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Two states halt payments to embattled HealthCare.gov contractor

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Massachusetts and Vermont officials will withhold payments from the contractor behind the states’ malfunctioning Obamacare exchanges, the Boston Globe reported Thursday.

CGI Group is the main contractor in charge of both Massachusetts’ and Vermont’s state exchanges, as well as the federal site HealthCare.gov.

“CGI has consistently underperformed, which is frustrating and a serious concern,” said Jason Lefferts, a spokesman for the Massachusetts exchange. “We are holding the vendor accountable for its underperformance and will continue to apply nonstop pressure to work to fix defects and improve performance.

Massachusetts officials have paid $11 million of its $69 million contract with CGI but will not dole out any more dough until the website is functioning properly, according to Lefferts.

Vermont has already paid $18.6 million of its $82.6 million bill to CGI, but is still in talks to decide what the bottom line will be. Exchange officials are currently withholding a $5.1 million payment in return for CGI missing important deadlines and are disputing over $1 million in charges due to “incomplete work.”

Massachusetts officials already worked with a similar health care system to Obamacare, but were stymied when trying to comply with Obamacare’s updates. The new exchange website has been unable to determine eligibility for different insurance plans and struggled to set up accounts and passwords.

For Vermonters it was even worse: customers were not able to purchase coverage online until early December, a paltry record only beat by the country’s worst Obamacare marketplace.

But while Vermont and Massachusetts are blasting now-infamous CGI, they’re not the first state to withhold payments. Oregon’s utterly failed exchange has withheld $20 million from contractor Oracle and already has attorneys reviewing the bungled launch.

Even after the deadline to buy insurance for January 1 coverage, Oregon’s state exchange still cannot support online purchases. Cover Oregon officials shifted to paper applications as they abandoned hope that the site would be functioning before the deadline to buy insurance for January 1.

Oracle, a massively successful IT company run by billionaire Larry Ellison, has received $43 million so far, but Cover Oregon’s then-director Rocky King announced in late November that the exchange had refused to make any payments in the past two months and interim director Bruce Goldberg said  in December that the exchange is withholding payment.

While contractors told officials the site was 80 percent finished, just 10 percent was finished correctly — and the entire site wasn’t tested until the fall.

But it appears that while Oracle is taking some hits.  Amid Cover Oregon’s fiasco, King took “medical leave” and the Carolyn Lawson, chief information officer at Oregon’s health department and the primary official overseeing the exchange roll-out, resigned for “personal reasons.”

While Oracle failed to deliver its product as promised, King admitted before taking leave that exchange officials were aware the site would be delayed due to significant problems, all while presenting a rosy picture to the public.

In addition to the Vermont and Massachusetts exchanges, CGI also built federal exchange HealthCare.gov, and five other state exchanges: Kentucky, Colorado, California,  Hawaii and New Mexico.

Kentucky has been held up as a model of Obamacare’s success, enrolling over 24,000 in private plans without any big hitches, while California has been portrayed as a success as well. Colorado’s CGI-built exchange didn’t experience drastic tech failures either, but even with a well-functioning site has struggled to sign up enough consumers even to meet officials’ “catastrophic” projections.

But Hawaii’s exchange launched several weeks late and may not be financially sustainable after enrolling just 683 customers. New Mexico’s small business exchange (the individual exchange was put in the care of HealthCare.gov until October 2014) didn’t fully launch until December.

While some states are happy with CGI’s performance, Vermont and Massachusetts officials have started talking about legal action against the company. Massachusetts’ exchange director Jean Yang blamed CGI for not committing enough resources to building the website, according to the Boston Globe.

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