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Health Choices switches contractors after accusations on data security, China

Florida Health Choices, which is building an insurance website for small employers, has switched contractors after accusing the first one of lax security and outsourcing some work to China.

Created in 2008, the state-authorized non-profit was supposed to have the exchange in operation last summer. Now the board and staff hope it will be up by January 2013.

Health Choices ended its contract with Ceredian Exchange Services, the original vendor, in March and signed a contract with Xerox in May.  The nine-year contract is worth $68 million, according to a Xerox press release.

Xerox's subcontractor is Choice Administrator Exchange Solutions, which runs health exchanges for more than 10,000 employers and 150,000 individuals.

Johnny Gonzalez, Xerox's point man on the Florida project, said development of the web portal should go quickly since they can adapt systems that the  subcontractor used in California and other states that are building exchanges that comply with the Affordable Care Act.

The ACA requires Americans to have health coverage, so if they don't get it through an employer or a government program, they'll be able to use an exchange set up for the purpose of comparison-shopping. Florida's Republican Gov. Rick Scott, a vocal opponent of the ACA, has said Florida will not build an exchange that confirms to it. He said Floridians can use one set up by the federal government.

At least one legisltive leader, Sen. Joe Negron, R-Stuart, has suggested that the state examine operating its own exchange so long as the federal requirement stays in effect. Negron has suggested that the Florida Health Choices program could be adapted to serve as the state’s exchange.

But Naff said state laws would have to be changed for that to happen; in the meantime, she said, “we are implementing state law.”

Tensions between Health Choices and the original contractor, Ceredian, was clear in a March 2011 letter from Health Choices' CEO Rose Naff to Ceredian's President Bart Valdez. She told him that Ceredian and its subcontractor eHealth had to stop working in China or any other offshore location.

The contract required that Ceredian tell Choices where work was going to be conducted, documents show. While Ceredian had said some of the work would be done outside Florida, “they never disclosed to us they were going do work in China,” Naff said.

Naff requested details about the extent of work that was“offshored” to different countries but said she didn’t receive it. Instead, Naff said she received a letter advising that all offshore work had been halted.

In the months that followed, Ceredian failed to develop the system it agreed to produce and couldn’t design one that complied with federal health care security laws, correspondence shows.

In November 2011 Naff wrote Patrick Foggia, program manager for Ceredian, advising him that the company was in breach of contract.  In March 2012 the parties settled, with Ceredian agreeing to give back $250,000 without admitting any wrongdoing.

Contacted by Health News Florida, Ceredian  communications specialist Elissa Zaks said in an e-mail that “it is inappropriate for us to comment” on the project since the company is no longer involved.

--Health News Florida is an independent online publication dedicated to journalism in the public interest. Christine Jordan Sexton can be reached at 850-251-0358 or by e-mail. Questions, comments can go to Editor Carol Gentry at 727-410-3266 or by e-mail.


Carol Gentry, founder and special correspondent of Health News Florida, has four decades of experience covering health finance and policy, with an emphasis on consumer education and protection.