Health IT Industry Benefitting From Boom in Federal Contracts

December 9, 2014 in News

HHS’ spending on contracts has doubled in the past decade as the department has worked to bolster health IT infrastructure and implement new health reforms, Kaiser Health News reports.

Specifically, HHS’ spending on business purchases has increased to $21 billion annually over the past 10 years and such spending is expected to keep growing. As a result, HHS has become the No. 3 contracting agency in the federal government.


According to KHN, the Affordable Care Act has increased federal health agencies’ budgets and expanded health coverage. In addition, the law includes sweeping reforms to payments and health care delivery helped boost companies focusing on health IT address various provisions under the ACA.

Meanwhile, the 2009 HITECH Act spurred health IT contracts by providing $30 billion in Medicare reimbursements to incentivize hospitals and doctors to purchase medical record software from private businesses.

Details of Contracts

According to KHN, new federal contracts are being used for:

  • Claims processing;
  • Computer system overhauls;
  • Consulting expertise to help identify fraud and control health care costs;
  • Consumer education efforts;
  • Data analysis;
  • Insurance websites; and
  • Medical record software.

For example, HHS has, among other initiatives:

  • Contracted with HighPoint Global to conduct job training and quality control for dozens of federal call centers handling enrollment in the ACA’s insurance exchanges;
  • Spent hundreds of millions of dollars on contractors to build and maintain;
  • Contracted with Serco for more than $400 million over the past two years, mostly to collect paper insurance applications when online insurance exchanges failed;
  • Budgeted over $10 billion for 10 years to fund its innovation lab, which contracts with companies to test payment model alternatives and combat Medicare fraud online;
  • Increased contracts with Lockheed Martin, which runs the department’s computers; and
  • Accepted bids from various companies to modernize the military’s electronic health records system (Hancock, Kaiser Health News, 12/8).
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