Healthcare Business News
Oregon Gov. John Kitzhaber

Heads roll following Oregon's rudderless healthcare exchange debacle

By Paul Demko
Posted: March 20, 2014 - 6:45 pm ET

No one was truly in charge of ensuring that Oregon's health insurance exchange website was functional when it opened for business Oct. 1. That's the conclusion of a report commissioned by the state to determine what went wrong with the disastrous launch of its online insurance marketplace.

In response to the report, Oregon Gov. John Kitzhaber announced at a news conference that the state's top health official, Dr. Bruce Goldberg, who also served as interim director of Cover Oregon, had resigned. The previous director of Cover Oregon, Rocky King, stepped down in December. In addition, the exchange's chief information officer and chief operating officer are also being removed.

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“I am angry and I am disappointed by the rollout of Cover Oregon and the ongoing technical problems,” Kitzhaber said.

Oregon was supposed to be among the states leading the way in implementing the Patient Protection and Affordable Care Act. Instead, its website has been plagued by problems, making it largely impossible for individuals to sign up for coverage through it more than five months after its launch.

In January, Kitzhaber hired the consulting firm First Data to find out what went wrong with Cover Oregon. On Thursday, First Data released a 74-page report documenting its findings from a six-week probe that included interviewing 67 individuals involved in the project and reviewing more than 3,200 documents.

The report found systemic management problems, poor communication and shoddy contracting. But the root of the website's problems came from a lack of clear consensus on who was accountable for making sure the complex project succeeded.

“It is clear that communication across agencies was ineffective and at times contentious,” the report noted. “The lack of a single point of authority slowed the decision-making process and contributed to inconsistent communication, and collaboration across agencies was limited at best.”

Beyond the state's internal troubles, the First Data report also found significant problems with its lead contractor, Oracle Corporation. In particular, the report found that the contract paid Oracle based on the amount of time and resources it devoted to the project, rather than on what it actually delivered. “This approach departs from contracting best practices by putting the burden on the state for directing the vendor's work and providing little financial accountability,” the report stated.

Kitzhaber suggested that the state is likely to sue Oracle to recoup some of the more than $130 million that the company has received for work on the exchange.

“We are prepared to pursue whatever legal means might be necessary,” he said.

The report also uncovered why state officials were largely caught off guard by the website launch's debacle. The state's quality assurance contractor, Maximus, repeatedly raised red flags about the status of the project and Oracle's work in particular. But those reports often weren't seen by key state officials.

For example, members of the state's Legislative Oversight Committee told First Data investigators that they were completely unaware of the role played by Maximus and never saw those reports. Instead, they were repeatedly assured by Cover Oregon officials that the website would be ready to go live on Oct. 1.

Problems with the website should not overshadow the state's progress in providing coverage to previously uninsured individuals, Kitzhaber stressed. Since Oct. 1, more than 150,000 individuals have signed up for coverage, including roughly 50,000 state residents enrolled in commercial plans.

Oregon now faces difficult decisions about how to proceed. The state has asked federal officials for an extension of the open enrollment period. Kitzhaber indicated that he spoke with HHS Secretary Kathleen Sebelius Tuesday.

But the state also needs to determine how it will handle the 2015 open enrollment period that begins in November. Given its falling out with Oracle, it's possible that Oregon could decide to scrap its website entirely and utilize the federal exchange.

“We are facing a serious set of critical decisions considering options moving forward,” Kitzhaber said.

Follow Paul Demko on Twitter: @MHpdemko

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