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GAO slams oversight of state insurance marketplace IT spending

Centers for Medicare & Medicaid Services practices created confusion and delays, report finds

The federal government has fallen short in tracking spending on state health insurance marketplaces, dividing responsibility across multiple offices and creating confusion in the process, according to a report from the Government Accountability Office.

As of March 2015, the Centers for Medicare & Medicaid Services (CMS) had issued $1.45 billion in in federal marketplace grant funding on IT projects supporting health insurance marketplaces, while $2.78 billion in combined federal and state funds have been set aside for Medicaid eligibility and enrollment systems.

Fourteen states elected to build their own marketplaces, but as of February, not all system functions were complete. And as of November 2014, seven of 37 states using the federal marketplace system could not transfer health insurance applications between their state Medicaid systems and a key component of the federal marketplace, or had not completed testing.

As of April, communication between state Medicaid application systems and the federal marketplace was not taking place in real time, which is a goal for 2016.

Various offices within CMS had responsibility for tracking all this, but the lines of responsibility often weren't clear, according to the report. Meanwhile, a patchwork of state agencies or "quasi-governmental entities" held oversight responsibility among the states. Some states missed testing deadlines, increasing risk that the systems would not work as intended.

"The agency did not always clearly document, define or communicate its oversight roles and responsibilities to states as called for by best practices for project management. According to some states, this resulted in instances of poor communication with CMS, which adversely affected states' deadlines, increased uncertainty and required additional work," according to the report.

Here are its recommendations:

  • Communicate all roles and responsibilities of those overseeing projects within CMS.
  • Make sure all CMS senior executives involved in the projects review and approve funding decisions.
  • Ensure that states have completed all testing of marketplace system functions before their go-live dates.

Some states running their own exchanges that underestimated how challenging and expensive it would be to build and maintain them are considering switching to the federal marketplace.

Of the 12 states and the District of Columbia that fully control their exchanges, about half of their marketplaces face financial difficulties, including losing federal funding, FierceHealthPayer previously reported.

To learn more:
- find the report highlights

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State exchanges may turn to feds, other states to run their marketplaces