Taxpayers who are effectively footing the bill for a new contractor responsible for implementing Obamacare’s exchanges may want their money back. The contractor HHS just hired to implement the exchanges, Serco, is now being investigated by the British government for potentially fraudulently billing the UK government for work not performed.
As the UK’s Independent reported, an audit revealed that in one prison contract, Serco and the partner company wrongly charged taxpayers up to £50m [$75 million], billing them for offenders who were dead or had left the country. In fact, according to one source cited by the Independent, Serco and its counterpart charged for work not performed for 3,000 different individual cases.
The company’s troubles may not be limited to the other side of the Atlantic ocean. Earlier this spring, the FBI discovered that Serco’s computer systems serving the federal Thrift Savings Plan—the retirement plan for federal employees—had been hacked. The intrusion compromised 123,000 Social Security numbers, and of that number, some 44,000 individuals had their names, addresses and Social Security numbers compromised.
But even if Serco’s American operations do not defraud taxpayers or leave their information exposed, there is still the question of whether or not the company can handle the job ahead. A spokesman for the company recently admitted the company’s Obamacare work is a “huge undertaking” and there are “some tight deadlines to meet.”
Certainly, the company has their work cut out for them. A New York Times story explained the company’s task is to “help the Obama administration and states determine who is eligible for insurance subsidies, in the form of tax credits, and who might qualify for Medicaid,” which could include “intake, routing, review and troubleshooting of applications.” However, given the Administration’s recent announcement that it was jettisoning income verification in favor of the “honor system,” it’s not exactly clear how Serco will determine eligibility.
The contractor’s mission may be further undermined by its lack of expertise in this area. The Times story noted Serco “has little experience with the Department of Health and Human Services or the insurance marketplaces, known as exchanges.” In fact, “several insurance and health policy experts said they were surprised at the selection of Serco because it did not have experience with the exchanges,” said the Times. Maybe that’s why the company has already posted listings for dozens of jobs related to CMS/HHS.
The Government Accountability Office has found that, to date, HHS has awarded almost $400 M worth of contracts for designing and implementing the exchange, to 10 different contactors. But the potential amount of money Serco is positioned to gain, rivals what the IRS is spending in implementing 47 provisions of the Obamacare law. As Government Executive reported the award to Serco “is worth $114.3 million in the first year, with options to increase the value by an additional $158 million. Its potential worth over five years is estimated at $1.2 billion.”
Serco’s American headquarters are based in Reston, Virginia. The company claims 8,000 U.S.-based workers in 45 states.
Obamacare Truth Squad
July 15, 2013