As cost overruns mount, exchange CEO says it’s time for ‘tough choices’

By Katie Kerwin McCrimmon

Complex sign-up problems have forced Colorado health exchange managers to spend more than they planned this year on call centers, but board members were reluctant Tuesday to approve another $3 million from reserves to pay the increasing tab.

Connect for Health store front

People who want to buy private health insurance can visit walk-in centers around the state through Feb. 15, but sign-up problems have caused millions in cost overruns for Colorado’s health exchange.

Instead, two board members on the operations committee gave tentative approval Wednesday for about $2 million in emergency funds through the end of June with a requirement that exchange managers find ways to cut costs and provide “world-class service” next year.

Finance committee members and the full board would have to give final approval for the cash infusion.

But the bottom line is managers are already spending millions more than was budgeted.

The budget for fiscal year 2015 originally called for managers at Connect for Health Colorado to spend $13.7 million on call centers in Colorado Springs and around the state. The exchange board then approved emergency funding in the fall that hiked that number to $14.9 million.

Forecasts now show that by the end of June, call center costs could reach $18.1 million, more than $4 million more than originally planned.

“It’s bad news,” exchange manager Adele Work said as she explained charts showing ever increasing costs for call center staff. “It’s about $3.5 million over the budget.”

Workers at the centers are facing angry customers who desperately need help. Last year, about 4,000 people a month needed help with “life-change events” that they can’t report online. Last fall, thousands of customers who could have automatically renewed plans instead called for help when they found their plans were costing significantly more because their tax subsidies had declined. Then a new sign-up system that Colorado Medicaid officials built that was supposed to be simpler instead caused problems for thousands of customers. In recent weeks, yet another snafu has emerged as exchange managers discovered that another 3,600 people who were supposed to have their plans renewed instead lost their coverage.

Exchange managers contend that the system has worked well for most people. But they’ve acknowledged that many have endured major problems. Each of those people has required extensive one-on-one help.

Meanwhile the deadline to sign up for help is on Sunday. Connect for Health officials say that all those who begin the process by Sunday will be guaranteed insurance coverage for 2015 even if it takes weeks after the deadline to finish processing their requests.

Interim CEO Gary Drews said during Wednesday’s committee meeting that the exchange is facing an unsustainable situation.

“We’re going to have to make some tough choices,” Drews said. “We can’t continue to be all things to all people.”

He wanted board members to consider closing the call centers on weekends after open enrollment ends. They didn’t seem eager to do that.

Drews also wants to consider ways in which the exchange might tap more funding from Medicaid.

In order to get tax subsidies and buy private health insurance through Colorado’s exchange, customers must first apply for Medicaid and be rejected. That has forced exchange call center employees and workers at in-person assistance centers to provide significant help to people who end up qualifying for Medicaid.

Sue Birch, the manager for Medicaid in Colorado, said she’s willing to talk about ways in which the exchange might get some additional funding. But she noted repeatedly that federal officials control how Medicaid dollars get spent.

Drews said problems with a backlog of people who have had trouble signing up continue to cause problems for Connect for Health’s sustainability.

“We have to do something because of the backlog we have,” he said, but he acknowledged that the financial forecasts look bleak.

“It’s just compounding,” Drews said of the money that the exchange is spending on problems. “At this point, until we fix the real systemic drivers (for additional spending), it’s going to be a recurring thing. We’re madly dashing toward what options we do have to change this dynamic right away.”

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