By ABBY GOODNOUGHMAY 20, 2014 - New York Times

WASHINGTON — The board of Nevada’s problem-plagued online health insurance exchange voted Tuesday to end its contract with the vendor in charge of building it and to rely on the federal enrollment system for at least a year.

The board voted unanimously to sever ties with the vendor, Xerox, which had a $72 million contract to build the Nevada exchange and has been paid $12 million to date. The exchange has been riddled with problems, including billing and enrollment errors that led to a class-action lawsuit by 200 customers who said they paid for exchange plans but still have no coverage.

About 46,000 people had signed up for private coverage through the exchange as of May 10 — far fewer than the original enrollment target of 118,000.

Nevada is joining a string of other states that have scrapped their exchange contractor and switched course after determining there were too many problems to fix in time for the next enrollment period, which starts Nov. 15. Oregon abandoned its botched exchange website last month after spending $248 million on it, and will use the federal exchange instead. The Associated Press reported Tuesday that federal prosecutors have subpoenaed state records for a grand jury investigation of that state’s failed exchange.

Maryland, too, is abandoning its exchange, but is turning to software developed for Connecticut’s successful exchange. Massachusetts decided this month that its exchange website was unusable and that it would buy an off-the-shelf system instead, while also holding open the possibility of joining the federal exchange for a year if the new system is not ready in time for the next enrollment period. Preparing for both options will cost an estimated $121 million.

Nevada’s governor, Brian Sandoval, is one of the few Republican governors who embraced both a state-based exchange and an expansion of Medicaid under President Obama’s Affordable Care Act. He remains a popular leader in his increasingly Democratic state, which has seen much more success with people signing up for Medicaid under the law. About 190,000 have been found eligible for the program so far through the exchange, according to Xerox. A spokesman for Mr. Sandoval said that Xerox had “failed to perform its contractual duties,” adding, “The board made the best decision it could under these difficult circumstances.”

Instead of fully joining the federal exchange that serves more than 30 states, a step that would require legislative action, Nevada’s board voted to use the federal eligibility and enrollment systems for the next sign-up period while keeping its autonomy as a state-based exchange. Applicants will still go through www.nevadahealthlink.com, but the federal government would do the back-end enrollment work, said Steve Fisher, the exchange’s interim executive director.

The board will also consider adopting another state’s successful system, as Maryland is doing. But that system would not be in place until the 2015-16 enrollment period and would most likely cost tens of millions of additional dollars.

A spokeswoman for Xerox called the vote “extremely disappointing” and pointed to the exchange’s success at enrolling Nevadans in Medicaid.