By now we are all painfully aware of the problems with the launch of the Federal health insurance website HealthCare.gov. NBC News recently quoted a government spokeswoman saying that the website successfully completes transactions only nine times out of ten.
The Federal website is not the only exchange with serious problems. The Washington Post is reporting that over the weekend (on February 23), the state of Maryland fired the vendor building their online health insurance marketplace. Reportedly, Maryland chose the vendor in early 2012 in part due their track record with developing software that processes Medicare and Medicaid claims, reasoning that since the vendor planned to use off-the-shelf components, the project would be more likely to meet the tight deadlines – it had to be operational on October 1 2013 for the initial enrollment period ending March 31, 2014.
However, problems started almost immediately. A Washington Post investigation uncovered that state officials failed to take action when an outside auditor warned that early deadlines were being missed, and that Maryland had not left enough time to adequately “complete, verify and test” the system. On top of that, the contracted vendor, based in North Dakota, hired another vendor, based in Maryland, for all the technical services related to operating the website, for nearly the same amount as originally contracted to develop the site. The second vendor proved to not have enough resources and hired multiple subcontractors. The two vendors are now suing each other.
Some of the issues revealed by this unfortunate situation are ones commonly seen in insurance core system projects. Among them:
- Unrealistic expectations – state officials set an aggressive timeline and did not allow enough time for testing once early deadlines were missed, according to auditors.
- Poor communication – Maryland claims that the vendor misled them about the maturity of the available software, and the vendor hired a subcontractor that did not clearly understand the resource requirements, leading the subcontractor to hire multiple sub-subcontractors.
- Poor governance – the project lacked overall accountability and did not have a process in place to reassess the project to correct issues raised during the outside audit.
- Lack of attention on testing – though not specifically mentioned in the article, the auditors questioned the time allowed for testing. As with most major projects, testing was likely trimmed back and not adequate for validating the major functions of the system.
The result of the poor execution of the project is that Maryland is now forced to find a vendor to rescue the system, while at the same time processing applications through more manual work and increasing the amount of call center support. State officials recently revealed that Medicaid participants cannot be properly identified by the system, costing the state over $30M. As any CIO who has lived through a failed implementation would tell you, you will always spend more money fixing issues than if you had taken the time and resources to get them right in the first place.