What is a MARS-E Audit

A MARS-E audit is an in-depth assessment designed to verify whether an organization’s operational, technical, and administrative controls align with CMS’s MARS-E requirements. These requirements incorporate security and privacy controls based on the National Institute of Standards and Technology (NIST) Special Publication 800-53. Though MARS-E is tailored to health insurance exchange environments, many of its principles overlap with other frameworks such as HIPAA (for handling PHI), NIST CSF, and FISMA for federal information systems. This close alignment with proven standards helps organizations manage risk more efficiently, streamline compliance efforts across multiple regulatory landscapes, and maintain robust data protection postures.

Unlike general cybersecurity assessments, a MARS-E audit demands a granular understanding of healthcare exchange workflows. You’re not just protecting standard corporate data; you’re handling enrollment applications, verifying subsidy eligibility, and interfacing with federal databases. This multifaceted environment presents distinct obstacles.

1. Granular Data Requirements

• • Multiple Data Types: MARS-E demands robust safeguards for all categories of data—medical records, Social Security numbers, income details, and even citizenship information. Each type has different rules for retention, encryption, and disclosure.
  • Real-Time Data Exchanges: Many health insurance exchanges rely on the Federal Data Services Hub and third-party verifiers. A MARS-E audit inspects authentication methods and encryption protocols for these data flows to ensure no unauthorized access.

2. Constantly Evolving Guidelines

• • Frequent MARS-E Updates: CMS periodically revises MARS-E to align with the latest NIST standards. Organizations must keep track of these updates or risk falling behind on newly introduced encryption, access control, or continuous monitoring best practices.
  • Heightened Oversight: Because these exchanges handle federal subsidies and tax-related data, auditors often look for any mismatch between your internal processes and the latest MARS-E volumes.

3. Broad Organizational Impact

• • Multiple Stakeholders: Successfully passing a MARS-E audit requires cross-functional cooperation among IT, finance, compliance, and legal teams. Each division has unique responsibilities that must align with overall MARS-E guidance.
  • Complex Vendor Networks: If you outsource premium payment processing or call center operations, you must extend MARS-E controls to third-party vendors. Contracts should mirror your internal security policies and be periodically reviewed for compliance gaps.

1. Planning and Scoping

A comprehensive audit begins by defining the boundaries of what will be assessed and establishing clear roles.

• • Identify Relevant MARS-E Volumes

    MARS-E covers privacy, system security, incident response, and continuous monitoring. Determine which volumes apply to your exchange. If you handle all facets of enrollment, premium payments, and eligibility checks, you’ll likely need to address each volume in depth.

  • Define the Exchange Boundary

    Clearly mark which systems, data flows, and vendor services are in scope. Include on-premises databases, virtual machines, and external agencies. An incomplete boundary often leads to unpleasant surprises during the audit.

  • Establish a Stakeholder Team

    Gather representatives from security, compliance, operations, and legal. This cross-functional team ensures that each requirement—whether it’s encryption management or user access review—has an owner who understands how the organization implements it.

2. Documentation Review

Auditors need full visibility into your policies, procedures, and technical configurations. Thorough documentation signals organizational maturity and greatly streamlines the audit.

• • MARS-E-Specific Policies

    MARS-E demands unique details such as data-sharing agreements with CMS and identity proofing requirements for consumer enrollment. Make sure these policies are meticulously updated and reflect current operations.

  • Data Flow Diagrams

    Lay out how consumer data—be it Social Security numbers or household income—travels between internal systems, federal databases, and vendor portals. This visual map highlights where encryption is mandated and where auditing controls should exist.

  • Incident Response and Continuous Monitoring

    These sections of MARS-E require concrete plans for detecting, investigating, and reporting security breaches. Clearly outline how your SIEM (Security Information and Event Management) system, log management tools, and escalation procedures function.

3. Assessment of Technical and Administrative Controls

At this stage, auditors check how effectively your policies come to life in practice. They look at everything from encryption keys to employee background checks.

• • Technical Controls

    1. Encryption Enforcement: A MARS-E audit scrutinizes whether your encryption solutions align with FIPS 140-2 or FIPS 140-3 standards. Are you using appropriate ciphers for data at rest and data in transit?
    2. Access Control Mechanisms: Administrators should not have the same privileges as enrollment staff. MARS-E emphasizes role-based access controls and frequent access reviews to limit unnecessary permissions.
    3. Continuous Monitoring Tools: Continuous monitoring is a central theme in MARS-E. Auditors will check SIEM platforms for real-time anomaly detection, ensuring that unauthorized data transfers and login attempts trigger immediate alerts.

• • Administrative Controls

    1. MARS-E Governance: Who oversees compliance on a day-to-day basis? Auditors often expect to see a designated MARS-E Security Officer and MARS-E Privacy Officer with clear decision-making authority.
    2. Vendor Agreements: If an external vendor handles enrollment calls or processes premium payments, the contract should incorporate MARS-E’s privacy and security provisions. You remain responsible for any vendor-related non-compliance.
    3. Employee Training: MARS-E compliance can’t succeed if employees fail to grasp data handling requirements. Strong training programs create an organizational culture where staff recognize that misuse or accidental disclosure of sensitive information triggers serious consequences.

4. Testing and Validation

Once documentation and controls are examined, auditors put these safeguards to the test. They look for real evidence that each control is working under normal and stressed conditions.

• • Penetration Testing

    • Exchange-Focused Scenarios: Auditors simulate attacks that directly target enrollment processes or aim to alter subsidy calculations. Unlike a generic pen test, these scenarios reflect the day-to-day threats facing a health insurance exchange.
    • System Integrity: The testers will try to bypass encryption, hijack user sessions, or escalate privileges. Any vulnerability is documented, along with recommended fixes.

• • Security Control Assessments (SCA)

    • Rigorous Evaluation: SCAs involve reviewing system configurations, scanning for policy-configuration mismatches, and interviewing staff. Auditors confirm that each procedure—like account termination or data access logging—works as intended, not just on paper.

5. Reporting and Remediation

After the testing, you’ll receive a comprehensive report detailing gaps, severity levels, and recommended solutions.

• Finding Severity

  • High: Unencrypted PII, insecure integrations with federal agencies, or inadequate oversight of privileged user accounts.
  • Moderate: Policies that are partially implemented or training that isn’t fully rolled out.
  • Low: Cosmetic deficiencies such as minor documentation lapses that don’t compromise security.

• Remediation Timeline

  • Address High-Severity Issues First: If data transmission with the federal government lacks encryption, remediate that issue without delay.
  • Document Your Plan: Outline the steps, assign responsibilities, and propose target dates. In some cases, CMS may require a follow-up assessment to confirm the fixes are in place.

6. Continuous Monitoring and Ongoing Compliance

MARS-E emphasizes that an audit isn’t a one-time project. Instead, it’s part of a lifecycle of perpetual vigilance.

• Automated Alerts: Configure your SIEM or intrusion detection system to send real-time notifications whenever suspicious activities occur. This proactive approach mitigates threats before they escalate.
• Plan of Action & Milestones (POA&M): Keep a living document that tracks deficiencies, status, and resolution timelines. CMS expects to see continuous improvements, so update your POA&M regularly.
• Annual or Bi-Annual Audits: Many organizations revisit their MARS-E controls on a set schedule, especially if they experience significant system changes or new legislative updates from CMS.

Avoidable common missteps in a MARS-E audit can stall your compliance goals and invite scrutiny from CMS.

• Insufficient Scope

  Some organizations forget to include integrated systems—like state Medicaid portals or vendor-managed databases—in their boundary. This oversight can trigger re-audits and drive up costs.

• Misalignment with Latest MARS-E Updates

  If your encryption standards or two-factor authentication policies haven’t been upgraded following a MARS-E revision, you risk instant findings.

• Vendor Compliance Blind Spots

  Even if your internal controls are watertight, an untested vendor environment can jeopardize your entire exchange. Regularly review contract clauses and vendor attestations to ensure alignment with MARS-E.

• Shallow Employee Training

  Staff who don’t grasp the importance of privacy and cybersecurity are more likely to click phishing links or mishandle PII. Consistent training that is role-specific and scenario-based can dramatically reduce these risks.

A robust MARS-E posture depends on continuous improvement, strategic resource allocation, and proactive management.

1. Stay Current on MARS-E Guidance

   • Review CMS Bulletins: Keep up with official announcements from CMS. Subtle changes in language around encryption algorithms or risk scoring can make a big difference.
   • Align Internal Policies Quickly: Once new standards appear, revise your policies, implement pilot tests, and finalize processes before your next audit window.

2. Integrate MARS-E with Other Frameworks

   • Control Mapping: If you already follow HIPAA Security Rule or NIST CSF, create crosswalks to MARS-E controls. This approach reduces duplication and keeps your organization from managing separate and conflicting procedures.
   • Unified Compliance Strategy: Use a single risk register or governance tool to handle multiple frameworks, including SOC 2, ISO 27001, or CCPA. A unified view helps leaders make informed decisions.

3. Focus on Identity and Access Management (IAM)

   • Proper Onboarding/Offboarding: Terminated employees should lose system access immediately. Any lag in deactivating accounts is a red flag during an audit.
   • Role Segregation: Align privileges with job responsibilities. An administrator who can also approve enrollments or alter billing data creates risk-laden overlaps.

4. Conduct “Mini-Audits” Year-Round

   • Internal Spot-Checks: Audit your own processes against MARS-E requirements periodically. Test things like multi-factor authentication usage, vendor compliance, and ongoing staff training.
   • Immediate Corrections: Fix issues as they arise, which prevents them from compounding into large-scale findings during the official MARS-E audit

5. Leverage Continuous Monitoring Tools

   • SIEM Configuration: Tailor your alert triggers to MARS-E’s focus areas, such as unauthorized data exports or suspicious changes to role permissions.
   • Behavioral Analytics: Some advanced solutions analyze user patterns. If an admin suddenly downloads large volumes of PII, the system flags it for investigation.

6. Partner with Experienced Auditors

   • Specialized Knowledge: Not every auditing firm has deep experience with MARS-E. Opt for auditors who regularly work with health insurance exchanges and know the nuances of federal data-sharing requirements.
   • Efficient Assessments: Specialized auditors like Audit Peak offer streamlined processes and practical remediation strategies that align with MARS-E while complementing your existing frameworks.

Consider a state-based exchange that needs to confirm eligibility for premium subsidies via the Federal Data Services Hub. During a MARS-E audit, it’s discovered that the exchange logs show only broad timestamps for data requests—no user ID or context behind each query. This incomplete logging hinders investigators if a breach or data misuse incident arises. By refining the logging system to capture user IDs and specific request details, the organization meets MARS-E’s traceability standards. It also gains a powerful tool for forensics and compliance reporting—essential for handling real-world security threats.

Meeting MARS-E standards is about protecting the trust your clients place in health insurance exchanges. Thoroughly assessed and properly implemented controls can shield you from data breaches, regulatory penalties, and reputational harm.

• Emphasize a Culture of Security: Every staff member, from the IT administrator to customer service representatives, plays a role in safeguarding PII and PHI.
• Plan Ahead for Audits: Regular preparation and mini-assessments help you adapt quickly to new MARS-E volumes or updated CMS guidance.
• Seek Knowledgeable Support: If navigating MARS-E feels overwhelming, connect with industry experts who have firsthand experience guiding health insurance exchanges through these intricate audits. Visit www.auditpeak.com for more insights on compliance strategies and to explore professional guidance tailored to your unique environment.

Next Steps

Strengthening your security posture under MARS-E is both a protective measure and a strategic advantage. By setting up airtight technical controls, refining administrative practices, and fostering continuous education, you ensure the resilience of your exchange. When you’re ready to streamline your compliance journey, consider partnering with professionals well-versed in HIPAA, FISMA, NIST CSF, and similar frameworks. Engaging the right expertise can bridge knowledge gaps and position your organization for sustained success and peace of mind.

WE WILL TAKE YOU TO THE PEAK.