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New Mass. health website estimated to cost $121m

The estimated price tag for ensuring that Massachusetts has a functioning health insurance website is $121 million, and, even then, consumers are unlikely to get a one-stop shopping experience this fall as they search for health plans, state officials said Thursday.

Sarah Iselin, the insurance executive whom Governor Deval Patrick tapped to oversee repairs to the state’s broken Health Connector website, said Massachusetts intends to ask the federal government to pay for the fix.

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The state has already received $174 million in federal funds to build a site that is compliant with the federal health care law, but about a third of that money has been spent, and Iselin said the Patrick administration is sorting out how much of the remaining $117 million has been committed to pay contractors for work already done.

The administration announced earlier this week that it plans to scrap its dysfunctional insurance website after deciding it would be too expensive and time-consuming to fix and to replace it with an off-the-shelf system used by several other states to enroll residents in plans.

Simultaneously, the state is preparing to temporarily join the federal HealthCare.gov insurance marketplace in case the replacement system is not ready by the fall.

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Iselin told the Health Connector board Thursday that neither of the paths offers an ideal fix, and the federal option, in particular, will probably require the state to design a multistep online process so consumers could get the extra subsidies for health insurance coverage provided by state law.

“I don’t want to sugarcoat this, there are no solutions yet,” Iselin said. “But we are pushing hard for customization.”

She said Connector officials are updating the US Centers for Medicare and Medicaid Services at least three times a week about their progress, and hope to be able to make a decision by midsummer about which track to go with for the fall.

With other state exchanges also faltering, including those in Oregon and Maryland, federal regulators are closely watching progress in Massachusetts.

Iselin said there were at least 20 officials from the federal agency in a meeting last week in Washington when Connector staff laid out their intentions for the dual-track system.

“We haven’t resolved any of these issues with CMS,” she said, referring to the design of the websites or the financial support from the federal government.

While the Connector board took a symbolic vote Thursday to support the dual-track solution, the ultimate decision was out of their hands, because the Patrick administration opted to use emergency procurement rules to buy software from a company called hCentive. That meant there was no competitive bidding that would have allowed other companies to vie for the contract.

Under the plan, hCentive will be a subcontractor to Optum, a company the state hired in February to repair the Connector site.

Optum has a 24 percent ownership stake in hCentive.

The Connector board voted 10 to 1 in favor of the adminstration’s approach, with member George Gonser Jr. the lone dissenter.

Gonser, an insurance broker, said in an interview later that while he appreciates the considerable work the Connector staff has done to try to fix the problems, he is concerned about the millions of dollars being spent, the assumption by state regulators that the federal government will keep paying the tab, and the scant discussions about the likely financial hardships to be borne by small businesses and consumers.

“What is it going to mean to small busineses if there is an attempt to pass these costs along?” Gonser said. “I thought it was important to voice discontent in the entire process.”

Health insurers are livid about the prospect of having to build two software systems that could work with the state’s two-track approach, saying the costs to the 10 health insurance companies statewide could run into millions of dollars overall.

“It’s a significant challenge that will really strain the resources of the plans,” said Eric Linzer, spokesman for the Massachusetts Association of Health Plans. “That may translate to higher costs for employers and consumers.”

Linzer said health plan officials are upset that the Patrick administration has not worked closely with the insurers to fully understand the technology impact on the companies, even though the administration knew its insurance marketplace was in trouble as early as last fall.

“Looking forward,” Linzer said, “we hope the plans will be actively engaged.”

Kay Lazar can be reached at Kay.Lazar@globe.com.
Follow her on Twitter @GlobeKayLazar.
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