Minnesota's online insurance exchange, MNsure, has cut more than a dozen agencies from its roster of enrollment subcontractors after concluding that the $4.7 million outreach effort lacked proper oversight in 2014 and needed an overhaul for its second year.

The cuts include last year's biggest contractor — Minnesota Community Action Partnership — a coalition that included Community Action of Minneapolis, a nonprofit that shut down last month when it came under investigation for possible misuse of public funds.

The Minneapolis agency was one of 15 subcontractors grouped together in an effort to enroll people of color, non-English speaking residents, rural Minnesotans, vulnerable adults and other hard-to-reach populations.

The overhaul comes as MNsure struggles to recover from a troubled first year, when it was blasted for a balky website and for overlooking some minority communities while hiring outreach contractors.

Now state officials are gearing up for year two of enrollment under the Affordable Care Act, also known as Obamacare, the federal law that expanded insurance coverage and created state exchanges like Minnesota's. Open enrollment begins Nov. 15.

MNsure spokesman Joe Campbell didn't comment on specific cuts to the list of subcontractors and attributed changes in the grant program to MNsure's own "unsatisfactory" support of the agencies.

As of June 30, with three months remaining in the contract year for outreach agencies, grantees had reached just 45 percent of their collective goal of 51,600 enrollments, according to a state review.

But Campbell noted that 341,000 uninsured Minnesotans had obtained health coverage through MNsure, mostly under government-subsidized plans such as Medicaid, a number that exceeded the state's expectations despite shortfalls by the outreach groups.

Campbell said a chief shortcoming in 2014 was assigning only one full-time MNsure employee to oversee 41 grantees. The agency has hired three additional grant managers to oversee this year's collection of 28 grantees and $4.6 million in federal dollars. The oversight managers will audit each contractor's operations after the first six months, something that wasn't done last year, Campbell said.

"There is some truth to the fact that grant oversight was not where it should have been and we needed to do better," Campbell said.

While year-end enrollment data may show better numbers for the outreach agencies, Campbell acknowledged that first-year performance was hampered by MNsure's own failures. Those included chronic website glitches during the rollout, a lack of training for inexperienced organizations, failed marketing support and a selection process that has since been improved.

In addition, he said, many grantees set unrealistic enrollment goals and others got started late because MNsure added them to its roster late.

Criticized by legislators and Gov. Mark Dayton for initially failing to include groups that could reach African-Americans, MNsure expanded the grant pool by $750,000 but couldn't establish the second round of recipients until late in 2013, when MNsure's heavily advertised open-enrollment period was ending.

"They were in such a hurry, I don't think there was enough scrutiny over who the money was being given to and how it was spent," said Rep. Joe Hoppe, R-Chaska, a member of the Legislature's MNsure oversight committee.

Hoppe said he didn't know of any misspending in MNsure's outreach program, but said that a recent state audit of Community Action of Minneapolis "certainly raises questions." The state audit, first reported by the Star Tribune, found that leaders of the organization misspent more than $800,000 in taxpayer money on travel, a celebrity cruise, spa visits and other items.

Arnie Anderson, executive director of Minnesota Community Action Partnership, said the umbrella group sought renewal of its $424,150 contract for year two of MNsure outreach, but was rejected in a form letter that didn't cite specific reasons. Anderson said he's proud of the group's overall enrollment results, which stood at 2,477 individuals as of June 30, the most recent period tabulated by MNsure. That was 62 percent of the partnership's goal.

"We hope and pray that the tragic failure of one independent organization doesn't damage the good work and good reputations of Minnesota's other, independent, local Community Action agencies," Anderson said.

Even before the scandal unfolded at Community Action of Minneapolis, MNsure came under fire by some legislators for its selection of outreach grantees. For one, lawmakers questioned a $326,606 award to a start-up called Health Access MN, which was formed just days before the grant application deadline by Maureen O'Connell, a former top executive for the Minnesota Department of Human Services. Through June 30, Health Access MN was credited by MNsure for reaching 28.6 percent of its 6,000-person enrollment goal. The group received a second-year award of $209,500.

Campbell said a key change to the grant program was creating a "much more rigorous" selection process. This year's expanded selection committee chose fewer applicants to receive larger grants. "We've scaled down the number of people we have to manage and dramatically expanded their reach in their communities," Campbell said. "There's been an end-to-end overhaul on this program."

Some critics also questioned the inclusion of the Minneapolis Urban League, which had no previous experience enrolling people in health insurance. It received $100,000 last year and is one of the contractors renewed for a second year.

MNsure reported just 23 enrollments for the Urban League through June. But Scott Gray, chief executive of the organization, said his agency has now reached about 90 percent of its enrollment goal of 200. Moreover, the league tapped less than half of last year's grant award, he said.

"It's been a continuous learning experience," Gray said. "We didn't let that stop us."