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Florida Company Setting Up RI Health Exchange

Friday, December 14, 2012


A Florida-based consulting firm has been awarded an $18.9 million contract to help the state set up its new health benefits exchange, through which uninsured Rhode Islanders will be able to obtain subsidized insurance plans, according to documents obtained by GoLocalProv through a formal records request.

Those documents show that the Wakely Consulting Group, Inc., a medium-sized consulting firm headquartered in Clearwater, Florida, has been hired to aid the state in a wide range of about ten distinct tasks, including developing a blueprint for the online portal through which insurance will be purchased and spearheading an aggressive marketing and public outreach campaign.

Wakely Consulting is based in Florida but has offices in Louisville, KY and Englewood, CO. Two years ago, it opened an office in Boston. The contract has a start date of March 2012 and ends in December 2014, with an option to renew for two one-year extensions.

Wakely Consulting was one of two firms that responded to a state RFP for the work. The other was Navigant Consulting, Inc., based in Chicago, Illinois.

Wakely Consulting is a health care actuarial firm that boasts a number of key figures involved in the establishment of the Massachusetts Connector—the first health exchange in the country, unveiled under former Governor Mitt Romney. They include the former CFO and Executive Director for the Connector. Drawing upon its Bay State experience, the firm is now helping nearly half a dozen states set up their exchanges. Besides Rhode Island that includes Illinois, Missouri, and Washington.

The firm has grown exponentially during the Obama Presidency. In 2010, it reported gross revenues of more than $7 million, representing a doubling in size since 2008.

Out of state companies dominate

Wakely Consulting is farming out much of the work to five subcontractors, none of whom are based in Rhode Island.

Those subcontractors include KPMG, which boasts that it is “one of the world’s largest professional services firms” with 145,000 employees in more than 150 countries, including the Netherlands, where its global headquarters are located. The other four subcontractors are the Portsmouth, NH-based RKM Research and Communications; GMMB, a PR firm in DC that has worked with the Robert Wood Johnston Foundation; MIT economist Dr. Jonathan Gruber; and Freedman Healthcare, located in Newton, Mass.

Much of the work and cost was expected to be done by the end of this year, totaling $9.1 million, according to Wakely’s original proposal. That drops to $6.4 million next year and tapers off to $5.8 million in the following year, according to an outline of costs.

The total original cost stood at $21.3 million, slightly above the $19.9 million that Navigant estimated in its bid. However, the final amount of the contract for Wakely came in at just under its competitor’s estimate. The project—at least the launch of the exchange—is being federally funded. How the state will keep the exchange running once it is set up, however, has yet to be determined.

Wakely was selected over Navigant based on a scoring process over four criteria: relevant experience and criteria (total possible points was 30), technical approach and understanding of the work (30 points), capacity and resources available to accomplish the work (20 points), and the value the state would be getting for the price (20 points).

Out of a possible 100 points, Wakely’s bid was scored at 82.2; Navigant’s was 64.1. (The review of the bids was done by a committee connected with the Health Insurance Commissioner’s Office.)

It’s not clear what efforts were made to reach out to any eligible Rhode Island companies to do any portion of the work and a spokesman for the Governor’s office yesterday did not respond to a request for comment in time for publication. One key vendor for the project, however, has yet to be determined: the consulting firm that will do the nuts-and-bolts work of building the digital infrastructure for the exchange. The chief spokesperson for the Governor’s office told GoLocalProv late last month that the contract for that work was still being negotiated.

Extensive work required in setting up ‘exchanges’

As for Wakely, the tasks it will perform directly or through its subcontractors are extensive. There are ten discrete tasks that are involved. Those include the following:

■ Technology: Developing a blueprint for the online portal where insurance will be purchased. (Another consultant then will build the online portal based on that blueprint.)

■ Outreach: Wakely will be taking on the task of educating the public, attracting consumers, and working with “stakeholders” to expand insurance coverage.

■ Health plans: The consultant will help the state exchange staff come up with criteria for vetting the health insurance plans that will be offered on the exchange.

■ Future funding: Federal funds run out at the end of 2014. After that the exchange has to be self-sufficient. A lot of the brainstorming on how to do that will happen at Wakely.

■ Financial accountability: Once it is up and running, the exchange will be subject to an annual audit by federal authorities. This oversight “will require the development of robust and reliable data and reporting systems,” something Wakely will help the state to set up.

■ Insurance market: Wakely will also be advising the state on certain “commercial market activities” that might be necessary to “support the viability of the exchange.” In its proposal, the consultant offers this example: “Wakely will provide detailed analyses of the individual-small group market merger decision, including premium and policy impacts, in a series of scenario projections. For example, what happens if the markets are merged or not, when small-group is expanded to 100?”

■ Insurance database: Wakely will oversee the establishment of an “all payor claims database” which is “needed to support reinsurance, risk adjustment and other exchange-related activities.”

Bid documents show that Wakely will devote about 60 of its staff or the staff of its subcontractors to working on the various projects identified above, totaling an estimated 84,238 hours over a three-year period. That works out to an average of more than 460 hours per consultant per year.

Top officials at Wakely will be paid at hourly rates of approximately $400 or more. For example, one of the firm’s top actuaries, Ross Winkelman, will be compensated at hourly rates of $395 in the first year, $406.85 the second, and $419.06 in the third. Patrick Holland, the former CFO for the Massachusetts Connector will be compensated at similar levels, ranging from an initial $361 an hour to $382.98 an hour in the final year. (Holland did not respond to a request for comment yesterday.)

Consultant not well known in state

Wakely Consulting will be intimately involved in almost every aspect of setting up the new exchange, but few in the state’s local health care industry yesterday, when asked for comment, seemed to know much about the company or what it will be doing.

Steve DeToy, spokesman for the Rhode Island Medical Society, said he didn’t know enough about Wakely to have an opinion on them, but he expressed confidence in the selection process used to award them the contract. “I have great faith in the people involved in the process on our end,” DeToy said. “I have no reason to have second thoughts.”

DeToy also pointed out that the exchanges—an integral component of the health care reform law—are a relative novelty and currently exist in only two states, Massachusetts and Utah, making it difficult to have an established benchmark against which to judge local efforts at setting one up in Rhode Island. “I sense we can’t know how good they did until it was up and running,” DeToy said.

The exchange—often compared to a government-run Travelocity for health insurance—is set to go live on January 1, 2012. Enrollment will begin next fall, on October 1.

So far, Rhode Island is ahead of a number of other states in the process, according to DeToy.

Officials at other key organizations in the state health care industry declined comment yesterday, including the Hospital Association of Rhode Island and the United Nurses and Allied Professionals.

Critic: State doesn’t need consultant

But outside the health care industry plans for the exchange are meeting criticism from the Rhode Island Center for Freedom and Prosperity, whose CEO, Mike Stenhouse, told GoLocalProv that he didn’t think the state needed to go to such great expense on consultant fees for setting up a health insurance exchange.

The free market, Stenhouse said, doesn’t need an exchange. “The free market is an exchange,” he said.

He called the project a “waste of time, waste of money, and waste of government and taxpayer dollars.” One of the main goals of the exchange—offering more choices to consumers who can’t afford the limited options currently available—could be achieved by allowing people to buy insurance across state lines, Stenhouse said. That could be done at no cost to taxpayers, as an alternative to spending so much to set up the exchange, he said.

Linda Katz, the Policy Director for The Economic Progress Institute, said using consultants to set up the exchange was more efficient for the state since the same consultants are doing similar work in other states. Katz, who sits on an advisory board for the exchange, said she was generally familiar with Wakely’s reputation for experience in what is basically a brand new field in public policy. “I know they have some good experience under their belt,” she said.

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On the surface it sounds more efficient, but somehow we'll manage to turn this into a disaster.

Comment #1 by Walt Barrett on 2012 12 14

This is typical Rhode Island stupidity... almost guaranteed to not work.

Let us see.... an RFP goes out and only two reply.

Then we end up with a Florida firm... the state where bankruptcy is easy and where RI crooks scamper off to on vacations or escapes.

And the dopiest most typical RI situation is that the mediocre to sub-mediocre talent think they are savvy enough to vet leading edge stuff.

These are the same few cliques of over-confident goobers who tacitly or actively screwed the state with the "leading edge video gaming" we all now know was a moron's paradise.(as did anyone savvy beforehand)

Get it through your heads "politicos and bureaucrats" you are not smart enough to do or even consider ANYTHING that is new and untried elsewhere.

We need not even look at the details.... we know that everyone who is looking for gullibles to con scan the papers for RFPs from the video game genius state, Rhode Island.

There is abolutely zero need for an exchange.. Obamacare provides for the federal government to provide the same service...and there might be some competent oversight if the feds do it.

Comment #2 by Caroline Evans on 2012 12 14

How about we save the state ALL the money and not have this exchange?

Why in the world do we need to have one stop shopping?

Where are the safeguards that will protect American taxpayers from fraud when we already know there is an abundance of fraud with Medicare and Welfare?

Where are the safeguards that ONLY US citizens will be allowed to join?

What will they do with ILLEGAL ALIENS that will attempt to commit fraud by applying for benefits not afforded to them?

Oh wait, never mind. It's a scam that the Dems use to spread the seeds for the next generation of voters.

Comment #3 by RolandJ Lavallee on 2012 12 14

RI is a welfare state and to protect that mentality wants to make sure RI stays in the federal cash flow department for Obama Care.
There will be a lot of money poured into the national health care act and RI sees this as another cash cow which will employ more friends and family members of the politically connected.
The outside consultants in the case of RI is a good move.
The cost to support would not be unwieldy is it did not get top heavy with RI politically connected people running it.

Comment #4 by Gary Arnold on 2012 12 14

more taxpayer dollars being spent,that we don't have.we should do as other state have done,don't bother. but being the good little troopers we are ,we well follow obama where ever he may lead us.

Comment #5 by bob ingerson on 2012 12 14

Gov. Chafee and Lt. Gov. Roberts both supported the Affordable Care Act (aka Obamacare) In the article the statement that bears the most interest is as follows:

"The project—at least the launch of the exchange—is being federally funded. How the state will keep the exchange running once it is set up, however, has yet to be determined."

Can you say "Increase in Taxes!"

Thank you!

Comment #6 by Mark D on 2012 12 14

"Much of the work and cost was expected to be done by the end of this year..."? Meaning in about 2 1/2 weeks?

Comment #7 by Charles Beckers on 2012 12 14

We need jobs in Rhode Island, why would we ship a big contract to support jobs in another state. Do they do anything right?

Comment #8 by guy smily on 2012 12 14

$18.5 million for something that the feds would do for us. I know it's all tax money, but why not let them set it up with NO state money involved? Possibly related question: Where will the Governot go when we kick him out in two years?

Comment #9 by Michael Trenn on 2012 12 14

This is exactly the reason there are 17 other states that have told the FED to pound sand on these exchanges. The FED would be forced to pay to run them. Why this stupid administration had to go forward and spend all this money for a federal program is just another example of lousy leadership. This is the Lt. Gov. little plumb she has been pushing since she has been in there. Another progressive with her agendas. She and her followers are transforming this state into a "nanny" state. Give away the store at taxpayers expense. I wonder where this $18.5 M is going to come from? Maybe the Sakonnet tolls!

Comment #10 by Gov- stench on 2012 12 14

I would like to see GoLocalProv run a poll with the question being
"If you were financially able to leave Rhode Island right now would you do it?" It might give us an idea as to who is really paying any attention as to what is going on with our government.

Comment #11 by Walt Barrett on 2012 12 14

This news is hilarious. I live in Naples, Fla. and on our local news this morning heard that the State of Florida is opting out of the health insurance exchange program. I find it totally side splitting that RI is spending 19 million to administer this process when the state can't rub two nickels together. Imagine what this firm would have charged Florida to do the same thing with a population of 19,057,542 most of them uninsured.

Comment #12 by Gary Isabella on 2012 12 14

Obamacaretax will crush RI. The implementation is federally funded, but the cost for running the program is "undetermined". That means a massive tax increase, as the size and scope of this program will balloon like no other federal program.

The bill is a massive power-grab by the left. Funny, you don't hear any of the democrats speaking about England's nationalized healthcare anymore. That is because England is beginning to decentralize the program in order to save billions of pounds.

More government waste and inefficiency coming to a state near you soon...

Comment #13 by Mateo C on 2012 12 14

I think the dates are strange in this article. Was the contract awarded almost a year ago (March 2012), and when is the site launching (January 1, 2012)? I don't think this consulting firm is that good to launch a site before work starts on it, and why are we just hearing about it.

Comment #14 by Bill Applegate on 2012 12 14

@Walt Barrett: Your question is biased, because it only includes those who believe they cannot afford to leave RI. A better question would be a two-part-er:

Do you live full-time in RI? (YES or NO)

If yes, do you believe you cannot leave RI for financial reasons? (YES or NO)

Just to get things started, my answers would be YES and NO. In other words, I choose to live here.

Comment #15 by Charles Beckers on 2012 12 14

@Charles Beckers: Right now I am a full time resident. If the town and state taxes keep going up though I'll be out of here before it becomes to difficult to sell my property.

Comment #16 by Walt Barrett on 2012 12 14

We could have avoided the $64 million for the exchange software, and now the $19 million for the consulting if we had done what the smart states did. They said to the federal government: "Okay guys, YOU set up the exchange." Those states didn't spend a dime.

Comment #17 by Art West on 2012 12 14

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