CMS Oversight of State Marketplace IT Projects Lacking, GAO Finds

Only a relative handful of states set up their own marketplaces as permitted under the Affordable Care Act (ACA), and they were given federal funds for IT contracts and other launch expenses. But the precise amount spent is unclear, and so are the performance records of states, according to a report released today by the Government Accountability Office (GAO).

CMS has fallen short in tracking the $1.45 billion spent on federal marketplace funding through March 2015, as well as the $2.78 billion in combined federal and state funds set aside for Medicaid eligibility and enrollment systems—since the ACA allowed Medicaid to expand. But the GAO found that the total spent to set up marketplaces and the status of IT contracts remained unclear as of February 2015, and “not all system functions were complete,” according to GAO.

Some of the state-level IT problems were catastrophic and resulted in significant delays or wholesale scrapping of early work. Examples of problems cited in the report include:

· Oregon and Nevada had to halt development on their states’ marketplace infrastructure and switch to the federal IT marketplace instead, despite its initial problems, for certain eligibility and enrollment functions.

· New Mexico’s delays forced the state to use the federal marketplace for the first enrollment period. For the second period in 2014, it used the federal IT platform for eligibility and enrollment only, but later decided to use the federal system indefinitely.

· Maryland scrapped the IT system it had developed and swapped to a platform that had been developed for Connecticut.

· Massachusetts, which had the advantage of having already approved an ACA-style reform without some of the marketplace features, nonetheless replaced its first system for what the report described as a “commercial off-the-shelf” platform for the 2014 enrollment period.

As of November 2014, there were still 7 of the 37 states using the federal marketplace system that could not transfer health insurance applications with the state Medicaid system, or had not finished critical testing of this function. CMS reported that some states were still working on this as the second open enrollment period began in November 2014. Even by April 2015, communication between state Medicaid application systems and the federal marketplace was not taking place in real time, and this is a “goal” for 2016.

Responsibility for tracking all this appeared to be distributed over multiple CMS offices, and documentation was unclear or incomplete. It was not always clear who was responsible for which oversight responsibility; as a result, some states missed deadlines.

Testing deadlines were missed, increasing the risk that systems would not work as intended, and oversight at the state level included a patchwork of state agencies or “quasi-governmental entities,” depending on the type of marketplace involved.

GAO recommended that CMS do a better job of defining and communicating its oversight roles and responsibilities and ensure that senior executives are involved in funding decisions for state projects. Testing must occur before systems go into action. HHS concurred with the recommendations.