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
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