CMS oversight is inadequate to ensure the sustainability of states’ marketplace informational technology (IT) systems, according to a Government Accountability Office (GAO) review of CMS oversight in four states. Based upon reviews of Hawaii, Minnesota, New York, and Oregon, the GAO determined that CMS failed to provide adequate oversight to help states transition to new IT platforms, ensure financially sustainable marketplace systems, and monitor the performance of state marketplace IT systems. The GAO recommended that CMS take several steps to revise its oversight and IT development process (GAO Report, GAO-15-258, September 12, 2017).
States. Hawaii, Minnesota, New York, and Oregon each experienced unique challenges in the development and operation of their exchanges under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). Since 2011, CMS had awarded Hawaii $205.3 million in federal marketplace grants to establish a state-based marketplace. CMS has awarded $189.4 million in federal marketplace grants to Minnesota, $575.1 million in federal marketplace grants to the state of New York, and $305.2 million in federal marketplace grants to Oregon for the same purpose. In addition to grant money, CMS provided periodic reviews of transition plans as Hawaii and Oregon switched to the federal marketplace IT platform. CMS provided documented guidance to assist transitioning states. CMS also provided assistance with state development of sustainability plans. The GAO review examined the effectiveness of this oversight and assistance.
Transitions. The collective cost for Hawaii and Oregon to switch to the federal marketplace IT platform was $84.3 million. Additionally, although CMS provided guidance, the guidance was not finalized until after Hawaii and Oregon began their transitions. The two states identified additional difficulties due to accelerated transition time frames and reassigned marketplace responsibilities. Hawaii noted additional communication difficulties arising from CMS officials working in the Eastern time zone and Hawaii officials working in the Hawaii Aleutian time zone.
Reporting. Although CMS reviewed state sustainability plans, the agency did not ensure that sustainability plans and financial audit reports were complete. Specifically, states failed to complete sustainability plans with full 5-year budgets. Additionally, according to Hawaii, Minnesota, and New York officials, CMS did not provide policies or procedures regarding sustainability planning, including budget and enrollment forecasts.
Performance. CMS also failed to adequately monitor performance. Although CMS requires states to submit a report of weekly performance indicators, the agency did not ensure that Minnesota and New York developed, updated, and followed performance measurement plans. CMS also failed to conduct reviews designed to analyze the operational performance of states’ marketplace IT systems.
Recommendations. To improve oversight of state marketplaces, the GAO recommended that CMS take steps to ensure: (1) state marketplace sustainability plans include a 5-year budget forecast; (2) state marketplaces submit required annual financial audit reports; (3) marketplace IT self-sustainability risk assessments are based upon measurable terms; (4) state marketplaces develop performance measurement plans; (5) operational analysis reviews are conducted to monitor state marketplace IT systems; and (6) performance metrics collected from states are adequately linked to performance goals.
HHS concurred with the second and third recommendations, partially concurred with the fourth and sixth recommendations (without noting which aspects it did not concur with), and did not concur with the first and the fifth recommendations. With respect to the recommendations HHS did not concur with, the agency indicated it will require a 2-year—as opposed to 5-year—budget forecast and noted that its existing Open Enrollment Readiness Reviews are similar enough to operational analysis reviews to eliminate the need for that additional oversight.
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