WCAX investigates ballooning health care contracts - WCAX.COM Local Vermont News, Weather and Sports-

WCAX investigates ballooning health care contracts

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"Let's face it, we pay federal income tax as Vermonters -- It's our money!" said former Vt. State Auditor Randy Brock.

Brock is fired up about how the state is spending the $171 million -- the federal government allotted Vermont to launch its health care reform law -- commonly known as Obamacare.
Brock, a Republican, lost the last gubernatorial election to Governor Peter Shumlin and is an outspoken critic of how the Shumlin administration is managing Vermont Health Connect. Under the Affordable Care Act, each state must design its own online health insurance exchange or allow the feds to do it for them. Vermont chose to take its share of the federal money and go it alone.

"This is a confusing transformation to the way Americans and Vermonters buy healthcare. It's why Congress gave money for education efforts and it's why we took the money and we spent it. And I think we spent it wisely," said Governor Peter Shumlin.

The state hired several companies to bring the changes to life. The work didn't come cheap and in many cases WCAX discovered the costs continue to rise.

"Many of these contracts were no bid contracts -- they were executed without competitive bidding," Brock said.

WCAX dug into the documents detailing the largest no-bid contract. It was awarded to Canadian IT giant CGI. An administrative memo shows the deal went forward after negotiations with a another vendor fell apart. Looming federal deadlines didn't give Vermont enough time to shop around. Out of time, the Shumlin administration signed an expedited contract with CGI, the same vendor building the botched federal website -- healthcare.gov.
CGI's original contract with Vermont was for $42,470,347. Three revisions later, the cost doubled to $83,998,004 -- and the website still isn't working.
Just last week Governor Shumlin defended CGI. "We expect to get what we paid for and I'm confident that we will," Shumlin said.

Another internal note from the Vermont Health Access Department reveals the work of HES advisors was not put out to bid either, citing a need to meet the administration's tight timelines. The Connecticut company was hired last year for $605,000 to help research and plan the exchange. The cost of that project is now up to $1,993,290 -- or a 229% increase.

Then there's the no-bid contract for Vermont Health Connect's Public Relations and Media Plan. Richmond, Vermont based ad agency HMC was contracted to develop the exchange's ad campaign and buy commercial time. State officials say they didn't shop around because HMC already has a long standing agreement with the state to place all of its media ads. The original cost of that contract was $90,000. Today -- the price tag is $2,290,000, or a 2,444% increase.

But even in cases where there were multiple vendors competing for work, the contracts still ballooned. Wakely Consulting Group is one example. The Boston-based health care consulting firm was hired to handle the exchange's operations, finance and enrollment with a winning bid of $1,499,988. But five contract amendments later, the firm upped its price by 308% and is now charging Vermont $6,122,624 for the job.

Then there's GMMB's contract.  The DC-based advertising and political consulting firm was hired to train the exchange navigators and design an education and outreach campaign. An internal memo states GMMB beat out five other vendors, with a winning bid of $669,700.  But after three contract revisions, the cost of this project jumped 326%, to $2,852,288.

It's consistent contract increases like these that have Randy Brock concerned. He's a financial risk advisor and a certified fraud examiner.

"From the state's perspective it can then add to a contract in any way, shape or form it wishes, without additional scrutiny. It gives the state a great deal more flexibility, but whether that flexibility is proper is a real question," Brock said.

Reporter Jennifer Reading: Some of these contracts have ballooned incredibly, are you concerned?

Gov. Peter Shumlin: I just want to be clear. If there's a contract that has quote, unquote ballooned incredibly, it's because we've asked them to do an incredible amount more work than they originally contracted for.

"You would normally think when people prepare contracts, they should know what the contract value ought to be and the scope of the contract at least for the next year," Brock said.

The Shumlin administration tells WCAX the federal government not only monitors how Vermont is spending its share of the health care money, but also reviews and approves every contract change.

Reporter Jennifer Reading: So why not throw them out to the bidding process again once you realized the scope of work had changed so much to see if you can't get Vermonters a better deal?

Gov. Peter Shumlin: I can tell you when someone is in designing a technology system and they're in there doing the work and you have an opportunity to expand the scope of that work so that agencies can talk to each other and deliver a more efficient government in the future, it very rarely makes sense to change vendors at that point.

But can the governor guarantee Vermonters are getting the best bang for their taxpayer bucks?

"I'm cheap. I'm tight with all money, whether it's Vermont taxpayer money or federal money, I treat it like it's my own, and I can assure you that money is not flying around -- things aren't happening haphazardly here."

Governor Shumlin announced Thursday the state will seek financial penalties against CGI because of website glitches. WCAX reached out to Vermont's current auditor, Doug Hoffer. He says he intends to investigate a number of aspects of the health care rollout because it involves a great deal of money, but declined to offer specifics on when that audit may occur.

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