Obamacare Set to Fuel Info Tech Modernizing Boom

January 7, 2013 in Business, Top News

Healthcare Information ExchangeAmerica’s computing and information technology sector is readying itself to handle a business boom by providing expanded support for American health care needs when Obamacare takes effect in 2014. Among the big players amping up their efforts, IBM already is actively in pursuit of contract work that will be required to build the state health insurance exchanges central to implementation of the new federal health care law.

According to Cameron Brooks, director of Government Healthcare at Big Blue, “We’ve been able to go from participation on the infrastructure side, to really leading participation in terms of the systems that help determine eligibility for these exchanges.”

CNBC’s Bertha Coombs reports that so far 17 states and the District of Columbia have begun the process of setting up their own exchanges. IBM already has won work on building exchanges for Maryland and Minnesota. The Obama administration has given states nearly $2 billion in funding to develop the exchanges. Analysts say that for tech firms the opportunities are still growing when it comes to the build-out of the infrastructure required for expansion of coverage under Medicaid for the health care overhaul.

“Health insurance is a complicated purchase and it involves interfacing through a number of systems and procuring capability from a number of vendors,” said Scott Donahue, a director and health technology analyst at Triple Tree. “We’re probably 30 percent of where we need to be, so it’s going to take a lot more than what’s already been awarded to get to have states fully stood up.”

Rick Howard, research director of the government industry team at Gartner, reportedly expects states to spend the next five years upgrading legacy infrastructure to link to the payment and data systems of the Centers for Medicare and Medicaid, or CMS (content management system).

“By CMS estimation, $23 billion will be spent to replace or enhance Medicaid management info systems through 2020 and the Medicaid management info systems,” according to Howard.

Coombs reports, “No one company now can provide the full spectrum of infrastructure and services needed for the exchange, so companies like IBM and system integration giant Accenture have been acquiring or partnering with firms that give them the expertise they need when it comes Medicaid systems.”

While some states already are planning their own government-mandated health exchanges, others will be partnering with the Feds or opt to work with a federally built exchange. Companies jumping into the competition now therefore are finding a diverse and fluid mix of organizational networking patterns.

Strong contenders for market share are emerging quickly. According to Coombs, Xerox has won a $72 million contract to build out Nevada’s state insurance exchange. Accenture won a $399 million contract to build out California’s health benefit exchange by arranging subcontract support from Oracle and Canadian health IT firm CGI Group. CGI also will be part of the build-out of exchanges in Hawaii, Massachusetts, Colorado, and the 30 health exchanges to be built by the federal government in the states opting out of building their own platforms.

IBM’s Brooks reportedly is not worried about the complexity of the tasks ahead. “I think companies know what to do if there are glitches last-minute, how to manage that, how to put redundancies in place,” he assured Coombs, adding “one of the things we focus on is making sure there’s a solid infrastructure.”