Woods' testimony Thursday before a House of Representatives committee will focus on the GAO report that looks at what led to HealthCare.gov's disastrous launch last fall.
When it opened for business Oct. 1, HealthCare.gov, which sells private health insurance plans through the exchange in 36 states, was unable for weeks to handle applications and enrollments for significant numbers of people. The site required a massive, around-the-clock repair effort that took nearly two months to bear fruit.
The Centers for Medicare and Medicaid Services "launched HealthCare.gov without verification that it met performance requirements," said Woods in his prepared remarks.
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Woods also warned that unless CMS improves its management of contracts and "adheres to a structured governance process, significant risks remain that upcoming open enrollment periods could encounter challenges."
Although HealthCare.gov was made functional enough to enroll more than 8 million people by mid-April, much of the site's back-end infrastructure remains to be built and tested. That part of the site will handle complicated calculations that insurers are relying on to minimize their financial risk in selling health plans on the exchange.
Woods noted that functionality of the back-end is "currently scheduled to be implemented in increments through December 2014"—more than a year after it was first scheduled to be working.
"CMS needs a mitigation plan to address these issues," he said.
Woods, in his remarks, noted that from September 2011 through this past February, estimated costs for developing HealthCare.gov grew from an initial obligation of $56 million to more than $209 million. And the cost of building the crucial data hub that determines enrollees eligibility for financial aid grew to nearly $85 million, from $30 million.
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"New and changing requirements drove cost increases during the first year of development, while the complexity of the system and rework resulting from changing CMS decisions added to the (HealthCare.gov) costs in the second year," Woods said.
"Moreover, CMS delayed the key governance reviews, moving an assessment of (HealthCare.gov's) readiness from March to September 2013—just weeks before the launch—and CMS did not receive required governance approvals."
And because of "inconsistent contractor oversight...and unclear roles and responsibilities, there was confusion about who had the authority to approve contractor requests to expend funds for additional work," he said. In about 40 cases identified by the GAO, CMS staff "inappropriately authorized contracts to expend funds totaling over $30 million," Woods said.
"This is not to say the work was not necessary; however, the work was not approved properly."
He noted that CMS had used "cost-plus-fixed-fee" contracts for the contractors assigned to build HealthCare.gov and the related data hub. Those contracts, Woods pointed out, are "considered high risk for the government because of the potential for cost escalation and because the government pays a contractor's allowable cost of performance regardless of whether the work is completed."
Woods singled out CMS' handling, or mishandling of CGI Federal, the lead contractor for HealthCare.gov, whose work has been castigated ever since the site flopped upon launch.
"As the Oct. 1, 2013, deadline for establishing enrollment through the website neared, CMS identified significant performance issues involving the (site's) contractor, but the agency took only limited steps to hold the contractor accountable."
He noted that CMS ended up withholding about $267,000 in CGI's requested fees, which is about 2 percent of the fees paid to that contractor.