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Audit: Serious problems remain with Vermont Health Connect insurance exchange

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MONTPELIER, Vermont — A state audit report released Thursday finds serious problems remain with the troubled Vermont Health Connect insurance exchange and questions whether the state can meet deadlines for needed system developments to address the shortcomings.

The exchange continues to be plagued by enrollment, renewals, payments and security problems, even though millions of dollars have been spent to fix them, said the report from Vermont State Auditor Doug Hoffer.

"While the State has taken steps to correct problems, gaps in VHC's functionality have been patched by manual and time-consuming processes that have caused hardship for Vermonters," Hoffer said. While the State has thrown substantial personnel and financial resources at the problems facing VHC, the ultimate effectiveness of those actions won't be realized unless new versions of the exchange are successfully released in May and the fall of this year."

The state switched contractors last summer after technical failures and security breaches in the system occurred after its launch on Oct. 1, 2013.

Hoffer said the absence of automatic functions to update accounts with changes in customers' circumstances has been an ongoing problem. The backlog was reduced from the fall of 2014 by manual processes but Vermont Health Connect reported 7,256 unprocessed change requests as of March 9, he said.

Despite the state reporting that it had corrected its highest priority security weaknesses, at the end of January of 2015 the system had 70 moderate risk weaknesses — defined as a threat that could have a serious adverse effect on organizational operations, organizational assets, individuals, other organizations, or the nation, Hoffer said.

The report also said the state has taken little action to address problems with the premium payment process.

"The lack of financial reporting, account oversight and a full reconciliation of customer account balance is troubling," Hoffer said.

The state is planning to release an automated process for making "change of circumstances" changes to customers' accounts in May and also planning to release an automated renewals processing for qualified health plans and Medicaid in the fall of 2015. Issues that must be overcome for this to happen are competition for staff and technical resources and the absence of a contract to complete the fall release, the report said.

Vermont Health Reform Chief Lawrence Miller said the report notes the steps the state has taken to make significant improvements but there's more work to do. He said he's optimistic the state will complete an automated change-of-circumstance function by the end of May.

"Anybody who's heard my testimony over the last year knows that I didn't find any surprises in the audit," Miller said.

The administration last month announced contingency plans under which Vermont could move to the federal exchange if key problems with Vermont Health Connect aren't fixed this year. Hoffer said he agrees with that consideration and recommends that the state do a cost-benefit analysis of VHC alternatives before making a decision.

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