By Diane Carman

Leaders at Connect for Health Colorado said Wednesday that they welcome new, more intense scrutiny by the Colorado Legislature, and Sen. Ellen Roberts, R-Durango, promised to deliver at a meeting of the Legislative Health Benefit Exchange Implementation Review Committee.

The first step was to vote unanimously to create a subcommittee to review candidates selected by the health exchange board to be the next CEO of the organization and to develop guidelines for an appropriate executive compensation package.

Roberts, who chairs the committee, said the legislators need “more dialogue” about what they seek in a CEO, especially given the bipartisan membership of the committee. The exchange board “needs to know what we’re looking for and why,” she said, so they don’t face the prospect of bringing candidates to the committee for approval only to have them repeatedly rejected.

Equally important, she said, is for the committee to provide advice on a compensation package for the new CEO to avoid potshots from legislators later if bonuses or other forms of compensation are awarded by the board.

“The exchange board would like to have some guidance,” said Rep. Beth McCann, D-Denver, who is vice chair of the committee. “They need to know what kind of parameters are acceptable.”

Patty Fontneau, the first CEO of Connect for Health who resigned last summer to take a job at Cigna, was earning more than $195,000 in annual salary and bonuses when she left. Her compensation drew criticism from some legislators who questioned the awarding of bonuses at a time when customers were faced with serious problems trying to enroll in insurance plans.

Roberts commented that since the exchange is a public/private sector organization and as a result is “a bit of a strange animal,” a compensation package for the CEO needs to feature “a pay-for-performance type of approach” and not the typical private sector package that awards bonuses and raises to CEOs regardless of how the organization is performing.

Gary Drews has been serving as interim CEO. The chief financial officer and chief operating officer for the exchange resigned soon after Fontneau left, leaving the exchange short-handed through the critical open enrollment period between November and January.

Board Chair Sharon O’Hara said that the search for a new CEO “has taken much longer than anticipated,” but “we expect to have a candidate very shortly.”

Board member Steve ErkenBrack explained why the search has taken so long.

“This is not an easy job to fill,” he said. Not only is there the tricky aspect of managing a public/private organization, but “the skill sets are fairly significant and fairly broad.” Candidates need experience managing consumer services and dealing with insurance companies, Medicaid, finance, information technology, operations and public policy on the state and federal levels. “It’s going to be a rare person who hits all those things.”

Responding to audit findings

Drews responded to the findings from several audits that criticized the exchange for poor financial record-keeping, inadequate oversight of contracts and other problems. The state audit cited $32.6 million in spending that was not properly documented or, in some cases, violated rules for managing federal funds.

“Remember as we review the audits, which are valuable under any circumstances and are always helpful,” that they covered the time from Day 1 until a very short time ago, and that “this organization was being built in a very short time frame,” Drews said.

“It had to be up and running by October 2013,” so he said it was not surprising to see some of the audit findings.

In an attempt to put the findings in context, Drews said, “We were building processes along the way as we added staff under time pressure and with numerous changes in regulations.”

He said the exchange staff did not know it would have “27 audits in two years,” but that it will “implement all recommendations in all cases.

“We welcome the continuing oversight provided through these, and it will help to make our organization stronger.”

He said given the challenges, “it’s remarkable that it came out as well as it did. We’ve been running very leanly since Day 1.”

As for the future, Drews said the exchange has to make its systems work effectively, provide value like any other business, reach the uninsured, stabilize the marketplace and, starting this year, pay its own way since federal grants are no longer available.

Some transitional funding will be available through the end of this year from money from the CoverColorado program and the exchange plans to continue to seek grants from foundations, but the goal is to support the exchange through funds generated from fees on health insurance policies.

The exchange also continues to struggle with costs it has incurred through determining Medicaid eligibility and assisting customers in signing up for that program, which traditionally has been handled by the state Department of Health Care Policy and Finance.

Drews estimated that 40 to 60 percent of the time spent across the assistance network was devoted to counseling Medicaid applicants, which is part of the reason that customer service center costs exceeded projections by 50 percent.

While the exchange wants to ensure that it provides a “no-wrong-door” system for enrolling in health care, Drews said it’s important that it doesn’t become overwhelmed with servicing Medicaid clients. “We need to create a system that quickly gets them to the right place.”

The pressure is on the exchange to streamline its systems so it can attract sufficient customers, set its fees correctly, achieve appropriate staffing levels and meet its goals by the end of this year.

“I  can’t overstate how challenging this is,” Drews said.

Meanwhile, Senate Bill 256, co-sponsored by Roberts and McCann, is working its way through the legislative process. It would change the name of the committee to the Colorado Health Insurance Exchange Oversight Committee and allow the group to meet up to 10 times per year outside of the legislative session and an unlimited number of times during the session.

The next meeting of the committee is April 15.