas marketplace, which was created by the state Legislature in 2013, $99.9 million to establish Arkansas-based exchanges for individual and small business and operate each one for a year. After the initial year, the exchanges would be supported by user fees.
The Arkansas marketplace requested $78 million to build the computer systems for the small-business and individual marketplace exchanges and $3.5 million for independent verification and validation services for the two projects.
Enrollment in an Arkansas-based exchange for individual consumers is expected to begin in 2016 for coverage that would start in 2017.
At Friday's meeting, committee and staff members were instructed to refer to the bidders by code names and not to reveal information that could be used to identify the company.
The finalists selected were code-named Yellow, Orange and Pink.
John Norman, the marketplace's director of operations, said the Orange company scored substantially higher than the other bidders under a system weighing factors such as corporate experience, staffing and the company's proposed plan.
But the cost of Orange's proposal was higher than those of Pink and Yellow, Norman said. He didn't reveal the amounts, but said the highest cost proposal submitted by the six companies was 3.3 times higher than the lowest-cost proposal, which was submitted by Yellow.
Pink had the second-lowest cost of the six companies, he said.
When factoring in the cost along with the bidders' technical score, Yellow ranked the highest, followed by Orange and Pink, Norman said.
At a committee meeting earlier this month, Norman said the company names will be kept secret until March 11, when the finalists will give presentations to the full marketplace board.
He said a similar policy of keeping such information confidential helped reduce the cost of the contract that was ultimately awarded to hCentive. After submitting its initial bid, hCentive reduced the cost of its proposal by about $2.7 million.
"I felt like the end result was certainly a great result for the state of Arkansas," Norman said.
The other finalist, Get Insured, reduced the cost of its proposal from $34.9 million to $16.5 million. It withdrew its bid Feb. 9 during a marketplace staff inquiry into a report that two people had attempted to improperly contact a board member about the contract.
The marketplace rejected Arkansas Democrat-Gazette requests under the state Freedom of Information Act for the companies' proposals, citing an exemption in the law for records that "if disclosed would give advantage to competitors or bidders."
The marketplace didn't respond Friday to a request by the newspaper for the proposals for the independent verification and validation services contract.
Metro on 02/28/2015