Massachusetts Goes Back To Square One As It Scraps $69 Million Health Insurance Exchange

After more than seven months of technical struggles, Massachusetts has decided to completely toss out $69 million of contracted work on its online health insurance exchange and start completely from scratch with an off-the-shelf solution.

The state will be bringing in hCentive, a provider of cloud-based health-care technology solutions, to revamp the site. Several other states, including Colorado and Maryland, have used the hCentive solution for their own exchanges. The state froze funding to original contractor CGI in December for failing to meet deadlines and specifications in developing the site.

While the site hasn't been working properly since its official launch at the beginning of October, the state is now under a tight deadline to get a completely new system working by a Nov. 15 deadline for residents looking to enroll in 2015. Plan B for the state would be to join the federal Healthcare.gov insurance marketplace, which also has faced its own significant technical troubles since its Oct. 1 launch.

[Related: Obamacare Site Disaster: 10 Steps Solution Providers Would Take To Fix It ]

"I've said all along that no option on the table would be perfect, and the dual track certainly has its benefits and its challenges," Sarah Iselin, special assistant to Governor Deval Patrick, said in a written statement to The Boston Globe. "It does, however, solve for two realities: we need a reliable website to help people during the next open enrollment period, and we need to be in a position to achieve a fully integrated system in 2015."

Given the short time frame, Andrew Faria, CEO of North Dartmouth, Mass.-based iMedia Solutions, said that it is unlikely that the government will be able to pull off completely architecting a solution from scratch, especially with additional logistics such as training employees on the new system.

"It's another blunder waiting to happen," Faria said. "The biggest question is, 'Are they going to do it right this time?'"

Faria, who has been building similar systems for 12 to 13 years, said that starting from scratch is rarely the best course of action because it is much more expensive and time-consuming. He said cases where a project has to start from scratch are uncommon, and it's usually better to repair an existing system.

"The worst way to go. It's absolutely well known it is the worst way to go," Faria said. "You have to fit the solution; the solution has to fit you -- especially for complex situations like this."

He said, however, with hCentive, Massachusetts might have a chance to get the site up and running. He said his concern was that the state would choose an off-the-shelf solution from another national contractor to get the job done, which he said would cause "Obamacare all over again."

"This vendor is very specific to the need, and need-specific vendors tend to succeed more often than not," Faria said.

Despite a long year of technical struggles for the state, including the difficulties with the site as well as a massive backlash against the state's Software Services Tax, Faria said that the move shows that the government still needs a more diverse set of advisers for its technology. He said that the state tends to go along with advice from big players like IBM and Microsoft, but it should also turn to more cutting-edge developers and solution providers for diverse counsel.

"There's a lot of red tape. There's a lot of politics. The traditional corporate companies don’t want to lose their business," Faria said. "We're the little guys, but we do big work. It's really sad."

PUBLISHED MAY 5, 2014