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Agency questions spending on ill-fated health care exchange website project



TRIBUNE ILLUSTRATION - Oregon might have to repay some federal funds because of Cover Oregon.The federal government wants some of its Cover Oregon money back.

Two years ago, the state's attempt to build its own one-stop health insurance shopping website failed to open on time despite $305 million in federal grants.

Oregonians never were allowed to use the website as planned to shop, enroll and qualify for tax credits, making the state the butt of jokes on national comedy shows. In March, the state abolished Cover Oregon.

Now, under pressure from Congress, the Centers for Medicaid and Medicare Services has been poring through spending by states on their website projects. And in Oregon, it has identified more than $800,000 in expenditures it considers "not allowable," according to the state Department of Consumer and Business Services, which has taken over Cover Oregon's functions. The news was first reported by Willamette Week.

One expenditure is $382,179 in retention bonuses that Cover Oregon started paying in June 2014 for staff it considered crucial. As soon as DCBS took over from Cover Oregon, its director, Pat Allen, rescinded a further round of scheduled bonuses.

The other expenditure is $448,080 spent on construction at a building leased by Cover Oregon.

Jake Sunderland, a state spokesman, said the federal government will finalize its spending review in the next couple of weeks. Any money reimbursed by the state won't come from the state's general fund. Instead, it will come from fees collected by the state from insurers for policies through the federal website Oregonians now use, www.HealthCare.gov.

The expenditures challenged amount to a tiny fraction of the total federal spending on Cover Oregon. But that money may not be all the federal government gets back. The state and California software giant Oracle America, the main website contractor, continue to sue each other over in state and federal court who is to blame for the technology project's woes. Since all the money spent was federal, the federal government is likely to seek part of any judgment received by the state.

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