Cover Oregon withholds $25M from Oracle

Cover Oregon withholds $25M from Oracle

Cover Oregon withholds $25M from Oracle

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by GOSIA WOZNIACKA/Associated Press

kgw.com

Posted on March 3, 2014 at 5:02 PM

Updated Tuesday, Mar 4 at 6:44 AM

PORTLAND - Oregon's troubled health insurance exchange said Monday it will pay its main technology contractor much of the money it's been withholding in payments, in exchange for Oracle's promise to continue working with the state during a transition period.

Meanwhile, Gov. John Kitzhaber expressed pessimism about the prospects for Cover Oregon and Oracle finishing the website before the end of March, when nearly all Americans are required to have insurance under the federal health care law.

"It has become increasingly clear that we may not be able to have the public portion of the website operational for the current enrollment period," Kitzhaber said in a statement following Cover Oregon's announcement. "While I am deeply disappointed in the technology's performance to date, we must do everything possible to ensure that we continue to enroll Oregonians through our current process."

More: Oracle moves 100 workers off of CoverOregon project

Kitzhaber's statement followed the announcement by Cover Oregon that it's reached a transition agreement with Oracle. The state agreed to pay $44 million of the nearly $70 million it was withholding. Cover Oregon said it will continue to withhold $25.6 million that Oracle Corp. has billed for technology development work from September 2013 through Feb. 28, 2014.

The state has already paid the Redwood City, Calif., company more than $90 million in federal funds for building the exchange. It stopped payments after the exchange website failed to go live Oct. 1 and serious problems with the site's coding came to light.

Oregon is the only state that still doesn't have an online portal where the general public can sign up for health insurance in one sitting through a marketplace required under President Barack Obama's health care law.

Cover Oregon said that under the transition agreement, Oracle will provide services during open enrollment, which ends March 31. The contractor will also provide "transition services, maintenance and repairs."

The exchange's acting director, Bruce Goldberg, said the agreement covers two months, in anticipation of a possible federal extension of the open enrollment period, which hasn't yet been announced. Goldberg said no further development work would be done during those two months.

"We will continue working (with Oracle) for the short term so we can continue enrolling people," Goldberg said. Though Goldberg also said the agreement allows for "knowledge transfer, for a transition to other developers or other individuals to help us fix the system as need be."

Cover Oregon also reserves the right to sue Oracle over present and prior payments.

More: State may sue Oracle over Cover Oregon site

The agreement follows a pullout Friday of 100 Oracle software developers - nearly two-thirds of Cover Oregon's Oracle workforce - from the exchange project. Just 65 Oracle developers remain to work on the project.

It comes even though the public still doesn't have access to the promised seamless, swift sign-ups for coverage, and key features of the website are unfinished.

Cover Oregon did launch the online enrollment system in mid-February to insurance agents and community organizations - more than four months after it was originally scheduled to be operational.

Exchange officials have said they're now focusing on fixes to the system, with the hope of opening up to the general public before the current enrollment period ends March 31. But no date has been set for the public launch.

Work on several website features that remain unfinished is also on hold. Those features include the ability for small businesses and employees to enroll in coverage or the ability to send enrollment files directly to the carriers.

A technology consultant hired by Cover Oregon is looking at future options for the exchange. Cover Oregon also says it will convene a group that includes private sector technology experts to help choose the best options.

Two options to be reviewed by that group include contracting with a different technology contractor to finish work on the exchange and incorporating technology from other states or the federal exchange. The options mentioned in a news release do not include staying the course with Oracle - though Goldberg declined to confirm that future work with Oracle was off the table.

No decision has yet been made about next steps, Goldberg said. 

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