Md. officials seeking options for health insurance exchange

The Maryland health insurance exchange has so many structural defects that a key member of Gov. Martin O’Malley’s Cabinet said Monday that officials are “actively investigating alternative options” for the next enrollment period, which begins Nov. 15.

That would mean walking away from all or part of a system that has cost tens of millions of dollars to build.

The system has “serious IT defects” that have made it difficult for Marylanders to enroll in health insurance as part of President Obama’s Affordable Care Act and for the state to properly process applications, said Joshua M. Sharfstein, Maryland’s secretary of health and mental hygiene, at a Monday afternoon meeting of a newly formed oversight committee. That has resulted in “substantial manual work,” he said, and heavy reliance on call centers with more than 400 employees.

Maryland officials were some of the earliest and most enthusiastic supporters of health-care reform, and O’Malley’s administration had bragged that its health-insurance marketplace would be one of the best in the country. Maryland is one of 14 states that launched their own exchanges instead of relying on the federal one, and its experience has been one of the worst.

State officials had estimated that 150,000 to 180,000 Marylanders would sign up for private health plans during the first enrollment period, which started Oct. 1 and will end March 31. As of Friday, the tally was at 29,059.

The struggling health exchange has become a focal point in the state gubernatorial race. Maryland Lt. Gov. Anthony G. Brown (D), who is running for governor, was tasked with implementing the Affordable Care Act in Maryland. Brown has said that it was his job to set up a legislative framework for the exchange, and that he entrusted the creation of the system to the exchange’s governing board, staff and contractors.

The exchange is expected to cost more than $260 million over four fiscal years, according to documents given to lawmakers Monday. That estimated total includes not only the cost of building the system, but also the salaries of exchange administrators and employees, the call centers and other operational costs.

Much of this funding came from the federal government, but Maryland is expected to pick up $47 million of the total estimated cost.

Maryland hired Noridian Healthcare Solutions, based in North Dakota, to build the system and signed a contract worth more than $193 million over five years. So far Noridian has billed the state for nearly $78 million, and Maryland has paid the company nearly $65 million.

Noridian took off-the-shelf health-care software sold by IBM and hired a technology company, EngagePoint, to stitch it together into one system. Some of the most serious problems with the system are caused by defects in core software, said Isabel FitzGerald, Maryland’s secretary of information technology. Those problems have caused applications to lose chunks of data or become lost in the system, she said. The system also doesn’t provide real-time status updates for applications, so some people are left wondering whether they are actually enrolled.

Clint Roswell, a spokesman for IBM, said in a statement on Monday that the company continues to work with Noridian, subcontractors and exchange officials to “enhance the performance of the state’s health insurance marketplace.” He noted that Noridian “is responsible for the overall implementation,” and that the latest statistics show that more than 95 percent of consumers now entering the site are having a “positive experience.”

Sharfstein said these software problems are a “significant reason” for the bungled launch of the state exchange on Oct. 1 and the ongoing problems it faces. But he also placed blame on Noridian.

“The contractors have not delivered what they said they would deliver,” Sharfstein said. “There’s no question about that.”

Sharfstein said it would not be beneficial to the state to drop Noridian before the first enrollment period ends. He would not say if the state plans to take legal action to recover money from the companies involved with the building of the exchange, but said that “all options against any and all vendors remain on the table.”

A spokeswoman for Noridian did not return a request for comment.

Noridian and EngagePoint are suing each other in a fight over money and employees. In court papers filed Friday, EngagePoint alleged that Noridian “concealed its lack of relevant expertise” when it bid on the contract. Noridian’s president and chief executive, Tom McGraw, responded by saying in a statement that the accusations are “false, unsupportable and will be contradicted by evidence that we present in court and arbitration.”

Maryland will continue to use the system for the remainder of the current enrollment period, which ends March 31. Switching systems now would only cause more turmoil, state officials have said. After that, the state will have just seven months to either overhaul its system — which, officials say would require rebuilding substantial segments — or partnering with the federal government’s marketplace, swapping out parts for superior technology from other state systems or joining a state consortium.

“This will be a critical decision and requires due diligence and fair consideration of all the options,” FitzGerald said. “At the same time, we recognize the earlier that we can make that decision, the more time we will have to prepare for next fall’s open enrollment.”

Sharfstein and FitzGerald did say that hundreds of fixes have been made to the exchange, and they will continue to work to improve it.

Although some users, especially those who are tech-savvy and have simple applications, are able to sign up for health insurance relatively quickly, FitzGerald said that there are “significant” problems that will continue to remain once enrollment ends March 31.

Jenna Johnson writes about Maryland politics, including the General Assembly, the administration of Gov. Martin O'Malley and the 2014 election.
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