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Continued: July 8: Exchange presents technical challenges on tight deadline

  • Article by: JACKIE CROSBY , Star Tribune
  • Last update: August 10, 2013 - 10:11 PM

When the switch gets flipped, MNsure will debut as a single website that will calculate how much premiums will be and whether a person qualifies for a public program or a subsidy to make premiums more affordable. The site must be able to collect money to pay the insurance companies, and tie into a call center or online chat room to answer questions.

Costly endeavor

Since 2010, the federal government has poured more than $394 million into states to help get exchanges built, according to a recent U.S. Government Accountability Office report. Minnesota has received about $110 million for the exchange, and about $165 million as of the end of April. About $46 million is going to pay Maximus and subcontractors. The funds also have gone to hire MNsure staff, and to market and run the exchange for the first year.

The money flowing into the state has leaders of some Twin Cities technology companies shaking their heads.

“It’s striking to me that the state has moved in this direction, to go to a firm like Maximus when there are companies right here in Minnesota that could have done the exact same thing for a fraction of the cost,” said John Reynolds, CEO of CieloStar, a technology start-up that has built a private insurance exchange for companies around the country but isn’t going after government exchange work.

“The state has invested a significant amount in the infrastructure. And, ongoing, the amount of money it’s going to take to keep this rolling — it’s a layer of cost and complexity on top of what is already an expensive system. I’m not sure in the end it’s going to get anywhere near the uptake that they’re predicting.”

Certifi is among the local companies working on state exchanges. The Hopkins company is handling the accounting billing and payment for the Utah exchange. Bloomington-based Ceridian was gunning for the state’s business but pulled out of the process midstream. Optum, a division of Minnetonka-based UnitedHealth Group, runs exchanges around the country but was precluded from applying in Minnesota because the state restricted companies with ties to insurers as a conflict of interest.

Minnesota officials assert that the IT contract with Maximus is the smallest among the states that are building a system they intend to run and not outsource.

Todd-Malmlov said the state has saved money because Maximus and the same team of subcontractors are building the insurance exchange in Maryland. The two states have been able to save costs by piggybacking on each other’s work. Minnesota plucked the work done on small business enrollment “lock, stock and barrel,” Todd-Malmlov said, and Maryland borrowed from Minnesota’s work on identity management. Building the exchange on existing computer system in the state also is more cost-effective, though challenging.

The exchange itself is expected to cost $50 million to $60 million to run the first year but will need to be self-sufficient by 2016.

Todd-Malmlov said she aims to build a system that will become a “state gem,” even if the process of joining old systems with the new, given the racing deadline, is coming with some hitches.

At a demonstration for the federal government a few weeks ago, MNsure successfully tapped into the federal hub to verify Social Security, citizenship and eligibility for tax credits, in 49 seconds or less.

“We’ll be ready to go,” Todd-Malmlov said. “It’s going to work and it’s going to perform the basic functions. Is it going to be perfect on Day One? No. But it is a significant amount of work in a small period of time that will provide service at a level people haven’t had before.”


Jackie Crosby • 612-673-7335

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  • April Todd-Malmlov, executive director of MNsure, stands in one of the St. Paul offices where software engineers are building Minnesota’s health insurance exchange.

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