OR: Audit Confirms Host of Problems at Cover Oregon

Kitzhaber and Goldberg

A lot of bungling and bad communication contributed to Cover Oregon’s failures, according to the much-anticipated results of an independent audit that Governor John Kitzhaber’s office released yesterday.

Among the un-redacted audit’s key findings:

  • Communication among Oregon Health Authority (OHA) Director Dr. Bruce Goldberg, former OHA Chief Information Officer Carolyn Lawson and former Cover Oregon Executive Director Rocky King was “ineffective and at times contentious” and contributed to Cover Oregon’s failure to launch a functioning website.
  • Cover Oregon’s IT project was overly ambitious, including the decision to use some of the developed software to help the state determine eligibility for Temporary Assistance for Needy Families (TANF), food stamps and other social services.
  • The lack of a single point of authority, systems integrator and common governance structure were major managerial flaws contributing to the website’s failures.
  • Overconfidence and optimism among Cover Oregon and OHA staff prevented accurate information from being delivered to legislators and the governor’s office.
  • IT contractor Oracle incorrectly estimated the amount of work needed to complete the website numerous times, missed deadlines, turned in incomplete work and didn’t adhere to industry standards.
  • A weak contract with Oracle meant the contractor was paid for time and materials rather than paid a fixed price for a completed product – a decision that deviated from industry best practices.
  • Cover Oregon’s contract with Oracle was hastily written, which contributed to its ineffectiveness.

First Data did find that Cover Oregon attempted to modify the contract’s terms “to be more in line with best practices and to make Oracle more accountable.” But those efforts were hampered by the short time frame and Oracle’s threat that it would stop working on the website if a new contract was not finalized.

At a press conference on Thursday, Kitzhaber called First Data’s report “very credible and sobering.” Its conclusions are similar to a CMS report and other information that has been made public in recent months.

Kitzhaber also announced he had accepted Goldberg’s resignation as director of the Oregon Health Authority earlier this week.

With Goldberg’s resignation, all of the people that First Data identified as Cover Oregon’s “key project decision makers”—Goldberg, King and Lawson—have resigned or been fired.

Kitzhaber said he had also instructed Cover Oregon’s board of directors to replace Chief Information Officer Aaron Karjala and Chief Operating Officer Triz delaRosa and to overhaul Cover Oregon’s staffing model and governance structure.

Litigation against Oracle may also be on the horizon. Kitzhaber said Oregon Attorney General Ellen Rosenblum has been given the First Data report and asked to look at “the full range of legal avenues and options to protect the public’s investment.”

“We are not satisfied with the quality of work we got from Oracle,” Kitzhaber said. “We have no intention of paying $26 million for work that has not delivered a fully functional website with the reliability and performance to meet our needs.”

The governor said he also planned to sign Cover Oregon-related legislation recently passed by the Legislature, instruct the Department of Administrative Services to inventory all of the state’s IT projects, and convene a group of IT professionals from many of Oregon’s insurance carriers to advise Cover Oregon.

Kitzhaber has also written to Oregon Senators Ron Wyden and Jeff Merkley asking them to request that the Government Accountability Office’s investigation into Cover Oregon look at “the quality of technical work, and representations made about its readiness to move to the public,” as well as “appraisal of inconsistent risk status ratings” revealed in First Data’s report.

Finally, Kitzhaber said he had met with Health and Human Services Secretary Kathleen Sebelius earlier this week regarding additional options Oregon and other states can take to continue enrolling people into health coverage. An announcement will be made within a week, he said.

Despite sounding angry and frustrated during the press conference, Kitzhaber told reporters the state was determined to move forward from the Cover Oregon debacle.

Kitzhaber said that recovering from Cover Oregon’s mistakes would show that Oregon is “a place where we take on our problems head-on and we solve them together,” harkening to Oregon’s can-do spirit, which sometimes pervades state policy.

He noted that Cover Oregon and the state’s fast-track process has enrolled 287,000 people into commercial health plans and the Oregon Health Plan, saying that even with all of Cover Oregon’s problems, “Oregon stands out even among state with fully functional health insurance exchanges.”