Exchange board approves budget with higher fees, big sales targets

By Katie Kerwin McCrimmon

Colorado’s health exchange board today approved a final budget for the next fiscal year that requires aggressive sales growth and higher fees, but still doesn’t bring in enough cash.

The next open enrollment begins in November and Connect for Health Colorado managers will have to dramatically boost sales of private health insurance with fewer health guides.

The final budget projects that $40.3 million will be coming in with expenses slated to add up to nearly $53.7 million with operating expenses plus  $8.8 million in additional IT projects. Managers are planning for net deficits of $13.3 million for the next fiscal year. To stem the losses, a new interim CEO is trying to get millions more in reimbursements from the public Medicaid program.

During the 2015 open enrollment, Colorado’s exchange signed up about 140,000 people for private insurance while nearly 80,000 qualified for Medicaid or public health insurance programs for children. Now more than 1 million — or one of every five Coloradans — gets health insurance through the public Medicaid program. Health exchange call center workers and health coverage guides helped many people qualify for Medicaid and the exchange didn’t collect user fees for those sign-ups.

The Colorado exchange board unanimously approved the final budget Monday for the new fiscal year, which starts on July 1.

And Kevin Patterson, the new interim CEO, pledged that his primary goal is to improve customer service.

“We’ve got to make it easier for people to enroll, easier for people to move in and out (of the exchange). We want to make sure we’re fixing the highest priority issues. We continue to need to work out those issues,” Patterson said.

Health insurance broker John Luhman of All Health Options spoke during the public comment period and said he’s not very optimistic that the exchange can fix its many problems by this fall.

“I know everybody is working hard, but the clock is ticking,” he said.

Errors continue to dog the system, Luhman said.

Exchange managers have conceded that’s the case about 10 percent of the time and they are trying to build a better shared IT system with state Medicaid officials.

“We constantly have to work with broken equipment and broken software,” Luhman said. “C4 (Connect for Health) will not grow or sustain itself without us (brokers).

In an attempt to improve the call center operations, the Connect for Health board met behind closed doors Monday to discuss negotiating a new contract with CGI to operate the Colorado Springs call center. Exchange managers are trying to drive down costs for the call center.

Regarding the overall budget, board member Davis Fansler said he’s concerned about the projected losses.

“There’s a gap here (between revenue and expenses) no matter how we slice it,” Fansler said. “We’re ultimately going to have to take a look at what some ancillary revenues might be.”

Fansler and others, however, expressed their gratitude to outgoing interim CEO Gary Drews for producing a realistic and transparent budget. The former managers of Connect for Health had repeatedly claimed that the entity could operate on about $26 million with user fees of 1.4 percent a year. That proved to be wildly inaccurate.

Drews set up a plan to add several employees and convert contractors into full-time employees. Patterson said he may have a new chief financial officer hired within days.

Along with the changes among managers, Connect for Health could see a major overhaul of its board.

Five board members’ terms are expiring. Some could be reappointed. Others, like Dr. Mike Fallon, have made it clear they’re ready to leave.

Gov. John Hickenlooper also has appointed a new board member to replace businesswoman and exchange whistleblower Ellen Daehnick, whom the governor ousted months ago.

The governor’s pick is Denise O’Learly, an investor in IT companies. Her husband is Kent Thiry, the CEO of DaVita HealthCare Partners Inc.

Correction: This story has been updated to add $8.8 million in IT and capitol projects that will increase projected spending in fiscal year 2016 from about $45 million to $53.7 million. Managers anticipate operating losses of $4.6 million and net projected deficits of $13.3 million.


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