The dysfunctional Vermont Health Connect website has burned up some of the Shumlin administration’s political capital and could jeopardize millions in ongoing federal funding for health care in Vermont.
Vermont Republicans plan to use the implementation of the Affordable Care Act in Vermont as a vehicle for winning seats in the Legislature this election season. For months the GOP has pilloried Democratic Gov. Peter Shumlin and his staff for defects that have marred the rollout of the state’s health care exchange.
Though Republicans don’t yet have a gubernatorial challenger, they hope the exchange failures will give their candidates a competitive edge in local House and Senate races. Their objective is to chip away at the Democratic super majority in the Statehouse. If they are successful, they could impede the Shumlin administration’s plans for a smooth transition to a universal health care system.
Meanwhile, the delays and glitches associated with the website over the last five months have undermined public confidence in the Shumlin administration’s ability to get health care reform right. Five months after the launch of Vermont Health Connect, the website remains cumbersome. The functionality is so poor, many people still aren’t able to use it without help.
In a recent poll of Vermonters’ views on Shumlin’s single-payer plan, half of the respondents said they are not confident state government could effectively manage a universal health care system.
The problems with Vermont Health Connect are even making some Democrats nervous about the Shumlin administration’s ability to handle the planned 2017 rollout of a state-run health care program.
But beyond the political and public relations ramifications, the state could also face a fiscal challenge if officials cannot get the website humming by the end of the year. At that point, the $171 million in federal money earmarked for implementing the state’s exchange will go away. If Vermont Health Connect isn’t completely functional by then, the state could be on the hook for millions of dollars in unanticipated costs.
The Shumlin administration must complete the Vermont Health Connect website and demonstrate that it is taking steps to improve how the state builds health IT systems in order to leverage hundreds of millions more in additional federal grants for health care technology systems that would build the foundation for a state run universal health care system over the next several years.
Exchange was an afterthought
A look back at the lead-up to the launch of Vermont Health Connect shows that Shumlin and his team were too focused on the politics of health care reform to give sufficient consideration to the complexity of the exchange system they were building.
A year after President Barack Obama signed the Affordable Care Act, Gov. Peter Shumlin signed Act 48, his own historic piece of health care legislation that charts a course for publicly financed health care for all Vermont residents.
In the early days of the Affordable Care Act, Shumlin and his team thought they might secure a waiver to bypass the insurance marketplaces entirely and move straight to a universal health care system, according Sen. Tim Ashe, D/P-Chittenden.
“Even though it was only three years ago it was a different era,” Ashe said.
But in the absence of concrete directives from the federal government, the Shumlin administration was forced to take a wait-and-see posture.
As the regulations surrounding the implementation of the Affordable Care Act took shape, it became clear the dynamic between states and the federal government wouldn’t allow for the kind of flexibility the administration had anticipated.
“That relationship has complicated things for the (Shumlin) administration and that was really no fault of their own,” Ashe said.
Vermont Health Connect, an online market for health insurance, would have to be built after all.
Once the parameters of ACA became clear, the Shumlin administration began to look at how the state could incorporate the mandate into the governor’s health care reform goals.
A big bet
From the beginning, the Shumlin administration was looking at ways to leverage the Affordable Care Act and other opportunities for federal funding to lay the foundation for a universal health care system.
The state’s exchange website is listed in a 2012 Vermont Agency of Human Services report as a component of a larger project to overhaul Vermont’s health IT infrastructure. There are two other IT projects in the works — a new Medicaid reimbursement system and a streamlined eligibility program for the Agency of Human Services. Together the Medicaid and eligibility systems will cost more than $200 million — on top of the $171 million earmarked for the exchange, which the Centers for Medicare and Medicaid Services is doling out as the state bills expenses.
Close to half the $171 million in federal money for the exchange is slated for CGI’s $84 million contract to build and maintain the exchange for the next two years.
So far, Vermont has spent $51.2 million to implement the Affordable Care Act. More than $19 million of the total has been spent on the Vermont Health Connect website. Five months after launch, the website is difficult to use and far from complete.
Vermont can draw down $120 million more to complete the website, but the federal government has said the implementation grants are only good through the end of the year.
If Vermont Health Connect isn’t finished by then, the state could be left on the hook for millions of dollars in unanticipated costs.
Shumlin has said he will work with governors of other states to lobby the federal government for an extension of the implementation grants.
In Rhode Island, which also has hundreds of millions earmarked for Health Source RI, the state exchange, a group of lawmakers is pushing to scrap the state website and use the federal Healthcare.gov site instead.
Rhode Island has spent $44 million. Gov. Lincoln Chafee and the Rhode Island Legislature haven’t determined how they would pay for the site once federal dollars are rescinded.
The Shumlin administration has set aside $10.8 million in its FY 2015 budget proposal for operating the exchange. Shumlin has pencilled in revenue from an increase in the claims assessment, a small tax on every transaction with an insurer.
The claims assessment increase is unpopular with the business community, and the House Ways and Means Committee rejected a similar proposal last year.
If Vermont has to find more money for the exchange, the task could be difficult. The Legislature is already trying to find $14 million to cut from the fiscal year 2015 budget, and lawmakers are loath to raise new revenues.
Meanwhile, neighboring states that used the federal exchange website are spending significantly less.
State by state enrollment data for January released last month by the federal government showed that Maine and New Hampshire had enrolled roughly equivalent number of people as Vermont has — with the federal website.
Maine has spent $4.3 million in federal money earmarked for ACA implementation, and New Hampshire, which has $8.6 million earmarked has spent less than $4 million.
‘A lack of realism’
From the moment Obama signed the Affordable Care Act into law, states that elected to build their own exchanges were under the gun.
“We knew from the beginning that it would be a really big and complex project and that the date given by the federal timeline of Oct. 1 was a pretty big stretch,” said Lindsey Tucker, the lead project manager for Vermont Health Connect.
But Tucker said she was confident the state could deliver.
“There’s an optimism in coming to work with a really great team and having an incredible mission in front of you to serve Vermonters,” she said.
That optimism, reflected in rosy scenarios painted by the governor and Mark Larson, the commissioner of the Department of Vermont Health Access, has been characteristic of what one person familiar with the planning process, who spoke with VTDigger on condition of anonymity, described as “a lack of realism.”
“The focus of (Shumlin’s) administration was on the politics, much more than the operations,” he said.
Concerns raised about technical challenges and the time frame for implementation went unheeded by the administration, and there was a poor understanding of the complexity of implementing such a large-scale IT project — and little interest in hearing about just how complex it would be, the source added.
Rep. George Till, D-Jericho, a physician who sits on the House Health Care Committee, has urged the state to delay the march toward universal health care. He says the state needs to collect data on the efficacy of ongoing health reforms.
Till also says Shumlin’s timeline for Green Mountain Care is arbitrary. The 2017 launch date for the state’s universal health care program is, in his view, merely “a political promise made by the governor.”
Building the IT backbone of Green Mountain Care
Shumlin has said he doesn’t envision a governmental superstructure for the administration of Green Mountain Care and has suggested a third party, such as Blue Cross Blue Shield of Vermont, could be contracted for much of the work.
The state’s planned Health Services Enterprise system will integrate several IT systems within the universal health care program. The Integrated Eligibility program, which will track Vermonters’ eligibility across Agency of Human Services programs, is part of the larger Health Services Enterprise system. The Integrated Eligibility project will replace part of the agency’s 1980s mainframe ACCESS program, which the state eventually hopes to mothball.
Cost estimates for the IE system range as high as $100 million; the health care portion of the project is pegged at $21.5 million. CGI, the contractor for Vermont Health Connect, bid on the project but negotiations with the state broke down and the state recently put out a new request for proposal.
The federal government will pay for 90 percent of the health care portion of the IE project — or $19.3 million — if the state can complete the work by October 2015, otherwise the federal match falls to 50 percent or roughly $10.1 million.
Another major health IT build-out the state has put out to bid is a new Medicaid system. The $112 million project, which is split into three parts, will also receive 90 percent federal funding with no deadline, according to Mark Larson, commissioner of the Department of Vermont Health Access.
“When timelines slip, as they inevitably do, there are only two options for what to do next: Extend the deadline or cut functionality.”
The state’s Medicaid contract with Hewlett-Packard expires in 2017, and Vermont is hoping to phase in the new system as part of the transition to Green Mountain Care. The state has released an RFP for one of the three parts of the Medicaid project, and the other two are expected out by April, Larson said.
In late February the administration put out a request for proposals to build a computer system to help track high-risk Medicaid recipients in order to improve care management. The vendor will be asked to propose ways the system can be expanded to serve the state’s entire Medicaid population.
Continuing to leverage the 90-10 federal splits for health care IT projects is integral to keeping Vermont’s portion of the estimated $1.6 billion to $2.1 billion cost of launching Green Mountain Care on the lower end of that spectrum, according to Steve Klein, chief financial analyst for the Joint Fiscal Office.
Contracting and procurement
The state is hoping the lessons learned from the troubled rollout of the Vermont Health Connect website will ensure that future health IT projects don’t go down a similar path.
Large sections of the exchange site are incomplete and the state has been unable to compel its vendor, the tech firm CGI, to finish the project in a timely fashion. Critics say the administration needs to make immediate and substantive improvements to the state’s IT procurement and contracting processes.
At a recent news conference, Shumlin said IT projects are notoriously difficult to manage, and tech projects at all levels of government and in the private sector routinely fail. The governor says he has worked to improve the state’s procurement and management practices.
Vermont has a history of failed IT projects. The state has lost nearly $20 million on websites for the Department of Motor Vehicles, the judiciary and the Vermont Department for Children and Families.
The IT failures predated the tenure of Richard Boes, Vermont’s chief information officer. Boes told VTDigger the state has been working to hold vendors accountable.
“Are there lessons to be learned? Yes, that’s the process we’re in now,” Boes said.
Boes and other members of the administration are pinning their hopes on getting it right next time. They hope that an independent review of the exchange rollout that Shumlin announced earlier this year will help them figure out what went wrong and how they can improve oversight of IT contractors.
The consulting firm BerryDunn will be paid more than $70,000 to help the state evaluate its approach, staffing and management to reduce risk and improve implementation of future projects.
Larson said he expects the independent review to be completed before the state signs contracts for new health IT projects.
Scuttled plans: the CGI story
The state originally tried to build the exchange on off-the-shelf software from Oracle. Boes said it made sense to then contract with Oracle to build the exchange.
When the two sides couldn’t come to terms, Vermont was left in the lurch.
Federal officials told the state there wasn’t time to put out an RFP; they instructed the state to select a vendor that had already been hired by other states. State officials lost precious time with Oracle and then had to rely on another state’s competitive bidding process. Hence, the contract with CGI.
Consequently, Vermont’s timetable for the exchange was significantly shortened and the state had little leverage to negotiate a contract.
Boes said the contract with CGI gave the state two ways to hold the company accountable for its performance, which at the time seemed sufficient.
The contract allowed for $5 million in penalties to be assessed for missed deadlines. Boes said pushing for higher penalties would have jeopardized the contract.
The other safety valve? Vermont is obliged to only pay for work that has been completed.
The state has paid CGI $19 million out of the $84 million for contracted work. The state will pay another $30 million for operation and maintenance of the website over the next two years.
“When we say ‘is that good enough?’ well obviously no, because us not paying CGI has not resulted in better performance,” Boes said.
While Vermont isn’t on the hook to pay CGI for any work that isn’t completed, at this point the state has no leverage to incentivize the company to complete the work in a timely manner — other than taking the tech giant to court.
The project is now four-and-a-half months past deadline and still far from complete.
Personnel and project management
From the outset, Gartner, a consultant for the state hired to oversee CGI’s performance, sounded a steady drumbeat of alarm over the project’s weak governance and ill-defined decision-making process, among other concerns.
Lindsey Tucker is the lead project manager for Vermont Health Connect and is largely responsible, along with a Department of Innovation and Information project manager and Larson, the commissioner of DVHA, for direct management of CGI’s work.
“We were still, spring into early summer (of 2013), kind of formulating how our governance structure — how our program management office — would work and would function,” Tucker said.
The state was not able to begin forming its decision-making structure until the officials secured the contract with CGI, Tucker said.
“We didn’t have a vendor, we weren’t doing design development and implementation,” she said.
Tucker did not explain why the state needed to know who the vendor would be in order to design its own internal governance structure for the project.
Asked if the project’s decision-making processes should have been ironed out earlier, Tucker said yes, but she would have liked to have had more time to work on all aspects of the project.
When she was hired by the state, Tucker had very little IT project management experience.
Her only foray into IT project management was with Blue Cross Blue Shield of Massachusetts. Tucker helped the company upgrade its website, she said.
In her new position, she found herself at the helm of what she described as a project with few corollaries anywhere in the country in terms of its scope and technical complexity.
“There are very few projects in the United States that are comparable to the work we’re doing,” Tucker said. “It’s not just the dollars involved but the technical complexity of connecting with the federal hub and the variety of data services and processes.”
In her prior work as an advocate in Massachusetts (she helped to shape that state’s landmark 2006 health care law), Tucker managed the interests of a large group of stakeholders, which is the bulk of her project management experience.
Tucker said that work helped to prepare her for running Vermont’s health care exchange.
“I don’t need to be technically proficient, I need to have a variety of skills and competencies, but in terms of understanding the level of technical functionality, we have other team members who can do that,” she said.
Jason Ahmed, co-founder of social video startup Epoxy, who has worked on software projects for BMW as well as several hedge funds and banks, said experience is hugely important to managing IT projects.
“Why it is that software projects are notoriously difficult to estimate and project is a surprisingly nuanced issue; as a result, human experience is commensurately valuable in their successful execution,” Ahmed said in an email.
Larson did not wish to address specific employees’ qualifications, but noted that Tucker had consultants and other individuals with IT project management experience working with her.
Asked if he believes that he had the right team in place to build the exchange website, Larson said, “I think people will continue to question that as long as we still have work to do.”
Larson said his department will seek “the best experience to set us up for success” for future health care IT projects.
He did not provide specifics on how that might be done.
Vermont has had trouble finding qualified people to work on Vermont Health Connect.
“Attracting project staff with the experience, technical skills, and knowledge base necessary to make an immediate impact on the project is proving to be difficult for the State,” wrote BerryDunn, a consulting firm hired by the state to review the project, in a 2013 report.
DVHA launched the project with unfilled positions and because many of the jobs are temporary, they have remained empty, Tucker said.
“In cases we haven’t been able to find appropriate staff who are willing to move to Vermont, for the amount we’re willing to pay, and work on a project that has an end date where the position goes away,” he explained.
Boes said the state has always had a difficult time attracting qualified personnel.
Missed milestones, dropped deadlines
In the spring, when CGI began to miss deadlines, the urgency in Gartner’s reports was ratcheted up.
State officials say that viewed sequentially, Gartner’s reports show how the state was able to address the risks the firm identified and move the project forward.
Tucker said Gartner’s reports were useful in highlighting where her focus needed to be.
“For us it was a really helpful distillation of where we were in the project,” she said.
Larson said taken as a whole, the Gartner reports show how the state was able to address the most pressing issues with the project as they were raised by the consulting firm.
An alternative reading of the narrative captured by the reports is a team dousing one fire only to find another had sprung to life elsewhere.
A May 22 report urges Tucker and the others to “Escalate missed deliverable dates to the highest levels within the state and CGI.”
The report also said understaffing put the final product and the launch date in jeopardy. Gartner advised that the state’s “executive leadership” should be notified. The consultant identified seven unfilled positions in the report.
When Gartner’s reports became public late last year, Robin Lunge, commissioner of health care reform, told VPR that only project level managers were receiving them.
But Tucker said she made Larson aware of the May 22 report.
Larson said that he did not inform the governor of Gartner’s warnings because the state was able to address the risks in a timely fashion.
With just four months to the launch date, the report notes “a lack of granularity in CGI’s scope of work.”
The lack of specificity around project requirements is raised early and often by both CGI and Gartner in their reports to the state.
Tucker said the scope continued to adjust because the state wanted to focus on what was absolutely necessary for meeting the October deadline.
“When timelines slip, as they inevitably do, there are only two options for what to do next,” Ahmad said. “Extend the deadline or cut functionality.”
With a very public federal statute setting the launch date in stone, Vermont would eventually be forced to forgo functionality — a decision it hoped would be temporary.
Foreshadowing VHC’s deficiencies
At a June 25 meeting of the joint legislative Committee on Health Care Oversight, Boes and Lunge told lawmakers the website had problems.
“There are significant risks and issues. They are being tracked, and they are being managed,” Boes said.
“If the Web portal is broken or isn’t usable we could continue to do a paper process. For example, we could have people sign up directly with the insurer,” Lunge said.
Nine months later, that’s exactly how half the Vermonters who will be covered through the exchange have been enrolled.
At a forum about health care reforms held for small businesses in July, Shumlin delivered a few cryptic remarks intimating that the website might not launch “with all the bells and whistles.” The Free Press reported on July 7 that Shumlin had assured the gathering “that by Oct. 1, Vermont will have a simple website to go to where you can get very good information about affordable health care.”
In a report from Gartner filed just days before, the consulting firm noted that timelines for “key testing areas” were unknown and left “minimal time” to fix errors.
Gartner warns that if project leaders focused too much on timelines, at the expense of broader management processes, they could lose control of the project.
Trinka Kerr, the state’s health care advocate, said she thought the administration could have been more forthcoming with Vermonters about where the project stood.
“I think they should have lowered expectations way earlier,” she said.
A shift in focus
In August, as the Oct. 1 launch date drew closer, Tucker said her team, on the advice of its federal partners, decided to scale back on the website’s functionality — at least initially.
Vermont would forgo premium processing and other functions related to payment in order to focus on creating an interface for Vermonters to determine their eligibility and select a plan.
“With CMS guidance, late in the summer we decided to focus on the early enrollment components, and to push premium processing until later in the fall,” Tucker said.
The administration didn’t go public with that shift in focus until mid-September, when it announced that Vermonters would be able to shop for, but not purchase, health plans.
At the time, Lunge told reporters that it wasn’t a big deal because Vermonters wouldn’t be making payments immediately anyway.
“Since the coverage doesn’t start until Jan. 1, it’s extremely unlikely anyone will want to pay before December,” she said.
But premium processing wasn’t the only functionality Tucker and others had decided to forgo, and the administration remained mum about others.
Tucker’s team also decided the yet-to-be-realized, change-of-circumstance function could wait. In plain English, if an enrollee makes a mistake on his or her online application, there is no way to correct it.
“That was also something we knew didn’t need to be available Oct. 1,” she said.
Kerr balked when she heard that.
“They didn’t think that people might make mistakes, or not know the consequences of how they answered questions?” she asked.
A mistake on the front-end, such as checking a box saying they wouldn’t be filing taxes — which many people with low-incomes checked — would result in disqualification for a premium tax credit, Kerr said.
The change of circumstance function, as its name connotes, is also crucial to updating one’s information.
“What if you had applied in October and it worked, but then in December you got married? They had to know people were going to have changes in their lives,” Kerr said.
The change of circumstance functionality still isn’t operable, and Tucker was not able to give an estimate for when it might come online. Larson told legislators in January it is a top priority for his department.
Last September the administration indicated the payment problems were temporary. Five months later, individuals can pay for premiums with credit or debit cards. Individuals still can’t sign up for the exchange through an employer. That’s why the Shumlin administration allowed small businesses, which must buy insurance through the exchange under state law, to enroll their employees directly through insurers.
“If the payment functionality had come online as planned I don’t think there would’ve been a problem, but obviously that didn’t turn out to be the case,” Larson said.
Instead, the administration was forced to make repeated announcements that insurers would pick up the slack and enroll small businesses directly.
Larson would not give a timeline for fixing the problematic functionality. The website, he said, will be fully operational by the next open enrollment period in the fall of 2014.
He insists that the state isn’t having trouble getting CGI to complete its work in a timely fashion, but the results beg to differ.
“It is our priority to make sure CGI gets that work done,” Larson said, but he could not say how the state is doing that.
Vermont out front?
A recent analysis of state’s health care exchange enrollment by Talking Points Memo puts Vermont at the top of the pack.
That analysis compares figures from the Kaiser Family Foundation for a state’s eligible population — individuals who qualify for Medicaid under the Medicaid expansion or those who qualify for a premium tax credit — to enrollment figures collected in January by the U.S. Department of Health and Human Services.
Vermont clocks in at 52 percent, followed by Washington at 47. Those are good numbers, especially when you consider Hawaii — which also has a CGI-built exchange — and Mississippi are only at 3 percent and 4 percent respectively.
But Vermont has worked closely with the insurers — who have bent over backwards — to make sure it limits the number of people who actually experience a gap in their coverage.
“They’ve tried really hard to prevent gaps in coverage, and I think that’s been fairly successful,” Kerr said.
Kaiser pegs Vermont’s eligible population at 45,000. As of March 7, Vermont had enrolled just over 39,500. However, the HHS data shows only 54 percent of enrollees have qualified for government assistance.
That means less than half of the Vermonters Kaiser estimated would be eligible for assistance have signed up at this point.
The group that has yet to enroll is comprised of people who are uninsured or need to transition from VHAP and Catamount.
The Shumlin administration is not tracking how many uninsured Vermonters are signing up for Vermont Health Connect. Statistics on the uninsured won’t be available until the next household insurance survey. There is some disagreement about when that survey will be conducted.
Vermonters on VHAP and Catamount who don’t qualify for Medicaid may have been reluctant to sign up because they face higher copays and deductibles and in some cases higher premiums when purchasing insurance through Vermont Health Connect.
Still, if the state can deliver a fully functional website with improved usability at least roughly comparable to what people have come to expect from the private sector, and without dipping deep into state coffers, then it’s possible the rollout will be a footnote in the state’s health reform history.
Thousands of Vermonters are newly qualified for Medicaid and thousands more will begin receiving a premium subsidy, which is likely to boost Vermont Health Connect’s popularity in the long run.
What is far more important, assuming CGI finishes the job, is that Vermont learns from this experience to better anticipate the inherent risks of IT projects and improve its contracting and management processes and structures.
The millions of dollars that will be spent to build out Vermont’s health IT infrastructure are unique in that they are eligible to receive the steep 90-10 federal matching grants, which Vermont has done well to leverage.
However, as Boes has pointed out, roughly 70 percent of Vermont’s IT systems are “legacy,” a polite term for arcane, and in each case when they need to be updated, the agency or department is looking to bring new functionality — a wish list for new digital age capabilities that sparkle in the landscape of private industry.
Those projects won’t be paid for by the feds, and the state’s struggles with IT have made lawmakers more reluctant to shell out the money required to pay for them.
At the same time, information systems are becoming a larger part of how government delivers the services people have come to expect.