Outside Audit Finds Vermont Health Connect Out Of Federal Compliance

Nov 19, 2015

The first independent, external audit of Vermont Health Connect has arrived, and Virginia-based auditing firm says the state is out of compliance with federal regulations for state health insurance exchanges.

There’s a term of art in accounting called a “adverse opinion.” It means an institution isn’t in compliance with generally accepted accounting principles, or that documents needed to prove compliance are either missing or inaccurate. 

This week, after a seven-month delay, a firm called Grant Thornton issued the first external audit of Vermont Health Connect. Its authors listed 18 separate transgressions as the basis for their adverse opinion of this state’s online insurance marketplace.

Lawrence Miller, chief of health care reform for the Shumlin administration, says he didn’t see anything in the audit “that’s surprising or new.”

Miller says the findings, especially ones related to ongoing problems with eligibility determination and verification, highlight some troubling shortcomings. But he says the issues raised in the audit are ones his agency is resolving, and he says they result from a decision to focus limited resources on making sure Vermont Health Connect works for the consumers buying insurance from it.

“Frankly, in the volume of challenges that were faced, we prioritized addressing Vermonters’ needs above documentation,” Miller says. “I’m not meaning to diminish the importance of those management components, simply that they were less important at that time.”

"Frankly, in the volume of challenges that were faced, we prioritized addressing Vermonters' needs above documentation." - Health Care Reform Chief Lawrence Miller

The audit faults the state for lacking federally mandated policies and procedures used to flag improper eligibility determinations. It also found that the state lacks appropriate protocols for making sure people are who they say they are, make as much as they say they make, or qualify for what they claim to qualify for.

The audit was conducted in February, and was due by April 20. Issues on Grant Thornton’s end delayed its submission. The audit also raises concerns about security protocols for contractors and employees at Vermont Health Connect, lack of approved training standards and an inability to demonstrate timely resolution of customer grievances and complaints.

Miller says the state remains out of compliance in some areas, but he says Vermont has worked with the Centers for Medicare and Medicaid to come up with interim measures that have satisfied federal regulators.

“So while we are not operating under normal policy guidance, we are operating under agreement with CMS on those areas,” Miller says.

Vermont Health Connect is required to undergo an external audit annually. Miller says he’s confident the next one will be much improved. 

“The project has been working very hard on completing the documentation that’s necessary, the standards that needed to be improved, the training materials that needed to be updated,” Miller says.

State Auditor Doug Hoffer issued a separate report on Vermont Health Connect in which he raises new concerns about the state's ability to deliver a fully functioning exchange.

On Thursday, State Auditor Doug Hoffer issued a separate report on Vermont Health Connect in which he raises new concerns about the state’s ability to deliver a fully functioning exchange. A Boston firm called Exeter was responsible for building a significant technical component of the exchange. That firm is now going out of business

“And the problem is Exeter is not going to service this software anymore,” Hoffer says. “Right now, it looks like a pretty big risk.”

Gov. Peter Shumlin in recent weeks had held press conferences to highlight some technological successes at Vermont Health Connect. Shumlin said software designed to automate the input of customer data into the system had eliminated the service backlogs that caused such massive headaches for consumers in 2013 and much of 2014.

More recently, he said that software needed to automate the enrollment process would avert this year the problems that plagues enrollment in 2014.

Hoffer says those successes are noteworthy. He says however that the state still has some hurdles to overcome.

"The State has scheduled other major enhancements to the VHC system, but there are significant uncertainties that could disrupt these plans." - State Auditor Doug Hoffer

“For example, the software changes completed earlier this year were also supposed to include other enhancements, such as automated processes to conduct Medicaid renewals and reconciliations between VHC, the insurance carriers, and the premium payment processor, that either were not implemented or implemented only in part,” Hoffer says in the report.

Hoffer says the folding of Exeter could exacerbate the risks.

“The State has scheduled other major enhancements to the VHC system, but there are significant uncertainties that could disrupt these plans,” Hoffer says.

Miller says another subcontractor at Vermont Health Connect – a firm called Archetype – has hired workers from Exeter, and that the state will have the technical resources needed to maintain and repair defects with the Exeter product.

“And those people are here working this week,” Miller says. “They arrived on Monday."