GAO to investigate complaint against Hawaii’s Obamacare exchange

By Malia Zimmerman | Watchdog.org

HONOLULU – The U.S. Government Accountability Office said Wednesday it will investigate Hawaii Health Connector’s spending of its $204 million federal grant.

Senate Minority Leader Sam Slom filed a complaint March 27, asking for the investigation.

He was the only one of 76 legislators to vote against the establishment of the state Obamacare exchange.

Slom pointed out Hawaii has the lowest exchange enrollment rate in the country — around 8,000 people — despite the $204 million grant, yet the Connector’s interim director Tom Matsuda is lobbying lawmakers for another $4.7 million in state funds for fiscal year 2015 to maintain its operations.

The exchange is supposed to be self sufficient by the end of 2014, but since enrollment is so low, the 2 percent tax on every transaction doesn’t cover the exchange’s operational costs, Matsuda told lawmakers. The exchange expected at least 50,000 people to enroll.

A sizable portion of the $204 million grant is going to CGI Corp., which received a $74 million contract to develop and maintain the Connector website.

However, the site has experienced a number of technical problems and delays. Because of similar problems, Slom noted the federal government and other states that had contracts with CGI Corp. cut ties with the vendor.

One of the major problems is the Connector isn’t integrated with the Medicaid system, even though Hawaii’s enrollment process requires consumers to be screened for Medicaid eligibility before seeking coverage, Slom said.

Lawmakers and media have complained about a lack of transparency by the Connector, an independent nonprofit agency set up by the Legislature to run the exchange. The lack of transparency is one of the main reasons Slom asked for the federal investigation.

“The Connector is operated by the state as a nonprofit organization, and governed by a board of directors, so it has been nearly impossible for legislators or the general public to get any specific information regarding the Hawaii Health Connector’s budget and expenditures,” Slom said, adding requests for details have been either denied or ignored.

TROUBLED: Hawaii Health Connector Director Tom Matsuda testifies April 3 before Congress on Hawaii’s problem-filled Obamacare exchange

Slom wants the GAO to investigate:

• How the $204 million Hawaii received in ACA grants has been spent.
• Whether the payment of a large portion of the federal grant to CGI Corp. for a product that continually fails to fulfill the requirements for a state health exchange website can be considered an abuse of federal funds.
• Why the Connector has failed to publicly disclose all copies of Hawaii’s grant applications related to the establishment of the exchanges.
• Why the Connector has failed to publicly disclose Hawaii’s contingency plan, which was due Jan. 15, 2013, and was required by the Centers for Medicare & Medicaid Services.
• What additional costs were incurred because of the failure to plan for the integration of Hawaii’s Medicaid system into the Hawaii Health Connector and CGI Corp.’s failure to anticipate or incorporate this issue into HHC’s exchange website.

Slom said taxpayers and legislators should be outraged by the Connector’s lack of planning and money management.

CUT US OUT: U.S. Rep Colleen Hanabusa, D-Hawaii, says Hawaii should be exempt from ACA requirements.

“This is not a partisan issue, this is an economic issue,” Slom said.

While none of Hawaii’s four members of Congress, all Democrats, joined Slom, a Republican, in asking the GAO for the investigation, U.S. Rep. Colleen Hanabusa did voice concerns earlier this month about the exchange’s spending and management at a congressional hearing.

Six state health exchange directors, including the director of Hawaii’s Obamacare exchange, were grilled by multiple U.S. House committees trying to determine why the websites aren’t working properly.

The committees are looking into how the six states with troubled Obamacare exchanges spent hundreds of millions of dollars in federal grants, yet still have low enrollment and glitch-filled websites.

U.S. Rep. Colleen Hanabusa, D-Hawaii, said at the hearing residents of her state are “frustrated and embarrassed” because of the low enrollment in the Obamacare exchange, and “very concerned” about how the $204 million federal Affordable Care Act grant has been allocated and spent.

Reach Malia Zimmerman at Malia@hawaiireporter.com