Optum: MNsure managed by 'crisis mode,' IT system in disarray

Minnesota's new insurance exchange is beset with severe problems that include IT systems in disarray, a woefully understaffed call center and management that can't get out of "crisis mode," according to consultants hired to examine MNsure.

The software underlying the insurance marketplace might be so badly flawed that MNsure should scrap parts of it, the Wednesday report concluded. The consultants, from UnitedHealth Group's Optum division, also pointed out significant issues in how MNsure has been managed.

"Current program management structure and process is nonexistent, and management/leadership/decisionmaking is occurring via crisis mode," the consultants wrote.

Optum has been lauded for improving the federal insurance exchange and was brought in by the state to help find answers for its online exchange, which has struggled to accommodate the crush of residents seeking coverage.

The consultants laid out three scenarios for fixing the glitch-filled MNsure site, including pros and cons of each, but did not make a recommendation. No cost figures were included in the report.

Under a more aggressive rebuilding calling for a "re-architect solution" that could take two years, the "existing asset may need to be written off — sunk costs," the report said.

MNsure interim CEO Scott Leitz, who took over last month, said the 26-page report provides a much-needed road map at a critical time, as consumers face a March 31 deadline to buy health insurance or face fines under the Affordable Care Act.

Still, Optum said problems with the exchange won't be fully fixed by that enrollment deadline. That raises the prospect that MNsure will sign up fewer people than expected and could face greater financial pressure as a result.

Optum, based in Eden Prairie, dispatched 15 consultants at the agency's request two weeks ago for an intensive two-day study of its operations, at no cost to the state.

Optum officials acknowledged that while their report makes the problems seem "insurmountable," each option has upsides and downsides in moving the state toward its goal of a functional system.

"Zero defects isn't a realistic target," Optum Senior Vice President Jim Eppel told the board. "It is a series of trade-offs."

Despite the problems, "continuous improvements can be made in both the short-term and long-term," the report said.

"In its current state, the existing MNsure system will not support enrollment expectations," according to the consultants.

For now, Optum suggests that MNsure double its call center staff and hire about 100 more operators.

It also said MNsure must set up greater accountability and a tighter chain of command to manage the work of outside vendors and state IT workers.

And MNsure leaders must create a clear timeline for "remaining deliverables," including software enhancements and long-term product releases.

The prospect of unexpected costs and lower enrollment raises new questions about the financing of MNsure.

In initial financial forecasts released Wednesday, the agency is facing a nearly $2.5 million deficit next year, if enrollment trends continue as they are today and there are no major expenditures, neither of which is likely.

Officials said that some parts of the site are stabilizing and that they are expecting a crush of last-minute enrollment in March. To date, more than 72,000 Minnesotans have used MNsure to enroll in a health plan.

But it's also clear from Optum's report that MNsure will need to find money to address technical issues.

Leitz and MNsure board Chairman Brian Beutner reiterated Wednesday that they weren't making plans to go back to the Legislature to ask for more money.

To cut costs and free up money to address problems with the call center, Beutner suggested immediately stopping an ad campaign using Paul Bunyan and Babe the Blue Ox.

Officials said all options are on the table to make immediate and long-term improvements, including replacing vendors or even using part of the federal exchange.

It's unknown how much work Optum will get in trying to fix the problems it laid out for the state, but Leitz said he expects to have a proposal in the next two weeks.

Optum's report spells out duties it can handle, including taking on additional call-center roles through its site in Orlando, improving program management issues and fixing the system for enrollment in 2015 and 2016.

The focus in the days ahead is on improving the call center and working on "interim" solutions, which include handling certain operations by hand.

With volume exceeding 3,000 calls per day and consumers waiting more than 50 minutes on average, Optum said MNsure needs to double its current call center staffing level. It also said calls should be routed into more specialized areas — such as passwords, enrollment and payment.