MNsure is shifting project management to outside vendor

After fumbling the job for more than a year, MNsure has hired an experienced IT company to coordinate the complex work needed to finish and repair its troubled health insurance exchange.

Deloitte Consulting is scheduled Wednesday to present its plans for moving the online marketplace forward during MNsure's board of directors meeting. It isn't clear how much the contract with Deloitte is worth, but MNsure's preliminary budget earmarked at least $10 million for technical work this year.

The hiring of an outside company reflects a grudging recognition that MNsure is not capable of managing the project, a concern recently voiced by its independent auditor. The state agency was created to enroll uninsured Minnesotans as part of the Affordable Care Act, but its efforts have been hampered by a troublesome website that has frustrated thousands of would-be enrollees.

MNsure has "compartmentalized" tasks to such a degree that it cannot make sure the most important work is getting done first, leading to lingering website problems and "poor customer satisfaction," according Software Engineering Services (SES) of Bellevue, Neb.

Overall, MNsure failed to make progress on 15 of 44 outstanding issues, worse than any previous quarter, according to the March 20 report. SES concluded that Minnesota "is unable to effectively manage the project."

In a written response to the audit, MNsure Interim CEO Scott Leitz said the agency agrees with most of the findings and that MNsure is hiring a new lead vendor to address the concerns. "Although considerable progress has been made in resolving findings raised in your previous reports, we are aware that much work remains to be done," Leitz wrote.

MNsure officials declined to discuss the audit on Tuesday, saying the agency would address project management issues during Wednesday's board meeting.

For months, MNsure officials have complained that many of its problems are related to poor performance by the agency's vendors, particularly the software provided by Curam, a subsidiary of IBM Corp. MNsure officials also have been critical of Maximus Inc., a Reston, Va.-company that was responsible for building the MNsure website and managing the project.

Missed deadlines

Maximus failed to meet a number of important deadlines in late 2012 and early 2013, just a few months after Minnesota hired the company, state records show.

In January 2013, for instance, state officials expressed alarm about the company's decision to monitor quality control without a test manager.

"I'd list it as critical since they are two months past their promise date, and the impact to quality is evident in the poor quality of their submitted test plan," a Commerce Department manager said in an e-mail.

MNsure assumed control of the project in February 2013, after state officials became increasingly concerned by the sluggish pace of progress and the huge amount of work needed to meet the Oct. 1 deadline to launch the exchange.

"That is why we finally decided to take over," said Chuck Johnson, a deputy commissioner at the Minnesota Department of Human Services who was deeply involved in the project. "We needed a plan for the whole project, clear responsibility for who is doing what. And we didn't feel like we were getting there quickly enough with Maximus. … We lost a couple of months at the beginning of the project where we didn't make the progress we needed to."

Maximus officials declined requests for an interview.

"We stand behind the work performed on behalf of MNsure," Maximus spokesman Blake Travis said in a written statement.

Jim Schowalter, commissioner of Minnesota Management and Budget, told the Star Tribune in February that Maximus might not have been the right choice to lead the $155 million project.

"They had certain skill sets. They were bringing those to the table," said Schowalter, whose agency oversaw MNsure for much of 2013. "What the project needed at that point wasn't matching what they had."

Bidding records show that Maximus was the only company that was unable to deliver a working prototype of its online exchange in December 2011, when the Minnesota Department of Commerce invited state residents to check out website "simulations" from all five bidders.

Instead of a functioning website, however, Maximus offered an informational video, state records show. The video drew scathing reviews from most of the people who participated in the survey. "This is awful. Confusing. Useless," wrote one reviewer. Said another: "Worst of all the options since no modules were available for interaction."

The public evaluation was supposed to be worth 10 percent of each bidder's score, but Maximus' poor showing was not a significant factor in the final selection process, records and interviews show.

Maximus and New York-based Deloitte finished the evaluation process with scores that were far higher than any of the other bidders. At first, state officials tried to cut a deal with Deloitte, but talks broke down because Deloitte wanted $20 million more than Minnesota was willing to spend, MNsure officials said. Deloitte also refused to go along with the state's decision to purchase off-the-shelf software from Curam, saying it was unwilling to accept the risk of being responsible for the company's work, MNsure officials said.

Curam's software has been linked to major problems with the health exchanges in both Minnesota and Maryland, which used several of the same vendors.

'Black hole'

In Minnesota, Curam's software has been blamed for a variety of breakdowns, including a glitch that caused thousands of incorrect eligibility determinations and another mistake that sent 2,600 applications into a "black hole" where they were lost for weeks.

Gov. Dayton interceded and strongly criticized IBM/Curam's performance in a letter to IBM's president and CEO in December 2013. He said the company knew about some of these problems and failed to alert MNsure.

The company ended up sending 100 workers to Minnesota late last year to help resolve problems that left thousands of consumers stuck in the system.

In the most recent report by SES, the auditor noted that MNsure cannot properly track software defects or even distinguish between those caused by normal operations vs. those created by software upgrades or enhancements.

IBM officials declined a request for an interview.

IBM spokeswoman Mary Welder said in a written statement: "IBM remains fully committed to the IBM Curam solution and to MNsure to further improve the user experience."

Jeffrey Meitrodt • 612-673-4132