By Katie Kerwin McCrimmon
A bipartisan group of Colorado lawmakers voted for a comprehensive audit of Colorado’s health exchange and the bill now moves to the full House.
Members of the House Health, Insurance and Environment Committee voted 9 to 2 on Thursday to support the audit.
Colorado Auditor Dianne Ray is already working on a narrow examination of how the exchange is spending $177 million in federal funds. If House Bill 14-1257 passes the full House, then the Senate, Ray will conduct a much more thorough examination. It will include how funds have been spent, whether the exchange is on track to be financially self-sustaining as planned by January 2015, if employee background checks are working and whether workers are safely handling private customer data.
The earliest Ray said she would release findings is December.
Support for the audit comes after an exchange employee was indicted in Montana earlier this month on federal embezzlement charges dating to activities between 2008 and 2010. Christa Ann McClure remains on paid leave from her $130,000 job at Connect for Health Colorado. Lawmakers did not bring up McClure by name, but did ask how Connect for Health conducts background checks. (Click here to read Audits escalate, Lawmakers question pay for accused embezzler.)
Connect for Health Executive Director and CEO Patty Fontneau said she plans to discuss McClure’s fate by next Tuesday. She declined to say anything more about McClure citing confidential personnel matters.
Fontneau had stirred the ire of some lawmakers and members of Colorado’s Congressional delegation in the fall when she sought a raise from her $190,550 salary as Connect for Health was struggling to attract buyers immediately after its launch. (Click here to read Exchange boss wants pay hike.)
So far, about 80,000 people have bought private health plans through the exchange since Oct. 1. Open enrollment continues through the end of March and exchange managers had hoped to sell as many as 135,000 plans by then.
Fontneau told lawmakers during Thursday’s hearing that the exchange has already been audited multiple times both by the federal government and independent auditors. She also pointed out that Connect for Health is new and that she and her employees should have time to establish themselves before being subjected to another audit.
Rep. Dan Nordberg, R-Colorado Springs, a co-sponsor of the bill, successfully convinced fellow lawmakers that a thorough audit is critical now because the exchange is spending such a large pool of taxpayer money so quickly.
“This is a very fast-moving and quick process. What’s at stake is not just a business, but it’s people insurance,” Nordberg said. “That is the need for the urgency.”
Fontneau said that while Colorado was originally slated to receive $187 million in federal funds, budget cuts known as sequestration reduced that amount to $177 million. And so far, she said Connect for Health has spent $80 million.
Nordberg, who is a member of the legislature’s audit committee, said it’s incumbent on state auditors to ensure that Connect for Health is properly spending taxpayer dollars.
“Unfortunately we recently have conducted several audits where federal funds are being mismanaged,” Nordberg said.
Rep. Beth McCann, D-Denver, expressed some concerns about a comprehensive audit before ultimately voting to support it.
“There have been several financial audits (of Connect for Health) done by the federal government. I’m concerned about using state resources and state money to repeat audits that have been pretty expensive and pretty extensive,” McCann said.
Auditor Ray assured McCann that her office has the resources to conduct the audit and that she did not plan to charge Connect for Health to conduct the analysis.
Ray said her biggest concern at the moment is that Connect for Health needs to be financially independent in less than a year.
“I think one of the highest risks right now is that January 2015 sustainability,” Ray said.
Assessing risks and offering recommendations could be helpful to the long-term viability of the exchange, Ray said.
“We don’t want to duplicate other efforts on any of this,” she said. “We do not want to overlap anything that any of the others have done.”
Fontneau said she’s convinced that the exchange is on a solid financial path. She said Colorado has some of the lowest user fees in the nation. While some other states and the federal exchange are charging as much as 4.4 percent, Colorado is charging 1.4 percent, leaving plenty of room for fee hikes if the exchange needs more money to cover costs.
Fontneau also said that outside experts conduct thorough background checks on all employees.
“We have a lot of review and we continue to have a lot of review.”