The Affordable Care Act is proving to be a boon for professional services firms, with Maryland and the District awarding millions of dollars in contracts to health care consulting and actuarial firms to study and advise on ACA-related provisions, including creating state-run health insurance exchanges.
About 75 contracts have been awarded nationally in connection with various parts of the federal health care law, and between 40 and 45 of those are related to setting up health insurance exchanges, according to Herndon-based Deltek, which analyzes the contracting market.
The exchanges are envisioned to be an online marketplace, similar to Expedia, for health insurance, where consumers can figure out what policies they qualify for and comparison shop for private plans.
The law calls for states to operate exchanges by 2014, and state officials are turning to outside consultants to help them analyze and comply with the new requirement. Fourteen states, including Maryland and D.C., are establishing exchanges. Virginia Gov. Bob McDonnell has yet to authorize the creation of the exchange and recently suggested he is reluctant to spend taxpayer money on doing so, in the event Mitt Romney is elected and attempts to repeal the health care law.
Maryland and D.C. have signed at least 12 contracts with consulting and actuarial firms, as well as a university, for work related to the Affordable Care Act, according to Deltek.
Contracts with states for consulting or planning are not hugely lucrative — they typically range from $200,000 to $1 million — but the companies securing those agreements stand to reap long-term gains as states embark on the years-long process of planning, building, implementing and later managing the exchanges down the road.
“There are countless opportunities for professional service firms in this effort, whether it is in the preliminary stages of insurance exchange implementation or the very end, when the system is operational,” said Amanda White, a Deltek research analyst. “When these systems are up and running, there will still be a need for these types of firms to do work in the states ... it will be more for quality assurance.”
The vendors for Maryland and the District include:
Noridian Administrative Services, Curam, Connecture and CNSI jointly have a two-year, $51 million contract to design, develop and implement the exchange starting in 2014.
Wakely Consulting, a Boston-based firm, has a $180,000 contract to study the financing and risks involved in the exchange, and analytic support.
Mercer, the New York consulting giant, a $378,650 contract to assess potential changes in premiums in the individual and small group markets, to study the effects of merging the individual and small group markets, and to recommend steps the state could take to reduce consequences of reforms. Mercer has also completed work with the state on building the exchange.
Oliver Wyman, a New York-based actuarial firm, to recommend how to enhance the premium rate review process and provide information to consumers and policymakers.
Hilltop Institute at the University of Maryland, Baltimore, for a one-year, $400,000 contract to develop a financial model based on enrollment estimates that take into account Medicaid expansion, subsidized care through the exchange and employer-sponsored insurance through 2020.
Manatt Health Solutions, of Los Angeles, a $210,000 contract in 2011 to study patient navigator program and provide consumer assistance, and a $259,000 contract in 2012 for additional work on navigator program
Weber Shandwick of D.C., a $135,000 contract for market analysis.
Health Management Consultants of Columbia, a $32,000 contract for a call center study.
Compass Solutions, a West Chester, Pa.-based consulting firm, for a one-year, $969,000 contract to provide consulting and technical assistance services.
Accenture, the management consulting firm, for a three-year, $800,000 contract for IT system development and design
Mercer, with Oliver Wyman Group, Alicia Smith & Associates and Cognosante, for a one-year, $1 million contract to research financial sustainability, program integration, technical infrastructure, administration and governance, legal and policy issues. Mercer also previously consulted on building the exchange.
District officials are in the process of approving an additional agreement with an actuarial firm and law firm to help review and potentially draft legislation to strengthen the District’s insurance laws to better protect consumers, said Mike Flagg, a spokesman for the District’s Department of Insurance, Securities and Banking.