Great moments in state exchange success: Maryland fires its contractor

“It’s going to be smoother in places like Maryland where governors are working to implement it rather than fight it. (Applause.)” — President Barack Obama, Sept. 26, 2013

Five months in, Maryland’s state exchange is still barely limping along. Lt. Gov. Anthony Brown, who headed up the exchange build, has no apologies. The exchange director resigned after she went on a Cayman vacation while the site was imploding. The situation is bad enough that this essentially one-party state has devolved into a fight over whether they should abandon their $100 million dysfunctional site for the federal site, and Democrats running for governor are whacking each other with its failure.

Now, another contractor bites the dust:

Maryland has fired the contractor that built its expensive online health insurance marketplace, which has so many structural defects that officials say the state might have to abandon all or parts of the system.

The Maryland Health Benefit Exchange voted late Sunday to terminate its $193 million contract with Noridian Healthcare Solutions. Columbia-based Optum/QSSI, which the state hired in December to help repair the flawed exchange, will become the prime contractor, while Noridian will assist with the transition.

“We worked very hard with [Noridian] to find a path forward,” said Isabel FitzGerald, the Cabinet secretary in charge of information technology. “And the decision now is that we are just not making the progress that we had hoped.”

Maryland was one of 14 states that chose to build their own health-insurance marketplace to implement President Obama’s Affordable Care Act, which politicians and residents in the state strongly support. Gov. Martin O’Malley (D) boasted that the marketplace and the Web site Marylanders would use to access it would be among the best in the country.

But the site failed within minutes of its Oct. 1 launch, blocking residents who were trying to get health insurance. The system has limped along since then. Ultimately, state officials say, they may have to rely at least partially on the federal health-care Web site or on sites operated by other states.

As of Monday, Maryland had paid Noridian $67.9 million for its work and had unpaid invoices totaling $12.9 million, state health officials said.

Predictably, state officials are blaming the contractor and the contractor is blaming the state’s unrealistic desire for a quick turnaround and frequent changes:

McGraw said his company met its contractual obligations under “tremendous pressure and constant changes by the state,” which amounted to hundreds of adjustments and fixes.

In attending Maryland’s Health Exchange meetings over several years, I can confirm that they did keep adding capabilities to the technologists’ plate, sunnily predicting an exchange to beat all other state exchanges with seemingly very little knowledge of what was necessary to make the project happen. I cannot emphasize enough that Maryland was supposed to among the best prepared states in the country for this boondoggle. They were foiled by their own ambitions, their lack of understanding of the magnitude of this tech undertaking, a system without anyone accountable for its success, and the federal government’s withholding important information until after President Obama was reelected, which compounded all of the above problems by making the timeline even shorter than it already was.

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