UMass wins US contract to design insurance exchange

Deal is focused on technology

By Kay Lazar
Globe Staff / February 17, 2011

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The University of Massachusetts Medical School received a $35.6 million contract from the federal government yesterday to create an online system that would make it easier for consumers and small business owners to shop for insurance under the national health care overhaul.

By 2014, all states will be required to have exchanges, essentially online shopping malls, to help consumers compare and select insurance plans, and the UMass contract is focused on designing the technology for those exchanges, officials said.

The contract is one of seven similar ones awarded yesterday, for a total of about $241 million. The other recipients are Kansas, Maryland, New York, Oklahoma, Oregon, and Wisconsin. But the UMass contract is the only one that will be run by a medical school. UMass will work with a consortium of technology experts from Connecticut, Maine, Rhode Island, and Vermont.

Massachusetts, which passed its own health care overhaul in 2006, already has an online exchange, called the Connector. But a major upgrade will be needed to make it conform to the national law, even though the national legislation was modeled on the Massachusetts experience, said the professor who will be in charge of the Massachusetts contract, Dr. Jay Himmelstein, UMass director of public sector health information technology.

“The exchanges, for instance, will have to verify citizenship, which is part of the 2014 law, and not part of current Massachusetts law,’’ he said.

The division of UMass that won the federal contract, Commonwealth Medicine, has also been awarded many no-bid contracts by the Massachusetts Medicaid office to manage several state health programs. Questions raised about that arrangement have prompted an ongoing state inspector general’s investigation.

In December the Globe detailed concerns raised by a Medicaid director of operations about UMass’s ability to manage a proposed $35 million contract to run a customer service operation for 1 million Medicaid recipients. Internal state documents obtained by the Globe showed that a 2009 review indicated UMass was ill-prepared to handle some key responsibilities required in that proposed contract, including a technology management system and a system to communicate with consumers about billing issues.

Himmelstein said that for the new federal project, UMass will tap top specialists from the state’s Medicaid office and from the Connector for their technology expertise.

Kay Lazar can be reached at