Deltek: In wake of court ruling, look to states for health IT opportunities

The Supreme Court decision to uphold the health care law means virtually every program created by the controversial law will move forward.

What the decision won’t do, however, is trigger a new round of federal technology spending. Some of the major contracts associated with the legislation have already been awarded, and work has already begun.

Instead, contractors seeking new health information technology work should look to the states.

At the federal level, the two most critical IT investments — the federal Health Insurance Exchange and IRS projects for tax collection — are already under way.

Indeed, the Centers for Medicare and Medicaid Services spent almost $134 million in fiscal 2011 and another $57 million in fiscal 2012 on its health care insurance exchange IT investment program, which included a contract with CGI.

Still, each state is now required to set up its own health insurance exchange online marketplace. The Department of Health and Human Services has awarded hundreds of millions of dollars to states for this express purpose and will continue to do so through 2014, when the law mandates the programs be up and running.

As a result, most of the associated procurements will come between now and the end of 2013.

States will likely be seeking a whole range of insurance exchange components, from Web portal services to quality assurance services to marketing and outreach services.

Some states have made little progress on their exchanges — typically because their governments opposed the law or believed it would be struck down — meaning they are behind schedule and will offer immediate opportunities for IT vendors.

Many states will be scrambling to put together these plans, as the federal government requires them to submit letters of intent, or blueprints, by Nov. 16.

Still, contractors should expect a varied approach to procurement. Some states may add work to existing contracts, likely giving existing contractors an advantage, while others may choose to buy multiple parts of the exchange under the same contract.

In the short term, contractors can expect an influx of consulting opportunities from states playing catch-up on their insurance exchanges and need help analyzing what they need to do.

Other states that were waiting for the ruling may release solicitations for actual system implementation, and many states will need to enhance or completely replace their eligibility systems. States will also be looking for consumer assistance-related services such as call center help.

Spending won’t stop in 2014. Vendors can expect to see more solicitations for marketing, outreach and education-related initiatives, as the public begins signing up for health plans.

Lauren Jones is a senior principal research analyst and Amanda White is a research analyst at Herndon-based Deltek, which conducts research on the government contracting market and can be found at www.deltek.com.