The Affordable Care Act mandates that states that received federal funding to establish their state-run health insurance marketplaces must be self-sustaining by Jan. 1, 2015. However, it's possible certain states may have violated this provision by using grants for operating expenses after the deadline passed, according to an audit from the Department of Health and Human Services Office of Inspector General (OIG).
The report found that many state-run exchanges' operating revenues in 2015 are uncertain and thus have led these states to use grant funds to cover operational costs.
However, it appears states might have violated the ACA provision due to a lack of clarity from the Centers for Medicare & Medicaid Services (CMS). For instance, current guidelines state that funds provided through a No Cost Extension--which go toward an exchange's design and implementation-- cannot be used to cover maintenance and operating costs, such as rent, telecommunications and utilities. But there are no specific details regarding costs for call centers and in-person assisters.
The OIG report calls for more specific guidance "that clearly defines the difference between a design, development, and implementation expense (potentially allowable) and an operating expense (statutorily prohibited)." Without clearer rules, states are more prone to use funding in an inappropriate manner, OIG said.
What's more, CMS could clear up any confusion by reviewing state-run marketplaces' plans for using "grant funds to ensure that the guidance addresses real-world examples, such as call centers, in-person assisters, bank fees, and printing and postage expenses." Additionally, OIG recommended that CMS monitor the way state-run exchanges use funding for operational costs.
- here's the OIG audit (.pdf)