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Serco secures US health insurance eligibility support contract valued at $900m USD

Published: 6 Jun 2018

Serco Group plc ('Serco' or 'the Group'), the international service company, has received formal notification from the US Department of Health and Human Services, Center for Medicare & Medicaid Services (CMS), that Serco has been awarded a contract to continue to support eligibility determinations for citizens purchasing health insurance through the Federal Health Insurance Exchanges. The contract has a one-year base period and four one-year option periods, with an estimated total value to Serco, subject to workload volumes, of approximately $900m if all option years are exercised.

Serco’s role is focused on delivering effective and efficient verification of applicants’ eligibility for health insurance benefits as citizens enrol for, or renew, a Qualified Health Plan. A wide variety of consumer interactions are processed by Serco using our deep case management and process expertise, as well as our world-class Eligibility Support Platform which we have developed specifically for this demanding work. Tasks include: processing paper-based applications; matching applicants’ data through secure electronic interfaces and reconciling any inconsistencies; verifying supporting documentation for eligibility; performing outbound customer contact services; and quality assurance and data analytics to support the integrity of the overall programme.

Serco has been providing CMS with processing support since July 2013. The current five-year contract ends on 30 June 2018 and revenue for the last 12 months has been approximately $210m. Our operation of the contract over the last five years has met the challenges of evolving federal policy requirements, as well as adapting to the changes in volumes, consumer contact channels and the timing and cyclicality of the Open Enrolment Periods. The new contract is forecast to deliver cost savings for CMS against the previous contract as we develop further process efficiencies and technological improvements; the proportion of the contract delivered on a fixed price basis has also been increased.

Rupert Soames, Serco Group Chief Executive, said: “Serco has developed a strong working partnership with CMS to provide it with vital consumer eligibility services. Over the past five years we have assisted millions of Americans by adjudicating their health insurance applications, using a combination of skilled staff and process automation to drive down costs and protect programme integrity. We look forward to delivering additional innovation and continued transformation of the operations, as we further develop the automated processing platforms and staff expertise to provide even better value and efficiency to citizens.”

This announcement contains inside information.