Four months into a legislatively mandated process of contracting with a tech company to build a new health insurance shopping website for Oregonians, state officials have canceled the effort and will start it all over again for reasons that remain unclear.
Deloitte LLP, a consulting firm with close ties to the Oregon Health Authority, was ranked by state officials as the top bidder after the first round of the competition to build Oregon a new online marketplace project, according to state procurement records.
Undisclosed concerns expressed over the legalities or fairness of the process reportedly drove the decision, though Oregon Health Authority officials won't discuss what they were or who raised them.
Officials had hoped to ink a contract immediately after an abbreviated contracting timeline. The online marketplace project was supposed to be ready by November 2026, in time for the 2027 plan year.
Sen. Deb Patterson, whose committee sponsored the bill directing the state to build its own online marketplace, said state officials are making the right decision.
“I am very disappointed that we are not going to be able to meet the original timeline,” she said, but added that “I would much rather see us do this right: We have to get the right vendor, we have to get the right software for the right price — and the process has to be fair and equitable.”
Announced quietly
On Friday, Nov. 15, buried at the bottom of an Oregon Health Authority newsletter to health insurance agents was a brief notice that the contracting process for the project had been canceled “in the best interest of the State of Oregon. The Agency is evaluating options to move forward.”
Asked to explain the announcement, Oregon Health Authority officials said they are opening up a new contracting process soon, but declined to discuss why the earlier one was scrapped.
Longtime Oregon Health Insurance Marketplace Director Chiqui Flowers did not respond to an email on Friday from The Lund Report requesting an interview.
The program’s longtime communications director, Amy Coven, on Monday afternoon said in an email the agency would not answer questions about why the contracting effort was scrapped. Nor would it make someone available to do so.
“As we move through the state-based marketplace project, the state is focused on ensuring the procurement process is done well,” she said.
Coven added that a new contracting process will begin later this week.
No more Cover Oregons
At issue in the contract is how the state complies with a federal requirement of providing an online “marketplace” for Oregonians who buy their own health coverage and are not on Medicare. Marketplaces allow consumers whose incomes meet federal rules to qualify for federal tax credits that bring down the cost of monthly premiums.
Oregon has been using the federal version of the online shopping website, called Healthcare.gov, ever since the state’s effort to pay Oracle America to build its own instead cratered spectacularly at a cost of more than $300 million in federal and state funding.
“We don't want to have another Cover Oregon problem,” Patterson said.
Cover Oregon became a household name across the country in 2014 as national media figures spotlighted and mocked the scandal. Outside reports concluded the project fell victim to mismanagement and lack of oversight by the state, as well as what court records indicated was horrible work that even the contractor's own employees felt “didn’t pass the ‘laugh test,' ” as one internal company assessment put it. An Oracle developer wrote in an internal email that the company was "rapoing [sic]” the state of Oregon.
At the time Patterson was working as health care nonprofit leader, not in government role. But her analysis is spot-on with what various reports and audits concluded at the time.
“We were the first ones out of the chute, and maybe had an overreach,” she said, adding that Oregon tried “to invent the wheel rather than improve the wheel. And so now others learn from our mistakes, which is great ... There's a lot of states who do have these state-based marketplaces now, and we can learn from their lessons.”
After pursuing the idea of a new state-based marketplace for years behind the scenes, state officials went public, joining advocates to persuade the Legislature that the state is ready to build its own state-based marketplace as 19 other states have.
The technology has advanced and is being pitched as ready to run “off-the-shelf.” Advocates of the idea, including state officials, echo arguments that having a state-based marketplace could save money for the state as well as for consumers, and could boost enrollment and improve the state’s flexibility and ability to address longstanding heath inequities.
“We need it as soon as possible,” Patterson said. “We needed it yesterday — but it has to be done the right way.”
No explanation given
The law cited by the Oregon Health Authority to cancel the marketplace contracting in mid-process says state officials may do so in the best interest of the contracting agency, but requires them to make the reasons for the decision public. “The reasons for the cancellation or rejection must be made part of the solicitation file,” the law states.
State officials have not provided any explanation for the decision in the state’s online solicitation file.
Asked Tuesday for an interview to discuss the decision after Oregon Health Authority officials refused, a Department of Administrative Services spokesperson said the agency would arrange an interview.
For now, however, the online website for the now-canceled contracting provides some potential clues.
- On July 3, the state issued a request for proposals from companies interested in the process. Three responded.
- On July 26, the state responded to bidders’ questions, several of which expressed confusion at the state’s wording of its bidding solicitation.
- One cited the “compressed timeline” sought by the state and requested a two-week extension; the state agreed to 11 calendar days.
- When one bidder asked about the rules for filing a protest about the RFP, the state responded that the deadline for filing a protest had been the same as for filing questions — appearing to indicate the initial protest deadline had already passed.
After round 1 of evaluation, on Sept. 23, the state made public its ranking of the bidders, placing Deloitte and VIMO Inc, doing business as Get Insured, well ahead of IdeaCrew, Inc.
Deloitte has a longstanding relationship with the Oregon Health Authority. Its role has grown under the Kotek administration, with some of its employees even taking on official state email addresses and filling state-employee roles.
The state hired Deloitte to help during the Cover Oregon debacle, and the firm took over a related eligibility project that a state review concluded Oracle had also performed poorly on. The state has since paid $416 million to Deloitte for the long-troubled replacement project, now known as ONE. That's far more than initially estimated, The Oregonian/OregonLive has reported. Nationally, the firm's work has drawn complaints.
It’s unclear who raised the concerns about the process or when, but there was no indication of any problem during an Oct. 17 public meeting discussing the contracting.
Uncertainty lies ahead
The number of people buying their own insurance in Oregon in what's known as the individual market — rather than getting it from an employer or the government — has plummeted from about 250,000 in 2015 to about 170,000 today, a drop that coincided with a federal uninsurance penalty going away.
The bulk of those people now buy policies through the state's portal to the federal online marketplace, and enrollment has been essentially flat over the last five years.
The number of people using the marketplace is about to drop as the yearly open enrollment period for the individual market begins. The state is projecting the number of people using the marketplace to drop by about 45,000 people to just 100,000, according to bid documents.
State officials told bidders the new “Bridge” program, launched by Oregon to provide free care to a larger swathe of working poor, would absorb many of those who previously were using the marketplace.
Those remaining on the marketplace could see changes. A state consultant found that due to federal rules the Bridge program will have the effect of jacking up the cost of premiums for many of the people who continue to shop in the marketplace — those who make too much to qualify for the new program but still qualify for subsidies due to their incomes. The premium hikes will force them to pay more for commercial insurance or downgrade to less generous coverage.
The projected premium hikes could grow even more if additional Biden administration tax credits are not renewed under the new Trump administration.
State officials contend they can better address premium changes if Oregon has its own marketplace, adding to the reasons cited for the new project.
Comments
Interesting to know. Isn’t…
Interesting to know. Isn’t GetInsured/VIMO the same vendor who is also responsible for GA Access, which has not been easy to use.
Also, they seem to have received a sole source on the Call Center contract at GA, which is uncommon.
Once again, Oregon has wasted millions of taxpayer dollars on a system we'll never implement. This happens over and over again when people who do not know what they're doing are put in charge of programs they do not understand. Cover Oregon may have been the largest example but it certainly isn't the only one in recent years. Our legislature needs to do a much better job of policing items relating to healthcare coming from entities who've proven time and time again they cannot be trusted or truthful.