The company chosen by the Obama administration to oversee the repair of the new federal health insurance Web site faced questions from lawmakers a year ago about whether it was an appropriate choice for earlier work on the site, given that it is owned by the country’s largest health insurance company.
Columbia-based Quality Software Services Inc. — known as QSSI — was purchased by UnitedHealth Group in September 2012, months after it was picked by the Department of Health and Human Services to help set up the Affordable Care Act Web site. That called for work on three areas: build a data hub for the site so that information could be transferred between different groups, deliver a tool to help users register, and do some testing of the technology.
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Republican lawmakers including Sen. Orrin G. Hatch (Utah), Sen. Charles E. Grassley (Iowa), Rep. Darrell Issa (Calif.) and Rep. Fred Upton (Mich.) sent letters to UnitedHealth Group and HHS asking how QSSI had been chosen, given what they viewed as a potential conflict of interest. The lawmakers were concerned that QSSI might have access to information or would build the technology in a way that would give UnitedHealth’s insurance business an advantage.
There were also concerns about a former top regulator at the Centers for Medicare & Medicaid Services, Steve Larsen, who left the government to work for UnitedHealth Group subsidiary OptumInsight. Soon after, OptumInsight purchased QSSI with little fanfare. No press release appears on the Web site for UnitedHealth Group or OptumInsight; the deal was also too small to require an SEC filing.
The only public evidence of the deal was an announcement by the law firm Jenner & Block saying it represented QSSI in the deal, which closed in September 2012.
“This raises serious questions about the conflicts of interest that may exist,” Grassley and Upton wrote in letters to QSSI and UnitedHealth Group.
“Our understanding is that Steve Larsen had no role in the hiring of QSSI or any of the other IT contractors involved in the federal marketplace,” UnitedHealth spokesman Matthew Stearns said. “Because Mr. Larsen is responsible for Optum’s state-based business, he does not deal with CMS.”
A Senate aide said that in meetings with CMS, the agency said it understood the appearance of a conflict of interest, but the agency did not view the contract as an issue since QSSI was just building a data hub and the hub wouldn’t be holding any information. CMS also said it did not monitor what happened to QSSI — including its acquisition by UnitedHealth — after the contract was awarded. The Senate aide spoke on the condition of anonymity to discuss the meetings with CMS because they were private.
Stearns said Friday that UnitedHealthcare, the insurance company, and OptumInsight share a parent company — UnitedHealth Group — but “otherwise operate independently.”
One day after being grilled on Capitol Hill about its role in the new federal health insurance Web site’s problems, QSSI will now be overseeing the repair of the government’s flawed technology.