Testimony Before the United States Senate Committee on Finance 
 
 
 
   
HealthCare.gov: A Review of Operations and Enrollment  
 
 
  Testimony of:   
 
  Erin Bliss     
  Assistant Inspector General 
                                               Office of Evaluation and Inspections    
Office of Inspector General  
Department of Health and Human Services 
 
 
 
 
March 17, 2016 
10:00 a.m. 
Dirksen Senate Office Building, Room 215 
 
 
 
 
 
 
   
Testimony of:  
Erin Bliss 
Assistant Inspector General 
Office of Evaluation and Inspections 
Office of Inspector General  
U.S. Department of Health and Human Services  
______________________________________________________________________________ 
 
HealthCare.gov:  Case Study of CMS Management of the Federal Marketplace 
 
Good morning, Chairman Hatch, Ranking Member Wyden, and other distinguished Members of 
the Committee.  I am Erin Bliss, Assistant Inspector General for Evaluation and Inspections in 
the Office of Inspector General (OIG), U.S. Department of Health and Human Services (HHS or 
the Department).  Thank you for the opportunity to testify about OIGs case study reviewing the 
management of the Federal Marketplace website HealthCare.gov by the Centers for Medicare & 
Medicaid Services (CMS).   
OIGs mission is to protect the integrity of HHS programs and the health and welfare of the 
people they serve.  We advance our mission through a nationwide network of audits, evaluations, 
investigations, enforcement actions, and compliance efforts.  OIG has identified oversight and 
operation of the Health Insurance Marketplaces as a Top Management Challenge for HHS. 
The case study is an important component of our marketplace oversight strategy.  It primarily 
examines implementation of HealthCare.gov, the consumer facing website for the Federal 
Marketplace, by CMS from passage of the Patient Protection and Affordable Care Act (ACA) in 
2010 through the second open enrollment period in 2015.  As required by the ACA, 
HealthCare.gov is the Federal website that facilitates purchase of private health insurance for 
consumers who reside in States that did not establish health insurance marketplaces.  At its 
highly-publicized launch on October 1, 2013, and for some time after, HealthCare.gov users 
experienced substantial website outages and technical malfunctions.  After corrective action by 
CMS and contractors following the launch, CMS ended the first open enrollment period with 5.4 
million individuals having selected a plan through the Federal Marketplace.  
OIGs Strategy for Oversight of the Marketplaces 
OIG has completed and planned a significant body of audits and evaluations regarding the 
Federal Marketplace and other ACA provisions of high interest and concern to the Department, 
Congress, and other stakeholders.  OIGs marketplace oversight strategy focuses on four areas 
that we have determined to be most critical:  payment, eligibility, management and 
administration, and security.  
 
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March 17, 2016 
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  My testimony focuses on the OIG report HealthCare.gov:  Case Study of CMS Management of 
the Federal Marketplace (OEI-06-14-00350) released on February 23, 2016.  The case study 
report evaluates CMSs implementation and management of HealthCare.gov.  Consistent with 
the OIGs statutory purpose to promote economy, efficiency, and effectiveness in the 
administration of Departmental programs, the rollout of HealthCare.gov presented a unique 
opportunity to assess CMSs management and operations.  The implementation of 
Healthcare.gov provides lessons that will be increasingly important as the success of 
Government programs becomes more dependent on the effective intersection of policy, 
technology, and management.  The case study enabled OIG to draw conclusions about factors 
that contributed to the websites breakdown and subsequent improvement, and lessons learned to 
promote effective Government operations moving forward.   
In summary, our case study report provides three takeaways about the development and 
implementation of HealthCare.gov, presented in chronological order over a 5-year period from 
passage of the ACA through the Marketplaces second open enrollment period:   
 
Development and Launch:  The poor launch of the website was caused by many 
avoidable organizational missteps, in addition to problems with website technology;  
Correction through Second Open Enrollment Period:  After the breakdown, CMS 
improved processes and worked with contractors and others to fix the website, and this 
approach led to broader organizational changes focused on leadership, decisionmaking, 
and communication; and  
Call for Continued Progress:  Challenges remain in managing the Federal Marketplace 
and improving operations and services provided by Healthcare.gov, including issues 
identified in related OIG reports.  CMS must continue applying lessons learned from 
HealthCare.gov to complete this work and address new challenges as they arise. 
   
Background on the Federal Marketplace and Healthcare.gov 
The ACA was signed into law on March 23, 2010, and amended on March 30, 2010.1  The ACA 
required the establishment of a health insurance exchange (marketplace) in each State that would 
be operational on or before January 1, 2014.2  For States that elected not to establish their own 
                                                           
1 P.L. No. 111-148 (Mar. 23, 2010), as amended by the Health Care and Education Reconciliation Act of 2010,  P.L. No. 111-152 (Mar. 30, 
2010), collectively referred to as the Affordable Care Act (ACA). 
2 Ibid.  1311(a), (b). 
 
 
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  marketplaces, the Federal Government was required to operate a marketplace on behalf of the 
State.3   
The marketplaces provide those seeking health insurance a single point of access to view 
qualified health plan (health plan)4 options, determine eligibility for coverage, and purchase 
insurance coverage.  Individuals also use the marketplaces to determine eligibility for insurance 
affordability programs (e.g., Medicaid, premium tax credits, and cost-sharing reductions) that 
lower insurance premiums and costs of care.5  At the beginning of the third open enrollment 
period, November 1, 2015, the Federal Government operated a marketplace (the Federal 
Marketplace) for 38 States, including 7 State-partnership marketplaces for which HHS and the 
State share responsibilities for core functions and 4 federally supported State marketplaces in 
which States perform most marketplace functions.6  Thirteen States (including the District of 
Columbia) operated their own State marketplaces.7 
CMS has had responsibility for managing the marketplace programs since January 2011.8  To 
implement the ACA provisions related to the marketplaces, CMS has worked in collaboration 
with public and private entities, including other Federal agencies as required by the ACA,9 State 
Medicaid agencies, private contractors, health insurance issuers (issuers), and not-for-profit 
organizations.  As it continues to operate the Federal Marketplace, CMS must ensure accurate 
eligibility determinations, process enrollments, facilitate Medicaid enrollment for those who 
qualify, and communicate timely and accurate information to issuers and consumers.  CMS also 
provides support functions for the State marketplaces and administers Federal financial 
assistance and premium stabilization programs related to the marketplaces.  
HealthCare.gov is the public website for the Federal Marketplace through which individuals can 
browse health insurance plans, enroll in plans, and apply for Federal financial assistance to help 
cover their premiums and other costs.  This is the consumer-facing, or front end, portion of the 
marketplace.  The back end systems of the Federal Marketplace perform functions such linking 
consumers information from HealthCare.gov to multiple supporting systems that facilitate the 
enrollment process and payment to issuers.   
 
                                                           
3 Ibid.  1321(c). 
4 Private health insurance plans certified as meeting certain standards and covering a core set of benefits including doctor visits, preventive care, 
hospitalization, and prescriptions. 
5 ACA  1401, 1402. 
6 The Henry J. Kaiser Family Foundation, State Decisions on Health Insurance Marketplaces and the Medicaid Expansion, December 17, 2015.  
Accessed at  http://kff.org/health-reform/state-indicator/state-decisions-for-creating-health-insurance-exchanges-and-expanding-medicaid/ on 
January 6, 2016.  CMS, Hawaii: For 2016 insurance coverage, use HealthCare.gov to apply and enroll.  Accessed at 
https://www.healthcare.gov/hawaii-2016/ on January 6, 2016. 
7 Ibid. 
8 76 Fed. Reg. 4703 (Jan. 26, 2011). 
9 ACA  1411, 1412. 
 
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  Key components of HealthCare.gov and the Federal Marketplace include an identity 
management system to enable consumers to create accounts and verify their identities; the Data 
Services Hub, which routes information requests from the marketplaces to other Federal agencies 
and back, such as the Internal Revenue Service (IRS); and the Federally-facilitated Marketplace 
(FFM) that comprises the core of the overall system.  The FFM includes three main 
subcomponents to facilitate various aspects of acquiring health insurance:  eligibility and 
enrollment determinations, plan management, and financial management. 
 
OIGs Case Study Approach 
The objective of the case study was to gain insight into CMS implementation and management 
of the Federal Marketplace, focusing primarily on HealthCare.gov.  The case study identifies 
organizational factors that contributed to the websites poor launch and subsequent improvement, 
and lessons for employing core management principles in navigating program implementation 
and change.  These organizational factors and the lessons learned identify principles that can 
contribute not only to improving the Marketplace, but also contribute to improving the economy, 
efficiency, and effectiveness of the Departments other programs and operations.   
Our review examined the 5-year period from March 2010 to February 2015, providing a 
chronology of events and identifying factors that contributed to the websites breakdown at 
launch, its recovery following corrective action, and implementation of Healthcare.gov through 
the second open enrollment period.  In conducting this review, we interviewed current and 
former HHS and CMS officials, staff, and contractors involved with the development and 
management of the website.  We also reviewed thousands of HHS and CMS documents, 
including management reports, internal correspondence, and website development contracts. 
 
OIG Findings From Preparation and Development of HealthCare.gov  
(March 2010  September 2013) 
The development of HealthCare.gov faced a high risk of failure, given the technical complexity 
required; the fixed deadline; and a high degree of uncertainty about mission, scope, and funding.  
Still, we found that HHS and CMS made many missteps throughout development and 
implementation.  Most critical was the absence of clear leadership, which caused delays in 
decisionmaking, lack of clarity in project tasks, and the inability of CMS to recognize the 
magnitude of problems as the project deteriorated.   
 
The HealthCare.gov project encountered problems at the beginning of development that set the 
stage for the poor launch.  Implementing the Federal Marketplace required substantial policy 
development and decisionmaking to inform technical planning and implementation of the 
website.  This included not only writing regulations to govern the marketplaces, but also 
establishing partnerships with other entities involved in implementation, such as other 
departments, States, and issuers.  This policy work was made more difficult and protracted by a 
lack of certainty regarding the mission, scope, and funding for the Federal Marketplace and 
 
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  website and by varying internal and external expectations for the marketplaces.  Delays caused 
by the lack of certainty used valuable time and made an already compressed timeframe more 
difficult. 
Additionally, the projects poor transition to CMS after 10 months in the HHS Office of the 
Secretary resulted in problems that lasted long after the move.  Initial work in the HHS Office 
of the Secretary made significant strides in establishing the policy framework, but did not focus 
attention on planning for the projects longer-term technical and operational needs.  CMS had 
to reconfigure roles and timelines, determine how it would leverage its resources, and begin 
work behind schedule.  Further, while CMSs infrastructure and experience provided greater 
resources for the project, it led to the Federal Marketplace operating within a large bureaucratic 
structure that separated contract, policy, and technical staff, further diffusing the project team 
and making implementation more complex.  Our review found that CMS leadership failed to 
foster effective collaboration and communication, particularly between CMS policy and 
technical staff and with contractors. 
 
Lack of clear project leadership led to project diffusion and poor coordination.  From the 
beginning and well into the project, CMS did not assign clear project leadership, which was 
particularly problematic for the policy and technological work needed to set up 
HealthCare.gov.  For example, CMS continued to make changes to the projects business 
requirements that then changed technical aspects of the website build, in large part because 
mid-level staff and managers did not have clear direction or the authority to make decisions.  
Effective leadership would have enabled a comprehensive view across the project to better 
identify problems and determine priorities.  Instead, lack of a single lead entity inhibited 
progress assessments and changing course as needed.   
 
IT contracting for the FFM encountered significant problems.  CMS mismanagement of the key 
HealthCare.gov contract continued throughout the website build.  CMS did not employ an 
acquisition strategy to develop contracts and solicit contractors, a tool used to precisely assess 
project needs and make a systematic assessment of the contractors ability to meet those needs.  
Further, due to CMSs contracting process and uncertainty about funding and specifications, 
CMS received a limited number of bids for the contract.  CMS hired CGI Federal to build the 
core of the overall FFM system, as well as the online application for consumers.  CMS oversight 
of the contract was disjointed and spread across different divisions with little coordination.  CMS 
made frequent changes to contract specifications, and did not effectively communicate these 
changes or adequately assess how they would affect staffing and schedules.   
Despite many warnings of substantial problems, CMS moved forward without serious 
discussion of delaying the launch.  Throughout the course of building HealthCare.gov, staff at 
HHS and CMS, as well as outside entities, identified problems with the program and warned 
 
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  that these problems warranted action.  In all, CMS received 18 documented warnings of 
concerns regarding HealthCare.gov between July 2011 and July 2013.  These documented 
warnings contained substantial detail about the projects shortcomings and were formally 
submitted to CMS senior leadership or project managers at CMS.  However, these reports were 
not shared broadly due to diffuse leadership and poor communication.  As a result, no one 
person in CMS had a comprehensive view of the poor progress and, given the problems were 
complex, information became unwieldy and difficult to prioritize.  Without a single 
comprehensive view,   CMS leadership and staff took little action to respond to warnings, 
remained overly optimistic about the launch, and developed few contingency plans.  As the 
project degraded further and problems became more well-known, CMS officials and staff 
became desensitized to bad news about progress.   
In early 2013, CMS attempted to take corrective action, but these efforts were largely 
unsuccessful because they were not fully and diligently executed.  For example, after criticism 
that there was no clear leadership, CMS assigned its newly appointed Chief Operating Officer in 
early 2013 to head the Federal Marketplace program, but the assignment was not formally 
announced, the position was not supported by clear responsibilities, and the designee had an 
already large responsibility as CMS Chief Operating Officer.  As another example, a CMS 
advisor recommended that the project hire a technical systems integrator to coordinate 
operations, and CMS and contractors discussed this need at several points in the project.  
However, in correspondence and congressional testimony, it was clear CMS technical leadership 
perceived that CMS itself was already serving as the systems integrator.10  CGI Federal 
managers reported that the lack of a true systems integrator created extra work that was outside 
the scope of their contract.   
Due to the poor contract management and ensuing delays, the final months of development and 
implementation for HealthCare.gov were chaotic.  CMS continued to make changes to business 
requirements and technical specifications well into 2013, delaying development to a point 
where it was not feasible to complete and test the website as initially planned.  Critical tasks 
went uncompleted, including testing website functionality and security and ensuring adequate 
capacity for users.  CMS continued with the same plans for a full launch.  Changing the 
projects path would have required a leader or team to conduct a comprehensive assessment of 
status, and to either possess the authority to alter tasks and processes or to fully communicate 
that assessment to leaders with authority.  Instead, CMS and contractors continued with the 
initial strategy and goals, falling further behind schedule, with largely the same diffuse 
leadership structure, staffing, and project plan. 
                                                           
10 U.S. House of Representatives, House Energy and Commerce Committee, PPACA Implementation Failures: Answers from HHS, October 30, 
2013.   
 
 
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  By the time CMS took more drastic action to change the projects path in August and September 
of 2013, it was too late to adequately affect change, given the substantial need for progress and 
improved execution.  CMS cut functions that were at one time considered critical to a successful 
launch, such as the Spanish language and SHOP websites, to divert resources to the main build.  
This occurred in the last few weeks before launch, when developers and testers reported they 
were months behind schedule.  The rush to launch affected all aspects of the build, including 
moving forward with only an interim authorization to operate and requesting double computing 
capacity late in September.  CMS sought to deliver a version of Healthcare.gov that had only the 
minimum necessary functions to operate, but did so without a comprehensive and thoughtful 
strategy.  
OIG Findings From Launch, Correction and Turnaround of HealthCare.gov  
(October 2013  February 2015) 
HealthCare.gov launched at midnight on October 1, 2013, and experienced substantial 
problems within hours.  The website received five times the number of expected users, but the 
problems involved more than capacity.  The website entry tool was overwhelmed, and 
software code defects caused malfunctions.  Fixing the website required substantial 
corrections to the software code and to further increase capacity.  Compounding problems 
further, some responsible staff were furloughed when the Government shut down on October 
1, 2013.   
CMS began corrective action, reorganizing the work to focus on key priorities and to improve 
execution.  CMS and contractors quickly brought in new staff and expertise following the 
launch, developing an all-hands environment wherein fixing problems with HealthCare.gov 
was the key agency mission.  Most of the additional staffing came to the project within 3 
weeks, including technological and project management experts from CMS, contractors, and 
the private sector.  By late October, CMS and contractors began to move command center 
operations, establishing what would become the formal HealthCare.gov command centerthe 
Exchange Operations Center (XOC).  The structure at the XOC was based on active 
coordination between technical and policy staff, a key component missing during the website 
preparation and development.  It also employed comprehensive website monitoring tools to 
identify problems and assess performance.  The widespread attention to the launch and the 
number of parties involved could have created bureaucratic paralysis, but those working on 
the repairs directed their attention to immediate action and improved the HealthCare.gov 
website substantially in 2 months. 
Before the launch, artificial distinctions and divisions among staff contributed to poor 
collaboration, lack of communication, disjointed management, and slow progress.  Following the 
launch, first with the technological team and then more broadly, CMS promoted a culture that 
was badgeless and titleless, working as a single team regardless of employer and job title.  
 
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  According to CMS, this change in culture fostered a greater sense of mission and teamwork that 
further improved daily operations. 
CMS initiated organizational change, such as a deeper integration between policy and 
technological tasks.  The Federal Marketplace and HealthCare.gov needed expertise and 
coordination across CMS divisions and many contractors.  CMS integrated the various 
functions within the project, which improved daily work.  This integration allowed CMS to 
identify and address problems more quickly, make informed decisions, and provide clearer 
direction to those involved in the website development and operations.  CMS also assigned 
clear project and technical leadership, hiring a technical systems integrator, and restructuring 
its divisions to allow for greater visibility and oversight of technical staff and contractors by 
senior leadership.     
This greater sense of operational awareness also prompted CMS to plan for and mitigate 
potential problems by considering contingencies, building redundant systems, and increasing 
capacity.  CMSs lack of contingency plans before the launch meant that CMS had few 
options when the functionality and computing capacity of HealthCare.gov encountered 
problems.  Essential to success was identifying possible problems and developing systems and 
strategies specific to each concern.   
By the end of the first open enrollment period, CMS had a stable website that functioned well 
at high capacity, but some planned components had yet to be completed.  CMS immediately 
began preparation for the second open enrollment period to begin seven months later.  CMS 
practiced what officials called ruthless prioritization of tasks to focus on the most urgent 
needs and functionality.  This strategy served to align goals with available resources, guide 
daily work and accountability, and temper unrealistic expectations about results.  According 
to CMS, officials developed a list of technological needs, then debated and cut about half of 
the items requested.  Cuts included key elements of the Federal Marketplace system, such as 
completion of the automated financial management system.   
This process for strategic and organized prioritization marked a significant improvement over 
the rushed reprioritization efforts that occurred prior to launch.  Project documentation 
indicated that in 2013, CMS and contractors were frantic to establish basic website 
functionality.  They pushed forward faulty and untested functionality and hoped to fix it after 
the launch.  Project documentation indicated that in 2014, CMS maintained a more disciplined 
project schedule, meeting deadlines with a goal to implement only technology that had what 
project documentation referred to as optimal functionality, or perfect execution.  When this 
standard could not be met in time, CMS identified problems more quickly to allow time to 
employ contingency plans.  CMS stated that this higher standard led to improved practices 
overall, such as targeting earlier deadlines for delivery and imposing stricter testing standards.  
For example, the new HealthCare.gov consumer application, App 2.0, was tested through a 
soft launch prior to open enrollment.  This approach meant that CMS did not always deliver 
 
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  according to schedule, but was able to test the applications functionality prior to use in the 
second open enrollment.     
CMS documentation indicated the technical aspects of the website and supporting systems 
performed well during the second open enrollment period, with no system outages and few 
consumer reports of problems applying for coverage or selecting plans.  CMS further solidified 
project leadership, worked to better align project goals with resources, and renewed its focus on 
contract management, particularly emphasizing the agency-contractor relationship.  As of 
February 1, 2016, CMS reported that over 9.6 million consumers had selected a health 
insurance plan through the Federal Marketplace or had their coverage automatically renewed.11   
 
Call for Continued Progress 
CMS continues to face challenges in implementing the Federal Marketplace, and in improving 
operations and services provided through HealthCare.gov.  As CMS moves forward, challenges 
include improving the website and systems as planned, such as completing the automated 
financial management system and improving consumer tools to select plans.  CMS must also 
continue to address areas OIG has identified in past reports as problematic or needing 
improvement, including contract oversight, the accuracy of payments and eligibility 
determinations, and information security controls.   
CMS concurred with OIGs call for continued progress, stating that it will continue to employ 
the lessons identified in the case study and that, since OIGs review, it has implemented several 
initiatives to further improve its management.  The 10 lessons articulated in the report comprise 
core management principles that could apply to other organizations.  They include assigning 
clear project leadership, encouraging staff to identify and communicate problems, and better 
integrating policy and technological work.  OIG will continue to monitor CMSs actions to 
address specific recommendations from our work, as well as its overall management of this 
program. 
In addition to the lessons learned from the case study, OIG has also completed 12 audits and 
evaluations of the Federal Marketplace, which combined make over 30 recommendations to 
CMS.  We continue to monitor CMSs progress toward implementing these recommendations.  
OIG has also published numerous other reports related to State marketplaces and other 
significant programs created by the ACA.  All of our ACA-related work is available at: 
http://oig.hhs.gov/reports-and-publications/aca/.  
OIG has ongoing and planned work in several areas related to marketplaces, including examining 
the accuracy of financial assistance payments for individual enrollees for the Federal 
                                                           
11 CMS, Health Insurance Marketplace Open Enrollment Snapshot  Week 13, February 4, 2016.  Accessed at 
https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-02-04.html on February 8, 2016. 
 
 
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  Marketplace, analysis of CMSs oversight of the State marketplaces, and a review of the funding 
that established the Federal Marketplace.  We are also currently developing work related to the 
premium stabilization programs.  In addition, OIG has established relationships with its law 
enforcement partners to investigate fraud and closely monitor activities and concerns related to 
the marketplaces. 
 
Conclusion 
The Department, and the health care system generally, are in the process of implementing major 
changes to health care delivery.  Most of those changes will depend on the successful 
implementation of information technology, but success will require more than just ensuring that 
the right code is written or that the right technology is purchased.  As our case study 
demonstrates, whether these changes will result in more effective, efficient, and economic health 
care and human service programs will depend on the interaction of technology, management, and 
policy.  
OIG believes the lessons learned identified in the case study may be beneficial to the Department 
beyond the operation and management of the Federal Marketplace.  Assessing Departmental 
management will continue to be a vital component of OIGs oversight of Department programs 
going forward.  Many programs or projects that OIG oversees will not require the same level of 
coordination or resources required of the Federal Marketplace; however, the principles identified 
in the Case Study can help foster the effectiveness and efficiency of Departmental and program 
management.  
The growing intersection of programs and technology requires OIG to grow its own capabilities 
to provide effective oversight.  OIG is building necessary expertise in data analytics, information 
technology, and forensic accounting.  Increasing our proficiencies and resources in these 
disciplines will allow OIG to provide meaningful analysis to inform decision-makers and 
program managers.   
Thank you again for inviting OIG to speak with the Committee today to share the results of the 
case study reviewing CMS management of HealthCare.gov.  With your permission, I would like 
to submit the case study report for the record and I would be happy to answer any questions the 
Committee may have.   
 
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