The Obama administration has spent roughly $840 million on HealthCare.gov, including more than $150 million just in cost overruns for the version that failed so badly when it launched last year.
The Government Accountability Office says cost overruns went hand-in-hand with the management failures that led to the disastrous launch of HealthCare.gov and the 36 state insurance exchanges it serves.
GAO's report, prepared for a House Energy and Commerce Committee hearing Thursday, details a long series of management, oversight, and contracting problems that plagued the entire process, from risky contracting practices in 2011 through the botched launch last October.
A massive repair effort got the site stabilized by January, and despite the early failures, the administration ended up exceeding its enrollment target for this year. More than 8 million people chose plans through Obamacare, including the 36 states whose marketplaces run through HealthCare.gov.
All the same, GAO says, similar problems could arise again without structural changes in the way the government manages its contracts and spending.
Here are the key findings from GAO's prepared testimony:
- The Centers for Medicare and Medicaid Services, the agency responsible for building the federally run insurance marketplaces, "issued task orders … when key technical requirements were still unknown."
- When the process began in 2011, CMS obligated $56 million for the federally run exchanges, including HealthCare.gov. Those costs swelled to $209 million.
- Costs for the federal data hub, which coordinates records and personal information from several state and federal agencies to help the exchanges process applications, rose from $30 million to $80 million.
- "New and changing requirements drove cost increases during the first year of development, while the complexity of the system and rework resulting from changing CMS decisions added to … costs in the second year," GAO states.
- CMS has paid $12.5 million to CGI Federal, the primary contractor for the site. CMS officials had problems with CGI's work throughout the process, but the agency only withheld about 2 percent of its payments to the company.
- CMS fired CGI in January and signed a new contract with Accenture. That contract has also seen major cost overruns—from an initial obligation of $95 million to more than $175 million.
- Because CMS's oversight of the contract with CGI was so poor, CMS officials inappropriately authorized more than $30 million in expenditures. GAO found 40 separate occasions on which work was approved incorrectly.
- "CMS launched HealthCare.gov without verification that it met performance requirements," GAO said, because the agency pushed back reviews of the site's performance to just weeks before the Oct. 1 launch.
Rep. Fred Upton, the chairman of the Energy and Commerce Committee, noted that key pieces of the HealthCare.gov system—including the part that pays insurance companies—still haven't been built.
"The disastrous implementation of the president's health care law has already led to canceled plans, lost access to doctors, and higher premiums," Upton said in a statement. "Now add to that hundreds of millions of taxpayer dollars wasted on an exchange that is still not ready for prime time."
CMS spokesman Aaron Albright said the agency has already taken concrete steps to improve its management of HealthCare.gov.
"CMS takes its responsibility for contracting oversight seriously and has already implemented contracting reforms that are more extensive than the recommendations in the report, including ending our contract with CGI and moving to a new type of contract with Accenture that rewards performance," he said.
CMS brought in another contractor, QSSI, to coordinate the HealthCare.gov repair effort and has now directly hired Andy Slavitt, who spearheaded the project for QSSI. Sylvia Mathews Burwell, the new Health and Human Services secretary, has also created new positions with direct responsibility for HealthCare.gov and the federally run exchanges.
The agency is also in the process of formalizing internal guidelines that aim to prevent unauthorized work orders like the ones GAO discovered.
This article appears in the July 31, 2014 edition of NJ Daily.
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