hamstreet & associates cover oregon final...
TRANSCRIPT
Hamstreet & AssociatesCover Oregon Final Report
September 29, 2014
Overview
Description of initial situation – April 2014
Hamstreet & Associates’ intervention
Recommendations for future direction
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INITIAL SITUATION
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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
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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
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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)
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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
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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
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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
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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
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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
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OBSERVATIONS AND RECOMMENDATIONS
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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
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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
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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
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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
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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
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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
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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
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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
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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
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