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Troubled Mass. health site leads to feud on $45m grant

Federal money was for model insurance marketplace; Conn. wants a share because Bay State failed

WASHINGTON — The Obama administration’s hopes that Massachusetts would serve as a model for New England states enrolling residents in health insurance has collapsed in a bitter regional feud over tens of millions of dollars, a victim of the botched rollout of the state’s online insurance portal.

Connecticut health care officials are now mounting a campaign to collect a portion of a $45 million federal innovation grant that was awarded to Massachusetts to build a state-of-the-art consumer platform for President Obama’s insurance program. The original idea was that the technical underpinnings of Massachusetts’ computer system could be shared with other New England states.

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“We’re not looking to get greedy. We just want to make sure we have our proper allocation,” said Kevin Counihan, chief executive of Access Health CT, Connecticut’s insurance marketplace.

Massachusetts has failed to produce a successful computer model to share, and in the meantime Connecticut’s insurance marketplace, built by Deloitte LLP, is working so well that the state is now offering its computer system as a model for other struggling states.

Counihan said five states have expressed interest in piggybacking off Connecticut’s insurance marketplace, but not Massachusetts.

“Some states were trying to build a Maserati. We built a Ford Focus,’’ Counihan said. “It might not be as glamorous but it runs. It can get you to the store.”

The Massachusetts website was supposed to tell consumers if they qualify for a subsidized plan, calculate the cost, and help them to compare plans and enroll. But the site has not worked properly since it was launched in October, leading the state to encourage people to fill out paper applications instead.

This week, state officials announced that CGI, the contractor responsible for building Massachusetts’ insurance marketplace, would be terminated.

Of the $45 million federal grant, about $24 million was spent building Massachusetts’ failed health insurance marketplace, including about $5 million paid to CGI, according to the state. The rest of the money is budgeted to rebuild the broken system or set up another one.

Dr. Jay Himmelstein, chief policy strategist for the UMass Medical School’s Center for Health Policy and Research and who is overseeing the federal grant, contends the money was never meant to be disbursed among the states.

The grant sought by Massachusetts in December 2010 was titled “New England States Collaborative Insurance Exchange Systems.” The application included letters of support from the governors and health officials of every New England state. Even so, Himmelstein said the idea for establishing a regional collaborative was an “add-on” to the state’s original grant proposal, after pressure from the White House and Governor Deval Patrick to showcase how Massachusetts could speed development in other states.

The White House had trumpeted the collaboration among New England states long before it became clear that Massachusetts’ troubles with CGI would make a regional collaboration all but impossible.

“We had hopes and fantasies that we would do essentially what Connecticut is doing,” Himmelstein said.

In Connecticut’s fight for a share of the grant money, Counihan said he has placed calls to officials in Massachusetts and the Centers for Medicare and Medicaid Services, the federal agency in Washington that is in charge of health care overhaul and awarded the grant, with no success.

A fair way to divide the money, Counihan said, would be by population in each state, or by the percentage of residents who are uninsured. As the second largest state in New England, Connecticut would stand to gain about $11 million if the grant money were awarded based on population.

“It’s just a matter of basic fairness. This is a New England coalition. It seemed to me that a regional grant would go to the whole region,” Counihan said.

Massachusetts maintains that the money belongs within its system. Other states were to benefit from the grant not with a cut of the federal money, said Himmelstein, but with “in-kind knowledge transfer from the Massachusetts development experience.”

Massachusetts spent about $1.1 million of the money to create a regional learning collaborative. The group convened monthly meetings for about two years, but the group fizzled in 2012 after Connecticut, Rhode Island, and Vermont struck off in their own direction to build separate insurance software systems. (Maine and New Hampshire decided not to run a state insurance marketplace, and instead, used the one designed by the federal government.)

It quickly became apparent to the participating states that they would benefit most if they applied for their own federal grants. “It made sense for states to go after their own funding and build systems that they could control,” Himmelstein said.

Republicans are calling the demise of the $45 million regional approach an example of waste in Obama’s health plan.

“I find it incredible that President Obama has refused to put basic oversight measures into place for a program that is in such obvious need of review and accountability,” said Senator John Cornyn, a Texas Republican who is a member of the Senate Finance Committee’s subcommittee on health care.

To build its own system, Connecticut received a total of nearly $140 million in various federal grants. Rhode Island has received $113 million, and Vermont, $168 million. Massachusetts, including the $45 million innovation grant, has received a total of $179 million.

“CMS had a financial interest in making sure that wherever possible, they were making investments once instead of in multiple places,” said Mark Larson, Commissioner of Vermont Health Access. “But it was really hard for states to wait to see what another state did, and then either copy from that or learn from it because everybody was sprinting.”

The New England innovation grant was to end in February 2013, but because of Massachusetts’ delays in its insurance portal, the federal government extended the deadline for the money to be used until the end of 2014, Himmelstein said.

The reaction from Vermont and Rhode Island officials has been muted, with few openly accusing Massachusetts of short-changing them.

Steven Constantino, Rhode Island’s secretary of health and human services, said “ultimately, because of an aggressive timeline and differing business approaches and needs, Rhode Island selected an alternative solution and determined it would not be necessary to use these resources.”

But, Rhode Island state Representative Joseph McNamara, a Democrat on the General Assembly’s Permanent Joint Committee on Healthcare Oversight, said he thinks Rhode Island could benefit from the money. Federal grants for the Rhode Island insurance marketplace end by July 2015, when the state would face a $24 million shortfall, he said.

“It’s a liability that we’re starting to discuss right now,” McNamara said. “We would appreciate any assistance from our friends in Massachusetts.”

Tracy Jan can be reached at tjan@globe.com.

Correction: An earlier version of this story misattributed a quote by Kevin Counihan.

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