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U.S. extends Terremark contract as HealthCare.gov host

A man looks over the Affordable Care Act (commonly known as Obamacare) signup page on the HealthCare.gov website in New York in this October
A man looks over the Affordable Care Act (commonly known as Obamacare) signup page on the HealthCare.gov website in New York in this October

WASHINGTON (Reuters) - The Obama administration said on Friday Verizon Communications Inc's Terremark unit will remain under contract as host of the federal website HealthCare.gov to better ensure a smooth end to Obamacare's open enrollment period on March 31.

Terremark's contract with the Department of Health and Human Services was due to expire on March 30, the day before the end of open enrollment for 2014, a time when high daily volumes are expected as consumers from 36 states rush to use to website to sign up for subsidized private health insurance. It would be extended for up to seven months, according to federal documents.

Hewlett-Packard Co has been named to replace Terremark as website host and operator of the department's federal data center as part of Obama's Patient Protection and Affordable Care Act.

"We extended Terremark's contract term in order to ensure a successful transition between the two contractors," said a statement issued by the Centers for Medicare and Medicaid Services, the Obamacare agency at HHS.

"HP and Terremark will work together so that the site runs smoothly for consumers during the remaining weeks of open enrollment," the statement said.

Terremark's replacement by HP came to light after the botched October 1 rollout of HealthCare.gov. The website was overwhelmed by technical problems for much of October and November.

Terremark's data center also experienced outages across the system that affected not only HealthCare.gov but also 14 healthcare exchanges run by individual states.

However, CMS had awarded the contract to HP several months before the launch.

The administration mounted an emergency operation to fix the site that has allowed enrollment to proceed relatively smoothly since early December. More than 4 million people have signed up for private health coverage through the federal and state marketplaces.

Terremark received $55.4 million under the original Obamacare marketplace contract, which was awarded in 2011. Federal documents said the new seven-month extension, valued at $58 million, includes a four-month base period and 30-day option periods.

(Reporting by David Morgan; Editing by Mohammad Zargham)

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