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Oregon Will Drop Expensive Health Insurance Technology, Go with Kentucky Exchange

Oregon will transition away from using the Oracle systems that it spent $240 million in federal funds to obtain and build.

By Nick Budnick

In the latest installment of its nasty breakup with Oracle America over the state's health insurance exchange website, Oregon will scrap its beleaguered Medicaid enrollment project and replace it with a system built by Kentucky, state officials told lawmakers Monday.

"The goal is ...we will no longer be relying on Oracle technology," said state Medicaid Director Judy Mohr Peterson in a hearing of the House Interim Committee on Health Care.

The decision makes it official that Oregon will transition away from using the Oracle systems that it spent $240 million in federal funds to obtain and build. Oracle software was supposed to be the foundation of Oregon's exchange, a one-stop shopping and enrollment website for health coverage.

Instead, Oregon will essentially obtain a portion of Kentucky's successful health insurance exchange project. Kentucky built its exchange in one year using $253 million in federal funds. Mohr Peterson said officials looked at eight states before deciding Kentucky's system is the best fit.

Relations with the California software giant have deteriorated this year as Oregon accused the firm of shoddy work on the non-functional health insurance exchange. In April, the state decided to use the federal version of the health exchange,, for the 2015 plan year.

But there was a catch. Even while blasting Oracle's performance, the state had hoped to salvage some of the firm's technology for use in the Medicaid funded Oregon Health plan. Some state officials even hoped that the resulting technology project could lead to a new, state-based Cover Oregon exchange website in 2016.

It didn't pan out.

In October, the state announced that it was dropping the idea of trying to rescue some portion of the $300-plus million exchange project. Officials said Oracle did not cooperate with the state's latest request for help, and they admitted that Oregon's Aug. 22 lawsuit accusing Oracle of racketeering and fraud seemed to be a factor.

Just as all states are required to offer an online exchange, the federal government also requires all states to offer online Medicaid enrollment.

While there is no cost for Oregon to obtain Kentucky's programming code, the state has budgeted about $30 million for its new Medicaid project. The funds will pay for the cost of adapting Kentucky's system to Oregon. State officials say the federal government has agreed to pay 90 percent of the cost of the new project.

Oregon is using Deloitte Consulting for its Medicaid project. That's the same firm Kentucky used to oversee its exchange project.

Dueling lawsuits between Oregon and Oracle continue to play out in state and federal court.

©2014 The Oregonian

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