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Originally published May 21, 2014 at 8:04 PM | Page modified May 21, 2014 at 9:59 PM

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Federal subpoenas target Oregon’s failed health exchange

Oregon had received $305 million in federal grants to build its exchange, according to the Congressional Research Service, but the flaws were so profound that residents were never able to negotiate through it without human help.


The New York Times

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Unworkable technology pushed Oregon’s health-care exchange to the brink, making it the first state to abandon its self-administered system in favor of the federal exchange. Now prosecutors are following the money.

Grand-jury subpoenas, issued last week by the U.S. Attorney’s Office in Portland and released Tuesday by Oregon Gov. John Kitzhaber, have demanded all records, including email correspondence and memos related to the application or receipt of federal funds that might have been used in developing, building or administering the state’s website.

Oregon had received $305 million in federal grants to build its exchange, according to the Congressional Research Service, but the flaws were so profound that residents were never able to negotiate through it without human help. Despite system problems, more than 81,000 people were able to enroll for private coverage, some of which was done using paper applications.

The subpoenas home in on materials — including emails, meeting minutes, texts and notes — related to performance meetings called “gate reviews,” where status reports on the state exchange were presented to officials from the federal Centers for Medicare and Medicaid Services. The grand jury also demanded purchase orders, invoices and statements of work by Oracle, the private contractor that built the site, and all correspondence between 10 current and former executives of Cover Oregon, the website’s manager, and Oregon Health Authority, which oversees other health-care programs.

Kitzhaber pledged his full cooperation. The governor, a Democrat, is up for re-election this fall, and Republicans have pledged to use Cover Oregon’s travails in the campaign against him.

A spokeswoman for Oracle declined to comment, as did a spokeswoman for the U.S. Attorney’s Office in Portland.

Oregon is not the only state to run in to trouble in building a complex Web portal to bring together consumers and health-care providers. State systems in Hawaii, Massachusetts and Minnesota have been plagued with technical problems that have made it difficult for consumers to enroll online.

Maryland has also abandoned its dysfunctional website, to use instead software developed for the Connecticut exchange, one of the most successful in the country. Health authorities in Nevada said they were terminating a private contract with Xerox for a state-run exchange and would rely instead on the federal enrollment system for at least a year.

But the magnitude of Oregon’s troubles stood out from the beginning — as did the questions about whether Cover Oregon managers were overly rosy in presenting their system to state and federal government officials and the public. An independent report commissioned by the state concluded in March that Cover Oregon employees had played down problems in the complex system — intended to be a one-stop portal for both commercial insurance and the state’s Medicaid-financed program, Oregon Health Plan.

Cover Oregon’s former chief information officer, Carolyn Lawson, who resigned in December, has threatened to sue the state and various other individuals and agencies over what her lawyer, David Angeli, said in a letter in March was a “cover-up” of the exchange’s problems and their causes. The letter was obtained by The Oregonian.

Lawson was also on the list of current and former employees of Oregon’s health agencies whose correspondence was being sought by the grand jury in its subpoenas. Angeli on Wednesday declined to comment. Also on the list, Bruce Goldberg, Cover Oregon’s former executive director, and Rocky King, Cover Oregon’s first executive director.

The Government Accountability Office has also begun an examination of health-care exchanges that includes Oregon, and the inspector general at the Department of Health and Human Services is looking at how well state exchanges verify information on an applicant’s eligibility for tax credits.

Material from The Associated Press is included in this report.



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