By Spencer E. Ante 

The Department of Health and Human Services extended its contract with Verizon Communications Inc.'s Terremark subsidiary as the web-hosting provider for the federal health-insurance marketplace, HealthCare.gov.

The extension means that the government won't attempt to move the website to its new hosting provider, Hewlett-Packard Co., while the insurance enrollment period under the Affordable Care Act is still open through the end of March.

Terremark's data center hosts important elements of HealthCare.gov as well as a digital juncture used to exchange information between it and state-run insurance exchanges, federal agencies and insurers. The website, which serves 36 states, has experienced a number of technical problems since it launched Oct. 1, 2013, including crashes that blocked consumers from enrolling in new health plans and outages of Verizon's data center.

HHS had awarded $55.4 million to Verizon since its contract began in 2011, including an award for $9.4 million of new website capacity in November. But last summer, H-P's Enterprise Services group was awarded a contract to transition the infrastructure from Terremark to a new data center run by H-P.

The Terremark contract was set to expire March 31, according to a spokeswoman for the Centers for Medicare and Medicaid Services, which administers the website. Now, the extension calls for an initial four-month period, along with three, 30-day option periods, with a value of up to $58 million, contracting records show. CMS confirmed the contract extension.

Verizon declined to comment and directed questions to federal officials. H-P didn't immediately respond to a request for comment.

CMS said in the contracting records that the extension was required because the replication of the Terremark data was delayed until the end of December 2013 and some planning meetings didn't start until early January of this year. The government also said it needed to install additional capacity to the new H-P data center to help stabilize the infrastructure, according to the records.

Since restoring stability to the website following its disastrous launch, the government is delaying the move to a new data center because it doesn't want to do anything that would harm the site's functioning during the final few weeks of enrollment, people familiar with the matter said. The overriding goal is to maximize enrollment on health-insurance exchanges through the end of the month.

On Feb. 25, CMS administrator Marilyn Tavenner said the most recent data indicate about four million people had signed up for private health insurance through federal and state-based marketplaces since Oct. 1.

The nonpartisan Congressional Budget Office has projected six million people will use the exchanges in 2014, down from an earlier estimate of seven million.

The Obama administration also is managing the shift to a new lead contractor that oversees critical parts of HealthCare.gov. In January, federal officials chose Accenture PLC to become the new lead contractor for the website, replacing CGI Group Inc.

CGI's contract expired Feb. 28, but it had included options to continue work for an additional 18 months.

Write to Spencer E. Ante at spencer.ante@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Verizon Communications (NYSE:VZ)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more Verizon Communications Charts.
Verizon Communications (NYSE:VZ)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more Verizon Communications Charts.