Legislative Auditor cites MNsure’s shortcomings during inaugural year

MNsure, the state’s consumer website for choosing health insurance since October 2013, failed more than it succeeded during its first year of operation, according to a Feb. 17 report released by the Office of the Legislative Auditor.

Legislative Auditor Jim Nobles told a joint meeting of the House Health and Human Services Reform and Finance committees Tuesday that MNsure and the forces behind it were fraught with serious technical problems and a leader who hampered its ability to succeed.

The audit focused on the program’s first year of rollout and didn’t include many of the improvements made since MNsure Chief Executive Officer Scott Leitz took over the troubled agency as interim CEO after former MNsure CEO April Todd-Malmlov resigned in December 2013.

Leitz “strongly” disagreed with the auditor’s conclusion and responded in a letter that MNsure “has made dramatic improvements to the consumer experience” and will continue to make necessary adjustments. Leitz admitted that consumers have been frustrated by long wait times on the phone and counties sometimes reverted to paper enrollment applications when experiencing electronic problems, but he said those issues will be fully addressed in 2015.

Part of the blame rested on the federal government for delayed rules and an ambitious timeline, according to the report, but there were enough state-related actions, or inactions, to warrant more finger-pointing.

Building the new website and supportive technology served a dual purpose and leveraged federal funds to “build a Human Services IT system which we desperately needed,” said Human Services Commissioner Lucinda Jesson. The current legacy system is so antiquated that former employees are pulled out of retirement to work on the system. An IT project that should have taken three years to build was condensed into one year, she said.

[MORE: Read the Office of the Legislative Auditor's full report on MNsure's rollout]

Other states had a six-month lead on establishing their health exchanges because Minnesota delayed implementing its own program due to politics. Nobles said ultimately it was legislators who decided to exempt MNsure from some of the policies that could have helped with its formation.

For example, other agency websites work through MN.IT, the state’s information technology office, but MN.IT had to “elbow” its way into working with Todd-Malmlov on the MNsure installation, said Joel Alter, a program evaluation manager with the Office of the Legislative Auditor. Contracts were written for fixed amounts and there wasn’t the flexibility in the contract to address changes or problems with the technology as they arose, said MNsure General Counsel Mike Turpin.

Nobles and his team tried to interview Todd-Malmlov but she declined to participate in the legislative auditor’s report, even after being subpoenaed, he said. 

Not ready for prime time

Despite the functionality issues with the IT system, MNsure’s rollout moved forward as scheduled. Other states who were still in development asked and received extensions from the federal government, but Minnesota did not ask for an extension, according to Nobles.

The result was people enrolling in programs for which they didn’t qualify because the technology system did not properly determine eligibility, Nobles said.

“We absolutely have to have a system that makes determinations accurately,” Nobles said.

In a related financial audit report released last November, the legislative auditor’s office concluded that the Department of Human Services did not adequately verify that public health program recipients who were enrolled through MNsure were eligible for the benefits they received.

[WATCH: View the full video archive of Tuesday's joint committee hearing]

In addition, technical glitches prevented counties from interfacing with the system and consumers waited on the phone for more than an hour or were re-referred.

Counties have resorted to filling out paperwork in place of malfunctioning technology, according to Rep. Nick Zerwas (R-Elk River), who said “the back end of this system is broken.”

“They have every right to be frustrated,” Leitz said.

Who has been served?

MNsure reported that it met its overall enrollment target in its first open enrollment period, but Nobles said the target contained an unrealistically low estimate.

What makes Minnesota’s insurance exchange different from other states is that it also can determine eligibility for Medical Assistance in addition to the qualified health plans. The overall numbers were skewed by the public assistance numbers.

The number of uninsured dropped by 181,000 between September 2013 and May 2014. However, only about 15,000 people who were enrolled during the first enrollment period qualified for the commercial health plans and premium rebates under the Affordable Care Act. Most enrollees were added to public assistance programs, such as Medical Assistance.

[WATCH: Learn more about the role of the Office of the Legislative Auditor]

“In spite of the outcomes, it is pretty impressive to me,” said Rep. Diane Loeffler (DFL-Mpls) because other insured people end up paying the cost for the uninsured who end up in emergency rooms. About 28 percent of MNsure enrollees said they were uninsured immediately before enrolling.

A majority of enrollees were happy with their new insurance plan, and when surveyed, said they would purchase the same plan again, according to an audit survey of customers. However, the majority of plans were purchased with one provider, Preferred One, which decided not to renew its vendor status for 2015. Its customers could automatically renew their policies, but they would no longer qualify for the premium tax credits or cost sharing reductions offered under MNsure. 

Governance changes recommended

One of the report’s recommendations is to give the governor, rather than the MNsure Board, the authority to appoint the MNsure chief executive officer. In addition, the Legislature should consider whether to keep the MNsure Board as a governing body or advisory, Nobles said.

The auditor also recommends that the Legislature amend laws to formally create a governance structure for MNsure’s enrollment system and to ensure MN.IT Services oversight of MNsure’s future information technology work.

A bill has been introduced that would seek federal approval to allow the purchase of qualified health plans outside of MNsure and still qualify the consumer for premium tax credits and cost sharing benefits.

Sponsored by Rep. Tara Mack (R-Apple Valley), HF5 awaits action by the House Health and Human Services Reform Committee, which Mack chairs. SF390, a companion sponsored by Sen. Michelle Benson (R-Ham Lake), awaits action by the Senate Health, Human Services and Housing Committee.