Federally facilitated marketplaces. Implementation. CMS Offered Assistance to Transitioning States, but Selected States Encountered Challenges in Their Efforts

CMS offered various types of assistance to states transitioning to a  different marketplace IT platform, including to the two selected states that  transitioned to the federal platform—Hawaii and Oregon. States’ officials  reported 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 and the states mainly relied on  Medicaid matching funds from CMS to do this. Further, the two states  encountered challenges during their transitions. These challenges were  related to accelerated transition time frames, difficulties reassigning  functional marketplace responsibilities, delays in receiving approvals and  decisions needed from CMS, and trouble accessing historical consumer  data in previous marketplace IT systems developed by vendors. Delays in receiving approvals from CMS. CMS Assisted Selected States with Their Sustainability Plans, but Did Not Always Ensure Reporting Was Complete and Risk Assessment Processes Were Fully Defined

CMS had processes in place to assist the selected states’ with their  efforts to financially sustain the development and operations of their  marketplaces, including supporting IT systems. Nevertheless, although CMS took steps to ensure that the states  submitted annual financial audit reports, the agency did not ensure the  states followed regulations and guidance, which decreased CMS’s  visibility into state marketplace sustainability and could increase  sustainability risks. CMS uses financial audit reports  and sustainability plans to create sustainability risk assessments and  conduct consults for each state-based marketplace. However, CMS did not consistently monitor the performance of IT  systems for Minnesota and New York—the two selected states that  operated state-based marketplace systems. Specifically, CMS did not  ensure that the two states had developed, updated, and followed  performance measurement plans. In addition, it did not conduct reviews  to analyze the operational performance of the selected states’  marketplace IT systems against an established set of performance  parameters to evaluate whether the states were performing in an efficient  and effective manner. As for IT metrics that were collected from the  states, CMS did not link these metrics to performance measurement  goals or establish targets for performance. However, CMS  guidance for states transitioning to the federal platform was not  documented and finalized until after two states had already initiated their  transitions. CMS’s guidance includes steps to monitor the performance of state- based marketplace IT system operations, including the collection of  related IT performance metrics such as electronic enrollments and  website traffic volume. As a result, CMS has been limited in its ability to determine whether state  marketplace IT systems are performing efficiently and effectively and to  provide early warning of potential problems for the overall state  marketplace IT systems’ service delivery to consumers. HHS concurred with our second and third recommendations which,  respectively, called for CMS to ensure that all state-based marketplaces  provide required annual financial audit reports that are in accordance with  generally accepted government auditing standards, and ensure that the  marketplace IT self-sustainability risk assessments are based on fully  defined measurable terms, a clear categorization process, and a defined  response to high risks. HHS partially concurred with our fourth recommendation that CMS 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. GAO staff who made major contributions to  this report are listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

Our objectives were to: (1) describe what actions the Centers for  Medicare & Medicaid Services (CMS) has taken, if any, to assist states  that have chosen to transition to a marketplace IT platform different from  the one they originally used and identify the costs and challenges for  states in making this transition; (2) assess what actions CMS has taken to  assist selected states’ plans to ensure that the development and  operations of marketplace IT systems can be financially self-sustained;  and (3) assess the steps that CMS has taken to monitor the performance  of the states’ marketplace IT systems. This included Minnesota  and New York—which operated state-based marketplace IT systems— and did not include Hawaii and Oregon—which relied on the federal  marketplace IT platform operated by CMS and did not collect system  performance metrics.
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 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).

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.