Dayton welcomes legislative audit of MNsure

Gov. Mark Dayton and other state agency leaders say they welcome a deeper investigation into MNsure, the new agency that built and operates the new online health insurance exchange.

"I have the highest regard for Mr. Nobles and agree that a full, independent examination of MNsure is highly appropriate," Dayton said in an e-mailed statement.

Legislative auditor Jim Nobles today launched a full-throttle investigation, focusing first on the vendors that received tens of millions of dollars to build the state's new health insurance exchange. But Nobles also wants to determine whether the state kept a close enough eye on their work during the process.

"It's fine to question the performance of the contractor," Nobles said about the sweep of his audit. "We'll do that. But one of the worst things you can do in managing these contracts is to stand on the sidelines with the hope that things will go well. You've got to be actively managing and verifying."

A team from Nobles' office began the audit at the state Department of Commerce, which handled the flow of federal funds to the state.

A spokeswoman said the department will fully cooperate. "We will provide any necessary information requested for the [Office of the Legislative Auditor] of MNsure," Commerce's Anne O'Connor said in an e-mail.

Minnesota received $46 million in federal grants to hire contractors to build the technological backbone for the website. Combined with additional federal grants for staffing and marketing, the state has drawn $155 million since February 2011 for the MNsure effort.

She said MNsure hoped a review of past processes and decisions "is able to identify additional strategies for improvement."

The exchanges are part of the federal Affordable Care Act, aimed at helping individuals and small business find more affordable insurance policies by creating a larger risk pool and a competitive marketplace. Minnesota is one of 15 states and the District of Columbia that decided to build their own exchanges.

Maximus Inc., a Reston, Va.-based company, was lead vendor and has been described as the "grand conductor" of the operation responsible for hiring the subcontractors.

IBM/Curam was responsible for determining whether applicants are eligible for public programs as well as for federal tax credits that could lower the cost of premiums for private insurance.

Connecture, based in Brookfield, Wis., designed the shopping platform. EngagePoint of Fort Lauderdale, Fla., handles the billing and financial management functions and also acts as an integrator, making sure various software programs and components of the system work together.

But the site was out of commission as recently as Thursday, and it was taken down for scheduled maintenance over the weekend.

MNsure is tied to the federal hub to verify citizenship and household income. When the federal site is down MNsure must go offline as well.

Officials various vendors did not respond to requests to comment on the legislative auditor's investigation.

MNsure's interim CEO, Scott Leitz, said he plans to initiate an end-to-end review of the MNsure system at Wednesday's board of directors meeting in St. Paul.

MNsure's continued woes are sure to be front and center during a meeting Thursday of the bipartisan Legislative Oversight committee

He said he has long planned to track how the state used federal funds to create MNsure, as part of his regular duties. But he said he will "use the opportunity" to go beyond what state and federal lawmakers would require and dive more deeply into MNsure, a new state agency that is run by a board of directors appointed by the governor.

Nobles said the first phase of his audit could take as long as four months. In March or April he plans to bring in IT experts to examine MNsure's security features. Eventually he will launch a comprehensive examination of MNsure's overall governance structure, including the board of directors' oversight.

"The goal is to create a timeline that's going to tell the full, complete story of what state officials knew was occurring, when they knew it and what they did to resolve those issues," Nobles said.

"This was such a new, visible, complicated and expensive enterprise. … It's become the biggest symbol of our failure to deliver what we promised."