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Originally published October 29, 2013 at 7:38 PM | Page modified October 29, 2013 at 8:49 PM

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Why states didn’t have problems that hit federal health-care exchange

What accounts for the different experiences of the state and federally managed exchanges? Why are the exchanges that the federal government runs so bug-ridden, subjecting users to long delays and possibly even more serious problems?


Special to The Seattle Times

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When President Obama addressed massive problems with the federal health-insurance exchange website last week, he couldn’t cite any actual enrollments in health plans offered through the site.

At the same time, several states running their own exchanges have exceeded federal-enrollment targets, including California, Connecticut, Kentucky, New York, Rhode Island and Washington. As of Oct. 28, Washington’s online site — the Washington Healthplanfinder — had enrolled 48,995 people.

What accounts for the different experiences of the state and federally managed exchanges? Why are the exchanges that the federal government runs so bug-ridden, subjecting users to long delays and possibly even more serious problems?

The federal agency managing the exchange — the Centers for Medicare and Medicaid Services (CMS) — did not respond to queries about the nature of the problems.

And the federal exchange’s primary contractor, CGI, declined to comment.

But in testimony before the House Ways and Means Committee on Tuesday, CMS administrator Marilyn Tavenner acknowledged the serious problems that have afflicted the online effort, and she targeted outside contractors as the source of the problems.

“CMS has a track record of successfully overseeing the many contractors our programs depend on to function,” she said in document provided in advance. “Unfortunately, a subset of those contracts for HealthCare.gov have not met expectations.”

Still, even if many of the details of the problems are still unknown, consultants and state technology officials say there are important lessons to be learned from a comparison.

Complexity of scope

Some analysts argue that the complexity of doing the job at the federal level is just too great.

Under the Affordable Care Act, states that chose not to create their own exchanges are to use an exchange set up by the federal government — Healthcare.gov. Thirty-six states chose not to create their own exchange.

The federal system must be capable of integrating with multiple-state eligibility databases.

“It’s just the complexity of their scope vs. ours,” said Curt Kwak, chief information officer of the Washington Health Benefit Exchange, the public-private corporation that manages Healthplanfinder. “We focus on just one state, but they are having to focus on 36 states. It’s just that much more complex.”

Robert Booz, an analyst with consulting group Gartner’s health-care-industry research unit, noted that each state has different computer equipment, different software and different bureaucratic structures. Tying them all together, Booz said, “was an incredibly complex, very short-fuse situation. If this was a corporation putting in a billing system in essentially six months with scope changes up until a month before, you could see all the earmarks of it being a disaster. This was a big, difficult, complex implementation.”

According to Kwak, his team benefited from being able to focus solely on the issues peculiar to Washington state. That meant, of course, building a clean consumer website and preparing for integration with the federal Data Services Hub, a data center managed by CMS that provides one connection to the common federal data sources (including the Social Security Administration and the Internal Revenue Service) to verify consumer application information for income, citizenship and immigration status.

But the trickiest part, Kwak said, was integrating the state eligibility system, which tracks services — including Medicaid — that residents are eligible to receive. The state decided to build that leg of the system from scratch.

“Our Department of Social and Health Services actually had to build a platform that connected to our health-benefit exchange,” he said.

The state’s choice was much like that of a person who decides to tear down a house and rebuild from scratch, rather than go the renovation route. It’s a lot more work and expense upfront, but you end up with modern wiring and other useful amenities.

Kwak said eliminating legacy hardware and out-of-date software has made it easier to integrate the state eligibility system both with the website and the federal data hub. As a result, while the links between the federal exchange and state databases have been plagued with problems, Washington’s exchange has had no major problems linking to its own eligibility system.

Closer to home

Another advantage to implementing Affordable Care Act portals at the state level, say analysts, is proximity to those with a stake in the system: insurers, state eligibility departments and consumers.

“At the state level, some already have direct state experience with the CIOs on the health-care side of the state government,” Booz said. “And just the knowledge of how the state interfaces with Medicaid puts exchanges a step ahead.”

Keeping control over the project closer to home is also important in managing contractors. While the federal exchange has used 55 outside contractors, Washington’s team worked with only three, two of which were hired specifically to help ensure compliance of the primary contractor.

Just as important, says Benush Venugopal, an analyst with Deloitte, Washington exchange’s primary contractor, “Our office was literally a block away.”

“In any sort of large, complex implementation like this, where there is not a whole lot of time to get things done, the more closely you are working together, the less room there is for communication gaps,” Venugopal said

Booz suspects that in addition to the problem of managing large numbers of widely scattered contractors, the federal effort may have been complicated by political considerations.

“At the federal level, it appears to be that the vendors may have been more hesitant to alert the sponsor of problems because of the politics and the optics of it,” Booz said.

Another apparent weakness in the federal effort was the lack of a single point of authority and responsibility with hands-on control over the project.

“We sometimes use the term a ‘single throat to choke,’” Booz said. “That encompasses the idea of having a single source of truth when it comes to decision-making around the scope of a project.”

Having a single throat to choke can be important because in any project involving multiple agencies, as well as consumers and private business, there are going to be competing interests.

At the state level, the competitors are familiar with each other. “Vendors with some experience with the particular regulators of the state, they sort of know where each other is going,” Booz said. “It’s like a dating dance.”

At the federal level, especially because the federal exchange has to accommodate different conditions in 36 individual states, that dance is more complex.

It’s not that state efforts haven’t had their problems. “We knew it was going to be difficult for everybody and it has been,” Kwak said.

Pointing to the technical issues that brought down the Washington state website for two days after its Oct. 1 launch, Kwak said that “even those bumps on the first day of launch didn’t really surprise us.”

The most recent “bump” to afflict the Washington exchange occurred last week, when it was discovered that the exchange site’s calculator had misestimated premiums for approximately 8,000 applicants. When applicants entered their monthly incomes, the federal site read it as yearly income and estimated a higher-than-warranted subsidy. Kwak’s team fixed the problem within 24 hours.

Still, the federal exchange’s struggles have been greater than those of the state exchanges. Yet Booz is confident the system will be fixed.

“It will muddle along,” he predicted “It will take a considerable amount of effort and a lot of time to get this fixed. It’s not going to be completely resolved before the March 31 effective date. Patches will be put in. It will work a bit better. But at some point they’ve got to release version 2.0.”



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