Cover Oregon Audit Released; Goldberg Out Atop Health Authority

Kitzhaber told reporters after the release of the Cover Oregon audit that he was asking Attorney General Ellen Rosenblum to review all legal options against hapless technology contractor Oracle. He said bad management of Oracle contributed to the crippling of the exchange.

The Cover Oregon debacle has cost one of the most recognizable leaders in state government his job.

Dr. Bruce Goldberg, who left his post as the director of the Oregon Health Authority in December to fill in atop Cover Oregon, will stay on at the insurance exchange until a permanent replacement is found next month, but he will not be returning in any form to the health authority when his work at the exchange is done, Gov. John Kitzhaber told reporters Thursday.

The governor released the results of the independent audit on Cover Oregon which found Goldberg partly responsible for the technology failure. “The buck stops here,” Kitzhaber said.

Goldberg has submitted his resignation from the Oregon Health Authority, and Kitzhaber said he would like the Cover Oregon board to axe two other people at the insurance exchange, the chief technology officer -- Aaron Karjala -- and the chief operating officer -- Beatriz delaRosa.

The chief of policy at the Oregon Health Authority, Tina Edlund, has served as acting director in Goldberg’s absence and she will now be elevated to permanent director, Kitzhaber said.

Cover Oregon spokeswoman Ariane Holm declined to say if the exchange board would call an additional meeting as a result of the audit’s findings. Kitzhaber said he did not want to do anything to interfere with open enrollment, which lasts until March 31, meaning Cover Oregon will probably wait before handing out any pink slips.

Kitzhaber told reporters the state would refuse to pay the remaining $26 million owed technology vendor Oracle and announced that he had asked Attorney General Ellen Rosenblum to review legal actions against Oracle, including breach of contract and violation of the False Claims Act.

The governor wore glasses as he talked to reporters and spoke in an impassioned tone: “I am angry and I am disappointed by the roll out of Cover Oregon,” he said. “We have retained all of our rights to take legal action.”

A medical doctor by training, Kitzhaber could not tell reporters whether a criminal case for fraud could be pursued against Oracle, but he did not think any of the individuals involved did anything illegal. “People made bad management decisions,” he said.

The report from Atlanta technology system auditor First Data laid bare that poor management decisions ultimately fell on three people -- Goldberg, former Cover Oregon Director Rocky King and Carolyn Lawson, the chief information officer for the health authority. The rollout was also hampered by a lack of unified leadership and infighting among state agencies.

Lawson, like Goldberg, “voluntarily resigned,” in December while the 68-year-old King departed at the same time for medical reasons, including possible surgery. Public records later revealed that Lawson felt she was fired.

The fall for Goldberg is undoubtedly a hard one. He became the director of Oregon’s Department of Human Services in 2005 and has been instrumental in many dramatic changes in state health policy, from the closing of the old state mental hospital to the creation of the Oregon Health Authority and the transformation of the state Medicaid program through coordinated care organizations.

A family physician, Goldberg practiced medicine for the Indian Health Service in Zuni, N.M., and rose to his position at DHS after working as the medical director for CareOregon. At DHS, he led efforts to improve children's access to healthcare, expanding state programs to include kids in families up to 300 percent of the poverty line, while also working to reduce hunger and food insecurity among Oregonians.

But he was ultimately responsible for the hiring of Lawson and approved her incompetent decision not to hire a system integrator to oversee the enormous IT project, which included not only the Cover Oregon insurance marketplace but new technology infrastructure for DHS and the Oregon Health Plan. Lawson claimed in her interview with First Data that the state -- which was given $303 million from the federal government to set up the exchange -- didn’t have the budget for an integrator.

Without a systems integrator, Oracle was left to oversee its own technicians -- a decision paramount to the fox guarding the hen house.

“This decision created a lack of accountability on the project,” according to the First Data report.  “It contributed to a lack of scope control, a delay in requirements definition, and unrealistic delivery expectations. A system integrator with a stronger financial incentive for ensuring performance most likely would have pushed harder in those areas and been more realistic about delivery dates.”

The lack of a system integrator is a key difference between Cover Oregon and the more successful exchange in Washington state.

Oracle was further paid based on hours worked, not on the completion of assigned tasks, reducing the incentive for the contractor to meet its deadlines and resulting in the state paying for unfinished work.

King continued to tell the public and legislators that the project was basically on track, even as it was clear that Oracle’s work was nowhere near being completed. He also kept Cover Oregon wedded to a very ambitious set of goals, including a much more complex SHOP program for small businesses than neighboring states Washington and California. That part of the exchange ultimately failed to operate at all for 2014 enrollment.

“A common theme from the assessment interviews was that both Rocky King and Carolyn Lawson were perceived as supremely confident,” according to First Data. “The interviews also confirmed that the overly optimistic schedule/scope projections were based on continued trust in Oracle and the [state] leadership (Rocky King, Carolyn Lawson, and Bruce Goldberg), despite repeatedly missed deadlines.”

“This report shows an unrealistically high sense of optimism that Oracle could deliver when that was not possible,” Kitzhaber conceded. He acknowledged that voters will decide whether he should keep his job as he faces re-election in November. A request for comment from his chief opponent, Rep. Dennis Richardson, R-Central Point, was not returned, although the former legislative budget chairman began raising alarm bells on the project as early as September 2012.

Oracle refused to allow any of its personnel to be interviewed who were involved with the Cover Oregon project, offering only a higher executive. The report said the Oracle executive pushed blame onto the health authority and Cover Oregon -- including, most gallingly, the lack of an independent systems integrator that would have supervised Oracle’s work.

The governor continued to try to shift attention to the positive -- 287,000 Oregonians have received health coverage since Jan. 1 thanks to the Affordable Care Act, including this reporter. Of those, 49,500 people have signed up for private insurance plans with Cover Oregon without a fully functional website.

The report did credit Kitzhaber and Goldberg’s use of a federal waiver to sign up people on the Food Stamp rolls and other government assistance programs through the Fast Track program. An effective detour of Cover Oregon gave many people access to the Oregon Health Plan who would likely remain uninsured if they had to count on the website. Oregon has consistently ranked in the top 10 among all states, big and small, for new Medicaid enrollments.

Kitzhaber said he decided to keep going with Oracle and the existing IT infrastructure development because there would have been no way to switch to the federal exchange in time for open enrollment, and people would have lost their chance to sign up through the contingency plan.

A switch to the federal or another state’s exchange would take 5 to 8 months to complete, he said, which is still being seriously considered for next year. Open enrollment for 2015 plans begins Nov. 15.

To view the full, unredacted audit from First Data, click here.

Chris can be reached at [email protected]
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