Maryland to be Reimbursed for Failed Exchange; Still Insured Almost 300,000 Residents

August 14, 2015 by Mark Scott in Blog, Budget and Tax, Health

The prime contractor responsible for initial problems with Maryland’s healthcare insurance exchange has agreed to pay the state and federal government $45 million because of its poor performance.

Maryland was one of 14 states that established their own health insurance marketplace to help residents get medical coverage under the federal Affordable Care Act. Maryland’s online portal failed within minutes of launching in early 2014, and for weeks afterward residents had a very time difficult navigating the site.

Noridian Healthcare Solutions and the state reached a settlement that will avoid what could have been a lengthy court battle. The company will pay $20 million upfront and an additional $25 million in annual installments of $5 million over five years. Maryland and the federal Centers for Medicare and Medicaid Services will recover 61 percent of the $73 million they paid Noridian for work on the online exchange that opened in 2013 to devastating reviews.

North Dakota-based Noridian had a five-year, $193 million contract to build the website for Maryland Health Connection, but the state terminated the agreement within the first 6 months of the launch, due to the company’s poor performance.

Because of the problems, Maryland’s enrollment rate was initially one of the worst in the nation. After the hiring of another firm to rebuild the site with technology that worked well in Connecticut the numbers improved dramatically. As of February, more than 289,000 Marylanders obtained coverage through the state-based marketplace, exceeding the state’s initial goal of 260,000.

Maryland Attorney General Brian E. Frosh called the settlement a “fair deal for taxpayers.” Frosh said, “The state was unlikely to get back the entire $73 million, even through litigation, because of Noridian’s inability to pay.”

Policymakers should continue to push ahead where the state has claims against other companies that were involved in the initial development and implementation of the Maryland health exchange website. By doing so, this will not only illustrate a commitment to accountability and transparency, but also clarify for the public who was truly at fault for the initial mishandling of Maryland’s health exchange.

Despite the numerous challenges that the state encountered throughout the implementation process, expanding Medicaid and setting up the exchange was still the right decision. Maryland is now a healthier state and will be for many generations.