Hamstreet & Associates Cover Oregon Final Reportmedia.oregonlive.com/health_impact/other/HamstreetPPT9...Overview Description of initial situation – April 2014 Hamstreet & Associates’

Hamstreet & AssociatesCover Oregon Final Report

September 29, 2014

Overview

Description of initial situation – April 2014

Hamstreet & Associates’ intervention

Recommendations for future direction

Cover Oregon Final Report Presentation 2

INITIAL SITUATION


Dysfunctional Management

Lack of experience or ability

Little accountability

Disagreement over high-level objectives

Unprofessional conduct

Ill-will and poor cooperation between CO and OHA

Unclear lines of authority

Poor communication

Inadequate or missing policies and procedures in important areas

Ad hoc decision-making with little support or documentation


Impact on Organization

Staff almost universally passionate, committed, capable, and eager for direction

Very poor morale

Widespread discomfort and mistrust

Uncertainty about whom to align with or trust

Exodus of some of the best and most needed people


Disruption related to IT and Software

Alex Pettit working to gain control of systems—still a month away

Management still chasing technical success with debilitating IT expenditure

Cumbersome hybrid process requiring skilled manual supporto Did enable CO to do its jobo Significant savings over exclusively manual

procedure

Impact on operations:o Higher personnel and other costso Increased complexity and risk of erroro Disabling system outages and work delayso Failure to fulfill key responsibilities (e.g.,

commission payments, carrier billing)


Other Problems

Ineffective industry relationso Agentso Carriers

Weak financial controls and business processeso Fragmentation of financial responsibilitieso Contract and invoice practiceso Uncontrolled IT spendingo Poor budget practiceso Poor business planningo Lack of IGA for OHA-CO cost sharing

Processing backlogo Piles of untouched work (redeterminations,

carrier billings, life changes, document verifications)

o No plans to addressCover Oregon Final Report Presentation 7

WORK PERFORMED


Operations

Governor’s insertion of Alex Pettit and Sarah Miller very helpful

Important contributions by CO staff

Developed Transition Projecto Quickly realized impact on OHA and worked with

Tina Edlund to find a broad solutiono Developed transition plan and presented

successfully to CMSo Supported the Transition Project

• Engaged Deloitte • Provided facilities and staff, including some of

CO’s best people• Cooperated in many other critical ways

Interim ED role


Operations

CO Restructuring:o Removed non-performing executiveso Stabilized business with focus on core activities o Changed management culture and improved

moraleo Closed out contracts and reformed contract and

invoice approval processeso Cut expenseso Clarified authorityo Improved agent relations and commission

processingo Addressed carrier concernso Implemented retention bonus plano Helped normalize data processing operations o Caught up on processing backlogs


Finance

CO Restructuring:o Reorganized finance department

• Promoted controller to executive ranks• Pulled billing, payroll, and commission processing

functions under financeo Improved financial forecasting and reportingo Implemented accurate and timely cash flow

budget forecastingo Implemented regular and timely financial

variance reporting o Improved processes to identify and track

significant forecasted costs, especially related to contracts

o Introduced contracts review to improve forecasting obligations

o Many other similar actions


Transition to New Leadership

Supported search for and transition to permanent executive director

Worked on smooth transition of operations and finance to new managers

Met with managers to review operations and finance tasks through 1Q2015


OBSERVATIONS AND RECOMMENDATIONS


Assumptions

Oregon remains a state-based marketplace (SBM)

Short-term – use federal technology at no cost

Long-term – keep technology options openo Maintain flexibility to ensure state control of

insurance market and respond to changes in federal law or policy


Cover Oregon has a strong core team

Problems arose from prior planning, direction, and management

Staff generally displays ability, sense of mission, and dedication

Strong organizational ethos to fulfill Oregon’s healthcare mission

Cover Oregon has potential to flourish


Technology failure should not undermine long-term healthcare goals

Acknowledge and learn from mistakes, move forward

Resist compromising on lesser vision

ACA created massive uncharted territory; Oregon is not alone in its troubles

Governor has taken significant and effective corrective actionso FirstData reporto Assignment of Pettit and Millero Support to engage Hamstreeto Support of Transition Project

Ensure that short-term imperatives do not undermine long-term goals


Technology failure should not undermine commitment to automation

The value of a working technology far outweighs its cost—even if that cost is a multiple of what it could have been

Example: Medicaid application processingo Direct labor cost only, does not include call

center functions or hands-on staff time o Exclusively manual procedure exceed $120

million/yearo Current hybrid process estimated at $30 million/

yearo Fully automated process projected at less than

$1 million/year• 100% automation never likely, but analysis shows

Oregon cannot afford NOT to complete the technology

o Fully burdened actual cost calculated at $120 per application vs. $5 if fully automated


Establish state IS department answerable to governor for all state IT needs

Promotes consistency, rationalized processes, elimination of redundancy

Integrates state databases enabling seamless information sharing

Concentrates and promotes expertise

Liberates other departments and agencies to focus on providing the services for which they exist

Fresh start using best business practices that avoid territorial or bureaucratic cultures

Strengthens Oregon’s position on healthcareo Reduces cost, time, and risk of implementing QHP

eligibility and enrollment capabilityo Enables Oregon’s exchange to more readily build in

components related to the tribes and SHOP


Considerations for Cover Oregon’s structure and governance

No strong opinion as to whether Cover Oregon should remain a freestanding entity . . .o But the balance tips towards the status quoo The same considerations supporting its creation

as an independent entity remain in forceo Cover Oregon still has much to do:

• Individual QHP market• Tribes • SHOP • Potential role to serve other public entities such

as school districts

If Cover Oregon is placed within an existing agency, DCBS makes more sense than OHAo Business of creating a competitive marketplace

for insurance vs. entitlement programs and safety nets


Considerations for Cover Oregon’s structure and governance

If Cover Oregon remains a freestanding entity, improve board composition and procedureso Require experience on boards of mid- to large-

sized organizations that deal with complex issues o Maintain independence but ease restrictions on

industry membershipo Governor appoints chair based on leadership

abilitieso Except for industry reps, requirements for specific

kinds of members should be guidelines rather than rules

o Board members must have ability, experience, and confidence to question and if necessary challenge vendors like Oracle and the executive director him or herself

o The best governance comes from a partnership between a strong and knowledgeable board and an effective executive director


Planning for Oregon’s health insurance exchange should be done in a more businesslike manner

Excessive politicization of healthcare reform nationally and in the state

Short-term needs or impractical goals too often displace careful long-term thinking

Need to get politics out of the picture

Examples:o Website and call center changeo Agent relations planningo Offsite computer hardwareo Licensing fees and maintenance agreements


Be open to regional or licensing solutions for the IT platform

More clarity on SBM requirements needed before moving ahead, but . . .

Oregon’s QHP market is small

Size should inform future planning

Absent continued use of federal technology and/or a statewide IS department, Oregon may wish to share costs with neighbors

Licensing federal or another state’s technology may also be worth consideration


Documents

Hamstreet & Associates Cover Oregon Final Reportmedia.oregonlive.com/health_impact/other/HamstreetPPT9...Overview Description of initial situation – April 2014 Hamstreet & Associates’