Minnesota Office of the Legislative Auditor
Financial Audit Division

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Report Summary
Minnesota Health Insurance Exchange: MNsure
Internal Controls and Compliance Audit

 

Financial Audit Division Report 14-21 Released October 28, 2014

The federal government awarded grants to the State of Minnesota totaling $155 million to develop a Minnesota Health Insurance Exchange (Exchange). As of December 31, 2013, Minnesota had received and spent $60 million of those awards. The state spent an additional $34 million of state and other federal money to upgrade computer systems since the Department of Human Services would use the Exchange to enroll individuals in publicly-supported health insurance programs, such as Medical Assistance, Children’s Health Insurance Program, and MinnesotaCare.

Audit Objectives and Scope

The Office of the Legislative Auditor (OLA) conducted this audit to determine whether the state agencies1 involved in developing the Exchange had adequate internal controls and complied with applicable legal requirements in spending public money to develop the Exchange and related computer system upgrades. Because the money came primarily from federal grants, we were required by the U.S. Office of Management and Budget to conduct an audit. However, we expanded the scope to include state requirements.

We audited expenditures made from July 1, 2011, through December 31, 2013. These expenditures involved:

  • Information Technology Contracts
  • Software Support and License Agreements
  • Professional and Consultant Services Contracts
  • Personnel/Payroll and Travel
  • Equipment
  • Outreach Grants and In-Person Assister Services

In addition to examining controls over these expenditures, we also examined controls over collection of receipts, employee ability to update financial transactions in the state’s accounting systems, and compliance with various state and federal finance-related requirements.

This audit did not assess the overall functionality of the MNsure system and, specifically, its ability to determine eligibility for public programs or premium tax credits. In addition, we did not review insurance plans, rates, or billings.

Conclusion

State agencies involved in developing the Exchange had generally adequate internal controls and generally complied with most legal requirements applicable to spending public money in fiscal years 2012, 2013, and 2014 (through December 31, 2013). However, MNsure did not have adequate controls over marketing costs and the collection of receipts and did not comply with some of its board policies and Minnesota Statutes. In addition, MNsure and the departments of Commerce and Management and Budget had other internal control weaknesses and noncompliance with federal and state requirements as noted in the findings in this report.

Key Findings

  • MNsure did not appropriately authorize $925,458 of additional marketing work or execute a contract amendment until after the contractor completed work.
  • MNsure did not design and implement adequate internal controls over collection of receipts from applicants.
  • MNsure did not monitor employee access to functions in the state’s accounting system that require separation of duties between employees.
  • The Department of Commerce and MNsure did not maintain complete and accurate inventory records of equipment purchased for the Exchange.

1 The state agencies involved in the development of the Exchange consisted of the departments of Commerce, Health, Human Services, and Management and Budget, MNsure, and the Office of MN.IT Services.

More Information

Office of the Legislative Auditor ♦ Room 140, 658 Cedar St., St. Paul, MN 55155