Health Insurance Marketplaces:

CMS Needs to Improve Its Oversight of State IT Systems' Sustainability and Performance

GAO-17-258: Published: Aug 15, 2017. Publicly Released: Sep 12, 2017.

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What GAO Found

The Department of Health and Human Services' (HHS) Centers for Medicare & Medicaid Services (CMS) has offered assistance through providing periodic oversight and issuing regulation and guidance to states transitioning from state-based marketplaces to the federally based marketplace IT platform, including two states that GAO reviewed—Hawaii and Oregon—that had made that transition. While CMS provided these states with assistance, documented CMS transition guidance was not finalized until after the two states had completed their transition. The two states incurred costs of approximately $84.3 million, collectively, to transition to the federal platform. The two states' transition efforts included making changes to their Medicaid systems, with these states mainly relying on Medicaid matching funds from CMS to do this. While the selected states successfully transitioned, they encountered challenges during their transitions, due to accelerated transition time frames, difficulties reassigning marketplace responsibilities, delays in receiving approvals from CMS, and trouble accessing historical consumer data in previous vendor-developed marketplace IT systems.

CMS took steps to assist Hawaii and Oregon, as well as two states that GAO selected for review that operated state-based marketplaces, Minnesota and New York, in developing plans for marketplace IT system sustainability. CMS assisted these four states by consulting with the states' officials and providing oversight of their sustainability plans, financial audit reports, and risk assessments. However, CMS did not fully ensure the states provided complete sustainability plans and financial audit reports. Further, CMS did not base its risk assessments on fully defined processes. These weaknesses limit CMS's oversight and assurance that it can be informed of the state marketplaces' sustainability efforts.

Although CMS established a process to monitor the performance of state-based marketplaces, CMS did not consistently follow its processes. For example, CMS did not ensure that the two selected states, Minnesota and New York, had developed, updated, and followed their performance measurement plans. Also, CMS did not conduct reviews to analyze the operational performance of these states' marketplace IT systems against an established set of parameters. Further, while CMS collected IT performance metrics from the two states, such as the number of electronic enrollments and website traffic volume, it did not link state metrics to goals or establish targets for performance. These weaknesses limit CMS's ability to determine if states' marketplace systems are performing efficiently, effectively, and to provide early warnings of potential problems (see table).

GAO's Evaluation of CMS Sustainability and Performance Oversight For Selected State Health Insurance Marketplaces

Sustainability

CMS did not fully ensure complete sustainability plans and financial audit reports for Hawaii and Minnesota or fully define its risk assessment processes.

Performance

CMS did not ensure updated performance measurement plans and metrics were linked to goals for Minnesota or New York or conduct operational analysis reviews for these two states.

Source: GAO analysis of Centers for Medicare & Medicaid Services and state data. | GAO-17-258

Why GAO Did This Study

The Patient Protection and Affordable Care Act required the establishment of health insurance exchanges—or marketplaces—to allow consumers to compare, select, and purchase health insurance plans. States can elect to establish a state-based marketplace, or cede this authority to CMS to establish a federally facilitated marketplace. Some states had difficulties with the rollout and operation of their marketplaces, and some states that struggled with IT implementation are now using the federal marketplace IT platform.

GAO was requested to review CMS's and states' actions to implement the marketplaces. This report (1) describes CMS's actions to assist states that have chosen to transition to a different marketplace IT platform and identify costs and challenges those states incurred in making this transition; (2) assesses CMS's actions taken to assist selected states to ensure that the development and operations of marketplace IT systems can be financially self-sustained; and (3) assesses CMS's steps to monitor the performance of the states' marketplace IT systems. GAO reviewed documentation from CMS and four states selected based on different types of marketplaces, federal grants provided, and enrollment numbers, and interviewed CMS and the states' officials.

What GAO Recommends

GAO recommends that CMS take six actions: ensure that states provide complete sustainability plans; complete financial audit reports; fully define its risk assessment process; complete updated performance measurement plans; align metrics with goals; and conduct operational analysis reviews. HHS concurred with two, partially concurred with two, and did not concur with two of GAO's recommendations, which GAO continues to believe are valid.

For more information, contact David A. Powner at (202) 512-9286 or pownerd@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: HHS did not concur with our recommendation and stated that it had updated its requirement to request 2-year budget forecasts instead of 5-year budget forecasts. In its December 2017 statement of actions, HHS stated that it was working to streamline and simplify its data collection effort as part of the annual sustainability plan. In April 2018, HHS provided a revised 2-year budget forecast template as well as related state marketplace training documentation. As of July 2019, HHS had not provided further documented evidence of its streamlined process using the 2-year budget forecast template or justification that a 5-year budget is not necessary for assessing long-term financial sustainability and state marketplace sustainability risks.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator of the Centers for Medicare & Medicaid Services to take steps to ensure that state-based marketplace annual sustainability plans, to the extent possible, have complete 5-year budget forecasts. (Recommendation 1)

    Agency Affected: Department of Health and Human Services

  2. Status: Open

    Comments: HHS concurred with our recommendation and stated in its December 2017 update that it continued to provide technical assistance such as webinars and other trainings on independent financial and programmatic audit submission requirements. In April 2018, HHS provided evidence that it had taken some steps to ensure that state-based marketplaces provide required annual financial audit reports, including draft financial audit procedures, documentation of related training provided to states, and a revised HHS state officer annual review checklist emphasizing financial audit reporting. However as of July 2019, the department had not provided evidence of finalized procedures, examples of checklist usage, or of states providing annual financial audit reports. Further, HHS training documentation stated that state-based marketplaces could provide alternate financial audit reports, such as a state-wide financial audit report, in lieu of a marketplace specific report. It is not clear from the provided evidence that the department has ensured that state-based marketplaces are in compliance with financial audit reporting requirements. We will continue to monitor the department's progress in implementing the recommendation and provide updates when the agency takes further action.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator of the Centers for Medicare & Medicaid Services to take steps to ensure that all state-based marketplaces provide required annual financial audit reports which are in accordance with generally accepted government auditing standards. (Recommendation 2)

    Agency Affected: Department of Health and Human Services

  3. Status: Open

    Comments: HHS concurred with our recommendation and stated in its December 2017 update that it would refine its marketplace self-sustainability risk assessment process to provide greater insight into the state marketplace sustainability efforts and to identify areas where states may need assistance. In April 2018, HHS provided evidence that it had taken some steps to base its risk assessments on fully defined processes. CMS provided documentation of clearly defined and measurable terms used for state marketplace budget analysis. However, HHS did not provide evidence that these defined terms were incorporated into analyses or risk assessments. As of July 2019, CMS has not provided evidence that it took steps to develop a clear categorization process or a defined response to high risks. We will continue to monitor the department's progress in implementing the recommendation and provide updates when the agency takes action.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator of the Centers for Medicare & Medicaid Services to take steps to ensure that marketplace IT self-sustainability risk assessments are based on fully defined measurable terms, a clear categorization process, and a defined response to high risks. (Recommendation 3)

    Agency Affected: Department of Health and Human Services

  4. Status: Open

    Comments: HHS partially concurred with our recommendation and stated in its December 2017 update that though each marketplace was accountable for managing and reporting its own IT metrics in accordance with federal and state law, HHS would work with states on the improvement of their management and operations through technical assistance and oversight and accountability measures. As of July 2019, the agency had not yet provided sufficient evidence that it has implemented the recommendation. We will continue to monitor the department's progress in implementing the recommendation and provide updates when the agency takes action.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator of the Centers for Medicare & Medicaid Services to take steps to ensure that states develop, update, and follow performance measurement plans that allow the states to continuously identify and assess the most important IT metrics for their state marketplaces. (Recommendation 4)

    Agency Affected: Department of Health and Human Services

  5. Status: Open

    Comments: HHS did not concur with our recommendation and stated that it conducted Open Enrollment Readiness Reviews to assess marketplace key performance indicators, which according to CMS officials, are similar to operational analysis reviews. However, as of October 2018, HHS had not provided evidence that the Open Enrollment Readiness Reviewed systematically and comprehensively reported on the key performance indicators or include discussion of other key elements identified in best practices for operational analysis reviews, such as how objectives could be better met, or costs could be saved. As of July 2019, the agency had not yet provided sufficient evidence that it has implemented the recommendation.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator of the Centers for Medicare & Medicaid Services to take steps to conduct operational analysis reviews and systematically monitor the performance of states' marketplace IT systems using key performance indicators. (Recommendation 5)

    Agency Affected: Department of Health and Human Services

  6. Status: Open

    Comments: HHS partially concurred with our recommendation and stated in its December 2017 update that states were responsible for monitoring their own performance measures but HHS would continue to review IT metrics of state marketplaces in the implementation phase of their systems through technical assistance activities and oversight and accountability measures. As of July 2019, the agency had not yet provided sufficient evidence that it has implemented the recommendation. We will continue to monitor the department's progress in implementing the recommendation and provide updates when the agency takes action.

    Recommendation: The Secretary of Health and Human Services should direct the Administrator of the Centers for Medicare & Medicaid Services to take steps to ensure that metrics collected from states to monitor marketplaces' operational performance link to performance goals and include baselines and targets to monitor progress. (Recommendation 6)

    Agency Affected: Department of Health and Human Services

 

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