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Oracle: Villain Or Scapegoat In Oregon Insurance Exchange Mess?

Even as Oregon works to exit a troubled IT services contract with Oracle, a longtime critic of the state's health insurance exchange project says the blame belongs elsewhere.

10 Biggest Tech Disappointments Of 2013
10 Biggest Tech Disappointments Of 2013
(click image for larger view and for slideshow)

Widely criticized for its work on the Oregon health insurance exchange website that has yet to start taking online applications, Oracle this week signed a "transition agreement" with the state that could lead to its exit from the project.

CNBC reported on this development as the first step toward Oracle's "ouster" from the project, while the local Oregonian newspaper characterized it as at least a partial negotiations victory for Oracle, which had threatened to walk away from the unfinished project for lack of payment. The state agreed to pay Oracle $43.9 million this week, but it is also holding back $26.5 million the vendor says it is owed. The state had previously paid Oracle about $90 million but has been withholding further payment since it "lost patience with Oracle last September," according to the Oregonian.

The transition agreement is supposed to keep Oracle personnel on the job and the Cover Oregon website operating out of Oracle datacenters while the state examines its alternatives, which could include having Oracle hand off the project to another technology partner. A renewal or renegotiation of the Oracle contract is still not out of the question.

[What are the takeaways from one of the biggest government IT flops? Read 5 Program Management Lessons From HealthCare.gov. ]

While the federal government came in for intense ridicule for its difficulties with the HealthCare.gov website it operated on behalf of states that declined to field their own health insurance exchanges, troubled state-operated exchanges have failed to recover as well as HealthCare.gov has. Oregon stands out as the worst of the lot, still completely lacking a site where consumers can sign up for coverage. The state has managed to enroll over 200,000 citizens anyway, but only by processing applications on paper. The limited online service that is live today is only for insurance agents.

This is despite the fact that Oregon was the first state to commit to building an exchange and start working on it, securing $48 million in initial federal funding for the project. Federal grants to build, test, and operate the site have since mounted to $305 million, leading to calls for a Congressional investigation, backed by both Democratic and Republican lawmakers. Oracle also has been criticized for refusing to make key employees available to talk to investigators.

Although no one involved in this project has much to be proud of at the moment, Oracle is not the only target for blame.

"There is no way this is Oracle's fault -- they're being completely scapegoated here," said Patrick Sheehan, a former state legislator and longtime critic of the state's approach to developing the software for the website. Back in December 2012, more than nine months before the website was scheduled to go live, he publicly charged that the state was wasting money by building the site from scratch rather than taking advantage of commercially available insurance exchange software, at least as a starting point. Privately, he sent a letter to Gov. John Kitzhaber (later made public as the result of a Freedom of Information Request) arguing that Carolyn Lawson, CIO of Oregon Health Authority and Department of Human Services, should be fired for "lying" to the audit and IT committee he served on about the availability of commercial solutions. He also alleged that Lawson was acting "to further her self interest -- I believe in pursuit of a consulting job with Oracle."

Cover Oregon still manually processes insurance applications. (Source: Cover Oregon.)
Cover Oregon still manually processes insurance applications. (Source: Cover Oregon.)

Sheehan also asked the FBI to investigate possible criminal wrongdoing, saying the project team fraudulently showed a mockup of the website to federal officials as if it were working code when trying to secure additional federal grant dollars.

Lawson resigned in December. Having served on the InformationWeek advisory board, she said in a message sent through LinkedIn that she regretted having to refer our interview request to her attorney. Her atttorney did not respond to a phone call Wednesday. An Oracle spokesperson said the company declined to comment on the Oregon contract.

Oracle is providing the kind of technical know-how needed to save the project, Sheehan said, but state employees have weighed it down with "completely unrealistic timelines and deliverables." In his view, the state project managers conceived of a "very ambitious business plan" for the site and by biting off more than they could chew wound up accomplishing nothing. "There were failures of leadership here, but that leadership wasn't from Oracle," Sheehan said. "They're being blamed, completely unfairly. If they were told exactly how to build something, they're not at fault for that."

Sheehan argued that the website could have been built for a fraction of the cost by spending $6 million on a commercial software product from Exeter Group and another $6 million on customizations and services to meet the state's needs. Exeter worked with other states that implemented their own exchanges -- relatively successfully, compared with Oregon -- including Vermont and Hawaii. Some of the other states that fielded health insurance exchange websites, such as California, also started with commercially available insurance exchange software.

Oregon started with more basic commercial software components from Oracle -- database, middleware, and Siebel CRM, for example -- but approached the construction of the website as a systems integration project.

Back on Oct. 1, the day health insurance exchanges across the nation were going live, InformationWeek published a column by Chris Murphy that discussed Oregon's decision to roll out functionality slowly, initially to insurance agents only (although a public version of the website was supposed to go live later that month). We called this a "play-it-safe, soft-launch approach that recognizes glitches are likely, so better to work those bugs out with a limited number of agents and lessen the general public's confusion." That column featured interviews with Lawson and Aaron Karjala, CIO of Cover Oregon, on what Lawson called the state's "ruthless incrementalism" and agile development strategy.

When the federal HealthCare.gov website and multiple state exchanges failed to work as designed, Oregon's aversion to a big bang approach to launching the website appeared to have some wisdom in it. The trouble is, the website project seems to be operating with the incrementalism of Zeno's paradox, where despite all claims of progress, it never quite gets done.

Other critics of the project have argued it should have relied on open-source software or followed a buy, not build, strategy. The only thing that's certain is that the strategy the state has followed hasn't worked.

Download Healthcare IT in the Obamacare Era, the InformationWeek Healthcare digital issue on the impact of new laws and regulations. Modern technology created the opportunity to restructure the healthcare industry around accountable care organizations, but IT priorities are also being driven by the shift.

David F. Carr oversees InformationWeek's coverage of government and healthcare IT. He previously led coverage of social business and education technologies and continues to contribute in those areas. He is the editor of Social Collaboration for Dummies (Wiley, Oct. 2013) and ... View Full Bio

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David F. Carr
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David F. Carr,
User Rank: Author
3/10/2014 | 9:43:55 AM
Re: Oracle blameless in Oregon health insurance exchange fiasco?
@PDXnativeson So you're saying Oregon did a superior job of vendor and product evaluation, which led them to select Oracle foundation technologies as the basis of the state health insurance exchange? So where do you see things went wrong? You lost me at the end: "Their mistake was NOT issuing an RFP after they selected software first." What would a retroactive RFP have accomplished? Or are you really making a more general comment about the contracting process and the expectations that were set at the beginning? Requirements too much of a moving target?
David F. Carr
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David F. Carr,
User Rank: Author
3/10/2014 | 9:35:53 AM
Re: Oracle blameless in Oregon health insurance exchange fiasco?
Yes, the state bought some substantial commercial-off-the-shelf systems for database, CRM, and other functions as the basis for the health insurance exchange, but these were to be treated as components of the grand system. That's different from starting with a COTS insurance exchange product, even one targeted for a somewhat different usage scenario. There were some of these that had been created for use in private exchanges run by employers and consumer websites for people seeing insurance on the individual market, as well as products rolled out specifically to meet the requirement for states to field these systems.

California, for example, took advantage of software from GetInsured as a starting point.
PDXnativeson
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PDXnativeson,
User Rank: Apprentice
3/8/2014 | 3:08:57 AM
Re: Oracle blameless in Oregon health insurance exchange fiasco?
Everything Oregon bought from Oracle is COTS software... Siebel, OPA, PeopleSoft Financials, Oracle BI, Fusion Middleware, Oracle Database etc.
PDXnativeson
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PDXnativeson,
User Rank: Apprentice
3/8/2014 | 3:02:03 AM
Re: Oracle blameless in Oregon health insurance exchange fiasco?
First of all Sheehan is an idiot. Exeter was offering an additional configuration of the software the state already owns with no proven value. Exeter offers a configuration of Siebel CRM, Oracle Policy Automation and a custom LifeRay portal front end for the customer-facing portion of the site. The core of their configuration is Siebel, OPA, Oracle fusion middleware and LifeRay. Why would the state buy Exeter's configuration when Exeter's configuration gets them no further down the road? It would be a ridiculous waste of money. Calling Exeter's configuration of Siebel and OPA is not specific to Oregons business rules or resulting data model and.business workflows. And to say cover oregon is not using COTS software is incorrect. Their implementation uses Siebel Public Secotor and Siebel Financial Services which has support for OOTB functionality for plan management (health plan products and catalog), individual policies, group policies, broker/partner management, eligibility and enrollment with Oracle Policy Automation. For so e reason the state wanted a new exciting front end for the "customer portal" so they decided to add Oracle WebCenter Portal for the front end website look and feel which exposes web services communication to Siebel and OPA..., this is where the state requirements started to expand and be more custom than it should have been in the first iteration. If they would have simplified and not tried to do too much, they would be in better shape... They told a oracle what they wanted, Oracle warned them, but they wanted the full Monty anyway... Open Source is NOT the answer... What open source eligibility rules engine would you use? What open source call center would you use? What open source financial ERP package would you use? What open source marketing automation product is on the market? What open source software exists for health plan management? What open source pricing and product configuration engine is there? What open source CTI integration is there? What open source business intelligence is there? Siebel has OOTB CRM, sales force automation, call center, marketing automation, partner and broker lead and opportunity management, financial services and insurance policy management, lead and opportunity management, and pre-built business intelligence... And oracle policy automation is the market leading policy management and natural language business rules engine... So don't tell me there is no COTS software out there that can actually meet majore functionality across all 6 pillars of HIX. The reason why Curam dropped out of the bid is because the state required a 3-day deep dive as part of the Orals process where each vendor had to put their money where their mouth was. Curam is only eligibility and case management t for social services..., no SFA, no CRM, no I surance functionality, not data warehouse, no eCommerce product catalog, no financial ERp package... That's the reason they dropped out because they could not show up and demo anything relevant. Oregon is the only state at least where they did their due diligence in the vendor demo process... Not other state did a full 3 day evaluation with their short listed vendors... Anyone can walk in a give a credible demo for one day but Oregon users and IT staff actually got their hands on the keyboards to evaluate the vendor. Their mistake was NOT issuing an RFP after they selected software first.
Mr. Gigabob
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Mr. Gigabob,
User Rank: Strategist
3/7/2014 | 4:13:40 PM
Re: Oracle blameless in Oregon health insurance exchange fiasco?
CoverOregon was meant to be a a National demonstration for the potential of Obamacare, leveraging decisions at the heart of the Oregon Health Plan which was a major success of Governor Kitzhabers first two terms.  What made it more ambitious was its effort to tailor an applicants program offering based on tax policy, medicare levels, core reeccomended requirements and alignment with programs providing various levels of support.  In short - it was not a front-end to entering an e-application - but a complex health tool that was part enrollment agent, counselor, financial tool and vehicle to capture data on outcomes that would be used to improve general healthcare deliverables across systems.  Nobody else in the nation was thinking in these terms or scope.

Rep Sheehan's comments came late in the game and were earnest - but not constuctive efforts on how to make things better (a year into the program and lets use a new set of tools, capabilites etc).  These were seen as "get rid of Oracle - and by inference the team adminstering this effort".  Given there had already been calls to remove Lawson 6 months before by the Republican Legislator from Central Point - many of these critiques were brushed back by Lawson and her supporters as Anti-Obamacare rhetoric to cripple a project in progress that was going to be a singular beacon of accomplishment, demonstrating the forward thinking in Oregons original efforts to grapple with health care issues was no fluke.

I found critiques by Legislator Dennis Richardson - where he condemned Caroyln Lawson for witholding payment to the external auditor for the CoverOregon project after it provided a damning report on project ability to meet deadlines in the coming year to have been more to the point.  His EMAILs directly to Gov. Kitzhaber in August timeframe were a major embarrassment and servered as the kind of "I told you so" that when shared with the press in November of this year really helped "un" coveroregon.
David F. Carr
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David F. Carr,
User Rank: Author
3/7/2014 | 3:40:19 PM
Re: Oracle blameless in Oregon health insurance exchange fiasco?
@Gigabob

Was there something about Cover Oregon that made it more complex than other state projects that did incorporate some off-the-shelf software as a starting point?

Also not clear what you're saying about Sheehan: do you believe he was advancing a partisan political agenda? If I'm reading you right, you also say that the project leaders at the state refused to listen to constructive criticism (maybe writing it off as partisan?)
Mr. Gigabob
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Mr. Gigabob,
User Rank: Strategist
3/7/2014 | 11:02:14 AM
Re: Oracle blameless in Oregon health insurance exchange fiasco?
Sheehan's post and focus joins several other from the Repulican side of the aisle that were viewed at the time through the polarizing lense of National Health Care Politics.  If we accept Rep Sheehans perspective it also is a key indication of why Oracle has a responsibility for the mess at Cover Oregon. 

In the actual bidding process there were three vendors - IBM, Oracle and a smaller third party.  After clarification on the bid neither IBM nor the third party felt qualified to execute, and dropped out.  This augurs strongly against the proposition that readily avaialble OTS SW, either opensource, commercial or otherwise could have been used to build CoverOregon.  Oracle moved in, bringing Oracle products and developers and had no plans to leverage open source tools to shorten a time and materials contract or reduce lucrative licensing contracts later.  

Calls by Sheehan to shelve Oracle and other Republicans to heed the audit reports showing the project missing key milestones a year earlier were not seen as constructive criticism by engaged lawmakers seeking the best outcome for Oregon Citizens - but as Republican Obamacare attacks.  I had reservations about this project from the beginning and was familiar with managers reputations inside Oregon IT.  When contacted to interview for a Project Management Role for this effort, I ran for the hills.  In 2011.  It was clear to me at the time that with Federal money behind it, Oregon IT directors driving it and Oracle that this was a Titanic Project - with similar outcome.
Mr. Gigabob
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Mr. Gigabob,
User Rank: Strategist
3/6/2014 | 6:48:58 PM
Re: Oracle blameless in Oregon health insurance exchange fiasco?
That both Oregon's ineffective management under Carolyn Lawson and Oracle - her chosen partner - share blame for this debacle is not for debate.  Assinging singular blame to either party in a marriage of this intimacy is about beating a dead horse.  Oregon sought to establish a new standard and hired what it thought were competent mangers to execute a project they deisgned to dwarf the scale of any previous "Large IT" effort - all of which had previously been challenged to deliver according to plan.  Oregon made several key mistakes - obviously Lawson was the biggest - but working on their own to create not just an insurance applicaton site - but a complicated financial tool designed to navigate the arcane paths of healthcare billing systems, tax policy and often contrasting user needs - all within a very contrained period of time was a major bridge too far.  

IMO the real issue is why major Federal programs like this are even given an option at the state level to proceed on their own - without clear guidelines and milestones to synchronize efforts and make sure systems are interoperable instead of having 50 separate efforts that can vary so widely in scope.
WKash
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WKash,
User Rank: Author
3/6/2014 | 4:38:21 PM
Siding with Uncle Sam
As much trouble as the federal health care exchange experienced, it's growing evident that the majority of states that participated in the federal exchange are probably better off than states like Oregon and Maryland that went their own way and now have big holes to fix -- and not the resources Uncle Sam had.  Oregon's tale also seems to be a case where internal politics and inadequate management (reflected in the decision not to reuse existing applications) would make it hard for any vendor to succeed.

 
jagibbons
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jagibbons,
User Rank: Ninja
3/6/2014 | 12:18:03 PM
Re: Oracle blameless in Oregon health insurance exchange fiasco?
Rarely are folks that blunt and forthcoming about their next job. In my experience, individuals make choices that would help lead to a future opportunity rather than buying a job by granting a contract.

Whether or not the CIO was hoping for a position in Oracle, it's easy to connect the dots and find a conclusion in hindsight, even if it's not the right conclusion. Whether or not she was, every company would benefit from non-hire clauses in contracts just to remove any possibility of that conflict of interest.
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