Exchange board members skeptical of multi-million dollar wish list

By Katie Kerwin McCrimmon

Colorado’s health exchange managers want to spend about $20 million on additional computer technology and $13.6 million on their Colorado Springs call center in the next fiscal year.

Screen shot 2013-05-10 at 10.37.29 AM

The new IT expenses include nearly $6 million for a streamlined sign-in system to make it easier for customers to figure out quickly if they qualify for Medicaid or tax credits. Colorado officials were supposed to have built that system last year, but a lack of time and sparring between exchange and Medicaid managers prevented them from doing so. This year, managers for both agencies say they are on track to build the new system, but the timeline is very tight, with little time to spare before the next open enrollment season begins in the fall.

On top of $20.3 million in new IT spending, exchange managers are locked into about $8.4 million a year in ongoing tech costs and are also planning to spend about $7 million on highly-paid employees next year. (Click here to read Exchange to spend millions on high-paid employees)

Connect for Health managers are in the process of putting together a budget for the next fiscal year, which starts on July 1. In June, the board is slated to vote on a budget and how to pay for all the costs. Federal grants that end this year will fund some of the expenses — including about $17 million toward the new IT projects. But as the spigot of federal cash shuts off, Connect for Health is supposed to cover all its own costs. Health insurance customers will get hit with many of them. So far, the exchange is charging customers a 1.4 percent user fee and managers are considering imposing $13 million in fees on all Coloradans who have health insurance — even those who don’t get it through the exchange. (Click here to read Fee to fund exchange would hit all Coloradans with health insurance)

Proposed exchange spending

$20.3 million: new IT, fixes, shared system with state

$13.6 million: Colorado Springs call center; 134 year-round employees, 210 during enrollment

$8.4 million: fixed annual technology costs

$6.9 million: costs for 49 headquarters employees

$1.6 million: additional operations costs

Still to be determined: marketing and assistance network

As Connect for Health managers spell out their wish list of expenses, board members have been frustrated with a lack of detail about the millions in proposed spending.

Vague spending proposals

At a Finance Committee meeting on Tuesday, board members Mike Fallon and Ellen Daehnick said they had far too little information to decide whether spending $13 million on the call center was necessary. The proposal includes a year-round staff of 136 people and those ranks would swell to 210 during the open enrollment period. That’s far higher than managers’ previous estimates when they said they would keep about 40 essential call center employees during the off-season.

Along with call center staff, the exchange has 49 headquarters employees, many of whom are highly paid “chiefs,” including the CEO who just got a raise. (Click here to read Despite fury last fall, exchange board gives CEO raise, $14,000 bonus  and click here to read Congressman blasts bonus, raise for exchange CEO)

The large year-round staff contradicts claims that Colorado has a much smaller staff than other states that run their own exchanges. Managers have said a relatively small staff justifies paying high salaries to core employees.

“I don’t feel good about it. We don’t have a lot of substance,” Daehnick said of the call center spending proposal. “I’ve been asking the same questions for almost a year now (and not getting answers)…I’ve been beating my head against a wall.”

She pressed to know why callers sought help and if their calls could have been avoided or shortened had IT systems been working better. She cited an example of a customer who couldn’t get a bill from her new insurer, Kaiser Permanente. Kaiser kept telling the woman that it had not yet received her information from the exchange. When she called the exchange service center, agents told her they had already sent the information to Kaiser. That kind of confusion — possibly spawned by technology snafus — can eat up hours of time for all involved, Daehnick said.

Exchange managers said they don’t have metrics that evaluate the reasons for the calls or spell out why many are so long. But, they said focus groups with call center agents were helping them discern what worked well and what didn’t during the first open enrollment that lasted from October through March.

Dr. Fallon said he was disappointed not to get very detailed data on Tuesday about why the exchange has spent so much on its call center already — about $20 million so far during this fiscal year — and how many customers would get help in the future.

“I don’t feel like there’s any detail,” he said. “These are big numbers. I need to know where all of those big numbers come from.”

Connect for Health CEO Patty Fontneau said spending $13.6 million on the Colorado Springs call center is essential so the exchange provide high quality customer service.

Connect for Health CEO Patty Fontneau said spending $13.6 million on the Colorado Springs call center is essential so the exchange provide high quality customer service.

Connect for Health CEO Patty Fontneau argued that $13.6 million is justified since customer service is essential.

“We want a good quality service center and that’s going to take money. You’ve got to spend money to have quality,” Fontneau said.

On Monday, members of the board’s Operations Committee raised similar concerns about proposed technology spending.

Eric Grossman questioned whether Connect for Health should be paying IT vendors millions of dollars for technology fixes in the next year since the vendor, hCentive, can then turn around and re-sell the technology to other states.

“If they’re incorporating it (in the core product) they get to sell it. There’s no reason you should bear 100 percent of those enhancement costs and that’s not the industry standard,” said Grossman, a health IT expert. “This is a game that is played all the time. Typically customers get a certain number of (free) enhancements.”

Chief Technology Officer Proteus Duxbury said Connect for Health would be paying for improvements that hCentive hasn’t built yet. He didn’t say whether Connect for Health could do a better job negotiating with hCentive or whether he had considered Grossman’s suggestion of demanding free upgrades.

The exchange — which provides a shopping portal for private health insurance companies — also wants to buy new software to allow private health plans to load new plan details and prices every year. They want to beef up the system for small businesses. So far, small business sign-ups have lagged far below those for individuals. And the exchange wants to allow customers to enter their own “change events” like marriages, divorces, births of babies, moves or changes in income. Currently people in those situations must call for help.

Grossman said the return on investment for improvements to the small business portal may not be worth the up-front costs. And he cautioned managers about adding too many IT bells and whistles because there’s an ongoing cost to maintaining all that infrastructure. He compared it to buying a large house and having to pay much higher utility and maintenance costs for years to come.

“The bigger you make the house, the more costs you have to keep the lights on,” Grossman said. “You may have to scale some of these things down.”

Simplifying sign-ups for customers

The biggest technology project for 2014 is building a “shared eligibility” system in conjunction with state Medicaid managers.

The exchange and Medicaid managers each have agreed to pay $2.8 million toward the $5.6 million cost for the new system, Medicaid managers said. Connect for Health managers plan to spend an additional $2.8 million integrating the new system with their existing software and have budgeted a total of $5.6 million toward the project.

Antoinette Taranto, eligibility division director for Colorado’s Medicaid agency, Health Care Policy and Financing, said the project is going “very well.”

“Both the (Medicaid) team and the Connect for Health team are collaborating. It’s very positive. We’re looking forward to rolling this out in the fall,” Taranto said in an interview with Health News Colorado. (She did not speak to board members at the Connect for Health operations committee meeting.)

The state’s vendor is Deloitte while Connect for Health uses CGI. Taranto said Colorado is borrowing the best ideas from other states including Kentucky to try to create a very simple system. Under federal law, anyone who wants tax credits to buy health insurance must first get rejected from Medicaid. During the last open enrollment season, customers who knew they earned far too much to qualify for Medicaid complained that they had to answer a 12-page questionnaire including intrusive questions about their income, assets and odd details like whether they had burial insurance.

By late fall, Medicaid managers were simplifying the questions and they plan to continue to do so for this year.

“We’re going to continue to refine the necessary questions and make it easer for the users,” Taranto said.

The challenge is that federal officials require some mandatory questions for those receiving Medicaid or tax credits. People with the greatest needs, like those who are disabled, need to answer the most questions, while those who don’t qualify for any government help don’t need to provide much information at all.

“We’ve looked at other states and how they’ve asked the questions. We’re trying to look at taking the best of all the worlds and lessons learned everywhere,” Taranto said. “Then we’re going to customize it for Colorado.”

She said Medicaid and exchange officials were unable to make the shared eligibility system work last year because there wasn’t enough time. Simply throwing more people or more money at the problem couldn’t have bought Colorado the necessary time.

Taranto compared the process to having a baby.

“If you want a baby, you can’t have three pregnant women have one baby in three months. It still takes nine months. Every state has struggled with this because we didn’t have enough time and this is a big, complicated system,” Taranto said.

“Now we have some time under our belts and experience,” she said.

In Colorado, part of the complication is that the exchange is not a state agency. It’s a public non-profit and operates independently. Yet, exchange managers must work closely with state officials. Last year, the two entities and their dueling IT contractors had so many problems working together that an outside mediator had to come in to try and resolve conflicts. (Click here to read Mediator to triage health exchange problems.)

Taranto said the two entities are cooperating well this year. And the state is improving its “real-time eligibility.” Customers are supposed to be able to find out right away if they qualify or get rejected for Medicaid. Then they can move on to buy private health insurance through the exchange. At times last year, many customers were getting snagged without quick answers and in some cases, it took as long as 45 days to get a Medicaid acceptance or rejection.

People can continue to apply for Medicaid even though the open enrollment season for private insurance has ended for 2014. Taranto said applicants are now getting real-time eligibility determinations about 60 to 70 percent of the time. She expects that percentage to keep climbing, but declined to say how high it could realistically go. Taranto says Colorado is one of the few states that is trying to do real-time determinations.

Colorado Medicaid managers also are continuing to try to boost customer convenience by allowing mobile updates and notifications.

Taranto said the improvements — especially the shared system with Connect for Health — are complex, but doable.

“It is a heavy lift, but we are on schedule,” she said.

The federal government is requiring a shared system, so Colorado has no choice but to comply and to spend the federal funds to do it, Taranto said.

Adele Work, the exchange’s technology project manager, said the state’s Medicaid agency and its consultants are responsible for creating the sign-on system while exchange consultants are building the part that determines if a customer qualifies for tax credits. In the future, consumers trying to sign up should not notice whether they’re on the state system or the exchange site.

“When you log onto our site, you should seamlessly be logged into the shared system,” Work said.

“All of that is moving along. We’ve hit every milestone we need to hit,” Work said, but she warned that “the timelines are very scrunched.”

The system is supposed to be finished just before the new open enrollment starts in the fall.

“The shared eligibility system goes live on its own. Then it needs to be integrated, then we do…stand-alone testing, then joint testing, then we can go live,” Work said.

Board member Eric Grossman said the schedule looked awfully tight.

“You have hit all the milestones, but there’s an awful lot that is going to get released in September. What are your risks and how are you going to mitigate them?” Grossman said.

Richard Betts, chair of the Finance Committee, warned about the complex spending that the board needs to evaluate in a short amount of time.

“We’ve got a lot of balls in the air in terms of accomplishing our mission. We’ve got the call center, the assistance network. All of these add up.”

Exchange managers and board members plan to continue holding committee meetings, then the full board is expected to vote on the budget and fees on June 9.


Print Friendly

Leave a Reply