‘Lego’ Model for Exchange Software; Firm Links People, Insurers and Government Systems in Two States’ Health-Insurance Marketplaces

September 29, 2013, 7:52 p.m. ET

‘Lego’ Model for Exchange Software

Firm Links People, Insurers and Government Systems in Two States’ Health-Insurance Marketplaces


CALVERTON, Md.—Pradeep Goel arrived from India 23 years ago to study in America. On Tuesday, Mr. Goel, now chief executive of a fast-growing technology company, faces his toughest examination yet: Making sure the software behind two new health-insurance exchanges doesn’t crash. Mr. Goel likens his work to taking Lego pieces and snapping them together in a manner that’s never been fully tried before. In the past week, he has routinely worked past midnight with his team at a command center near Baltimore on Maryland’s insurance exchange.For the state exchanges to work, normally separate computer systems have to talk to each other and it is EngagePoint Inc.’s job to build software bridges between those systems. When a consumer tries to sign up online for insurance, the state’s computers have to interact with federal computer systems to verify the person’s Social Security number, citizenship status and income. The state exchange also has to link up to the private insurance companies offering policies on the exchanges.

Within minutes, the program has to produce a final answer, telling enrollees what plans are available, how much in federal subsidies they are eligible for and whether they qualify for Medicaid. There are thousands of different scenarios determining whether a person might qualify for help, Mr. Goel said.

“Eligibility is the 800-pound gorilla,” he said.

Mr. Goel said he sees the beginning of open enrollment Tuesday as mile five in a 26-mile marathon. “We’ll pause, take a drink of water and run again,” he said.

Technology tasks are occupying an army of thousands of contractors ahead of the biggest change in the U.S. health system in decades—which is also the first to put online enrollment at the core.

Fourteen states and the District of Columbia are running their own exchanges, with the rest leaving all or part of the task to the federal government. Mr. Goel’s privately held EngagePoint won contracts to help build exchanges in two of the 14 states, Minnesota and Maryland.

In the past year, Mr. Goel, 44 years old, has added more than 200 people to the company’s staff of about 400, and expects to more than double last year’s revenue of $23 million. With his older brother, he started a health-care software company in 1991 that in 2004 was sold to WebMD Corp. His next venture was EngagePoint, founded in 2007. The company has been based in Florida but is officially moving its headquarters to Calverton, outside the nation’s capital, in late October. It is also working in two other states to upgrade their Medicaid systems and connect to the federal exchange.

Originally, EngagePoint’s main business was designing software to help consumers manage health-savings accounts. But the passage of the Affordable Care Act in 2010 opened up opportunities for people who understood both health care and software.

Mr. Goel’s Lego-building work is just one part of the picture. For exchanges in Maryland and Minnesota, Connecture Inc. makes “shopping” software that allows consumers to see insurance-plan offerings and compare them. Other software, made by EngagePoint, handles bill processing and payments. EngagePoint is the systems integrator, working under prime contractor Maximus Inc. in Minnesota and Noridian Healthcare Solutions LLC in Maryland.

Mr. Goel said he is confident the Maryland and Minnesota marketplaces will open and allow consumers with relatively simple situations to buy coverage on day one. He is less sure about more difficult cases, such as large families with children from multiple marriages living together who may qualify for different types of insurance. The federal and state exchanges can enroll people manually if needed.

Last week, the District of Columbia said its marketplace was experiencing a “high error rate” and wouldn’t be able to calculate the subsidies until November, effectively forcing many people to wait a month.

Mr. Goel expects Maryland and Minnesota’s marketplaces to function better because they started earlier. Still, he says, they effectively had to cram two years of work into one. “I call this stacked dominoes. It’s very important to make the first one go live on Oct. 1,” he said. The company is working on additional system updates for later, to fix known problems and address any new bugs.

In Minnesota, the state exchange known as MNsure won’t initially be able to accept “life changes” such as a baby born on, say, Oct. 2. It plans to add the function in time for Jan. 1, when coverage takes effect across the country.

In Maryland, state officials decided in April to focus on getting its exchange, known as Maryland Health Connection, working for individuals on Oct. 1 and delayed the opening of the small-business exchange until Jan. 1.

Shuttling between the two states has made Mr. Goel a familiar face to Delta flight crews. He spends little time in his corner office, which is devoid of pictures and contains a single whiteboard wiped clean.

Last week, Mr. Goel chalked up one small victory. He typed his Social Security number into a test version of the Maryland system and it correctly verified his identity

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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