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Massachusetts Latest Blue State Facing Exchange Failure

Massachusetts is joining Oregon as the latest state to pull the plug on its online health insurance marketplace and prepare to send residents to the federal website instead.

Two other Democratic-led states, Minnesota and Maryland, also are struggling with their markets and may have to switch to the federal site before the next open enrollment period, which begins Nov. 15.

It’s part of a pattern in which states whose leaders have been gung ho about the health care law (PL 111-148, 111-152) have overreached designing their online marketplaces. The inability of contractors to deliver has led officials in Oregon and Massachusetts to resort to paper applications to get people covered.

Overly ambitious website designs, tangled lines of authority, incompetence and bad luck in picking contractors are among the reasons, according to experts who’ve analyzed the state efforts. Some of the miscues mirror what also happened on the federal level when the blown launch of the federal site last fall nearly sank insurance expansion under the health care law until a massive repair project got the site on track.

Optum, the IT contractor that helped turn around, has advised Massachusetts officials that rebuilding its existing site “was too costly and too risky,” a state official said in an interview Tuesday. Instead, the state will present a plan to the board of its exchange Thursday to pursue a two-track strategy in which it will simultaneously pursue a switch from its existing contractor CGI to another contractor HCentive while also making preparations to shift enrollment to A final decision will be made “this summer” on which plan to adopt.

The move comes after the board of Maryland Health Benefit Exchange in April voted to adopt a simpler website design used by Connecticut and hire its IT vendor, Deloitte LLP.

The board ruled out dropping the state marketplace altogether. But it’s not clear whether the Department of Health and Human Services will give Maryland more money to make the changes needed to continue maintaining its own marketplace.

Oregon never was able to launch the website enrollment process it designed and had to rely heavily on outside brokers and paper applications.

Officials there in late 2010 vowed to build a “high value” exchange offering consumers apples-to-apples comparisons of plans, easy shopping and choice, smooth enrollment processing and easy payments, along with customer service and “clear value for the premium dollar.” The site was also supposed to give insurers access to enrollment, billing and payment processing.

But news reports and an independent audit chronicled what turned out to be an overly ambitious project hampered by feuding state agencies, lax contracting and a lack of authority and accountability in project oversight.

“Though it has spent more than $200 million on its exchange, Oregon’s is the only exchange in the country where the public can not self-enroll in a single sitting,” the news website Oregonlive reported last month.

A March 19 independent analysis of the fiasco noted that it was a “complex, multi-agency project.”

“There was no single point of authority,” said the report prepared for Oregon Democratic Gov. John Kitzhaber by FirstData. That “slowed decision making and contributed to inconsistent communication.”

The project relied on a commercial, off-the-shelf product from Oracle rather than a more customized approach. To save money, Oregon decided it would serve as its own systems integrator.

The decision not to hire an outside integrator “departs from best practices,” according to the independent report and caused a lack of accountability on the project. That, in turn, contributed to a delay in defining requirements and unrealistic delivery expectations. The report noted that one state official described Oregon as having “the most robust scope of any exchange.”

The report also found poor communication with the governor’s office about problems. Kitzhaber was told on July 31, 2013 that a “staged launch” may be needed on Oct. 1 and that the project remained on track. But on Sept. 30 Kitzhaber’s office was told the website would not be up and running on Oct. 1

Unwinding state online sites is no simple matter, however.

Using the Connecticut IT platform would allow Maryland to be ready for the fall, state officials say. But it also means spending another $40 million to $50 million, they noted. That’s about what Maryland would have to spend to develop a Medicaid eligibility and enrollment system that would work with the federal exchange. Maryland hopes to use federal dollars to do that but it’s unclear whether HHS will permit that.

Massachusetts is in a similar bind. The official said that the two track plan would cost $100 billion through 2015. There’s no certainty HHS will approve federal money for that, either. Massachusetts is hoping it will be able to switch back to its own website in 2016.

Massachusetts already has near-universal health coverage under a 2006 state law signed by Republican Gov. Mitt Romney. State officials have continually struggled to upgrade the online marketplace, called the Massachusetts Health Connector, so it can meet the requirements of the health care overhaul.