Oregon Health Insurance Exchange Failure: Blame Runs Deep

Postmortem report confirms diagnosis of weak project oversight, unrealistic goals, and poor performance by Oracle.

David F Carr, Editor, InformationWeek Government/Healthcare

March 21, 2014

6 Min Read
Maximus rated the Cover Oregon project high risk, from <br />the beginning, in multiple categories.

Excessive optimism, weak oversight, and poor performance by Oracle consultants all contributed to the failure of the Cover Oregon health insurance exchange (HIX) to deliver a functioning consumer website, according to a report commissioned by Oregon Governor John Kitzhaber, which he released at a news conference Thursday.

"I am angry and I am disappointed by the rollout of Cover Oregon and the ongoing technical problems that have created delays, uncertainty, and frustration among Oregonians who need and deserve healthcare," Kitzhaber said.

The state released the full, unredacted report, meaning that it names names, pointing to Rocky King, Bruce Goldberg, and Carolyn Lawson as the key decision makers on the project. During the news conference, Kitzhaber announced that Goldberg will resign as director of the Oregon Health Authority, staying only until a replacement is found. His resignation follows those of King and Lawson, who previously served, respectively, as director of Cover Oregon and CIO of the Oregon Health Authority.

[Oregon's not the only state exchange with problems. See State Health Insurance Exchanges Still Sick.]

The report, authored by First Data Government Solutions, echoes the findings of other investigations, including a report commissioned by the Centers for Medicare and Medicaid Services (CMS), that found substantial fault with both the primary contractor on the project, Oracle, and with the state project managers and executives overseeing the work.

Kitzhaber called the report "a very credible and sobering critique" of a complete breakdown in project management and administrative oversight. Even though the state employed a quality-assurance contractor, Maximus, which early on sounded alarms about inadequate processes and controls, the project's personnel over time "became desensitized to quality assurance reports showing the project was not on track," he said.

Figure 1: Maximus rated the Cover Oregon project high risk, from the beginning, in multiple categories. Maximus rated the Cover Oregon project high risk, from
the beginning, in multiple categories.

Kitzhaber also pointed to "very serious questions of the quality of work of our primary website developer, Oracle," particularly its inability to accurately estimate its progress toward project goals or keep its commitments to a schedule.

One of the project's fatal flaws was unrealistic optimism, Kitzhaber said. He acknowledged seeing project reports with multiple elements flagged in red, indicating high risk, on progress charts, but accepted assurances that those risks would come down as the deadline neared. Asked about his own responsibility for executive oversight of the project, he said, "The buck stops here, and I assume responsibility for that," but also noted that, "as it turns out, neither me or most of the legislature builds websites, so we have to rely on other people to give us information."

One thing Kitzhaber said he wishes he had done differently was look at how those QA reports tracked over time, rather than looking at them in isolation. "It's very clear, if you look back, that some problems Cover Oregon said had been addressed... appeared again in subsequent Maximus reports."

First Data reported a common theme in interviews with project staff "was that both Rocky King and Carolyn Lawson were perceived as supremely confident. The interviews also confirmed that the overly optimistic schedule/scope projections were based on continued trust in Oracle and the HIX-IT leadership (Rocky King, Carolyn Lawson, and Bruce Goldberg), despite repeatedly missed deadlines." Only very late in the process, in August and September, did any of these leaders acknowledge that the initial

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launch of the website on Oct. 1 would be incomplete, serving only insurance agents and other intermediaries. Even then, they characterized it as a "staged rollout" of a project that was essentially still on track.

One of the key errors identified in the First Data report was a decision Lawson made, and Goldberg approved, not to hire a system integrator. That decision left state employees with the responsibility for making sure all the components of the project would come together correctly. So, although the report does lay some blame on Oracle, it also notes that Oracle was never in the role of system integrator -- only as a provider of software and consulting manpower, billed on a time-and-materials basis rather than with payment tied to concrete deliverables.

"This departs from best practices and put the state in the position of having to pay for work that did not always result in the anticipated deliverables or that required more hours (and higher cost) than planned," the report noted. "It also created an environment where there were no consequences for missing deadlines and no financial incentive for being realistic about delivery dates."

The state selected Oracle technology based on assurances that it could meet 95% of the state's requirements, meaning that only 5% customization would be required. But a May 2013 assessment of how the project was shaping up characterized it as requiring more like 40% custom coding.

First Data asked to interview six members of the Oracle project team, none of whom were made available to investigators. Oracle instead provided an interview with chief corporate architect Edward Screven (accompanied by an attorney), even though Screven was not actively involved in the project until November.

First Data's summary of that meeting does include a defense of Oracle's role in the project, which Screven said suffered from:

  • The lack of well defined, stable requirements

  • The lack of discipline in the change-control process (too many undocumented, ad hoc changes)

  • The absence of a system integrator, which Oracle said was unprecedented for a project this complex

  • The lack of timely test cases, some of which were not provided until mid-October 2013, according to Oracle

However, First Data found that Oracle was one of the parties continually offering assurances, while the project was underway, that the work would be completed on time.

Kitzhaber said the next step is for the state to figure out whether to repair the online exchange or replace it, either by moving to the federal HealthCare.gov exchange or adopting software developed by one of the other states with a more successful exchange. Asked if it was possible the state would scrap all the work Oracle has done to date, he said, "it's a possibility" and reiterated that the state was keeping open "all its legal options" to recover money paid to Oracle or withhold funds it says it is owed.

Despite the lack of an online signup process, Kitzhaber said the state had signed up more than 287,000 people on paper and through other workarounds. "It's important to remember that the website is a means to an end, not an end in and of itself," he said. "Our enrollment figures stand out even among other states that have fully functional websites. The value of our success in this regard should not be overlooked, even as we work to fix what went wrong."

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.

About the Author(s)

David F Carr

Editor, InformationWeek Government/Healthcare

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 was the social business track chair for UBM's E2 conference in 2012 and 2013. He is a frequent speaker and panel moderator at industry events. David is a former Technology Editor of Baseline Magazine and Internet World magazine and has freelanced for publications including CIO Magazine, CIO Insight, and Defense Systems. He has also worked as a web consultant and is the author of several WordPress plugins, including Facebook Tab Manager and RSVPMaker. David works from a home office in Coral Springs, Florida. Contact him at [email protected]and follow him at @davidfcarr.

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