Follow-Up on Recommendations from Report No. 15-20, Audit of the Department of Human Services’ KOLEA System

We found that the department has implemented seven of the recommendations and has made significant progress toward implementation of the remaining seven recommendations

From Hawaii State Auditor, September, 2018

Section 23-7.5, Hawai‘i Revised Statutes, requires the Auditor to report to the Legislature annually on each audit recommendation more than one year old that has not been implemented by the audited department or agency. This report presents the results of our review of fourteen recommendations made to the Department of Human Services in Report No. 15-20, Audit of the Department of Human Services’ KOLEA System: $155 Million KOLEA Project Does Not Achieve ACA Goals, which was published in December 2015.

Why we did the 2015 Audit

We conducted the audit pursuant to Section 131 of Act 119, Session Laws of Hawai‘i 2015, which required the Auditor to perform a management and financial audit of KOLEA (Kauhale On-line Eligibility Assistance), including an evaluation of the procurement of KOLEA and the proposed addition of other Department of Human Services (DHS) program functions such as the Supplemental Nutrition Assistance Program (SNAP) and the Temporary Assistance For Needy Families (TANF) program. The audit also called for a review of all contract modifications, planning for ongoing maintenance and operations for KOLEA, effectiveness of staff training on and utilization of KOLEA, and an analysis of KOLEA’s capabilities.

The Kauhale On-line Eligibility Assistance (KOLEA)

Beginning in 2014, the federal 2010 Patient Protection and Affordable Care Act (commonly known as the Affordable Care Act or the ACA) expanded the Medicaid program, allowing more Americans to qualify for assistance. In addition, the Affordable Care Act required a coordinated and simplified application process between Medicaid and states’ health insurance exchanges to allow consumers to apply for coverage with a single application. One of the primary goals of the Affordable Care Act was to create a simple, real-time eligibility and enrollment process that uses electronic data to ease the paperwork burden on applicants and state agencies while expediting an eligibility determination. For most states, including Hawai‘i, this required new or greatly enhanced Medicaid enrollment information technology (IT) systems.

In April 2011, the Centers for Medicare and Medicaid Services, an agency within the U.S. Department of Health & Human Services, began providing increased federal financial support for states that needed to overhaul their IT systems to accommodate changes that the Affordable Care Act required to be implemented by October 1, 2013. DHS applied for the enhanced federal funding to replace its aging Hawai‘i Automated Welfare Information (HAWI) System which could not support the mandatory provisions of the Affordable Care Act. After a procurement process, KPMG, LLP was selected by DHS to replace HAWI with a new system capable of meeting the Affordable Care Act requirements.

In January 2013, the Centers for Medicare and Medicaid Services approved DHS’ contract with KPMG, allowing KPMG to begin work on the KOLEA system. On October 1, 2013, DHS’ Med-QUEST Division launched the KOLEA system in accordance with the Affordable Care Act. As of December 2014, the total amount paid to KPMG and three other vendors for developing and supporting KOLEA was $154.7 million.

What we found in 2015

Our 2015 audit found that, although DHS was able to launch KOLEA on the federally-mandated deadline of October 1, 2013, the new IT application fell short of meeting Affordable Care Act goals.

More specifically:

• Poor planning and lack of effective leadership at the Med-QUEST Division exacerbated already tight time constraints for developing the system and forced the KOLEA Project Team to take on the additional task of developing the eligibility and enrollment process while designing KOLEA.

• The $155 million IT eligibility and enrollment system failed to achieve the Affordable Care Act’s goals of creating a simple, realtime eligibility and enrollment process that uses electronic data to ease the paperwork burden on applicants and state agencies while expediting an eligibility determination.

• KOLEA was unable to perform electronic data matching to verify an applicant’s income, and staff reported that KOLEA was difficult to use and error-prone.

• The Med-QUEST Division’s Eligibility Branch workers were not appropriately trained on either the new Affordable Care Act eligibility rules, policies, and procedures or on how to navigate KOLEA and its subsequent system updates.

• With respect to the proposed addition of other DHS program functions such as SNAP and TANF programs, we found that, because of the time constraints, the department prioritized Medicaid in the initial IT upgrade phase, but had already begun working on a new enterprise-wide system to allow integration of other human services programs.

What we found this year

Two and half years after our audit, we found that the Med-QUEST Division has embarked upon an organizational transformation to implement redesigned business processes and leverage the KOLEA system. Our follow-up on the implementation of recommendations made in Report No. 15-20, conducted between February and May 2018, included interviews of selected personnel, examination of relevant documents and records, and evaluating whether DHS and the Med-QUEST Division’s actions appeared to fulfill our recommendations. We found that the department has implemented 7 of the recommendations and has made significant progress toward implementation of the remaining 7 recommendations.

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