IBM, Outsourcing, Medicare, Consolidation, Contract
IBM wins federal contract to consolidate healthcare services and operations
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The Centers for Medicare & Medicaid Services (CMS) signed IBM and two partners to a contract to consolidate 17 data-processing centers into three highly efficient ones over the next five years.
CMS expects to save nearly $45 million annually under the new arrangement.
IBM's portion of the CMS services contract is valued at approximately $200 million, making it one of the largest federal outsourcing deals ever.
One of the world's largest claims-processing organizations, CMS is attempting to fulfill requirements of the 2003 Medicare Modernization Act, which mandates that CMS use competitive bidding to streamline the agency's operations and cost. Claims-processing costs now hover around the 18 percent of the Gross Domestic Product (GDP) threshold Congress set in 2003 for health-care related spending.
Other winners of the work, known as the CMS IT Modernization Initiative, were Electronic Data Systems (EDS) of Plano, Texas and Companion Data Services LLC (CDS), a fully owned subsidiary of Blue Cross Blue Shield, of South Carolina.
Together with IBM, EDS and CDS will be able to compete for future data-center tasks from the Centers under a process known as an Indefinite Quantify/Indefinite Delivery contract vehicle.
This allows certain pre-qualified vendors to compete for agency work in a streamlined and cost-effective manner.
In addition to the reduction of number of data-processing centers and the annual savings of $45m, the CMS IT Modernization effort will help the Centers:
- Further standardize the implementation of policy changes
- Establish better control of IT processes and procedures
- Reduce the CMS system security risk
- Support increasing health care processing workloads
The win reflects comparable projects IBM has undertaken to consolidate data centers throughout the healthcare industry and within government, both in the United States and abroad.
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