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Joshua Sharfstein
Dr. Joshua Sharfstein, secretary of the Department of Health and Mental Hygiene, center, addresses progress at Maryland Health Connection on Dec. 10, 2013, alongside interim Executive Director Carolyn Quattrocki, left, and Lt. Gov. Anthony Brown. (The Daily Record/Maximilian Franz, file)

Maryland makes switch on health exchange

State decides to go with technology proven to work in Connecticut

Maryland will abandon the underlying software used for the state’s malfunctioning health insurance exchange and replace it with a system used successfully in Connecticut, state officials decided Tuesday night.

The board of the Maryland Health Benefit Exchange voted unanimously to implement software developed for Connecticut by Deloitte Consulting LLP because using technology that’s been proven effective would be less risky and cheaper than continuing to try fixing the existing state exchange, officials said.

Implementing the new system will cost $40 million to $50 million — some of it likely federal funds — plus unspecified costs for hardware and other infrastructure, said Isabel FitzGerald, the state’s secretary of information technology, who was brought in earlier this year to lead the exchange.

Continuing to work on the existing infrastructure of Maryland Health Connection, which has malfunctioned since it launched on Oct. 1, would likely take about a year and a half, and would cost about $66 million, FitzGerald said.

The underlying software running on Maryland’s exchange is “deeply flawed” and is not equipped to handle the complexity of operations required of a health insurance exchange as envisioned by the Affordable Care Act,” FitzGerald said.

“Remediation is unacceptably costly, risky and would take over 12 months,” she said. “And [even then,] we’re not entirely sure that we would have a system that would meet our long-term needs.”

Switching to new software is also the best option given the tight deadline: Maryland needs to have a functional exchange by Nov. 15, when another open enrollment period begins. Officials are cutting it close: It will likely take about seven months to switch to the new software, FitzGerald said.

“I’m a pediatrician, and I say it to parents a lot: There’s risk all over the place,” Maryland Health Secretary Dr. Joshua Sharfstein said. “You have to choose the best option.”

Given the tight timetable, Maryland will not change much about the new software other than brand it with the Maryland Health Connection name and logo and incorporate rules and policies that are unique to Maryland’s health insurance environment.

The software code itself is free for Maryland — and other states — to use because it was developed using federal money, and federal funding rules stipulate that the technology must be shared with states that ask for it.

However, Maryland still needs to pay any other costs associated with installing and customizing the software.

The impact on contractors working on Maryland Health Connection is not entirely clear. The state will enter into a contract with Deloitte to install the new software, but Columbia-based Optum/QSSI Inc., the prime contractor, will continue to work on the exchange, officials said. QSSI’s contract with the state pays the company $14 million.

Rumors have been circulating for weeks about the switch to the Deloitte software. But MHBE officials also considered, at least at first, two other options: moving enrollment activities to the federal exchange and continuing trying to fix Maryland Health Connection.

Maryland Health Benefit Exchange has already spent $125.5 million on setting up the website, paying employee salaries and other operational expenses.

Sharfstein said the MHBE would submit the plan to use Connecticut’s system to federal officials. If it is approved, Maryland should continue receiving federal grants for implementing the ACA, he said.

Enrollment on the exchange will continue for Marylanders still working to get through the system. Their information will be converted to the new software platform as it becomes available, officials said.

So far, 295,077 people have signed up for insurance via the exchange, Sharfstein said. About 63,000 of those sign-ups were for private health plans. The rest were enrolled in Medicaid.

Connecticut hired Deloitte for $42.5 million to create the software for its exchange, Access Health CT, which was one of the best-performing exchanges among the 14 states that chose to build their own. Deloitte also worked on exchanges in several other states, such as Kentucky and Washington.

Although other states have struggled with their exchanges, such as Oregon and Hawaii, Maryland is the first to abandon its system.

In a statement, Gov. Martin O’Malley and Lt. Gov. Anthony G. Brown said: “Our administration has not succeeded at every first try, but we have never given up. We learn from both success and failure. The vendors we hired failed to build us the platform they promised. So now that the first open enrollment period has ended, we’ve decided to upgrade our website.”