By Katie Kerwin McCrimmon

Millions in new cost overruns and escalating finger-pointing between Colorado’s Medicaid bosses and health exchange managers spurred the exchange board on Monday to vote for its own “end-to-end” audit, while the governor’s office is launching a new round of talks between top officials.

Medicaid and exchange managers need to map out solutions for the problems that could cost an additional $2 million to $7 million. That’s on top of $6.2 million in cost overruns for the exchange call center this year. It’s unclear who will pay for the new fixes — the state, the exchange or both. Exchange board members plan to meet again on March 23 to vote on solutions.

On top of the new self-imposed audit, Colorado lawmakers tomorrow will consider a bill that would require an additional state audit of Colorado’s exchange.

Quarreling between the two entities in charge of sign-ups for public and private insurance in Colorado has escalated in recent months because thousands of people struggled this year to sign up through Colorado’s exchange, Connect for Health Colorado.

Gov. John Hickenlooper’s deputy chief of staff, David Padrino, is on the exchange board, but does not have a vote. He encouraged fellow board members to vote for the audit, saying it would not be a “fault-finding” exercise, but rather could help support better decisions.

Padrino plans to bring exchange and Medicaid managers together for talks within the week.

“We’re making sure there’s an environment of collaboration,” Padrino said after Monday’s board meeting. “The governor has stated before that he wants the customer service to improve.”

Squabbling between the two entities has been going on for years. (Click here to read Mediator to triage health exchange problems.)

Padrino declined to comment on whether it still makes sense for Colorado’s health exchange to operate outside the state as its own separate entity.

When Colorado lawmakers established the state’s exchange in 2011, they set it up as an independent entity and said it had to support itself. So far, the exchange has been funded with nearly $200 million in federal start-up funds.

While the exchange operates outside of the state government, everyone who wants to try to get tax credits must first get rejected for the state-run Medicaid program. A shared system between Medicaid and the exchange that was supposed to be simple, instead has snagged thousands of potential customers. On Monday, exchange officials acknowledged that they had 8,000 to 10,000 problematic “incidents.” They said one person could have reported multiple incidents, so it’s unclear exactly how many thousands of people struggled to sign up. Some people’s applications remained hung up for a full four months. Exchange managers said 700 of them are still stuck without health coverage well after open enrollment ended on Feb. 15.

“The technology stinks,” said John Luhman, a health insurance broker who attended Monday’s exchange board meeting to summarize troubles he and his clients have been having.

“Let’s get the truth on the table. We have technology that’s horrible,” Luhman told exchange board members and the head of Colorado’s Medicaid department, whom he blames for all the trouble.

He said he, alone, has 38 families who remain stuck without insurance and he believes many more than 700 people are still having trouble getting covered.

Luhman described customers with dire health needs and one widower who mistakenly was identified as “deceased” in the state system and couldn’t qualify for health insurance until he was able to convince officials that he was, in fact, alive. Luhman said the process of being killed off in the system was traumatic for the man who had recently lost his wife.

The glitches have been costly. Last week, managers told board members that their call center would cost a total of about $21.14 million this year, $6.2 million over budget. The previous exchange CEO, Patty Fontneau, and her CFO, Cammie Blais, repeatedly estimated that the entire cost of the exchange per year would be $26 million.

“Our $26 million budget is laughable,” said exchange board member, Dr. Mike Fallon.

He blasted the IT system that is shared with the state’s Medicaid department for not working properly, and said the exchange can no longer subsidize the state’s $7 billion Medicaid behemoth.

Exchange officials estimate that 40 percent of the calls they are getting at the exchange call center relate to people on Medicaid, rather than to those buying private insurance. On top of that, they estimate that an expensive network of in-person health coverage guides is dealing with Medicaid questions about 60 percent of the time.

Exchange officials said about $10 million out of $16.8 million in costs for the assistance network are attributable to Medicaid clients, not people buying private health insurance.

Sue Birch, head of the state’s Medicaid program, pushed back against the exchange data, saying it was anecdotal, not based on actual numbers.

She said that if the exchange can prove that Medicaid clients are costing the exchange significant sums of money, the state can pay its “fair share” and try to get reimbursements from the federal government.

“What I don’t feel confident about is that I don’t have estimates on how much this is going to cost,” Birch said.

Connect for Health is supposed to serve people who are buying private insurance. At the same time, federal law requires a “no wrong door” approach, meaning that any person in need of health coverage can call the exchange or Medicaid to try to sign up.

The exchange’s interim CEO, Gary Drews, urged board members to decide whether they want to keep subsidizing Medicaid patients and, if so, to consider how to pay for that expensive work.

“We’re experiencing a good deal of volume related to serving this (Medicaid) population for the folks that come through our shop,” Drews said. “We don’t do the kind of job that we’d like to do. We’re not trained to do that and we can’t access their (IT) systems.”

If the state exchange is going to take care of large numbers of Medicaid clients — about 76,000 of whom qualified for coverage during the recent open enrollment season — Drews warned that that will be costly.

“We need to right-size and right-fund this entity,” he said.

Finding solutions is urgent since the next open enrollment season begins on Nov. 1.

Other data that exchange officials announced on Monday included:

• About 141,639 signed up for private health plans;
• Connect for Health retained about 94,385 of its 2014 customers, or about 67 percent. (That was below projections. Connect officials had predicted that they would start the 2015 enrollment season with a baseline of about 114,000 customers.);
• About 54 percent qualified for tax credits, which averaged $229 per month;
• About 26 percent of those who signed up were between ages 18 and 34;
• Half of people who signed up were individuals (rather than families);
• About 10 percent of people who bought plans lived in rural Colorado;
• Brokers signed up about 40 percent of customers, while workers in the assistance network brought in 6 percent; and
• The small business exchange has covered just 339 businesses and covers about 3,716 people.