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September 22, 2014

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Health insurance:

Gov. Brian Sandoval’s office was warned of serious flaws in Silver State Exchange before launch

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Steve Marcus

Nevada Governor Brian Sandoval speaks during a Memorial Day ceremony at the Southern Nevada Veterans Memorial Cemetery in Boulder City Monday, May 26, 2014.

Gov. Brian Sandoval’s office was warned of serious flaws in the software that runs Nevada’s health exchange in the weeks before its Oct. 1 launch, according to an internal report.

Publicly, state leaders issued reassuring statements about the Silver State Exchange’s software even as they worked feverishly to solve serious glitches behind the scenes.

The report by Public Consulting Group of Las Vegas said that when the Silver State Exchange’s website went live, it did so “with (known) missing functionality, undefined business processes and incomplete testing.”

The report highlights a culture of poor communication between software contactor Xerox and the state and other contractors. Public Consulting Group, hired to verify the quality of Xerox’s work, couldn’t get access to critical information in the weeks before the website’s launch. The company reported its audits were “constrained by the lack of visibility” because Xerox had to focus on “critical project concerns.”

The report also said that just before the website launch, “most critical milestones were not met and project delays occurred.”

The state made the October report public on its website. The Las Vegas Sun followed up on the report after the exchange ran into serious problems this year and the state fired Xerox in May.

State leaders acknowledge the exchange faced serious challenges but said they were trying to finish a massive software project on a tight timeline under considerable political pressure.

“What I would have done different if I was king for a day: We should have had longer implementation deadlines,” Mike Willden, Sandoval’s chief of staff and former director of the Nevada Department of Health and Human Services, said in an interview Tuesday. “At some point in time you’re too far down track to change course.”

The problems called out in the report foreshadowed flaws that earned Nevada’s Silver State Exchange national attention for its problems. It is one of four states that tried to build a state-run system but failed.

Some Nevadans facing life-threatening illnesses — just the kind of patients the exchange was supposed to help — have been unable to enroll or delayed from seeing a doctor because of flaws in the software.

Nevada has received $91 million in federal money to run the exchange, according to the Henry J. Kaiser Family Foundation, and paid Xerox $12.3 million to build its website, Nevada Health Link.

State leaders expected to enroll 118,000 people in its exchange. As of June 1, they had reached 30 percent of their goal, 36,000, largely because of software problems.

The state will use the federal system for a year while it searches for a new contractor to rebuild its software.

Nevada a health care pioneer

Sandoval took a surprising stand when he endorsed a state-run exchange in Nevada three years ago.

President Barack Obama signed the Affordable Care Act in 2010. A year later, Sandoval’s staff helped write the 2011 law creating the Silver State Exchange.

That made Nevada one of 17 states to build its own system and it made Sandoval the only Republican governor to do so. He made his decision even though Nevada had joined a lawsuit challenging the very existence of the Affordable Care Act.

Sandoval’s move gave him and the state control over how the Affordable Care Act would be implemented in Nevada. “I think Nevadans want Nevadans to be running their exchange and not having something done from Washington, D.C.,” Sandoval told the Elko Daily Press.

In 2011, the federal government tapped seven state exchanges to build customer-friendly websites and software for other states to copy. Nevada was not among the seven.

Even so, Nevada later set out to be a pioneer in the way it built its exchange. Unlike most states, Nevada decided that the state -- not insurance carriers -- would collect the payments for premiums.

By January 2012, Nevada had nearly reached its goal to be a national leader.

The White House highlighted Nevada as one of 10 states on the right track to building an exchange. Idaho officials traveled to Nevada to meet with Silver State Exchange leaders, and New Mexico studied Nevada’s work as well.

Just weeks before the exchange’s public launch, Sandoval made a reassuring statement in the Elko Daily Press on Aug. 30, saying: “We have to be up and running by Oct. 1 of this year and my understanding is we’re going to be ready to go.”

But trouble soon emerged.

Private problems become public

The Silver State Exchange website launch came 17 minutes late on Oct. 1.

To most people, it looked like a minor blip in a big government project.

But it became the first public sign of problems.

Behind the scenes, the challenges with the software were well known to state leaders.

In the weeks before the launch, dozens of contractors and state and federal officials rushed to finish the software on time. They met several times each week to triage the most serious and complex flaws, Willden said.

On the Oct. 1 launch day, the Silver State Exchange’s executive director, Jon Hager, told reporters the launch was “not all roses.” He said corrections would take weeks.

But a consultant’s report was more blunt.

The Public Consulting Group report for the Sept. 1 to Oct. 31 period said “concerns arose over the project’s ability to go live on time.”

Sandoval’s office “stepped in to monitor the project.”

Project leaders offered ideas to delay the launch date. Those ideas were “rejected by the Governor’s Office,” the report stated.

A status report by Public Consulting Group revealed problems with the Silver State Exchange as it launched in October 2013.

A status report by Public Consulting Group revealed problems with the Silver State Exchange as it launched in October 2013.

What’s next

The problems with the Silver State Exchange grew worse as time went on.

Customers tried to enroll only to be kicked off the website. Some people said they couldn’t get the site to recognize their account, forcing them to create 10 or more accounts. When they had questions, some customers waited on hold for hours to talk to a person.

Nevada’s decision to collect premium payments turned out to be one of the most troubled parts of the exchange software. Some customers reported paying their premiums only to receive past due notices and threats of cancelled insurance plans.

While the Silver State Exchange’s problems have been well publicized, Sandoval’s public role in the project has been minimal.

In early 2014, an outside audit that revealed 1,500 glitches in the software. According to reports by Public Consulting Group, Sandoval’s office ordered the audit, a fact that hadn’t previously been disclosed.

The Silver State Exchange’s board fired Xerox in May. At the time, Sandoval assigned blame for the software problems to Xerox and deferred responsibility to the board. The governor appoints five of the board’s seven members.

“Unfortunately, these options are under consideration because Xerox, by its own admission, failed to perform its contractual duties,” Sandoval’s office said in a statement. “The Silver State Health Insurance Exchange Board is statutorily charged with deciding the future of Nevada Health Link. I trust the Board will make the best decision under these difficult circumstances.”

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