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Former Md. health exchange director given five wage increases

Rebecca Pearce, who resigned under pressure in December as the director of the state's troubled health insurance exchange, was given five wage increases during her nearly 27-month tenure — including one scheduled raise after she stepped down, according to emails and letters provided by the exchange.

Pearce's salary when she departed was $199,511, or $24,511 more than when she was hired.

After a career in the insurance industry, Pearce was appointed in September 2011 to oversee the agency in charge of developing and running the state's online marketplace.

In a little over a year and a half, three merit raises approved by the exchange board and Gov. Martin O'Malley added a combined $15,000 to her salary, including a $5,000 raise six months before the botched rollout of the exchange website.

The remaining $9,511 came from two cost-of-living raises automatically given to all state employees.

"The board is very satisfied with Ms. Pearce's performance during the last 12 months … and at the board meeting on Sept. 25 [2012] the members present voted unanimously to increase her salary by $5,000 annually," read one email assessing her first year on the job from Janet S. Nugent, director of the Office of Human Resources at the state health department, to officials in the health department and the department of management and budget.

But the board accepted her resignation more than a year later on Dec. 6, as state officials struggled to explain to lawmakers and the public why the exchange website crashed on its first day and remained severely crippled by technical problems until major fixes were implemented later in December.

Two weeks after her resignation, Pearce was put on administrative leave and paid until the end of January, as long as she agreed to "an amicable departure" and to be available for consultation.

Lt. Gov. Anthony G. Brown, the state's point person on health care reform, said Pearce did not make him aware of the extent of the problems facing the exchange website. He criticized her for taking a vacation less than eight weeks after the disastrous launch and being out of email and phone contact.

The same day he told The Baltimore Sun that the exchange board should question her competency, she resigned. She did not return a call Friday seeking comment.

One Republican lawmaker said Friday that O'Malley and Brown have to answer for the fact that they not only hired Pearce but gave her raises despite what has turned out to be a problem-riddled program.

"This is one more indication of the failed leadership of the program," said Del. Kathy Szeliga, the minority whip. "Ultimately, if she was the director, she was the person at the top and reporting to the governor or lieutenant governor. The buck has to stop there. They brought her in. You have to live by the consequences of your decision."

Szeliga has introduced a bill that calls for a joint House and Senate committee to review the exchange and calling for a performance audit that would be completed by Sept. 1.

The new email records show that Pearce did not have a contract, but served at the pleasure of the exchange board, led by Dr. Joshua M. Sharfstein, state health secretary. Sharfstein also has said Pearce did not provide a full picture of the troubles besetting the exchange, though emails sent to many employees and contractors and court records showed there had been problems for months beforehand.

Technical glitches persist on the website, though officials have since said major problems have been repaired.

Officials reported Friday that 29,059 people have enrolled through exchange in private insurance plans, up 2,227 from the week before. Combined with those who enrolled in expanded Medicaid through the exchange and those moved automatically from a state program to Medicaid, a total of 169,475 people have signed up for insurance.

Open enrollment under the Affordable Care Act runs through March 31, after which uninsured Americans can face penalties.

The exchange office is being run now on an interim basis by Carolyn Quattrocki from the governor's health reform office. She is paid $136,818.

Work continues on the website. Sharfstein said Friday that Optum/QSSI, a Columbia-based company specializing in health care information technology, may continue to work on the exchange for up to 18 months. That's enough time to get the exchange through the next open enrollment beginning this fall.

The state hired the company, which helped fix the federal exchange website, in December to ensure people could enroll on the website, as work was being done to fix it. Officials initially indicated the contract would begin in December and last at least two months and cost no more than $4 million.

Officials would not immediately disclose the value of the full contract, or how much could be the state's responsibility, but said the federal government likely will pick up much of the tab.

Noridian Healthcare Solutions remains the prime contractor in charge of the site's operations, though its contract expired in December, Sharfstein said Friday. There is no additional cost to the exchange. Officials said recently that the company had been paid about $57 million on the $71 million contract.

Sharfstein said Noridian remains responsible for hosting and maintaining the site. When asked if the company would be fined for delays, as outlined in the contract, Sharfstein repeated comments he's made in the past: "All options remain on the table."

Sharfstein said he would provide more information during a meeting Monday with lawmakers in Annapolis.

Meanwhile, the legal battle between Noridian and its main subcontractor EngagePoint Inc. continues in U.S. District Court in Baltimore. Noridian fired its subcontractor within weeks of the exchange launch, saying it performed poorly. EngagePoint sued when Noridian tried to hire its employees and Noridian countersued.

In court papers filed late Friday primarily to debate keeping the case in court versus moving it to arbitration, EngagePoint offered new details and criticism. The company claimed it's still owed millions for its work. The company also said Noridian had held "itself out as capable of acting as prime contractor to the state of Maryland for the Maryland Health Insurance Exchange project, notwithstanding that it knew that it lacked the expertise, resources and commitment actually required to develop the project."

Noridian responded Friday with a statement to The Sun from Tom McGraw, Noridian's president and CEO: "We have reviewed the most recent filings by EngagePoint and believe the statements are false, unsupportable and will be contradicted by evidence that we present in court and arbitration."

McGraw said he could not comment further because of the litigation, but said the company remained committed to improving the exchange.

EngagePoint could be reached Friday evening for comment.

Baltimore Sun reporter Jean Marbella contributed to this article.

meredith.cohn@baltsun.com

Copyright © 2015, The Baltimore Sun
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