Finding someone else to blame for Obamacare government incompetence.

Gov. John Kitzhaber announces consultant's findings, resignation of top health administrator

(An updated, more detailed version of this article can be found here.)

Management breakdowns, over-optimism, and poor work by the main IT vendor contributed to the Cover Oregon health insurance exchange debacle, according to a state consultant's review.

While releasing the report at the Capitol, Gov. John Kitzhaber said he is "angry and disappointed" by the exchange's problems, but praised the report as pointing the way to prevent similar problems in the future. He announced that Bruce Goldberg, the former Oregon Health Authority director who now heads the exchange, has submitted his resignation -- calling it "the right decision."

Kitzhaber cited a "fundamental breakdown" of project management, "no single point of authority or accountability," weak contracting and the failure to hire a system integrator, sort of an IT general contractor that had been part of the initial plan.

Kitzhaber also mentioned "mistrust and tension" between the Oregon Health Authority and Cover Oregon, and that "key project managers over time became desensitized" to quality assurance consultant reports that raised warning after warning.

He also stressed poor work by Oracle, and a "unrealistically high sense of optimism among key leaders that Oracle could deliver when key measures indicated that was not possible."

The report, underway since January, marks the latest phase of a story that has become the subject of national media attention. Oregon's is the only exchange in the country where the public is not allowed to self-enroll in a single sitting. Agents and consumer assisters can use a password-protected beta version of the exchange, but report mixed results.

The exchange is a focus of the Affordable Care Act, intended to allow consumers same-day enrollment. In its place, the Kitzhaber administration set up a manual processing system. Problems with the manual processing have subjected thousands of Oregonians to difficulties and delays in getting coverage.

Officials report about 280,000 have enrolled in the Medicaid-funded Oregon Health Plan or private health insurance plans either through the state or Cover Oregon. About 130,000 of those used a streamlined OHP process to bypass the exchange.

Goldberg's resignation is from the Oregon Health Authority, from which he's been on loan. He will stay on at Cover Oregon until his replacement there is selected, potentially by the end of April. The Cover Oregon board is engaged in narrowing down more than 60 candidates who have applied since Rocky King resigned for medical reasons.

More to come later today.

Kitzhaber cleans house, announces reforms in wake of Cover Oregon health insurance exchange report

Oregon Gov. John Kitzhaber on Thursday discussed the reasons for Cover Oregon's failed launch. (The Associated Press)

Gov. John Kitzhaber announced a major managerial house-cleaning Thursday in response to the state's ongoing health insurance exchange fiasco.

Among those departing is perhaps Kitzhaber’s closest and most important health care reform ally, Bruce Goldberg, the Oregon Health Authority director who's led Cover Oregon since January. Kitzhaber said he also asked the Cover Oregon board to remove Triz DelaRosa, chief operating officer for Cover Oregon, and Aaron Karjala, Cover Oregon’s chief information officer.

“We have made mistakes and we will learn from it,” Kitzhaber said, following the release of an independent report highly critical of the state's work on the project. He added that it's still unclear what can be done to rescue the exchange website and didn't rule out scrapping the bulk of the work already performed. “I’m not saying that this is going to be easy.”

The governor pledged management and procurement reforms. The reforms include a statewide inventory and assessment of state information-technology projects, as well as a review of contracting practices thought to be central to the Cover Oregon debacle.

Cover Oregon's board-management structure will be overhauled. Moreover, a team of insurance-company technology experts will assist in assessing whether the current exchange work can be rescued.

The report by First Data, underway since January, marks the latest phase of a story that has become the subject of national media attention. Though it has spent more than $200 million on its exchange, Oregon’s is the only exchange in the country where the public can not self-enroll in a single sitting.

Oregon’s health insurance exchange may have been doomed from the start due to the management mess overseeing the project. There was no single point of control overseeing the program. There was no decision-tracking typical of large IT projects. Instead, there were competing, conflicted state agencies that didn’t much like one another.

As a result, communications were poor. But managers of Cover Oregon and the Oregon Health Authority did share one thing: A somewhat mystifying faith that Oracle Corp., their chief technology contractor, would make good on its promises to deliver a functional exchange.

“A consistent theme First Data heard in the interviews was that the continued reassurance of Oracle led Cover Oregon to believe the October rollout was achievable, and Cover Oregon, therefore, continued to reassure the state,” the report said. “Although past performance on the project indicated a history of missed deadlines and problems, the Cover Oregon leadership and the State continued to trust that performance would improve.”

The problem: contracts entered into by the Oregon Health Authority, then taken over by Cover Oregon, lacked any teeth. So Oracle faced no penalty for missed deadlines or poor work.

First Data interviewed 67 people as part of the assessment, including Kitzhaber, several lawmakers, agency directors, the Cover Oregon board of directors, project management staff, and contractors. It did not interview the six key Oracle workers it requested because Oracle refused to make them available. Instead, the company made available only Edward Screven, one of the company’s senior technologists who was not active in Oregon’s project until November 2013.

In their interview with First Data, Oracle stated that the problems were caused by weaknesses within OHA and Cover Oregon, “especially the lack of well defined, stable requirements, the lack of discipline in the change control process, the absence of a system integrator, and the lack of timely test cases.”

Kitzhaber directed the state's Department of Administrative Services to compile a complete inventory of ongoing state IT projects and to gauge their progress. DAS already had some review responsibility for state technology contracts. But developing this statewide IT portfolio will foster better monitoring and communications, the governor said.

Kitzhaber said the question of potential litigation against Oracle is now in the hands of Attorney General Ellen Rosenblum and the Department of Justice.

The state has withheld $25.5 million of the $69 million the company claims it is owed just for work since last fall. Oracle threatened to walk off the job immediately if Oregon didn’t pay up. The two sides agreed to a compromise in which the state withheld the $25.5 million but paid Oracle more than $43 million.

The state reserved the right to litigate over the entire sum it has paid Oracle.

Records show that Kitzhaber's then-top health policy aide, Mike Bonetto, was aware of the feuding between the Oregon Health Authority and Cover Oregon. Kitzhaber said he doesn't not recall being informed of the feuding, only of the risks in the project and reassurances that the project was nevertheless on track.

Kitzhaber said the personnel changes were appropriate. At Cover Oregon, managers need to look with fresh eyes at the technological and managerial challenges they face. At the Oregon Health Authority, “we had a number of top-level decision makers who made the wrong decision,” he said.

Among the most glaring foul-ups, the governor said, was not hiring a top-level systems integrator to serve as general contractor over the exchange project. Former OHA Chief Information Officer Carolyn Lawson, forced out in December, decided the state could serve as its own general contractor, with disastrous results. Without a hard-nosed overseer, there was no one to hold Oracle’s corporate feet to the fire.

The other big mistake cited by Kitzhaber was signing Oracle to a time-and-materials contract instead of a more explicit, fixed-price agreement.

“I’ve known Bruce (Goldberg) a long time, he was a great public servant,” Kitzhaber said. “But those were his calls.”

Goldberg has resigned his position at OHA and will continue to serve at Cover Oregon only until a permanent executive director is hired, likely in late April.