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What’s Next for Health Care Reform and Health IT?

Despite seven and a half hours of discussion yesterday, the nation is no closer to a bipartisan health care reform bill. Although there were a number of items that both Democrats and Republicans agreed upon, such as reforming medical malpractice and reducing health care costs, they could not come together around the fundamental issue of what role government should play in reform. Democrats believe that the federal government should set minimum standards of care, coverage, and basic consumer protections, while Republicans believe the government should make smaller incremental adjustments and allow market forces to shape reform rather than government mandates and oversight.

The President's proposal, released on Monday that combines points from the House and Senate bills, did little to sway Republicans. Republicans showed no willingness to consider either of the current bills passed by the House or Senate, or the President's plan. They favor starting over from scratch with an incremental approach to health care reform rather than a comprehensive approach favored by Democrats. "We are too close to stop now" is the attitude held by most Democrats.

Reaching bipartisan agreement at this point seems unrealistic. Democrats will begin efforts to find support of the Senate-passed health care bill in the House, and are likely to use the reconciliation method for passing the legislation in the Senate. Action is likely to begin as early as next week.

What does this mean for information technology government contractors and health IT? The good news is that the Senate health care bill, Patient Protection and Affordable Health Care Act, is chocked full of health IT initiatives to reduce health care costs; eliminate fraud, waste, and abuse; and make health care more effective and efficient. In addition, the bill would require the establishment of a number of new organizations and expansion of existing organizations which will require IT to fulfill their missions, such as reinsurance, insurance exchanges, expansion of Medicaid and CHIP, information dissemination to consumers, and health care quality.

It's unfortunate that the nation's politicians were unable to reach bipartisan agreement on health care reform, but Democrats are not about to give up at this late date. If they succeed, government and health IT contractors can look forward to an environment ripe with IT opportunities to support the implementation of comprehensive health care reform legislation.

GovWin to speak at the International Chief's of Police Law Enforcement Information Management Conf.

GovWin will be joining forces with the International Association of Chief's of Police (IACP) in providing information on federal grants for public safety and homeland security initiatives. GovWin has been selected to present on this topic at the 34th annual IACP Law Enforcement Information management (LEIM) conference in Atlanta, Georgia, May 24-27th. The conference brings together law enforcement practitioners to share leading practices and lessons learned in the application of technology to fight crime.

GovWin's session will focus on the grant process and our federal grant forecast for the next five years in the public safety vertical. Federal grants account for nearly one quarter of all state and local government spending. GovWin's grant presentation will provide insight into how this funding stream will affect state and local Justice/Public Safety technology spending through President Obama's current term in office and beyond.

Building on the priorities of the early 2009 federal fiscal stimulus, the White House and Congress will establish new priorities for states and localities with fiscal year 2010 grant funding. This will involve shifting billions of dollars along with new guidelines and reporting requirements.

Topics to be discussed include:

  • The recession's impact on federal grant funding
  • The relationship of FY2010 funding to 2009 stimulus funding
  • Current grant priorities vs. those of the previous administration
  • Technology funding hot spots
  • Examples of effective grant use

Missouri Gears Up For Their HIE RFI Release

The State of Missouri held their Technical Infrastructure Workgroup meeting today to continue the discussion of their Health Information Exchange (HIE) plan. Missouri plans on releasing a Request for Information (RFI) on March 24, 2010, to help gather more information on the technical approach and financing assumptions of their HIE. The Office of the National Coordinator (ONC) requires state strategic and operational HIE plans by July 30, but Missouri has their eye on a May 31 submission date.

The architecture Missouri is currently considering constitutes three layers utilizing larger institutional environments (for example hospital systems that contain more than one provider or university systems). The first objective would be to provide the system or highway that these larger environments connect to each other. After becoming certified under standards still being developed, each hospital or provider could join one of the existing environments and would be authorized a certificate to trade information through mutual authentication. This model is similar to the National Health Information Network (NHIN) Social Security Administration (SSA) pilot production.

Layer two comprises what most people think of when hearing HIE such as exchanging lab results or prescription information. Missouri is looking at a service oriented architecture (SOA) based on web services and an enterprise service bus pattern that includes a service registry. Layer three includes actually identifying each person's health records and linking them across providers.

Missouri has not set their plans in stone, however, the idea of several tiny, individual providers connecting directly to a statewide HIE could bring about many individual problems combining into large problems for the state. The state does not want to build an HIE from scratch and will be following NHIN standards closely as not to invent anything new. The RFI will provide vendors an opportunity to present their industry knowledge and experience, but be aware that not all HIE project workers are on board with vendor solutions. Will vendors be willing to modify their solutions to conform to the state HIE or even connect to another vendor's solution? Will vendors be able to sustain 1 million plus users logging on in the next twelve to 24 months? Ideally the RFI will identify what capabilities are available; what the current HIT environment looks like; and budget availability. GovWin is tracking the Missouri HIE Opportunity under ID #60207 and more information on Missouri's Health Information Technology environment can be found here.

Facial recognition on your phone: Wave of the future or waste in the future

A Swedish based mobile software design company, The Astonishing Tribe, has developed a smart phone program called Recognizr which would enable you to use your camera as a means of identification through facial recognition. While this program's goal is to discover the individual's "name, schedule, profile and latest tweets," it could be seen as a step in the direction of facial recognition by phone.

Already in existence is software that can send a public safety official a mug shot and other information via email, text message and direct message, but this could be the next phase of that technology. Facial recognition via cell phone camera could facilitate the ability to take pictures of a possible crime suspect and to then text it to a police station via text message. This technology, which is already being implemented across the country is Next Generation 911, uses IP networks to allow police dispatch to receive text messages, pictures and other files.

Television stations often display suspect's pictures online, and America's Most Wanted displays their lists via the Web as well. The next logical step, with the Internet on phones, is to be able to view these pictures on a phone and enable a citizen to see that individual, take a picture which may recognize their status, and can immediately be forwarded to the police: A citizen arrest at its finest.

While this technology, via phone, is still in its early stages, it is something to consider as we move forward to more advanced forms of facial recognition software and hardware. As development occurs there could be casualties along the way: mobile automated fingerprint identification systems. Just as public safety agencies have moved from analog surveillance to digital and vehicle recognition, it will take time before this technology matures and becomes a viable product for vendors to create and citizens to have in the palm of their hands.

Draft RFI Available for the Florida Health Information Exchange

The Florida Agency for Health Care Administration (AHCA) held a Health Information Exchange (HIE) workgroup on February 12, 2010, releasing more information about the development of the HIE Collaborative. AHCA confirmed that they will be releasing a Request for Information (RFI) in the near future for planning for operations of the state-level Health Information Organization (HIO) and the HIE Request for Proposals (RFP) that the HIO will issue with AHCA later this year. The RFP is expected to be released in August with a contract award in October.

Included in the presentation materials was a draft copy of the RFI, describing the basics that the Florida Health Information Network (FHIN) will be looking for. At a minimum, FHIN should be able to support more efficient coordination of patient care through faster delivery of pharmacy, laboratory, and other results to clinicians and allow for improved exchanges of patients' health information during transitions of care. The implemented HIE should function seamlessly with already existing public health organizations and conform to meaningful use criteria. The HIE will need to interface with not only the Medicaid Health Information Network (HIN), but also connections outside Florida to other entities connected to the Nationwide Health Information Network. AHCA estimates that technical funding for the FHIN will not exceed $4 million in the first year with a $6 million limit for year two of implementation. They are estimating responses for the RFI will be due by March 31, 2010. Time between the RFP release date and estimated contract award date is under two months, so vendors should make sure to familiarize themselves with the Draft RFI and released FHIN documents. Workgroup materials and the Draft RFI can be found on GovWin's Florida Health Information Technology Vertical page or on Opportunity ID #51791.

State Health Information Exchange Grant Awards Announced

Today Department of Health and Human Services (HHS) Secretary Kathleen Sebelius announced approximately $800 million in economic stimulus grant awards for advancing the widespread adoption and meaningful use of health information technology (HIT), as well as, providing funding to train the health care workforce. $375 million has been awarded to the first round of 32 non-profits to support the development of regional extension centers (REC). RECs will provide technical assistance to providers as they work towards implementing the meaningful use of electronic health records (EHRs). Forty states agencies and State Designated Entities (SDEs) received awards in the first round of health information exchange (HIE) grant funding which totaled $386 million. Additional HIE and REC awards are expected to be announced in the near future. In addition, Department of Labor (DOL) Secretary Hilda Solis announced the $227 million job training portion, which is expected to train 15,000 people in health IT related job skills and lead to the creation of 10,000 new jobs. The grants will support 55 separate training programs in 30 states.

States have four years, from 2010 to 2013 to utilize HHS grant funding to build capacity for exchanging health information through an interoperable HIE network. State matches start in 2011. Below is the first round of HIE grant recipients:

  • Alabama Medicaid Agency- $10,564,789
  • Arizona Governor's Office of Economic Recovery- $9,377,000
  • Arkansas Department of Finance and Administration- $7,909,401
  • California Health and Human Services Agency- $38,752,536
  • Colorado Regional Health Information Organization- $9,175,777
  • Delaware Health Information Network- $4,680,284
  • Government of the District of Columbia- $5,189,709
  • Georgia Department of Community Health- $13,003,003
  • Office of the Governor (Guam)- $1,600,000
  • The Hawaii Health Information Exchange- $5,602,318
  • Illinois Department of Health Care and Family Services- $18,837,639
  • Kansas Health Information Exchange Project- $9,010,066
  • Kentucky Cabinet for Health and Family Services- $9,750,000
  • State of Maine, Governor's Office of Health Policy & Finance- $6,599,401
  • Massachusetts Technology Park Corporation- $10,599,719
  • Michigan Department of Health- $14, 993,085
  • Minnesota Department of Health- $9,622,000
  • Missouri Department of Social Services- $13,765,040
  • Nevada Department of Health and Human Services- $6,133,426
  • New Hampshire Department of Health and Human Services- $5,457,856
  • Lovelace Clinic Foundation, New Mexico- $7,070,441
  • New York eHealth Collaborative Inc. - $22,364,782
  • Commonwealth of NMI, Department of Public Health- $800,000
  • North Carolina, Department of State Treasurer- $12,950,860
  • Ohio Health Information Partnership LLC- $14,872,199
  • Oklahoma Health Care Authority- $8,883,741
  • Pacific Ecommerce Development Corporation (American Samoa) - $600,000
  • State of Oregon- $8,579,992
  • Commonwealth of Pennsylvania, Governor's Office of Health Care Reform- $17,140,446
  • Oticina del Gobernador La Fortaeza (Puerto Rico) - $7,770,980
  • Rhode Island Quality Institute- $5,280,000
  • State of Tennessee- $11,664,580
  • Utah Department of Health- $6,296,705
  • Vermont Department of Human Services- $5,034,328
  • Virgin Islands Department of Health- $1,000,000
  • Virginia Department of Health- $11,613,537
  • Washington Health Care Authority- $11,300,000
  • West Virginia Department of Health and Human Resources- $7,819,000
  • Wisconsin Department of Health and Family Services- $9,441,000
  • Wyoming Office of the Governor- $4,873,000

GovWin's Take:

The amount of HIT funding provided in the stimulus package is game-changing; funding will help states break through cost barriers, especially at a time when state budgets are tight. With federal momentum, significant funding, and aggressive timelines, states are going to move quickly, yet methodically, on their HIE initiatives. Contractors need to actively participate in HIE workgroups and attend HIT events as a way to strengthen relationships with states and better understand their plans for standardized system that meets their needs. In addition, in order to ready for the anticipated contracting opportunities, vendors should be engaging in marketing activities to position themselves for the market, hiring, and educating staff for upcoming HIE business opportunities.

GOVERNING's Outlook in the States and Localities: Part 2

Day Two of GOVERNING's Outlook in the States and Localities began with murmurs from participants echoing in ballroom at the National Press Club, as they hoped the states' outlook would be less dreary than the previous day. However, as the first panel of speakers began, the dark cloud that hung over the room on Day One, had indeed returned.

The first panel of the day discussed state issues, priorities and politics. Speakers for the panel included David Adkins, Executive Director of the Council of State Governments (CSG); William Pound, Executive Director of the National Conference of State Legislatures (NCSL); and Ray Scheppach, Executive Director of the National Governors Association (NGA).

Ray Scheppach was the first bearer of apparent bad news as he described what he called a "lost decade" and his prediction that it would be 2012 and 2013 before states will begin to see the same revenue numbers that were seen in 2008. While Scheppach praised the American Recovery and Reinvestment Act of 2009 (ARRA) and the flexibility it allowed for state spending, he explained how states are still acting in survival mode as they work fervently to make the most out of the little resources they have. Scheppach highlighted three big issues that will largely shape the outlook of the states for 2010: healthcare reform, some form of a jobs bill, and President Obama's recent recommended budget. William Pound began by highlighting numbers, specifically the budget shortfalls seen in 2009 and those already seen in 2010. Pound pointed out that this trend will continue as stimulus funds – which currently make up approximately 20% of a state's budget – are suspended. Pound predicts that the Federal government's action or inaction will largely shape the future outlook of the states such as healthcare reform and whether or not it will alleviate the current Medicaid burden for which states are responsible. David Adkins alleviated some of the doom and gloom atmosphere by opening with a quote from Woody Allen in which two paths – one to despair and utter hopelessness, and the other to total distinction – depict the current choices states are now faced with. However, despite Adkins' comical, yet negative opening, he offered some hopeful discussion as he pointed out the opportunity that has arisen from our current dire economic environment. State leaders will be forced into adaptive leadership. Common practices and where funds are spent will have to be readdressed in order to produce the same services at a lower cost. Adkins concluded his portion of the panel by pointing out that in US history the nation has endured thirty economic recoveries; there still is a light at the end of the tunnel.

The second panel of the day, covering 2010 revenue and spending consisted of panelists, Sujit CanagaRetna, Senior Fiscal Analyst at the Council of State Governments (CSG); Scott Pattison, Executive Director of the National Association of State Budget Officers (NASBO); and Ron Snell, Director of the State Services Division at the National Conference of State Legislatures (NCSL). Pattison began the panel's discussion by introducing the concept of a New Normal. In terms of state revenue and spending, a New Normal defines a projected slower increase in growth. Pattison pointed out that already 36 FY2010 state budgets have been cut with the possibility for future cuts. According to Pattison, Medicaid and education take up approximately 62% of a state's general fund budget. Ron Snell reported that 40 states predict to see lower revenues for FY2010 compared to FY2009. In a survey of state legislative state fiscal offices, the majority of responding states do not foresee a return to peak revenue collections until the years 2012 and 2013. Snell cautioned that once ARRA funds cease, states will face a cliff when it comes to funding. States will have to reevaluate their spending in order to continue to function normally. Sujit CanagaRetna discussed programs that states are likely to see a surge in expenditures, with a specific case study on Unemployment Insurance. CanagaRetna also cautioned that despite a decrease in revenue, states are likely to see surging expenditures in other major areas such as healthcare, education, and public pensions.

Following the Revenue and Spending panel, three issue panels covering Technology Trends, Health Reform, and the Census 2010 took place. In the Technology Trends issue panel, speakers included Steve Fletcher, Chief Information Officer of Utah; Bert Jarreau, Chief Information Officer of the National Association of Counties; Doug Robinson, Executive Director of the National Association of State Chief Information Officers (NASCIO); and Bill Schrier, Chief Technology Officer of Seattle.

Steve Fletcher kicked off discussion in the Technology Trends panel as he initiated discussion of a common term used throughout the session: consolidation. According to Fletcher, government needs to be perceived more like a business in the current economic environment. In order to enable government services, business processes must be reevaluated and redesigned. Fletcher spoke of opportunities in enterprise technology and cloud computing that could help engage state governments. Doug Robinson echoed the sentiments of Fletcher in regards to consolidation, but also emphasized collaboration, and the possibility for regional clouds. Bert Jarreau and Bill Schrier however discussed the possible inefficiencies of consolidation efforts. Schrier spoke from personal experience when he brought up the possibility of failure, and Jarreau pointed out that while the technical aspect of consolidation may not be difficult, the collaboration of people and local entities can be difficult. Schrier and Jarreau emphasized broadband technology as the key to transformational government. According to Schrier, broadband enables citizens to aid state and local government in the provision of some services. When asked what the upcoming FCC Broadband Plan should include, answers from the four panelists included better overall service, access to rural areas, wireless as well as fiber needs to be addressed, and some sort of adoption strategy needs to be addressed. Other technological innovations were discussed, such as the idea of a virtual, mobile workforce. Though advocates of a virtual workforce, the panelists pointed out impediments state and local governments endure such as a bleak public perception.

The Keynote Speech, delivered by Mark Zandi, Chief Economist and Co-Founder of Moody's, followed the issue panels. In his speech, Zandi walked through the recession from its beginning in December 2007 to its recovery in August 2009. Zandi attributed the end of the recession to ARRA, claiming that the recession officially ended once ARRA funds began to trickle downward to the state and local level. Though the recession is officially over, Zandi does not foresee a full recovery anytime soon. While layoffs are abating, companies are still not hiring largely due to a lack of confidence in the economy and policy uncertainty. Housing foreclosures are still rising, while revenue is still decreasing. According to Zandi, policy-makers need to remain aggressive and work diligently to get something solidified in order for the precursors to self-sustaining growth to begin. Zandi provided a timeline in which he predicted self-sustaining growth will begin in Q1 of 2011, however fiscal pressure will intensify by Q4 of 2011 due to the rising debt to GDP ratio, which according to Zandi, the President's recent recommended budget only worsens.

Following the Keynote Speech, issue panels were once again offered, this time in energy, tax, and transportation. In the Energy Outlook panel, speakers consisted of Jeb Brugmann, Interim Executive Director of ICLEI – Local Governments for Sustainability; Mandy Mahoney, Director of Sustainability for the City of Atlanta; and Mark Wolfe, Executive Director of the Energy Programs Consortium. Panelists discussed the growing trend of energy efficiency and key initiatives taking place at the state and local level. Unfortunately, because the trend is still new, there is a huge gap between those states and localities that have advanced in energy efficiency, and those that are still searching for a definition. Panelists agreed that ARRA has helped by providing funding for specific programs, and increasing support. Mark Wolfe discussed how selling energy efficiency still remains difficult, however upgrades to software tools that track and measure energy consumption could benefit the effort.

The final panel of the event consisted of Alan Ehrenhalt, Former Executive Editor of GOVERNING; Josh Goodman, Staff Writer for GOVERNING; and Charlie Mahtesian, National Politics Editor of Politico discussing the political races to watch this fall. As previous speakers already pointed out earlier in the day, 36 governors are up for reelection this fall, which could have a tremendous effect on state and local government for the upcoming years. Panelists agreed that Florida's race will act as a weather vane for other states, and to watch states with unelected governors – such as New York and Arizona – for their outcomes will likely be interesting.

At the conclusion of GOVERNING's Outlook in the States and Localities 2010, it became evident that the upcoming year will hold its fair share of hurdles for state and local government. However, if leaders can adapt and work toward transforming processes, state and local government may be able to bear the long road ahead with few scrapes and bruises.

GOVERNING's Outlook in the States and Localities: Part 1

GOVERNING magazine held its annual Outlook in the States and Localities conference on February 2-3, 2010. The conference, which took place at the National Press Club in Washington, D.C. brought together both the public and private sectors as a thorough outlook of what is to come in 2010 was provided by a series of guest speakers who covered everything from the fiscal forecast to political races to watch. As a proponent of shared ideas and expert insight into the state and local arena, GOVERNING's 2010 Outlook, though bleak, still offered a plethora of opportunity for all industries working within current economic boundaries.

Day One of the conference began with City and County Concerns amidst a post-stimulus reality. Speakers for the first panel included Don Borut, Executive Director of the National League of Cities; Chris Hoene, Research Director of the National League of Cities; Larry Naake, Executive Director of the National Association of Counties; with moderator, e.Republic's Todd Sander.

A bleak picture was painted as localities were described by Chris Hoene to be heading into the eye of the storm. Hoene expanded his metaphor as he discussed the current budget shortfalls states and localities are facing and their remedies thus far which include layoffs and furloughs, the delay or cancellation of major projects, and even a revisiting of employee pensions and benefits. Hoene called for the need of transformational government, which Don Borut echoed as he discussed stimulus funds, and though helpful as they have been for states and localities, are scheduled to run out leaving local government entities to alleviate their own tension. Borut proposed a transformational government in which localities consolidate functionality and even the possibility of down-sizing and allowing citizens to take over functions governments once provided. The sole county representative on the panel, Larry Naake agreed with both Hoene and Borut's transformational ideas and highlighted issues like healthcare reform and immigration reform that must be addressed at the Federal level in order to alleviate the burden on counties. All three gentlemen, though pointing out a rather morbid time frame – anywhere from two to five years – for local recovery, concluded that in the midst of a tumultuous storm, opportunity can be found in the local governments' need to innovate and continue to provide their services with fewer resources.

Following City and County Concerns, was the Local Leadership Forum. Headlining the Forum were leaders Jon Dickinson, a Senior Policy Advisor to Mayor Bloomberg's Office of Long-Term Planning and Sustainability in New York City; Bill Schrier, Seattle's Chief Technology Officer; David Smith, County Manager of Maricopa County in Arizona; A.C. Wharton, Mayor of the City of Memphis; with Todd Sander once again as acting moderator.

Unlike the daunting concerns of the city and county panel before them, the leaders in the leadership forum took the opportunity to discuss current innovative initiatives taking place in their home localities, as well as providing their stance on the state and local environment. The leaders stressed the need for local governments to seize the opportunity found within the present crisis. Transformation was once again the word of the hour as the leaders shared their views on the need for government to reevaluate the services they currently provide and develop new methods of providing those services with reduced means. Mayor Wharton stressed that though it will be a good two to five years before states and localities are free of the burden of recession, localities should still plan and function as though recovery may arrive sooner. Bill Schrier took the opportunity of the forum to share his idea as to how a local government can perform the same services at limited cost: broadband. According to Schrier, advancing and expanding the sharing of information is the key for increased functionality in government as it opens doorways for constituents to provide the possible tools and information for government to run efficiently.

Following the Leadership Forum, conference participants were invited to join one of four roundtable discussions in the areas of Fiscal Forecast, Technology Trends, Sustainability Challenges, and Regional Initiatives. Within the Technology Trends Roundtable, led by Seattle Chief Technology Officer, Bill Schrier, participants were asked to provide a technological government need, as well as an innovation. Themes were revisited as participants discussed the need for government to consolidate in order to increase functionality and efficiency. Innovative remedies that were mentioned include business intelligence and project management tools, enterprise technology tools, and the more recent trend of cloud computing. Another innovative practice that was brought up in the Roundtable consisted of the notion of larger shared services, such as a Medicaid Management Information System (MMIS) shared amongst multiple states.

As the first day of GOVERNING's Outlook drew to a close, it appeared the only ray of sunshine in the murky 2010 forecast is the notion of transformation, from which opportunity may arise.

The Department of Labor Dives into the Cloud: Others to Follow?

The Department of Labor doesn't typically jump to mind during discussions about innovation in the federal government IT marketplace. This may be changing, however, with the announcement late last week that Global Computer Enterprises (GCE) has just completed its implementation of the DOL onto GCE's financial management Shared Service Provider (SSP) system. With this announcement, the DOL becomes the first cabinet-level department to move a major internal operation onto a cloud platform. If statements by President Obama and Federal CIO Vivek Kundra are any indication, the DOL is blazing a trail into cloud computing that other federal agencies will soon follow.

The Obama administration is banking on cloud computing and other shared services initiatives to drive efficiencies and cut costs in government IT. Word out of the Federal CIO's office is that agencies will test the waters in FY 2010 by implementing cloud computing pilot programs before making a wholesale leap into the cloud. The transition of DOL's financial management system to a cloud platform, however, suggests that agencies might be ready to make larger-scale moves on their own and bypass the pilot testing phase. If so, this would support conclusions GovWin put forward in its recent report Emerging Technology Markets in the U.S. Federal Government, 2009-2014. More than half (54%) of the federal IT personnel GovWin surveyed stated that cloud computing was going to be a "high impact" technology solution in their enterprise. Nearly a quarter of those surveyed were already using a cloud solution of some kind, despite the fact that the security of data in the cloud was the overwhelming concern of 69% of respondents.

When faced with results like this, it is natural to ask if the feds are moving too fast. Are they damning the torpedoes and pushing forward with cloud adoption regardless of the possible ramifications? Vivek Kundra and NIST cloud expert Peter Mell (co-author of the federal government's definition of cloud computing) might answer "no", because in many cases the security surrounding vendor cloud solutions is better than that surrounding many of the stovepiped IT systems currently in use across government.

So, if data security isn't as big a concern as it has been made out to be, what does this suggest for the rate of cloud adoption by the federal government? GovWin takes Vivek Kundra at his word about moving federal agencies to the cloud. We forecast that the adoption of cloud computing across the federal government will surge over the next 5 years to become a $1.2 billion market. This is of course a small portion of the federal IT market (IT spending in the FY 2011 budget alone is $79.3 billion), but with cloud computing projected to experience a 27% CAGR by FY 2014, vendors selling to the federal government would be wise to add cloud-based solutions to their offerings. Customers like the DOL appear to be waiting for them and with federal IT dollars tightening, offering cloud-based solutions can help vendors maximize earnings during tough economic times.

Obama budget includes funds for anti-fraud efforts

If you've been reading GovWin's latest report on state and local investment in anti-waste, fraud, and abuse (WFA) solutions, you'll be familiar with Obama administration efforts to crackdown on "improper payments." (That's the fed's politically neutered term for "waste, fraud, and abuse.") As forecast in that report, President Obama's FY 2011 budget provides additional resources for this effort.

"$250 million in additional resources that...will help expand the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, a joint effort by the Departments of Health and Human Services and Justice," to reduce WFA in Medicare, Medicaid, and SCHIP.

The White House estimates up to $100 billion in improper payments annually. It's unclear whether this represents improper payments made only by federal agencies directly. However, GovWin has estimated up to $67 billion in annual improper payments made by state and local agencies administering funds for the five largest federal social services programs.

Four more items (quoting verbatim from the budget) :

  • First, we will bring more transparency to these errors by creating an online dashboard of key indicators and statistics so that the public can access information on improper payments, view payment error rates by agency and program, and see a list of the most egregious actors.
  • Second, we will hold agencies accountable for reducing improper payments while maintaining program access, through--among other steps--designating one Senate-confirmed appointee to be accountable to the President for meeting improper payment reduction targets and consolidating program integrity activities.
  • Third, we will provide incentives for States, agencies, and recipients to report and reduce payment errors by using rewards--such as allowing States that reduce improper payments--to recoup more Federal grant dollars to cover administrative expenses, and use punishments, such as financial penalties on contractors who do not timely disclose an improper payment.
  • Lastly, the Administration is launching the Partnership Fund for Program Integrity Innovation an initiative which focuses on improving service delivery, payment accuracy, and administrative efficiency in Federal assistance programs while reducing access barriers for beneficiaries.

We'll be watching that last point closely as it portends good things for state anti-WFA investments.

[Personal aside: I beg the Beltway elite to please not call this new Senate-confirmed appointee an "Improper Payments Czar."]

Here's another good one.

"When States have to finance high levels of UI improper payments, employers face higher taxes and workers may see cuts in their benefit levels. Despite the efforts of States to reduce improper payments, over $11.4 billion in UI benefits were erroneously paid in 2009--an overpayment rate of almost 10 percent. The Administration will tackle this problem by boosting funding for UI integrity efforts and proposing legislative changes that together would reduce improper payments by over $4 billion and employer tax evasion by $300 million over 10 years."

For those of you keeping score, you might recall that GovWin forecast $8.2 billion in WFA for UI in 2010. These federal stats put us over $3 billion under the mark for 2010. (And, I was worried our model assumed too much WFA in UI!) Either way, reliable statistics are hard to come by and I don't know the provenance of the $11.4 billion figure.

If UI WFA remained steady for the next ten years (unlikely if unemployment continues to climb) for a total of $114 billion, and we assume an optimistic timeline of four years to reach the reduction targets, the Obama administration would reduce UI WFA by around $60 billion (53%) over the ten years.

Anyhow, go download the budget and search for the term "improper payments" to get the full picture.

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