Minn. legislative auditor investigating MNsure contracts

Minnesota's legislative auditor is launching a wide-ranging inquiry into how the state handled contracts with several vendors that helped build MNsure, the state's new online health insurance marketplace.

The review will examine whether the state adequately managed contracts with IBM Curam, Maximus and other vendors, and whether the contractors delivered what they said they would, Legislative Auditor Jim Nobles said.

The legislative auditor's office is required to look at how the state spends federal dollars, which have funded MNsure. But Nobles said a recent letter from Gov. Mark Dayton to the CEO of IBM that details the failures of software with a $3.9 million price tag has raised serious concerns about how the contracts were managed.

"A lot of issues have come up about the performance of the contractor and also, frankly, from our point of view, about the performance of the state of Minnesota in managing this contract," Nobles said.

In his letter, Dayton scolded IBM for saying its health care software was "90 percent complete and ready out-of-the-box ... We now know that the product is still not 90 percent complete in December of 2013, and that your product has significant defects, which have seriously harmed Minnesotans."

"We are squarely focused on making the consumer experience through MNsure a better one," said MNsure Spokesperson Jenni Bowring-McDonough in a statement. "We welcome the effort by the Office of the Legislative Auditor to review past processes and decisions, and we hope this review is able to identify additional strategies for improvement."

IBM said that it's addressed the issues laid out in the Dayton letter. And the company pointed out that it's not the only contractor working on the MNsure project.

"We are providing on-site services and technical resources beyond the scope of IBM's contractual responsibilities to assist the State in resolving the remaining issues as quickly as possible," said a statement from IBM. "Although our original role on this project was limited, we are bringing the full resources and capabilities of IBM to the state because of the importance of the success of the project."

Nobles said Dayton's letter provides his office with a starting point to examine the problems with the site, which have infuriated users, prevented people from getting insurance, and kept MNsure from meeting a critical deadline related to determining an individual's eligibility for Medicaid.

Nobles also said his team may learn a lot more once they start sifting through the details. "Once we are in there, we may see a lot of other issues we may pursue."

Nobles said he's particularly concerned that the state apparently never verified or tested the software before buying it. He's concerned that the state didn't learn any lessons from the failed HealthMatch project, a massive computer systems overhaul that was also meant to determine eligibility for public insurance programs.

"Even the governor reveals in his letter that the state seemed to not know a lot of things, and that concerns me a great deal," Nobles said. "The state is not supposed to be a passive observer in managing a contract of this importance and this size. So why the state was coming so late to understanding what was going on is of great concern."

Late last month, Dayton demanded that IBM dispatch Curam employees to St. Paul to fix problems with the site, as the state approached a critical enrollment deadline for Jan. 1 coverage.

Dayton said in a statement Monday that he has the highest regard for Nobles and agrees that a full, independent examination of MNsure is "highly appropriate."

MNsure reported last week that enrollment picked up during the final weeks of December.

Despite the last-minute "tech surge," consumers continue to complain that they are being locked out of their enrollment applications, and that they are still unsure whether they have coverage or not.