More than a year before Maryland launched its health insurance exchange, senior state officials failed to heed warnings that no one was ultimately accountable for the $170 million project and that the state lacked a plausible plan for how it would be ready by Oct. 1.
Over the following months, as political leaders continued to proclaim that the state’s exchange would be a national model, the system went through three different project managers, the feuding between contractors hired to build the online exchange devolved into lawsuits, and key people quit, including a top information technology official because, as he would later say, the project “was a disaster waiting to happen.”
The repeated warnings culminated days before the launch, with one from contractors testing the Web site that said it was “extremely unstable” and another from an outside consultant that urged state officials not to let residents enroll in health plans because there was “no clear picture” of what would happen when the exchange would turn on.
Within moments of its launch at noon Oct. 1, the Web site crashed in a calamitous debut that was supposed to be a crowning moment for Maryland officials who had embraced President Obama’s Affordable Care Act and pledged to build a state-run exchange that would be unparalleled.
Instead, by the next morning only four people had signed up using the Web site — and amazed that anyone had gotten through the system successfully, state officials contacted each of them to make sure they were real. The site’s problems continue to prevent Marylanders from signing up for health insurance. As of Friday, 20,358 people had selected private plans, and state officials have said they do not expect to come close to their initial goal of 150,000 by the end of March.
This report is based on a Washington Post review of thousands of pages of previously undisclosed documents, including e-mails, internal reports, audits and court records, along with interviews with dozens of current and former contractors, state officials and others. The review shows that the creation of the exchange was dysfunctional from the start and that there were repeated missteps at almost every level.
On the morning of Oct. 1, shortly after Obama had proclaimed that Maryland would lead the charge in signing up residents for new health-care plans, the director of the state’s health exchange was repeatedly rejected by the network before she became the first to log on, with the help of her IT staff.
Since then, an unknown number of Marylanders have experienced the same frustration with the Web site and have been prevented from signing up for health insurance.
As the state continues to try to fix the site, Gov. Martin O’Malley (D) and state lawmakers are working to enact emergency legislation to spend millions to help insure those who could not sign up and had to begin the year with no coverage.
With many Marylanders still facing frozen computer screens and error codes when they attempt to select insurance, O’Malley is expected this coming week to decline an offer by the Obama administration to temporarily take over parts of the troubled site, despite the urging of some state Democrats to embrace the move. This past week, O’Malley acknowledged that the rollout “did not meet our expectations” but said that many things have been fixed and the state’s site is improving.
It’s a situation far different than what O’Malley predicted on a sunny morning in March 2010, less than 24 hours after Obama signed the Affordable Care Act. O’Malley called reporters to the entrance of an Anne Arundel County emergency room to announce that Maryland would begin drafting plans to “immediately begin the work to ensure our state leads the nation.”
Of the 14 states that opted to build and run their own health-insurance marketplaces, Maryland was among the earliest and most enthusiastic supporters of what became known as “Obamacare.” And it became the second state, trailing California, to enact legislation creating an exchange.
Lt. Gov. Anthony G. Brown (D), the highest-ranking elected official charged with implementing the law, was invited to speak across the country about the state’s early success. The Obama administration began depositing tens of millions of dollars in state accounts to pay for development, thinking Maryland’s exchange might be built so early that other states could copy it.
But out of public view, reports of trouble started arriving.
The first came in the fall of 2012, just over a year before the exchange was to launch. Auditors from the Portland, Maine-based firm of BerryDunn found that exchange officials were missing early deadlines to begin building the IT backbone for the public Web site, known as the Maryland Health Connection. The exchange was supposed to have signed agreements with state agencies that would allow them to link data from sources such as Medicaid and the Department of Motor Vehicles to the nascent site. But most agencies had not heard from the exchange or were unaware that the work was even overdue. The findings were summarized in a Nov. 1, 2012, letter to the president of the Maryland Senate and the speaker of the House of Delegates.
Almost $9 million in federal money was set aside to pay BerryDunn to be the watchdog for the high-profile project, with the expectation that Maryland officials would use the assessments to correct course as needed. The Post obtained copies of the confidential documents.
At the exchange’s temporary offices in north Baltimore during the fall of 2012, no one could produce for BerryDunn standard project plans showing a timeline and checklist for how the main IT contractor, from Fargo, N.D., would get the job done. The exchange’s staff, then just seven full-time state employees and borrowed ones from other agencies, “may not be sufficient to complete the work,” BerryDunn said in a PowerPoint presentation delivered to senior state officials in December. Five of the presentation’s slides began with: “There is a risk . . .”
One proved particularly prescient: Maryland might build all of the components of its health-insurance exchange and then put them together and find out they do not work, the presenters said. It was a serious risk, because the state also did not appear to be leaving itself with enough time to “complete, verify and test all system components before go-live.”
The 10 months that remained before the launch would go by quickly, the consultant warned, but corrective action could get the project back on track.
Two of O’Malley’s Cabinet members, his senior IT advisers and leaders of the exchange received copies of the confidential monthly reports, according to distribution lists. The first was also summarized in the technically worded letter to lawmakers. Aides to the legislative leaders said that the significance of the warning was not clear at the time and that they never knew the outside audits continued.
Late in 2012, the consultant’s reports focused increasingly on warnings that no one seemed to be in charge. Maryland Health Secretary Joshua Sharfstein; Human Resources Secretary Ted Dallas, the Cabinet member in charge of Medicaid; and Rebecca Pearce, the exchange leader, tried to make decisions together. It was a “three-headed-monster. . . . The next meeting could overrule the last. It was classic, you know, nothing was moving,” said one official who spoke on the condition of anonymity for fear of reprisal.
Within the exchange, Pearce, who had been lured away from a top job at Kaiser Permanente to run the system, was jostling with her own project manager for day-to-day control. Sunny Raheja was a state contractor who preceded Pearce on the exchange and would go to Sharfstein for decisions, according to documents as well as exchange officials who witnessed the dysfunction.
Ultimately, Raheja, who declined to comment, was replaced, and Pearce brought in a Medicaid IT specialist to run the technical side.
As Pearce’s new project manager began, the outside auditor said there was still no discernible plan for building the exchange, no oversight by the state and poor communication among the contractors hired to build the online site.
“There is also no overall Master Project Plan and schedule that is being utilized to manage the milestones and activities necessary for the entire program effort,” BerryDunn warned in a Feb. 25 report.
The consultant broke the project into 11 categories and began labeling them as red, yellow or green — seven were in red, four were in yellow.
“From our perspective, agreement on a consolidated work plan will need input from all . . . so that there is a common understanding of what needs to occur between now and Oct. 1, 2013.”
In e-mails, Pearce’s new project manager said the situation appeared untenable. He resigned after a month, and the third project manager in three months took over in April — with six months to go before the site would launch.
“I think the wheels came off very early on,” said Amir Segev, who was deputy IT director for the exchange from February to May.
Segev said he left after only a few months “because it was a disaster waiting to happen.”
By May, the Obama administration was deciding which states would be allowed to proceed with building their own exchanges and which ones it would force to use the federal exchange. The team gave Maryland a deadline of June 1 to prove a core task: Its rudimentary software would have to communicate with a data hub the federal government was building to let states check whether health-care enrollees were eligible for subsidies.
The month of May became a sprint to make the deadline.
On one of the last days before the deadline, a federal team arrived at the Maryland IT contractor’s office in Linthicum, south of Baltimore, and sat in the front row of the briefing room with computers at each desk and a projection screen on the wall.
One part of the screen showed a fake enrollee’s information being sent from Maryland; the other showed the response from the federal hub. The two connected, and Maryland passed. Despite the internal turmoil and negative audits, the state seemed to finally be on the right path.
Sharfstein, the state health secretary, and Pearce called together the production team. Pearce put her foot on a chair and thanked everyone with a deep sense of relief evident in her voice.
News of the success also passed quickly to Brown and O’Malley, who began touting it in public appearances.
But as they celebrated, feuding between the two contractors in charge of doing much of the technical work to get the Web site running was getting worse.
Shortly after it had won Maryland’s initial $50 million contract, Noridian Healthcare Solutions, a company that grew out of Medicare claims processing, hired a Florida company — run by a former executive of Noridian’s parent firm — that renamed itself EngagePoint.
Noridian and EngagePoint agreed to share profits for development of the exchange, according to court documents filed by the companies — a move that state officials said they were made aware of only much later.
But within months of joining forces, the two were fighting over costs.
By July, according to court documents, infighting had brought work to a near-standstill.
Meanwhile, the software used successfully to pass the June test had to be replaced with newer and untested versions needed to meet federal security requirements.
In an interview, Sharfstein said the dispute had become a major distraction by then.
“For a while, we tried to play marriage counselor, but it was clear these were two companies that couldn’t work together well,” he said.
And another federal test was looming.
On Aug. 26, five weeks before the launch date, Maryland faced its final major test with federal overseers, a more thorough demonstration of how each part of its system would work.
This one did not go as well.
When the test got to the part of having a fictitious person choose a health plan, the Web site crashed. It also could not fully send enrollment data to insurers or e-mail Marylanders when they successfully selected a plan — something it still cannot do.
BerryDunn, the consultant, said the state must “hold Noridian to scheduled” deadlines and make 65 other changes. The state, it warned, also needed to start focusing on contingencies, knowing some parts of the site were bound to fail.
On a weekend in early September, Sharfstein logged on to measure the problems for himself. “You don’t want to know what he thought,” Pearce relayed in a message to her team, according to a testing report.
Pearce would soon send an e-mail titled “12 days out,” pleading with contractors to finish the job after she visited their Linthicum office on the evening of Sept. 18 and found it nearly empty.
“There’s a management methodology that has 4 aspects: pamper/pull/push/pummel. I think I have tried all of them at some point during this process,” she wrote at 11:24 p.m. “Tonight I am begging . . . we have got to make this reality.”
The success of the exchange was also becoming freighted with political implications as Brown launched his campaign for governor. In an early-morning e-mail on Sept. 23, Sharfstein wrote to Pearce, under a subject line “from today’s [Baltimore] Sun.”
He pasted in a line from U.S. Sen. Barbara Mikulski’s endorsement of the lieutenant governor the day before: “While we’re fighting to save Obamacare, we know that in Maryland we have a health exchange that’s ready to go because of Anthony Brown,” the Maryland Democrat said.
Pearce forwarded the e-mail to the heads of Noridian and EngagePoint, adding one line: “It’s time to get this right. Now. Period.”
Noridian chief executive Tom McGraw responded with military sparseness: “Understood.”
Testers filed their final report on Sept. 13, calling the last version of the software they could review “extremely unstable.” Internal testing of one aspect of the site found 449 defects, almost half of which would probably trouble the final release.
On a conference call at the start of the final week of September, senior aides gave O’Malley a high-level summary of expected troubles with the exchange.
The Web site would not allow some people to check for subsidies or to select plans, but everyone should at least be able to log on, he was told, according to several aides.
The governor ended the call, said John Griffin, his chief of staff, saying the state should “move forward.”
But two days later, Griffin requested that a roomful of aides to the governor and Brown vote on whether to proceed. Most gave the Oct. 1 launch a green light. The next day, O’Malley smiled as Obama visited Prince George’s County and praised state leaders for being ready to roll.
Just after midnight on Oct. 1, programmers in the Linthicum office listened through a speaker phone to the anxiety growing in Pearce’s voice as she tried to log on, according to several people on the call. The site was not yet viewable publicly, but it should have allowed her to sign on. If there was one part of the site everyone agreed would work, it was this.
They waited for a second try and then a third as she reentered her name and address. Everything was correct. “What’s wrong?” she demanded.
No one was sure. Someone noticed that Pearce had left blank a box for the four-digit extension of her Zip code. Maybe the computer code required every single data field to be filled in to proceed. Try adding that, one manager said.
Pearce did not know the extension to her Zip code. They listened as she Googled it and attempted a fourth sign-on.
Click. She was in.
At 8 a.m., the exchange was supposed to launch simultaneously with other states, but it froze. The exchange posted a message online asking residents to come back in four hours.
Finally, at noon, officials watched from a command center in Baltimore as about 10,000 people logged on to the site, pinging servers in Fargo.
Screens showed blank graphs that should fill with enrollees moving through each phase of the system: creating accounts, checking for subsidies, shopping for plans, purchasing.
The stroke of noon came and went. No one logged on. No one bought health care.
The next morning was scarcely better. In the subject line of an e-mail to fellow contractors at 6:53 a.m., Noridian’s McGraw typed “Maryland is Down,” and wrote,“We cannot get through.”
More than 24 hours after the launch, there were just four people who had selected plans and eight more who appeared to have logged on.
An IT contractor wrote to state officials on Oct. 2 wondering if the four were “legitimate,” since contractors could not even access the site. She questioned if they might be fictitious accounts from prior phases of testing.
But later that day, the exchange’s chief information officer responded with good news: “The team has researched the 4 records and have determined these are for real customers. 3 applicants and 1 dependent. Applications have been processed albeit very slowly and sporadically.”
Pearce, who resigned under pressure in December, declined to comment on many aspects of the exchange’s development but said the wholesale failure on Oct. 1 “was a complete surprise to all of us.”
“We didn’t know it would be broken when we turned it on,” she said.
The day after the failed launch, Pearce sent an e-mail to the heads of Noridian and EngagePoint demanding answers.
“Gentlemen,” she wrote. “As the executives in charge of this program I would like to understand from you exactly what is happening with the project, and what you are doing to address our issues.”
But by the end of the first week of October, relations between the two companies were so strained that Pearce and Sharfstein acted as go-betweens. After more weeks of fighting, EngagePoint, the subcontractor, made a bold proposal to state officials, urging them to allow it to take over the project entirely. Days later, Noridian instead fired EngagePoint, whose programmers packed up their laptops and left, leaving some of the software in Ukraine, where EngagePoint had hired programmers.
It was now up to Noridian to fix the site — with few employees certain of where to begin. It began making offers to hire back fired EngagePoint workers it said were key to fixing the site.
EngagePoint chief executive Pradeep Goel was aghast. “We are not going to respond to ridiculous emails from Noridian demanding our team members show up for work after being escorted out of the office,” Goel wrote to McGraw and Noridian’s attorneys on Oct. 26. “Are you people on crack cocaine?”
EngagePoint persuaded a judge to sign a restraining order that blocked Noridian from hiring back workers to fix the site. Noridian countersued, and the state entered the fray, siding with Noridian for the sake of Marylanders who needed a functioning site.
Through its attorney, Daniel Graham, Noridian declined to discuss its work with EngagePoint, citing the ongoing litigation. In a statement, the company said that “the complexity of this project has led to a number of major issues beyond what was anticipated.” But the company believes that recent improvements have made the system easier to use and said it “will continue to work with the State” to improve it further.
Karen See, a spokeswoman for EngagePoint, said the firm would not discuss its work, also citing the lawsuits.
The full effect of the failed project on the two companies remains unclear. Both had expanded rapidly to build the Maryland site, expecting it could give them a foothold in the potentially lucrative health-exchange market.
Before the launch, the state had allocated about $100 million in federal money for the construction of its exchange, and, according to one estimate, it has spent tens of millions more since Oct. 1. It is unclear how much of the added costs federal officials will agree to cover. But the bigger question is how many people the state can sign up.
Maryland’s next deadline is March 31, the date by which it expected 150,000 people to have used the site to select health insurance, excluding Medicaid. Officials have said the state will not meet that goal.
“It’s a problem for the people of Maryland, a problem for the people that Obamacare was supposed to help,” said Peter Beilenson, chief executive of the Evergreen Health Co-Op, a new Maryland insurer that launched its business on a bet that it could compete with the state’s bigger insurers on a smooth-running Maryland exchange.
The company had a waiting list of more than 1,000 people who were expected to sign up with it when the exchange turned on.
For months, however, it could barely sign up one. On its best day in recent weeks, its staff helped 10 people navigate Maryland’s site. Evergreen still has more than 1,000 people waiting to buy insurance.
Jennifer Jenkins, Jenna Johnson and Amy Goldstein contributed to this report.