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Regulation and Compliance > State Regulation

GAO: PPACA exchanges still have $703 million in federal IT grant money

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States with state-based public health insurance exchanges may still have about $703 million of their $1.4 billion in federal information technology grant money available.

See also: PPACA: HHS Offers Exchange Grants

The states that were states in 2014 still have about $300 million of the $375 million in federal exchange IT spending authorization power that they were allocated.

Valerie Melvin, a director at the U.S. Government Accountability Office (GAO), gives information about the public exchanges’ federal IT grant resources in a report on how the U.S. Department of Health and Human Services (HHS) has overseen states’ efforts to build Patient Protection and Affordable Care Act (PPACA) exchange programs.

Some states have refused to help build or run PPACA exchanges. Some have built and continued to run state-based exchanges.

Others actively decided, before the exchange system opened on Oct. 1, 2013, to let HHS handle or part or all of their exchange operations.

See also: Arizona governor rejects state-run PPACA health exchange

Three states — Nevada, New Mexico and Oregon — tried to run their own exchange enrollment systems in 2014 but ended up using the system for enrollment in 2015. 

GAO investigators found that the Centers for Medicare & Medicaid Services, the arm of HHS responsible for exchange construction, had serious problems with managing states’ exchange projects and use of the PPACA grant money provided by HHS. 

See also: Watchdog warns states may be misusing PPACA funds

“Roles and responsibilities were not always clearly defined, documented or communicated,” Melvin writes in a summary of GAO investigators’ findings. “A number of states faced hurdles in communicating with stakeholders and receiving timely CMS guidance.”

In one table in the report, Melvin gives a description of all of the offices and groups responsible for state exchange IT project oversight. She notes, for example, that one well-known CMS division, the Center for Consumer Information and Insurance Oversight (CCIIO), has state office officers who are supposed to help the CCIIO executive director oversee state exchange construction and grant money use.

Some of the other offices that are, or should be, involved include the CMS Office of Acquisition and Grants Management, the CMS Marketplace Operations Board, the CMS Health Reform Operations Board, and the CMS Office of Communications, according to the table.

The CMS Office of Communications should have been helping CMS communicate with state exchange IT officials, and some exchange oversight boards mention the office in their charters, but some CMS officials were not aware of the role of the office, and they told GAO investigators that the office did not have a role in states’ exchange IT oversight, Melvin writes.

Melvin has also included an appendix that lists how much total HHS exchange grant funding each state received, how much of the grant was authorized for IT use, how much of the state’s total grant money had been spent or returned to HHS as of March 2015, and how much of the IT grant money was still available.

The table shows, for example, that California had access to about $1.1 billion in total HHS exchange grant money, with $324 million allocated for IT work. The state still has about $355 million in HHS exchange grant money left, including about $70 million in IT grant money.

Minnesota, the home of the MNsure exchange, appears to be the surviving state-run exchange with the highest percentage of unspent federal IT grant money. The GAO table shows that, as of March, MNsure had spent only $29 million of its $76 million in federal IT grant money.

Allison O’Toole wrote on behalf of MNsure that the exchange believes that the GAO IT spending figures are incorrect. She said the exchange believes it had actually received $94 million in federal exchange IT grant funding as of March 31 and had spent $68 million.

The table shows that Illinois, a state, has received more federal exchange IT grant money than any other state. Illinois, which is helping HHS run the Illinois exchange through a partnership arrangement, has received $81 million in exchange IT grant money and spent only $8.8 million.

Iowa, another partnership state, has received $21 million in IT grant money and spent slightly more than it received.

Some states that oppose PPACA ended up returning exchange grant money. Wisconsin, for example, received $39 million in total exchange grant funding, including $38 million in IT funding, and it returned $38 million to HHS.

GAO investigators also rated the performance of the exchanges at meeting IT operations goals.

Vermont has been the best at meeting exchange IT goals, and its systems are fully operational in three of the four IT categories analyzed, according to GAO data.

The exchanges in Idaho, Kentucky and Massachusetts have systems that are fully operational in two of the four categories.

The GAO views the exchanges in Colorado, Connecticut and Rhode Island as being only partially operational in all four areas.

See also: Auditors eye Colorado exchange


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