Federal government renews Optum contract

  • Article by: JIM SPENCER , Star Tribune
  • Updated: January 15, 2014 - 5:41 AM

The UnitedHealth subsidiary will get $43 million for overseeing repairs to the federal health insurance exchange.


This is the sign outside the headquarters of UnitedHealth Group Inc., in Minnetonka.

Photo: Dawn Villella, Bloomberg News

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– The first thing Andy Slavitt did to fix the federal government’s failing health insurance website was require representatives of every contractor on the project to work in the same location 24 hours a day, seven days a week. Then, he made them all share information with each other.

“The good news about a tight deadline is that you only have time for the pragmatic and the practical,” said Slavitt, a leader at Optum, the UnitedHealth Group Inc. subsidiary that oversaw repairs to HealthCare.gov, the federal health portal.

“There were a lot of contractors who hadn’t talked to one another,” Slavitt explained an interview with the Star Tribune. “We created a site called the exchange operating center and we talked to the CEOs and leaders of every contractor and required that each contractor put two people around the clock, 24/7, in this one location. In a very short amount of time, everybody began performing as if they were members of the same team.”

The government rewarded Optum’s success on the project with a contract extension over the weekend. The government is slated to pay the company $43 million through Oct. 31 for its work overseeing repairs to HealthCare.gov, according to an official at the Center for Medicare and Medicaid Services (CMS). Meanwhile, performance of the website has improved exponentially since the unit of Minnetonka-based UnitedHealth took over as general contractor in October 2013.

At the time, the move was seen at the time as a huge technical and political risk. But figures released by the government Monday showed that more than 1 million people picked health insurance plans through the federal website in December, compared with just 137,000 in October and November.

Roughly 250,000 of those picking plans in December were in the coveted 18-34 age group that experts say will make or break health care reform financially. In the first two months, only 31,000 young adults signed up.

Although more are needed, “momentum is particularly strong among young adults,” Secretary of Health and Human Services Kathleen Sebelius said during a press call Monday afternoon.

Increasing sign-ups by people of any age demonstrates Optum’s technical acumen, said David Heupel, senior health analyst at Thrivent Financial in Minneapolis. Since CMS named Optum’s Quality Software Services division general contractor, the company has led implementation of more than 400 software improvements and bug fixes.

“If you were worried that they couldn’t do anything,” Heupel said, “their actions of the past few months put that to rest.”

“Optum/QSSI [Quality Software], which stepped up in October to serve as our general contractor, has been integral in fixing HealthCare.gov,” Sebelius said in a statement issued Tuesday.

Another affirmation of Optum’s success came last week as MNsure turned to the company for help in making Minnesota’s troubled state-run health insurance exchange work better. Minnesota was one of 14 states to build their own exchanges, while others are using HealthCare.gov.

Since December, Optum also has signed on to fix Maryland’s foundering insurance exchange. Heupel predicted that Optum will see several business opportunities to work on state health exchange websites.

“People will look to Optum as someone who can do the work,” he said.

At its launch HealthCare.gov was plagued by hourslong wait times, error messages and hundreds of thousands of unintended disconnections.

“The way we looked at it is that we wanted to make sure the vast majority of people who wanted to get coverage could.” Slavitt said.

Optum set a series of milestones that in October almost seemed unachievable, Slavitt admitted. But with “ruthless prioritizing,” open communications and twice-daily meetings to uncover and fix problems in real time, goals gradually became reality.

Optum built Internet capacity so that a website that once crashed when a few thousand people tried to sign on simultaneously could handle at least 50,000 users at the same time.

Offline more than half the time when Optum took over as general contractor, HealthCare.gov now operates nearly continuously. Page loads that used to take several seconds each now take fractions of seconds. Page error rates formerly as high as 6 percent currently average less than half a percentage point.

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