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State dismisses health site firm

May hire new company to repair problems, seeks another extension to enroll residents

Massachusetts is dropping the contractor that created the state’s dysfunctional online health insurance marketplace, ending a troubled partnership that has left thousands of consumers frustrated and many without coverage for months.

The state notified CGI last week that it was being terminated, and officials have started negotiating a transition. The $68-million contract with the Montreal-based technology consulting company expires in September, and Sarah Iselin, who was hired last month by Governor Deval Patrick to oversee repairs to the Health Connector website, said that exactly when CGI finishes its work and how much the state pays for it are subject to bargaining.

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Massachusetts has paid just $15 million to CGI and has not made any payments since the fall.

“We have made the decision we are going to be parting ways with CGI,” Iselin said Monday during a meeting of the Massachusetts Health Connector Authority board.

Iselin said she decided against scrapping the website entirely and starting again, an option that was being considered a few weeks ago. Instead, she is leaning toward working with a new company to rebuild key portions of the website.

The website is supposed to tell consumers whether they qualify for a subsidized plan, calculate the cost of coverage, and enable them to compare plans and enroll. It has not worked properly since it was launched in October, leading the state to encourage people to fill out paper applications instead.

“The reality is we have a long way to go,’’ Iselin said. “People still get stuck in the system. They get errors, and they can’t complete their applications. We wouldn’t see over half of the applications come in on paper if it was working well.”

Massachusetts will not meet the June 30 deadline to move more than 200,000 people into insurance plans that comply with the federal Affordable Care Act, she said. The state intends to ask the federal government for another three-month extension. The enrollment deadline was previously delayed from the end of March. A federal official she spoke to over the weekend signaled that the government wants to “work with us and be as flexible as they can,’’ Iselin told the board.

CGI declined a request for an interview through its public relations firm, Denterlein, but released a written statement: “CGI has worked tirelessly to deliver a health insurance exchange for the residents of Massachusetts. We will work with the Commonwealth to ensure a smooth transition to the next phase of exchange deployment, allowing for the best use of system capabilities already in place.’’

Dan Zerafa , an executive at Optum, a separate health care technology firm brought in last month to help fix the problems, said the website still contains at least 500 critical defects. “We are not even close to the finish line,’’ he said at the meeting of the Connector board.

Consumers applying for subsidized health insurance plans can start applications online, but cannot determine which plan they qualify for and the amount of their subsidy and cannot choose a specific plan. For now, employees of the Health Connector, Optum, and the state Medicaid program are enrolling people using paper applications.

However, the staff is unable to match people with the correct subsidized plan, so the state has enrolled 84,000 people in temporary coverage with Medicaid. Others have been allowed to keep expiring plans.

Using such workarounds, the staff estimated that up to 150,000 residents have been enrolled in health insurance plans this year, though they cautioned the numbers are rough because it is unclear how many had other insurance.

Connector board member Nancy Turnbull, an associate dean at the Harvard School of Public Health, called that progress amazing.

“At least we have people who were uninsured now enrolled,” she said. “That is fantastic.’’

Iselin said the goal is for the website to be working and fully tested by October, in time for the open enrollment period that begins Nov. 15, for people to buy 2015 coverage.

The website, created under the state’s 2006 landmark health insurance law, worked well for several years. But it was overhauled last year to meet the more complicated demands of the Affordable Care Act, by CGI, the same company that designed the federal health insurance website, which also had a disastrous rollout last fall. The federal HealthCare.gov site is now working much better. The US government stopped working with CGI in January.

One major question is how much the failures will cost. For example, the state is paying for the 84,000 people enrolled temporarily in Medicaid, costs that could be partially picked up by the federal government.

Glen Shor, Patrick’s secretary of administration and finance and chairman of the Health Connector board, said “it is not possible at this moment to put a cost’’ on the transition coverage, because medical bills for this group continue to come in. So far, they total $7.3 million.

He said the state is losing federal reimbursement money, about $10 million per month, by keeping about 100,000 people in Commonwealth Care, an older state-subsidized plan, rather than switching to health plans complying that comply with the Affordable Care Act.

There was some positive news Monday. Iselin said that staff had made “significant progress’’ reducing the backlog of paper applicationsfrom 50,000 to 21,000 in the past month while processing new applications. She expects the Health Connector to be fully caught up in the next week or two.

Customer service improved, staff said. The average time on hold with the call center fell from 16 minutes in November to 2 minutes in March.

Liz Kowalczyk can be reached at kowalczyk@globe.com.
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