Lawmakers concerned about lucrative contract for exchange sales chief

By Katie Kerwin McCrimmon

Colorado’s health exchange board unanimously voted on Monday to give its chief strategy and sales officer a contract that could pay up to $150,000 for six months of work.

On an annual basis, that’s a higher rate of pay than the interim CEO for the exchange who receives $199,200 a year and more than triple what the governor of Colorado receives: $90,000 a year.

Marcia Benshoof will get paid $120 an hour and up to $150,000 over six months at Colorado's health exchange. Lawmakers are questioning her lucrative contract.

Marcia Benshoof will get paid $120 an hour and up to $150,000 over six months at Colorado’s health exchange. Lawmakers are questioning her lucrative contract.

The lucrative contract comes after exchange managers earlier this year hiked costs for customers to fund a ballooning budget and vowed to operate more efficiently with fewer highly paid contractors and more salaried employees. The previous head of Colorado’s exchange, Patty Fontneau, incurred the wrath of some critics when she sought a raise and bonuses when the exchange was performing poorly.

The exchange board met in secret during an executive session on Monday, then voted in public on the contract for Marcia Benshoof. She will receive $120 per hour and up to $150,000 during the next six months. A spokesman called Benshoof’s work “invaluable.”

Altogether over the past three years, Benshoof has received $542,880 for consulting work and expenses. On top of that, she worked for seven months in 2014 and early this year as an exchange employee. During those seven months, she earned $165,000 a year or about $96,200 in additional pay.

She’s not alone in receiving a high-paying contract. Another high-level exchange manager, Adele Work, worked as a contractor from spring of 2012 to spring of this year and the exchange paid North Highland Consulting just over $1 million for Work’s services. Earlier this year, Work became an exchange employee — chief information officer — and now earns $165,000 a year.

Among other work, Benshoof has overseen the small business exchange. As of April of this year, the small business exchange had only attracted 329 employer and 2,589 individual customers. In a report to board members at that time, Benshoof conceded that the small business exchange was “underperforming” and was at a critical juncture. Managers promised to make the system easier to use, but have shelved any fixes until spring.

Benshoof also oversees brokers working with the exchange, does outreach and eligibility work, partners with insurance carriers and federal officials, and is the official “insurance license” holder for the exchange, according to interim CEO Kevin Patterson.

In presentations to the board about enrollment projections this year, Benshoof has said that the exchange will have to perform much better in 2016 than it has in previous years. She predicted individual sign-ups closer to 217,000 for 2016, compared to about 143,000 for 2015. And she is gambling that the small business exchange will cover nearly 7,000 people by the middle of next year, compared to over 2,500 this year.

So far, the health exchange has not managed to attract the majority of customers in the individual market. The Colorado Health Access Survey released earlier this month found that Colorado’s exchange so far has captured 42 percent of the individual market.

After the Monday vote, the exchange’s lawyer, Alan Schmitz, and spokesman Luke Clarke both tried to stop Benshoof and board members from commenting on the contract.

Benshoof declined to comment.

Board Chair Sharon O’Hara said that the contract amounted to “appropriate spending” and “is necessary.”

Adela Flores-Brennan, a board member and former Connect for Health employee who now represents consumers as head of the Colorado Consumer Health Initiative, declined to explain why she voted yes.

Patterson said he recommended that the board approve Benshoof’s contract.

“When you look at the amount of responsibility and work that Marcia has to do, I think it’s very justifiable,” Patterson said after the board meeting. “She has a unique set of skills and a history of knowing this insurance world extremely well.”

Why not then make Benshoof a salaried employee?

Patterson said it’s unlikely he could replace Benshoof with a single person. He said she has the expertise, knowledge and relationships that add value for the exchange.

“For what she is able to deliver to our organization, I think it’ is the right amount (of pay),” Patterson said.

Exchange critics, however, said that the contract for Benshoof is typical of out-of-control spending at the exchange.

“Unfortunately, I’m not surprised, but I’m deeply disappointed,” said Sen. Kevin Lundberg, R-Berthoud, who sits on the legislature’s exchange review committee. “I’m not surprised because I’ve found that they spend money like water. They’ve already burned through (as much as) $200 million setting this whole system up and it’s still not functioning as expected.”

Lawmakers have tried to more carefully scrutinize exchange managers and board decisions. But Lundberg said the committee has little power over decisions like contracts.

Lundberg is planning to introduce a bill next year that would require voter approval for consumer cost hikes at the exchange that he believes amount to illegal taxes. Unlike a typical fee, Lundberg said all Colorado customers who buy health insurance have to pay to fund the health exchange and he calls that an illegal tax.

He said high pay has been the rule, not the exception at the exchange.

“Everybody who had done anything (for the exchange) has been paid well beyond the scale for state workers,” Lundberg said. “This is part of the state of Colorado. The state seal is on all their letters. They are created by the state. Yet they operate with impunity.”

Connect for Health Colorado is a public entity, but operates independently of state government.

“I believe their entire system is a fantasy. It does not provide affordable insurance for the people of Colorado. It just adds a layer of bureaucracy. They have driven a lot of people into Medicaid, but fewer people can afford to pay their medical bills,” Lundberg said.

Sen. Beth McCann, D-Denver, who is vice-chair of the legislative oversight committee, said that exchange workers have “confronted an extremely heavy work load with many challenges. Overall, they have been successful in signing up large numbers of people both for Medicaid and private insurance.”

McCann said “much work remains to be done” particularly with respect to glitches in the enrollment system.

“Marcia appears to be highly qualified and committed to the success of Connect for Health. The potential of $300,000 a year, if that is in fact the case, is too high. I would hope the Board will monitor her hours so that her compensation remains within reasonable limits, certainly not more than the CFO or CEO are making.”

Benshoof joined Connect for Health Colorado in 2012. She initially worked as a contractor at a rate of $74 an hour, a rate that jumped to $85 an hour, then to $120 per hour this year. Altogether, Benshoof has received $542,880 for consulting fees and expenses over the last three years, according to exchange spokesman Luke Clarke.

For six months last year and one month this year, Benshoof, worked as an employee for the exchange at a compensation rate of $165,000 per year. At the end of January this year, Clarke said she asked to go back to being a contractor.

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