Specifically, the data hub will provide one  electronic connection and near real-time access to the common  federal data, as well as provide access to state and third party data  sources needed to verify consumer application information. Federal and State Roles in Exchanges

The role of the federal government with respect to an exchange for a  state is dependent on whether that state seeks to operate a state-based  exchange. CMS Expects to Operate FFEs, including Partnership Exchanges, in 34 States in 2014

For 2014, CMS will operate the exchange in 34 states, although it expects  that states will assist in carrying out certain activities in almost half of  those exchanges. CMS is required to operate an FFE in the remaining 34 states. 1 for a map of exchange arrangements for  2014.) Planned CMS and State Activities to Establish Exchanges Have Evolved Recently and May Continue to Change

The activities that CMS and the states each plan to carry out to establish  the exchanges have evolved recently. CMS was required to certify or  conditionally approve any 2014 state-based exchanges by January 1,  2013. For example, issuers began submitting applications to exchanges for  QHP certification on April 1, 2013. If any state conditionally approved to operate a state-based exchange or  to participate in a partnership exchange does not adequately progress  towards implementation of all required activities, CMS has indicated that it  would carry out more exchange functions in that state. CMS Issued Numerous Regulations and Guidance Necessary to Establish FFEs, and Made Progress in Each of the Core Exchange Functions and in Developing the Data Hub

CMS issued numerous regulations and guidance that it has said are  necessary to set a framework within which the federal government,  states, issuers of health coverage, and others can participate in the  exchanges. CMS has many key activities  remaining to be completed across the core exchange functions—eligibility  and enrollment, including development and implementation of the data  hub; program management; and consumer assistance. While CMS stated that the agency has thus far met project schedules and  milestones for establishing agreements and developing the data hub,  several critical tasks remain to be completed before the October 1, 2013,  implementation milestone. According to CMS officials and the  testing timeline:
Service Level Agreements (SLA) between CMS and the states, which  define characteristics of the system once it is operational, such as  transaction response time and days and hours of availability, are  planned to be completed in July 2013;
SLAs between CMS and its federal partner agencies that provide  verification data are expected to be completed in July 2013; and
Completion of external testing with all federal partner agencies and all  states is to be completed by the beginning of September 2013. The activities that remain for CMS to implement the plan management  function primarily relate to the review and certification of the QHPs that  will be offered in the FFEs. For those 15 FFEs for which states will assist with the plan management  function, CMS will rely on the states to ensure the exchanges are ready  by October 2013. CMS has yet to complete many activities related to consumer assistance  and outreach, and some initial steps were behind schedule. Specifically,  several steps necessary for the implementation of the Navigator program  in FFEs have been delayed by about 2 months. Nevertheless, much remains to be  accomplished within a relatively short amount of time. However,  certain factors, such as the still-unknown and evolving scope of the  exchange activities CMS will be required to perform in each state, and the  large numbers of activities remaining to be performed—some close to the  start of enrollment—suggest a potential for implementation challenges  going forward. And while the missed interim deadlines may not affect  implementation, additional missed deadlines closer to the start of  enrollment could do so. CMS recently completed risk assessments and  plans for mitigating identified risks associated with the data hub, and is  also working on strategies to address state preparedness contingencies. Whether CMS’s contingency planning will assure the timely and smooth  implementation of the exchanges by October 2013 cannot yet be  determined. Agency Comments

We received comments from HHS on a draft of this report (see app. HHS emphasized the progress it has made in establishing exchanges  since PPACA became law, and expressed its confidence that on   October 1, 2013, exchanges will be open and functioning in every state. Appendix I: Contractors Supporting the Federally Facilitated Exchanges and Data Hub and Amounts Obligated

Table 5 provides information on the amounts the Department of Health  and Human Services’ (HHS) Centers for Medicare & Medicaid Services  (CMS) obligated for contract activities to support the establishment of the  federally facilitated exchanges (FFE) and the data hub and carry out  certain other exchange-related activities by individual contractors.
Why GAO Did This Study

The Patient Protection and Affordable Care Act required the establishment in all states of exchangesmarketplaces where eligible individuals can compare and select health insurance plans. CMS must oversee the establishment of exchanges, including approving states to operate one or establishing and operating one itself in states that will not do so. CMS will approve states to assist it in carrying out certain FFE functions. CMS will also operate an electronic data hub to provide eligibility information to the exchanges and state agencies. Enrollment begins on October 1, 2013, with coverage effective January 1, 2014. GAO was asked to examine CMSs role and preparedness to establish FFEs and the data hub. In this report, GAO describes (1) the federal governments role in establishing FFEs for operation in 2014 and state participation in that effort; and (2) the status of federal and state actions taken and planned for FFEs and the data hub.
GAO reviewed regulations and guidance issued by CMS and documents indicating the activities that the federal government and states are expected to carry out for these exchanges. GAO also reviewed planning documents CMS used to track the implementation of federal and state activities, including documents describing the development and implementation of the data hub. GAO also interviewed CMS officials responsible for establishment of the exchanges. GAO relied largely on documentation provided by CMSincluding information CMS developed based on its contacts with the statesregarding the status of the exchanges and did not interview or collect information directly from states.

What GAO Found

The Centers for Medicare & Medicaid Services (CMS) will operate a health insurance exchange in the 34 states that will not operate a state-based exchange for 2014. Of these 34 federally facilitated exchanges (FFE), 15 are in states expected to assist CMS in carrying out certain FFE functions. However, the activities that CMS plans to carry out in these 15 exchanges, as well as in the state-based exchanges, have evolved and may continue to change. For example, CMS approved states' exchange arrangements on the condition that they ultimately complete activities necessary for exchange implementation. CMS indicated that it would carry out more exchange functions if any state did not adequately progress towards implementation of all required activities.
CMS completed many activities necessary to establish FFEs by October 1, 2013, although many remain to be completed and some were behind schedule. CMS issued numerous regulations and guidance and took steps to establish processes and data systems necessary to operate the exchanges. The activities remaining cross the core exchange functional areas of eligibility and enrollment, plan management, and consumer assistance. To support consumer-eligibility determinations, for example, CMS is developing a data hub that will provide electronic, near real-time access to federal data, as well as provide access to state and third party data sources needed to verify consumer-eligibility information. While CMS has met project schedules, several critical tasks, such as final testing with federal and state partners, remain to be completed. For plan management, CMS must review and certify the qualified health plans (QHP) that will be offered in the FFEs. Though the system used to submit applications for QHP certification was operational during the anticipated time frame, several key tasks regarding plan management, including certification of QHPs and inclusion of QHP information on the exchange websites, remain to be completed. In the case of consumer assistance, for example, funding awards for Navigators--a key consumer assistance program--have been delayed by about 2 months, which has delayed training and other activities. CMS is also depending on the states to implement specific FFE exchange functions, and CMS data show that many state activities remained to be completed and some were behind schedule.
Much progress has been made, but much remains to be accomplished within a relatively short amount of time. CMS's timelines provide a roadmap to completion; however, factors such as the still-evolving scope of CMS's required activities in each state and the many activities yet to be performed--some close to the start of enrollment--suggest a potential for challenges going forward. And while the missed interim deadlines may not affect implementation, additional missed deadlines closer to the start of enrollment could do so. CMS recently completed risk assessments and plans for mitigating risks associated with the data hub, and is also working on strategies to address state preparedness contingencies. Whether these efforts will assure the timely and smooth implementation of the exchanges by October 2013 cannot yet be determined.
In commenting on a draft of this report, the Department of Health and Human Services emphasized the progress it has made in establishing exchanges, and expressed its confidence that exchanges will be open and functioning in every state by October 1, 2013.