GAO: HealthCare.Gov Still Faces Technology Delays, High Costs

July 31, 2014 in News

The federal health insurance exchange website continues to be hampered by technology delays and costly overruns amounting to millions of dollars, according to a Government Accountability Office report released Wednesday, Reuters reports (Morgan, Reuters, 7/30).

Report Findings

According to the report, the federal government as of March had spent nearly $840 million on building the website (Radnofsky, Wall Street Journal, 7/30). From the website’s initial phases of development in September 2011 to February 2014, the site’s estimated cost increased from $56 million to more than $209 million (Haberkorn/Norman, Politico, 7/30). Meanwhile, the report found that the cost for the exchange’s data hub, which coordinates records and personal data from various state and federal agencies, nearly tripled from $30 million to $85 million (Baker, National Journal, 7/30).

The report acknowledged that building “a first-of-its-kind marketplace” was bound to be a difficult project. However, GAO said CMS officials made the situation worse by:

  • Not allowing enough time for work to be completed;
  • Changing instructions given to the main contractor; and
  • Not scrutinizing progress made on the site (Goldstein, Washington Post, 7/30).

The report also noted that CMS paid CGI Federal, the site’s first contractor, $12.5 million and withheld just 2% of the contractor’s payment despite issues with CGI’s performance (National Journal, 7/30).

The government’s three-year contract with CGI Federal was not renewed when it expired on Feb. 28. Instead, CMS in January announced it was awarding Accenture a one-year contract to oversee HealthCare.gov and prepare for the next open enrollment period (iHealthBeat, 7/17).

However, the report noted that:

  • Some aspects of the website are still incomplete, including a financial management system needed for health insurers; and
  • Accenture’s no-bid, one-year contract, which was originally valued at $91 million, has increased to a value of more than $175 million because of additional requirements (Politico, 7/30).

House Testimony

In prepared testimony for a House Energy and Commerce Committee hearing on the report Thursday, GAO Director of Acquisition and Sourcing Management William Woods wrote, “In summary, we found that CMS undertook the development of HealthCare.gov and its related systems without effective planning or oversight practices, despite facing a number of challenges that increased both the level of risk and the need for effective oversight” (Politico, 7/30). He added, “CMS incurred significant cost increases, schedule slips and delayed system functionality for the [site] and data hub systems due primarily to changing requirements that were exacerbated by inconsistent oversight” (Wall Street Journal, 7/30).

Woods said the lapses resulted in “CMS launch[ing] HealthCare.gov without verification that it met performance requirements” (Al-Faruque, The Hill, 7/30).

Recommendations

Woods cautioned that if CMS does not “improv[e] contract management and adher[e] to a structured governance process, significant risks remain that upcoming open enrollment periods could encounter challenges” (Washington Post, 7/30).

The report recommended that CMS:

  • Issue guidance on who is able to authorize extra contractor funding;
  • Inform staff about acquisition strategies; and
  • Make sure new projects are better managed.

The report also called on the administration to review the site’s remaining issues and its increasing repair costs (The Hill, 7/30).

Reaction

Rep. Tim Murphy (R-Pa.) said the report shows the “Obama administration was not up to the job” of creating HealthCare.gov, “and American taxpayers are now paying the price.” He added that the House panel will “have many questions” about how the administration “got into this near billion-dollar mess” (Politico, 7/30).

Meanwhile, Accenture spokesperson Joanne Veto said that the company “is delivering all of [its] work for CMS on time and on budget.” She said that the increase in contract value noted by GAO “is a result of CMS assigning Accenture additional work.”

CMS officials who received draft copies of the report before its release said they mostly agreed with GAO’s findings. They noted that the department is working to address the issues (Wall Street Journal, 7/30).

A CMS spokesperson said the agency “takes … responsibility for contracting oversight seriously and has already implemented contracting reforms that are more extensive than the recommendations in the report” (The Hill, 7/30).

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