MNsure chief: Feds' deadline pressure led to contract changes, problems

Scott Leitz
MNsure interim CEO Scott Leitz reacts during a press conference Wednesday, Dec. 18, 2013, in Minneapolis.
Glen Stubbe/The Star Tribune via AP

As questions swirl over what appears to be a significant change in the state's contract with a key MNsure vendor last spring, the insurance exchange's new chief has shed light on why the state took a more active role in managing the website in early 2013.

In an interview with MPR News, interim MNsure CEO Scott Leitz said the federal government issued two new deadlines in early 2013, forcing MNsure officials to put the project on an even faster track to be ready to launch Oct. 1.

Leitz's comments come as the exchange is getting increasingly intense scrutiny. This week MNsure announced an outside company will conduct an end-to-end review of the project, and the state's legislative auditor has begun a series of audits that will look at why the MNsure site is still struggling to enroll people in health insurance.

The contract dust-up concerns Maximus, a Virginia-based firm the state hired in 2012 to serve as the primary contractor on the MNsure project. Leitz said the company offered expertise in planning how all the different technological pieces of MNsure would fit together.

But in early 2013, timelines changed when the federal government announced two tight deadlines, Leitz said. MNsure found out it had to meet 70 percent of the federal government's 70 requirements for state exchanges by April 1 with the rest by June 1.

"The judgment (of MNsure officials) was that for us to actually move from where we were at to where we needed to be by Oct., 2013, we needed to move from a planning stage to a building stage pretty rapidly," Leitz said. "It was felt that the expertise that Maximus had ... really needed to evolve to something that was much more focused on the operational aspects."

In early 2013, former MNsure Executive Director April Todd-Malmlov, MN.IT Chief Information Tom Baden and Jim Golden, the top Medicaid official for the Department of Human Services, decided to change the state's contract with Maximus.

The decision was made in consultation with the Interagency Steering Committee, whose membership represented DHS, MNIT, MDH, Commerce, MMB and MNsure, according to a MNsure spokesperson.

At that time, roles changed, Leitz said.

First, MNsure, in collaboration with MN.IT, the state's technology arm, took over managing the technical aspects of the project.

Meanwhile, EngagePoint, hired by the state to do MNsure's system integration, among other things, coordinated the other vendors, said Leitz.

Maximus still serves as the project's prime contractor, coordinating the contractual activities of other vendors working on the site and making sure they get paid, a MNsure spokesperson said.

Leitz said he wouldn't judge whether his predecessor had made a mistake in truncating Maximus' responsibilities or whether the state had done a good job taking over. But he's hoping an internal review conducted by a third party will help MNsure decide if they should reinstall a primary contractor on the MNsure project.

"Ultimately, we are accountable for the outcome, here," he said.

Gov. Mark Dayton said he wasn't aware of the change in Maximus' contract change until late October at the earliest.

"Up until then everything was reported to us to be going as smoothly as possible, and better than almost anywhere else in the country," Dayton said.

But as problems with the site persisted throughout the fall, "that's when these arrangements became more concerning," Dayton said.

Dayton also said he wasn't sure MNsure officials were telling him about problems in a timely manner.

"As the problems unfolded, it appeared that we weren't apprised of them until they surfaced," Dayton said. "Whether that was because senior staff was not aware of them until they surfaced... it's something the Legislative Auditor should go in and review."

Meanwhile, a new budget analysis shows the low enrollment numbers MNsure is posting could lead to budget shortfall of as much as $16.7 million when the system has to be financially self-sustaining in 2015. The federal government picks up the tab for this year.

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